R o b e r t S. F r a n k
January 13, 2000
Alessandro A. Iuppa, Superintendent of Insurance
c/o Lyndy Morgan
Docket No. INS-99-14
Bureau of Insurance
124 Northern Avenue
Gardiner, Maine 04345
Re: INS 99-14
Application of Associated Health Plans Inc. under 24 M.R.S.A. § 2301-9D
Dear Mr. Superintendent:
Enclosed for filing are the following documents:
- BCBSME’s Supplemental Memorandum in Support of Motion for Supplemental Protective
Order;
- Affidavit of Edward J. Kane in Support of BCBSME’s Motion for Supplemental
Protective Order
Mr. Kane is currently out-of-state, although in telephone contact with
the undersigned. We are arranging for his notarized signature, and we will file the
notarized and signed original of his affidavit when we receive it.
Very truly yours,
cc: Service list (see attached certificate of service)
STATE OF MAINE
DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
BUREAU OF INSURANCE
| In Re: Application of Associated Hospital Service of Maine
d/b/a Blue Cross and Blue Shield of Maine to convert to a Stock Insurer and Voluntarily
Liquidate and Dissolve |
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and |
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Certificate of Service |
| In Re: Application of Anthem Health Plan of Maine, Inc. to
Acquire the Assets of Associated Hospital Service of Maine d/b/a Blue Cross and Blue
Shield of Maine and Related Transactions
Docket No. INS-99-14
(Consolidated) |
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CERTIFICATE OF SERVICE
The above signed person hereby certifies that on January 12, 2000, he
caused a copy of the following documents to be served by United States mail, first class
postage prepaid, on each of the persons listed below.
James Zimpritch, Esq.
Judith Chamberlain, Esq.
Martin Robles, Esq.
William Laubenstein, Esq.
Gregory A. Brodek , Esq. (Maine Health Alliance)
Andrew B. MacLean, Esq. (Thomas D. Hayward, M.D., Maroulla S. Gleaton,
M.D., and the Maine Medical Association)
Joseph P. Ditre, Esq. (Consumers for Affordable Health Care
Foundation/Coalition)
John Kane, Esq. (Central Maine Healthcare Corporation)
Robert I. Goldman (Maine Council of Senior Citizens)
Bonnie Post (Sacopee Valley Health Center, Regional Medical Center at
Lubec, Eastport Health Care, Inc. and the Maine Ambulatory Care Coalition) John Dieffenbacher-Krall (Maine People’s Alliance)
Donald E. Quigley, Esq.
Kellie P. Miller, M.S., (Maine Osteopathic Association)
Sandra L. Parker, Esq., (Maine Hospital Association)
Edward F. Miller (American Lung Association of Maine)
STATE OF MAINE
DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
BUREAU OF INSURANCE
| In Re: Application of Associated Hospital Service of Maine
d/b/a Blue Cross and Blue Shield of Maine to convert to a Stock Insurer and Voluntarily
Liquidate and Dissolve |
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and |
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BCBSME’S SUPPLEMENTAL MEMORANDUM IN
SUPPORT OF MOTION FOR SUPPLEMENTAL PROTECTIVE ORDER |
| In Re: Application of Anthem Health Plan of Maine, Inc. to
Acquire the Assets of Associated Hospital Service of Maine d/b/a Blue Cross and Blue
Shield of Maine and Related Transactions
Docket No. INS-99-14
(Consolidated) |
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|
BCBSME submits this supplemental memorandum in support of its motion for supplemental
protective order, filed December 17, 1999.
- The Salary And Other Executive Compensation Information of BCBSME Executives Is Properly
Classified As Confidential.
The Affidavit of Edward Kane filed herewith details the competitive significance of the
executive salary and other compensation information provided in response to the
Superintendent’s request. Kane Aff., ¶’s 4-7. This type of information had
regularly been treated as confidential and appropriate for protective order coverage in
the context of discovery in federal civil actions, where Fed.R.Civ.P. 26(c)(7) authorizes
protective orders for "trade secret or other confidential research, development or
commercial information". See Muka v. Nicolet Paper Co., _ F. Supp. __ ,
1979 WL 297, *4 (E.D.Wis 1979) ("the materials discovered thereby will be subject to
a protective order to prevent the dissemination of salary information which might harm
Nicolet's competitive position with respect to hiring top executives"); Jacobs v.
Sea-Land Service, Inc., __ F. Supp. __, 1980 WL 141, *1 (N.D.Cal. 1980)
("Defendant is entitled to a Protective Order limiting dissemination of salary
information. Defendant shall submit to the Court a proposed order to protect dissemination
to non-parties to the litigation."); Ford v. University of Notre Dame, __ F.
Supp. __ 1980 WL 224, *1 (N.D.Ind. 1980) ("Defendant shall produce affirmative action
plans, reports and evaluations and other self-evaluative reports and studies requested by
Plaintiffs, including internal salary studies and faculty senate attitude surveys, but
only after a protective order has been entered maintaining the confidentiality of such
materials"); Zeid v. MCI Telecommunications Corp., 1985 WL 653, *1 (N.D.Ill.
1985) ("The parties agree that all documents, portions thereof, or other information
produced in discovery in this case ('Confidential Information') shall be subject to this
protective order. Such information shall include, but may not be limited to, corporate
financial records, salary ranges and salary structures, individual employee salaries,
employment histories . . ."); Terwilliger v. York Intern. Corp., 176 F.R.D.
214, 218 n. 4 (W.D.Va.1997) ("The salary information that
Terwilliger is being ordered to produce is within the purview of the amended protective
order entered by this Court on June 7, 1996").
In Tipsword v. Ogilvy & Mather, Inc., __ F. Supp. __, 1995 WL
506028, *1 (N.D.Ill. 1995), the court, relying on an affidavit similar to that provided to
the superintendent here, expressly found that the disclosure of compensation information
could work a competitive harm on the disclosing corporation:
Defendant Ogilvy & Mather ("O & M") has moved under General Rule of
the United States District Court for the Northern District of Illinois ("Local
Rule") 10(c) for an order suppressing certain exhibits to its motion for summary
judgment. Such an order may be granted upon a showing of "good cause," which in
the related context of protective orders under Fed.R.Civ.P. 26(c), may include protecting
a party from being placed at a competitive disadvantage because of the disclosure. See Miles
v. Boeing Co., 154 F.R.D. 112, 114 (E.D.Pa.1994).
In this case, O & M wants to preclude public disclosure of (1) a listing of the
annual and average salaries of its vice presidents and officers in the Chicago office, as
well as a list of every Chicago employee and his or her birthday, gender, race and
termination date (Exhibit F); (2) a spread sheet of cost savings to be realized by the
December 1993 reduction in force, a list of bonuses paid in the Chicago office from
1988-93, information about Chicago employees' previous raises, bonuses, performance
ratings and hiring dates, as well as a list of freelance employees utilized in 1993
(Exhibit G); and (3) a list of incentive bonuses paid in 1992 (Exhibit H). Excluding the
list which contains the age, gender, race and termination date of the Chicago employees,
all of these documents contain confidential information which, if disclosed to O & M's
competitors, could hamper its ability to retain its employees. Plaintiff responds to
defendant's request by arguing that these documents are necessary to her case, and that
public disclosure of them poses no threat to O & M's competitive health because they
only deal with activities at the company between 1988 and 1993. Tipsword's first argument
is unresponsive to the issue before us, since she and her attorney will be provided access
to the documents under the protective order proposed by defendant. Plaintiff's second
argument is unpersuasive; we cannot conclude that salary and performance information from
as recently as 1993 would be useless to a competitor, especially since O & M asserts
that many of the employees listed in the documents still remain with the company. See
Culinary Foods, Inc. v. Raychem Corp., 151 F.R.D. 297, 303 (N.D.Ill.) (protecting
pre-1987 development plans because of the likelihood that such information would reveal
present practices), modified, 153 F.R.D. 614 (N.D.Ill.1993); see also Phillips
Petroleum Co. v. Rexene Products Co., 158 F.R.D. 43, 47 (D.Del.1994) (rejecting
contention that data from prior years was "ancient").
The analysis in this case is precisely the same, for the reasons set forth in the Kane
Affidavit.
The compensation information should be covered by the protective order, notwithstanding
the fact by statute, 24 M.R.S.A. § 2306 (1999. Supp), BCBSME must file an annual
financial report on forms furnished by the NAIC form, and in accordance with the
NAIC’s annual statement instructions. As the Superintendent’s adaptation of the
NAIC form indicate, while the NAIC requires the filer to prepare a supplemental
compensation schedule (page 1 of Exhibit 1 attached. Line 16), the state insurance
regulator has the authority to exempt the company from a hard-copy filing. The
Superintendent has elected this option, as the notation "O" for line 16 on the
annual state form instructions indicates. According to the Superintendent’s Notes and
Instructions, (page 4 of Exhibit 1 attached) information in the "O" category is
classified as follows: "[i]n general this information is subject to a claim of
confidentiality, and may be retained on site rather than being filed with the
Superintendent . . . " In accordance with these instructions, BCBSME has prepared
such information but has neither filed a hard-copy with the Superintendent nor furnished
an electronic copy to the NAIC of any supplemental compensation schedule. Kane Aff., ¶ 6.
For these reasons, the compensation information should be classifiable as
"confidential" within the meaning of the existing protective order, and
be subject to such additional protections as the Superintendent may order in response to
the pending BCBSME motion for supplemental protective order.
- The Superintendent Should Craft Special Procedures for Balancing Intervenor Access to
Particular Categories of Information With BCBSME’s Need For Confidential Protection
As BCBSME described in its motion, a limited amount of the information included in its
production to the Superintendent is of marginal relevance, at best, in this proceeding,
while of considerable business sensitivity. Bank account numbers, the listing of accounts
receivable, historical compensation information, and the financial terms of its
pharmaceutical contract and claims, and its form contracts with providers –processing
contracts are of this description. Other information may be of more relevance to the
Superintendent’s information, but the disclosure of such information to particular
parties can work a peculiar harm to BCBSME. The information and opinions assembled by
BCBSME in its evaluation of Anthem’s and competing offers, and the respective
business plans and non-public financial statements of Maine Partners and Central Maine
Partners are of this latter description.
Facing similar complexes of interests, federal courts in fashioning protection for
sensitive information in discovery have utilized a variety of techniques to both protect
the information from unwarranted disclosure safeguarding the integrity of the adjudication
process. Where trade secret information has been involved, courts have required the party
requesting the information to establish that disclosure of the information is relevant and
necessary to the action. C. A. Wright & R. Marcus, 8 Federal Practice and Procedure
Civ. 2d § 2043 (1994) ("If it is established that confidential information is
being sought, the burden is on the party seeking discovery to establish that the
information is sufficiently relevant and necessary to his case to outweigh the harm
disclosure would cause to the person from whom he is seeking the information. This should
include consideration of all pertinent circumstances, including dangers of abuse, good
faith, and availability of other means of proof"). See Keyes v. Lenoir Rhyne
College, 552 F.2d 579 (4th Cir. 1977), cert. denied , 434 U.S. 904
(1978) (court refused to require college to produce confidential evaluations of each
faculty member on grounds that confidentiality of such evaluation records was necessary to
enable college to receive honest and candid appraisals of abilities of faculty members by
their peers"); Stena Finance B.V. v. Sea Containers Ltd., 131 F.R.D. 361
(D.D.C. 1989) (order to produce documents regarding financial advisors' opinions would
hamper ability of corporation that was subject of tender offer to negotiate contracts with
third parties regarding sale of its assets; accordingly, that information was protected
from discovery under business strategy doctrine); Temple Holdings Ltd. v. Sea
Containers Ltd., , 131 F.R.D. 360 (D. D.C.1989) (under business strategy doctrine,
discovery relating to tender offer target company's strategies, alternatives, or proposals
under consideration is protected from disclosure in related securities litigation); Everco
Industries, Inc. v. O.E.M. Products Co., 362 F.Supp. 204 (N.D. Ill.1973) (in actions
between business competitors, certain documents are confidential and should not be
discovered without sufficient cause). Absent sufficient cause for discovering such
competitively sensitive information, courts have at times declined to order the production
of such information, notwithstanding the availability of special protective measures
designed to minimize competitive harm. See Corbett v. Free Press Ass'n., 50 F.R.D.
179 (D. Vt. 1970) (information as to defendant's net profit was of same nature as trade
secret, especially where plaintiff was still actively engaged in various aspects of
newspaper business, and in absence of stronger showing than was made by plaintiff suing
for breach of contract of employment as general manager of defendant's newspaper, court
saw no need to order discovery as to defendant's net profit, even invoking safeguards of
rule permitting deposition to be taken with no one present except parties and their
officers or counsel);. Courts have also deferred requiring a party to produce such
information until the time of trial, and a showing that the requesting party needed such
information in order to present its case at trial. Manitowoc Milk Producers Co-op. v.
Kornely Guernsey Farms Dairy, 61 F.R.D. 499 (D. Wis. 1973) (court refuses to permit
discovery of current, confidential and competitive information, subject to later
demonstration by plaintiff cooperative that the more current information requested would
serve furthering of lawsuit rather than potential competitive advantage).
BCBSME believes that the Superintendent can and should establish a similar protocol
here. It is not at all obvious at this stage that any of the private intervenors, in order
to present their respective case in this proceeding, must receive copies of BCBSME’s
bank account numbers, the listing of its accounts receivable, historical compensation
information, customer-specific contract information, and the financial terms of its
pharmaceutical contract and claims, or its form contracts with providers. Nor is it
obvious that Maine Partners and Central Maine Partners must see each other’s
respective business plans and non-public financial statements. The possibility should not
be precluded, however, but production of such information should be deferred until such a
showing is made.
In any event, the initiative should lie with the party seeking such information to
explain its need for access to the information to BCBSME or, if necessary, to the
Superintendent or his designee. In order to the facilitate the use of all of these
measures, BCBSME undertakes to update and disseminate the attached list (Exhibit 2),
showing all information for which it is seeking supplemental protection.
There is one category of information subject to this motion that is both centrally
relevant to these proceedings and a matter of great confidentiality concern -- the
information and opinions assembled by BCBSME in its evaluation of Anthem’s and
competing offers. The concern arises from the fact that unless and until Anthem closes on
its purchase of BCBSME’s assets, there remains the possibility that BCBSME will be
having to negotiate the terms of its relationship with Anthem. This is the type of
information that has been protected from disclosure under the business "strategy
doctrine" cited above. 24-A M.R.S.A. § 222(13) likewise recognizes the importance of
keeping such information confidential.
In this instance, the centrality of the information to the issues at hand in this
proceeding may require that all parties review this information. In order to address this
particular situation, BCBSME proposed that for this limited information , Anthem labor
under restrictions similar to that placed on intervenors. Whereas the current protective
order provides allow all of applicants ‘ officers, employees and counsel access to
confidential information, the distribution of this information should be limited to
Anthem’s outside trial counsel of record and their consultants– that is, counsel
and experts retained for purposes of this proceeding and not otherwise involved in the
drafting or negotiating of the business agreements between Anthem and BCBSME.
Date: January 12, 2000
________________________
Robert S. Frank
HARVEY & FRANK
Two City Center
Suite 402
Portland, Maine 04112-0126
(207) 775-1300
Attorneys for Blue Cross Blue Shield of Maine
(1)
Check-list |
(2)
Line
# |
(3)
Required Filings For The Above State |
(4)
Number Of Copies* |
(5)
Due Date |
(6)
Form Source
** |
(7)
Applicable
Notes |
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Domestic |
Foreign |
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State |
NAIC |
State |
NAIC |
Postmarked |
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I.
NAIC FINANCIAL STATEMENTS |
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1 |
Annual Statement (8
½"X14") (1 original, 2 copies-Bound) |
3 |
1 |
xxx |
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3/1 |
NAIC |
G |
| |
1.1 |
Printed Schedule A detail |
3 |
1 |
xxx |
|
3/1 |
NAIC |
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| |
1.2 |
Printed Schedule B detail |
3 |
1 |
xxx |
|
3/1 |
NAIC |
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| |
1.3 |
Printed Schedule BA detail |
3 |
1 |
xxx |
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3/1 |
NAIC |
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| |
1.4 |
Printed Schedule D – Parts
1-6 detail (excluding Part 1A) |
3 |
1 |
xxx |
|
3/1 |
NAIC |
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| |
1.5 |
Printed Schedule DA – Part 1
detail |
3 |
1 |
xxx |
|
3/1 |
NAIC |
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| |
1.6 |
Printed Schedule DB detail |
3 |
1 |
xxx |
|
3/1 |
NAIC |
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| |
1.7 |
Printed Schedule E – Part 1
detail |
3 |
1 |
xxx |
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3/1 |
NAIC |
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| |
1.8 |
Officers & Directors
Information |
xxx |
|
xxx |
|
3/1 |
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| |
2 |
Quarterly Financial Statement (8
½" x 14") |
2 |
xxx |
xxx |
|
5/15, 8/15, 11/15 |
NAIC |
G |
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3 |
Annual Statement
Electronic Filing |
1 |
1 |
xxx |
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3/1 |
NAIC |
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4 |
Supplemental
Electronic Filing |
xxx |
1 |
xxx |
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4/1 |
NAIC |
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5 |
June Electronic Filing |
xxx |
1 |
xxx |
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6/1 |
NAIC |
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| |
6 |
State Filing Fees |
xxx |
xxx |
xxx |
xxx |
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State |
C |
| |
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| |
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II. NAIC
SUPPLEMENTS |
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| |
11 |
Actuarial Certification |
1 |
1 |
xxx |
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3/1 |
Company |
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| |
12 |
Management Discussion &
Analysis |
1 |
1 |
xxx |
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4/1 |
Company |
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| |
13 |
Medicare Supplement Insurance
Experience Exhibit |
3 |
1 |
xxx |
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3/1 |
NAIC |
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14 |
Risk-Based Capital Report |
1 |
1 |
N/A |
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3/1 |
NAIC |
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| |
15 |
Risk-Based Capital Electronic
Filing |
1 |
1 |
xxx |
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3/1 |
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| |
16 |
Supplemental Compensation Exhibit |
xxx |
N/A |
N/A |
N/A |
3/1 |
NAIC |
O |
| |
17 |
SVO Compliance Certification |
3 |
1 |
xxx |
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3/1, 5/15, 8/15, 11/15 |
NAIC |
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III. AUDITED
FINANCIAL STATEMENTS |
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51 |
Accountants Letter of
Qualifications |
1 |
N/A |
N/A |
N/A |
6/1 |
Company |
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| |
52 |
Audited Financial Statements |
1 |
1 |
xxx |
N/A |
6/1 |
Company |
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| |
53 |
Audited Financial Statements
Exemption Affidavit |
xxx |
N/A |
N/A |
N/A |
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Company |
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| |
54 |
Independent CPA |
1 |
N/A |
N/A |
N/A |
6/1 |
Company |
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| |
55 |
Notification of Adverse Financial
Condition |
1 |
N/A |
N/A |
N/A |
6/1 |
Company |
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| |
56 |
Report of Significant
Deficiencies in Internal Controls |
1 |
N/A |
N/A |
N/A |
6/1 |
Company |
|
| |
57 |
Request for Exemption to File |
xxx |
N/A |
N/A |
N/A |
6/1 |
Company |
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IV. STATE
REQUIRED FILINGS |
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101 |
Filings Checklist (with Column 1
completed) |
1 |
1 |
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State |
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102 |
Certificate of Compliance |
1 |
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xxx |
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3/1 |
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103 |
Certificate of Deposit |
1 |
|
xxx |
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3/1 |
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| |
104 |
Officers and Directors
Information (Biographical Affidavit) |
1 |
|
xxx |
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3/1 |
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P |
| |
105 |
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*If XXX appears in this column, this state does not require hard copy, if hard copy is
filed with the state of domicile and the NAIC and if the data is filed electronically with
the NAIC. If N/A appears in this column, the filing is required with the domiciliary
state.
**If NAIC is shown as Form Source, the form should be obtained from the appropriate
vendor.
Please duplicate forms as necessary
General Instructions
For Companies to Use Checklist
Please Note: This state’s instructions for companies to file with the NAIC are
included in this Checklist. The NAIC will send mailing labels and other information to all
companies but will not be sending their own checklists this year.
Electronic Filing is intended to include filing via the Internet or filing via diskette
with the NAIC. Companies that file with the NAIC via the Internet are not required to
submit diskettes to the NAIC.
Column (1) (Checklist)
Companies may use the checklist to submit to a state, if the state requests it.
Companies should copy the checklist and place an "x" in this column when mailing
information to the state.
Column (2) (Line #)
Line # refers to a standard filing number used for easy reference. This line number may
change from year to year.
Column (3) (Required Filings)
Name of item or form to be filed.
PLEASE NOTE: The Annual Statement Electronic Filing
includes the annual statement and all supplements due March 1, per the Annual Statement
Instructions. This includes all detail investments schedules and other supplements for
which printed detail is exempted per the Annual Statement Instructions. This
submission includes all PDF files for annual statement data.
The Supplemental Electronic Filing includes all
supplements due April 1, per the Annual Statement Instructions. This submission
includes all PDF files for supplemental schedules and exhibits.
The June Electronic Filing includes the PDF file for the Audited
Financial Statements.
Column (4) (Number of Copies)
Indicates the number of copies that each foreign or domestic company is
required to file for each type of form. The 1999 Annual Statement Instructions were
modified to waive paper filings of certain NAIC supplements (those supplements previously
included in the Electronic Filing Pilot Project) and certain investment schedule detail,
if such investment schedule data is available to the states via the NAIC database. The
checklists have been modified to reflect this action taken by the Blanks (EX4) Task Force.
XXX appears in the "Number of Copies" "Foreign" column for the
appropriate schedules and exhibits.
Column (5) (Due Date)
Indicates the date on which the company must file the form.
Column (6) (Form Source)
This column contains one of three words: "NAIC,"
"State," or "Company," If this column contains "NAIC," the
company must obtain the forms from the appropriate vendor. If this column contains
"State," the state will provide the forms with the filing instructions. If this
column contains "Company," the company, or its representative (e.g., its CPA
firm), is expected to provide the form based upon the appropriate state instructions or
the NAIC Annual Statement Instructions. Column (7) (Applicable Notes)
This column contains references to the Notes to the Instructions that
apply to each item listed on the checklist. The company should carefully read these notes before
submitting a filing.
NOTES AND
INSTRUCTIONS (A-K APPLY TO ALL FILINGS) |
A |
Required
Filings Contact Person: |
Annual and
Quarterly Statements: Barbra Garboski (207) 624-8489
barbra.l.garboski@state.me.us
Filing Fees: Ingrid Garand (207) 624-8465
Ingrid.l.garand@state.me.us |
B |
Mailing
Address:
|
Maine Bureau
of Insurance
Financial Analysis Division
#34 State House Station
Augusta, ME 04333-0034
Courier: Maine Bureau of Insurance
Financial Analysis Division
124 Northern Avenue
Gardiner, ME 04345 |
C |
Mailing
Address for Filing Fees:
|
Annual
Statement filing fees will be billed on or before July 1 or each year. DO NOT send fees at
this time.
If the company has elected to pay examination assessment fees based on
Title 24-A, M.R.S.A., § 228 (3), please include your payment with the filing of your 1999
annual statement. If you have any questions with regards to these fees, please contact
Lisa Nelson at (207) 624-8439 lisa.m.nelson@state.me.us |
D |
Mailing Address and Contact for
Premium Tax Payments, Questions and Forms: |
Maine Revenue
Service, Excise Tax Division, #24 State House Station, Augusta, ME 04333-0024, Phone:
(207) 287-3851, FAX (207) 287-6628 |
E |
Delivery
Instructions:
|
All filings
must be postmarked no later than the indicated due date. If the due date falls on a
weekend or holiday, then the deadline is extended to the next business day. |
F |
Late
Filings: |
Foreign
companies must supply a written copy of any exemption or extension received by its state
of domicile at least 10 days prior to the filing due date to receive such from Maine. Domestic
Companies should apply at least 30 days prior to the due date. |
G |
Original
Signatures:
|
Original
signatures required on all filings from Domestic Companies. Foreign
companies should follow the instructions in the NAIC Annual Statement instructions. |
H |
Signature/Notarization/Certification:
|
The following
officers are required to sign the annual statement: CEO, President, and Treasurer. |
I |
Amended
Filings:
|
The following
items must be filed within 10 days of their amendment, along with an explanation of the
amendments.
*Bylaws (certified) $25.00 filing fee
*Articles $25.00 filing fee
Report of Examination
*Biographical affidavits
Form B Holding Company Registration Statement (Due 5/1 and amendments
are due on the 15th of the month following the change)
Check payable to Treasurer State of Maine
*As changes occur.
see also additional insert |
J |
Exceptions
from normal filings:
|
Foreign
companies must supply a written copy of any exemption or extension received by its state
of domicile at least 10 days prior to the filing due date to receive such from Maine. Domestic
Companies should apply at least 30 days prior to the due date. |
K |
Bar Codes
(State or NAIC) |
Not Used |
L |
NONE Filings:
|
Supplemental
exhibits and schedules as listed in the annual statement interrogatories are not required
to be filed if your response in the supplemental exhibits and schedules interrogatories is
a "NONE" report. |
M |
Filings
discontinued or modified materially since last year:
|
If this
information is filed with the domiciliary state and with the NAIC, it is not necessary to
file with this state. Effective for 12/31/99 filings, Maine law Title 24-A MRSA
§221-A,(3) no longer requires a foreign or alien insurer to file audited financial
reports. Foreign or Alien insurers are only required to file at the request of the
Superintendent of Insurance. |
N |
No longer
required |
Accident
Health Policy Experience Exhibit. |
O |
Confidential
treatment for domestic companies only. |
In general
this information is subject to a claim of confidentiality, and may be retained on site
rather than being filed with the Superintendent, as long as it is prepared in a timely
manner and is available on request for inspection and copying by Bureau of Insurance
personnel. |
P |
Required by
the State of Maine |
Should be
filed separately from the annual statement. |
| Item |
Begdoc# |
Enddoc# |
Page# |
Doctype |
Docdate |
Doctitle |
Summary |
| 1 |
B00149 |
B00149 |
1 |
APA |
07/13/1999 |
APA Disclosure
Schedule |
Redacted recipients
of tax, defined as "parachute payment" in event of change of control |
| 2 |
B00182 |
B00203 |
22 |
APA |
07/13/1909 |
Exhibit to APA 3.08 |
Machigonne
Receivables |
| 3 |
B00204 |
B00206 |
3 |
APA |
07/13/1999 |
Exhibits to APA
Schedule 3.08 |
Machigonne and
Katahdin Receivables |
| 4 |
B00222 |
B00384 |
163 |
APA |
07/13/1999 |
Exhibit to APA
Schedule 3.13 a ii |
List of BCBSME
Service Agreements (summarized) |
| 5 |
B00568 |
B00573 |
6 |
APA |
07/13/1999 |
Exhibit to APA
Schedule 3.18 |
Groups with 100+
contracts |
| 6 |
B00574 |
B00578 |
5 |
APA |
07/13/1999 |
Exhibit to APA
Schedule 3.18 |
List of Machigonne
clients, with number of covered lives |
| 7 |
B00579 |
B00584 |
6 |
APA |
07/13/1999 |
Exhibit to APA
Schedule 3.18 |
List of Katahdin
customers and number of covered lives |
| 8 |
B00616 |
B00624 |
9 |
APA |
07/13/1999 |
Exhibit to APA
Schedule 3.26 |
List of Bank Accounts
by number, bank, signatory |
| 9 |
B00669 |
B00682 |
14 |
Contract |
05/01/1998 |
Merck-Medco Rx
Pricing |
|
| 10 |
B01021 |
B01021 |
1 |
Revenue Schedule |
12/00/1999 |
BCBS Minnesota
Revenue Schedule |
|
| 11 |
B01022 |
B01169 |
148 |
Contract |
01/00/1999 |
BCBSME/Minnesota
Contract |
|
| 12 |
B01144 |
B01153 |
10 |
Contract |
05/01/1998 |
BCBSMN Pricing Terms |
|
| 13 |
B01170 |
B01171 |
2 |
Agreement |
01/00/1999 |
Exhibit F - Pricing
Terms for BCBSMN Contract |
|
| 14 |
B01172 |
B01228 |
57 |
Agreements |
02/08/1997 |
Change of Control
Compensation |
Redacted names of
persons covered by agreement |
| 15 |
B01229 |
B01232 |
4 |
Board Minutes |
10/04/1999 |
MPHP Minutes |
Minutes - references
to Anthem BCBSME |
| 16 |
B01290 |
B01214 |
77 |
Merck-Medco |
07/09/1999 |
Merck-Medco Rx
Pricing |
|
| 17 |
B01549 |
B01552 |
4 |
A/R List |
06/30/1999 |
List of BCBSME A/R |
|
| 18 |
B02516 |
B02529 |
14 |
Financial Statement |
06/30/1999 |
2nd Q 1999 CMPHP
Financial Statement |
|
| 19 |
B02577 |
B02590 |
14 |
Financial Statement |
06/30/1999 |
2nd Q MPHP 1999
Financial Statement |
|
| 20 |
B02772 |
B02782 |
11 |
Contract |
01/16/1999 |
Pricing terms of
BCBSMN Agreement |
|
| 21 |
B04208 |
B04211 |
4 |
A/R |
11/30/1998 |
List of BCBSME A/R
over 90 days |
|
| 22 |
B04249 |
B04262 |
14 |
Narrative |
07/00/1999 |
Summary of BCBSME
provider arrangements |
|
| 23 |
B04263 |
B04295 |
33 |
Provider Agreement |
12/31/1998 |
PCP Agreement |
|
| 24 |
B04296 |
B04311 |
16 |
Provider Agreement |
07/22/1997 |
Hospital Service
Agreement |
|
| 25 |
B04333 |
B04337 |
5 |
A/R |
06/30/1999 |
BCBSME A/R over 90
days |
|
| 26 |
B04509 |
B04518 |
10 |
Financial Statements |
07/21/1999 |
CMPHP Financial |
Includes balance
sheet and monthly operating exp. |
| 27 |
B04519 |
B04528 |
10 |
Financial Statements |
07/21/1999 |
MPHP unaudited
financials |
includes monthly
operating exp. and balance sheets 2nd Q 1999 |
| 28 |
B04778 |
B04876 |
99 |
Board Minutes |
07/13/1999 |
Misc BCBS Board
Minutes Reviewed by HLHZ |
Minutes from 3/18/98
up to 7/13/99 |
| 29 |
B05004 |
B05010 |
7 |
Business Plan |
02/11/1999 |
1999 MPHP Business
Plan |
|
| 30 |
B05067 |
B05160 |
94 |
Business Plan |
01/22/1999 |
1999 CMPHP Business
Plan |
|
| 31 |
B05161 |
B05172 |
12 |
Contract |
06/28/1996 |
BCBSME/CMHC Agreement |
|
| 32 |
B05173 |
B05177 |
5 |
Financial Statements |
01/28/1999 |
CMPHP Balance Sheets
1998 |
|
| 33 |
B05178 |
B05182 |
5 |
Financial Statements |
01/00/1999 |
1998 CMPHP Monthly
operating Expense |
|
| 34 |
B05183 |
B05189 |
7 |
Analysis |
01/00/1999 |
Analysis of Senior
Management Comp Plan |
|
| 35 |
B05267 |
B05270 |
4 |
Analysis |
02/09/1999 |
Review of 1999 MPHP
results |
|
| 36 |
B05271 |
B05275 |
5 |
Financial Statements |
02/09/1999 |
MPHP 1998 unaudited |
|
| 37 |
B05276 |
B05281 |
6 |
Financial Statements |
02/09/1999 |
1998 MPHP Monthly Op.
Exp. |
|
| 38 |
B05292 |
B05296 |
5 |
Financial Statements |
07/21/1999 |
CMPHP balance sheet |
|
| 39 |
B05297 |
B05301 |
5 |
Financial Statements |
07/21/1999 |
CMPHP Monthly Op.
Exp. |
|
| 40 |
B05302 |
B05306 |
5 |
Financial Statements |
07/21/1999 |
MPHP Balance sheet
unaudited |
|
| 41 |
B05307 |
B05311 |
5 |
Financial Statements |
07/21/1999 |
MPHP Monthly Op Exp. |
|
| 42 |
B06585 |
B06621 |
37 |
Agreement |
12/03/1992 |
BCBSMN POS |
Continuation of
B02863 |
| 43 |
B07011 |
B07022 |
12 |
Provider Agreement
Form |
01/00/1998 |
BCBSME/HMO/Specialist |
|
| 44 |
B07023 |
B07029 |
7 |
Provider Agreement
Form |
01/00/1998 |
Sample Fee Schedule |
|
| 45 |
B07096 |
B07107 |
12 |
List |
01/06/1999 |
BCBSME Claims
Reinsurance by Case |
|
| 46 |
B07108 |
B07110 |
3 |
List |
12/17/1998 |
MEA Contract detail |
|
| 47 |
B07325 |
B07336 |
12 |
List |
06/15/1999 |
List of BCBSME
payments to providers |
|
| 48 |
B10029 |
B10031 |
3 |
List |
12/16/1999 |
Officers/VP Total
Compensation |
|
| 49 |
B10032 |
B10041 |
10 |
Response |
12/16/1999 |
Variations - Standard
contracts |
|
| 50 |
B10042 |
B10053 |
12 |
Provider Agreement
Form |
01/00/1998 |
HMO Provider
Agreement |
|
| 51 |
B10054 |
B10080 |
27 |
Provider Agreement
Form |
01/00/1999 |
PCP Agreement Form |
|
| 52 |
B10081 |
B10108 |
28 |
Provider Agreement
Form |
01/00/1999 |
HMO PCP Form |
|
| 53 |
B10109 |
B10137 |
29 |
Provider Agreement
Form |
01/00/1999 |
Rural Health Care
Provider |
|
| 54 |
B10138 |
B10150 |
13 |
Provider Agreement
Form |
01/00/1998 |
Specialist HMO |
|
| 55 |
B10151 |
B10162 |
12 |
Provider Agreement
Form |
01/00/1998 |
Professional
Agreement |
|
| 56 |
B10163 |
B10171 |
9 |
Provider Agreement
Form |
06/22/1999 |
Ambulance Agreement |
|
| 57 |
B10172 |
B10183 |
12 |
Provider Agreement
Form |
10/00/1995 |
Ambulatory Surg Ctr
Agreement |
|
| 58 |
B10184 |
B10200 |
17 |
Provider Agreement
Form |
01/00/1998 |
BCBSME/Physician |
|
| 59 |
B10201 |
B10229 |
29 |
Provider Agreement
Form |
12/00/1994 |
BCBSME/DME Agreement |
|
| 60 |
B10230 |
B10241 |
12 |
Provider Agreement
Form |
12/00/1998 |
HMO/Family Planning |
|
| 61 |
B10242 |
B10249 |
8 |
Provider Agreement
Form |
01/00/1998 |
BCBSME/Family
Planning |
|
| 62 |
B10250 |
B10263 |
14 |
Provider Agreement
Form |
01/00/1998 |
BCBSME/Home Health |
|
| 63 |
B10264 |
B10278 |
15 |
Provider Agreement
Form |
12/00/1994 |
BCBSME/Home Infusion |
|
| 64 |
B10279 |
B10286 |
8 |
Provider Agreement
Form |
01/00/1999 |
AHS/Comm Mental
Health Ctr |
|
| 65 |
B10287 |
B10296 |
10 |
Provider Agreement
Form |
01/00/1999 |
BCBSME/Orthotic |
|
| 66 |
B10297 |
B10304 |
8 |
Provider Agreement
Form |
01/23/1995 |
BCBSME/Rural Health
Ctr |
|
| 67 |
B10305 |
B10325 |
21 |
Provider Agreement
Form |
01/00/1998 |
AHS/SNF |
|
| 68 |
B10326 |
B10335 |
10 |
Provider Agreement
Form |
12/20/1994 |
AHS/Substance Abuse |
|
| 69 |
B10336 |
B10353 |
18 |
Provider Agreement
Form |
07/02/1999 |
AHS Hospital Services
Agreement |
|
| 70 |
B10354 |
B10355 |
2 |
Provider Agreement
Form |
01/00/1999 |
BCBSME/Participating
Professional |
|
| 71 |
B10356 |
B10390 |
35 |
Provider Agreement
Form |
01/26/1999 |
HMO/PO AHS Agreement |
|
| 72 |
B10391 |
B10420 |
30 |
Provider Agreement
Form |
01/00/1997 |
PHO Network Agreement |
|
| 73 |
B10421 |
B10421 |
1 |
Discovery Response |
12/17/1999 |
BCBSME Response to
Second Request 50 |
BCBSME Retention
Program |
| 74 |
BC02000 |
BC02002 |
3 |
Status Report |
02/28/1999 |
Current Status
Process |
Describing status of
offers inc. amounts of offers and next steps |
| 75 |
BC02003 |
BC02007 |
5 |
Bid Summary |
04/00/1999 |
Analysis of Final
Bids |
Compares Anthem vs.
Bidder # 1 offers |
| 76 |
BC02008 |
BC02010 |
3 |
Bid Summary |
02/26/1999 |
Overview of
Preliminary Bids |
Sets forth terms of
three bids |
| 77 |
BC02011 |
BC02012 |
2 |
Bid Summary |
02/28/1999 |
#1 Bid Summary |
Summarizes purchase
price from "Mustang" |
| 78 |
BC02013 |
BC02014 |
2 |
Bid Summary |
02/17/1999 |
#2 Bid Summary |
|
| 79 |
BC02015 |
BC02016 |
2 |
Bid Summary |
02/19/1999 |
#3 Bid Summary |
|
| 80 |
BC02023 |
BC02026 |
4 |
Bid |
05/28/1999 |
Offer for Surplus
Notes |
From BIDDER # 1 |
| 81 |
BC02027 |
BC02038 |
12 |
Bid |
04/30/1999 |
Bid #1 |
|
| 82 |
BC02062 |
BC02075 |
14 |
Outline Due Diligence
Review |
04/08/1999 |
BCBSME Due Diligence
of Bidder #1 |
|
| 83 |
BC02097 |
BC02134 |
38 |
Outline-Due Diligence |
04/08/1999 |
BCBSME Due Diligence
Review of Bidder #1 |
|
| 84 |
BC02135 |
BC02136 |
2 |
Letters |
04/16/1999 |
Letters to Bidders
re: final proposal |
|
| 85 |
BC02145 |
BC02147 |
3 |
Bid |
02/23/1999 |
Proposal from Bidder
#1 |
|
| 86 |
BC02165 |
BC02215 |
51 |
Bid |
02/12/1999 |
Bid from Bidder # 1 |
|
| 87 |
BC02216 |
BC02222 |
7 |
Bid |
05/03/1999 |
Bid from Bidder # 4 |
|
| 88 |
BC02235 |
BC02240 |
6 |
Request for Proposal |
01/27/1999 |
Request for Proposal
from Bidder #1 |
|
| 89 |
BC02243 |
BC02246 |
4 |
Bid |
02/12/1999 |
Interest from Bidder
#2 |
|
| 90 |
BC02247 |
BC02557 |
311 |
Bid |
04/30/1999 |
Bidder # 1 Proposal
(mark-up) |
|
| 91 |
BC02667 |
BC02693 |
27 |
Presentation |
07/13/1999 |
Fairness Opinion |
Summarizes offers;
evaluates Anthem; evaluates BCBSME |
STATE OF MAINE
DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
BUREAU OF INSURANCE
| In Re: Application of Associated Hospital Service of Maine
d/b/a Blue Cross and Blue Shield of Maine to convert to a Stock Insurer and Voluntarily
Liquidate and Dissolve |
)
)
)
)
)
)
) |
|
and |
)
)
)
) |
AFFIDAVIT OF EDWARD J. KANE IN SUPPORT OF
BCBSME’S MOTION FOR SUPPLEMENTAL PROTECTIVE ORDER |
| In Re: Application of Anthem Health Plan of Maine, Inc. to
Acquire the Assets of Associated Hospital Service of Maine d/b/a Blue Cross and Blue
Shield of Maine and Related Transactions
Docket No. INS-99-14
(Consolidated) |
)
)
)
)
)
)
)
)
)
) |
|
EDWARD J. KANE, having been sworn, now deposes and states under oath:
- I am senior vice president of legal and governmental affairs at Blue Cross Blue Shield
of Maine. I make this affidavit from personal knowledge, except as to those matters which
I expressly reference on information and belief. I make this affidavit in support of the
pending BCBSME motion for supplemental protective order.
- In responding to the Superintendent’s pending discovery request, BCBSME made a
conscious decision not to object to the scope of the request, even if in BCBSME’S
view the request called for information broader than required to adjudicate the issues
before the Superintendent. In making this decision, BCBSME determined that that the
Superintendent should have the highest level of confidence that he had all information
necessary in order to review BCBSME’s application to convert.
- As detailed more fully in BCBSME’S motion for supplemental protective order, some
of the information requested by the Superintendent and produced by BCBSME is of marginal
relevance to the proceeding, or is in a form that includes both relevant and marginally
relevant or irrelevant information. In accordance with the discovery posture described
above, and to expedite the production of requested information to the Superintendent,
BCBSME produced the information in the form in which it possessed the information, without
redacting the relevant from the irrelevant information.
Salary Schedule
- One of the items requested by the Superintendent was the salary information for BCBSME
officials for the last three calendar years, and BCBSME produced this information. BCBSME
regards this information as extremely sensitive from a competitive point of view.
- Since announcing its proposed asset sale to Anthem Health Plans, Inc. in July 1999,
BCBSME has been greatly concerned with the retention of its personnel. The process of
seeking a firm with which to affiliate, obtaining administrative approvals for the
transaction, responding to adverse changes in the financial fortunes of BCBSME, and now
reacting to major turmoil in the Maine market for health insurance, have together caused
BCBSME to place extraordinary demands on its senior management. These demands have been
made at a time when the same people are understandably beset with considerable job
insecurity. To my knowledge, Anthem Health Plans, Inc. has made no promises of continued
employment for current BCBSME senior management personnel subsequent to the closing on the
sale to Anthem. In my view, because of the above pressures, BCBSME is in jeopardy of
losing key members of its management to opportunistic employers.
- BCBSME has safeguarded salary and compensation information from disclosure to
competitive employers. Individual senior management salary information is, of course,
disclosed to the board of directors, but is known to senior management only a need-to-know
basis. I have been advised by knowledgeable people within BCBSME, and believe to be true,
that in Annual Statements filed with the Bureau of Insurance since 1994, BCBSME has not
filed the Supplemental Compensation Exhibit for Directors, Officers and Employees, but has
instead maintained in it our offices for review on site by Bureau personnel pursuant to a
claim of confidentiality. Likewise, in accordance with the Superintendent’s written
instructions for the completion of NAIC forms, BCBSME has not electronically filed such
information with the NAIC.
- In my opinion, the disclosure of this information to competitors would facilitate their
efforts to hire away key BCBSME personnel (persons with highly specialized training and
experience in much-sought administrative, financial, legal, information services or
operations fields) at a time when it is critical that BCBSME retain such personnel. I have
been advised by senior BCBSME personnel that, for example, at least one health plan
operating in Maine has been actively recruiting senior operations personnel and their
assistants from BCBSME. Armed with such information, BCBSME’s competitors would have
a better idea of what "price" they would have to "beat" in order to
hire away such personnel.
Due Diligence Relation to Acceptance of Anthem Bid
- Documents produced to the Bureau contain, among other things, proposals made by Anthem
and other companies to affiliate with BCBSME, the evaluation of those proposals by
BCBSME’s investment banker, advice from the investment banker to BCBSME concerning
responses to thoseproposals, and deliberations concerning such proposals by BCBSME’s
board of directors’ deliberations concerning such offers. BCBSME received these
proposals with assurances that such proposals would not be disclosed if the bid were not
accepted. In addition, the disclosure of such information to Anthem or to the public could
compromise BCBSME’s ability to negotiate with Anthem or other entities. Unless and
until the transaction with Anthem closes, there remains the possibility negotiation or
re-negotiation of an affiliation with BCBSME, in which case the would -be affiliation
partner could use such information to its advantage in such negotiation.
Contracts between BCBSME and Vendors, Providers and BCBS of Minnesota
- Documents produced to the Bureau include BCBSME’s contract with Merck-Medco for
pharmaceuticals. Paragraph 9.1 of the this agreement provides that "[t]he parties
agree to keep the terms of this Agreement confidential and not to disclose them unless
required by law, [except that the parties] . . . agree to provide federal and state
regulators access to BCBSME-related confidential information, to the extent allowed by
law." Public disclosure of the terms of this arrangement, or disclosure to
providers, provider groups or hospitals would be competitively-harmful to Merck-Medco or
BCBSME, allowing others who deal with these entities unfairly to negotiate more
advantageous terms or to know their rivals’ costs.
- Documents produced to the Bureau include BCBSME’s contracts with Blue Cross and
Blue Shield of Minnesota for administrative services. BCBSME has not publicly disclosed
the financial terms of this contract, and knowledge of its terms has been restricted
within the Company on a need-to-know basis. Section IX of the agreement defines
"information" to include, among other things, prices, discounts [and
costs", and provides that neither party will divulge such "information" to
any third party without the prior written consent of the other, and neither may use the
"information", directly or indirectly, for the benefit of third parties.
Disclosure of costs, prices and other contract-specific items is of little or no value to
anyone other than a competitor. Disclosure of this information is likely to be
competitively harmful to BCBSME and BCBSMN, allowing others who deal with these entities
unfairly to negotiate more advantageous terms or to know their rival’s costs.
- Documents produced to the Bureau include BCBSME’s form contracts with providers,
and a document specially created at the Superintendent’s request in these proceedings
that compares differences in these various contracts. I have been advised that while
BCBSME has provided physician provider contracts to physicians and hospital provider
contracts to hospitals, it has never submitted the full library of its various contracts
to any one or group of providers. The creation of these contracts reflects many hours of
attorney and executive time. The variations in these contracts, which would be determined
from a comparison of the contracts and forthrightly evident from the comparative analysis
prepared by BCBSME at the Bureau’s request, could provide an unfair negotiating
advantage to a provider with whom BCBSME must contract.
- Counsel for Central Maine Partners and Central Maine Health Care have requested BCBSME
to provide copies of its responses to the Superintendent’s Second Discovery Request,
paragraphs 44 (the BCBSME Blue Cross of Minnesota contract), Paragraph 55 (the most
current copy of BCBSME provider contracts, including contracts with HMO Maine and Maine
Partners), and Paragraph 56 (most current pharmaceutical contract for each Third Party
Prescription Program or other prescription benefit offered by BCBSME). Inasmuch as neither
CMPHP nor CMHC has indicated any interest in presenting evidence concerning the valuation
of BCBSME or the financial terms of the transaction, it is not apparent that CMPHP or CMHC
needs this information to present their case in this proceeding.
- Counsel for Central Maine Partners and Central Maine Health Care has requested BCBSME to
provide copies of its responses to the Superintendent’s Second Discovery Request,
paragraphs 49, which would include Maine Partner’s business plans and non-public
financial statements. Although the terms of their current certificates of authority do not
contemplate competition between MPHP and CMPHP, it has been BCBSME’s experience that
the provider partner in each plan regards itself in competitive rivalry with the other,
particularly in respect to future growth or expansion. To date BCBSME has safeguarded the
information of CMPHP from its provider partner in MPHP (and vice versa), in part because
of this competition.
/S/ Edward J. Kane________
Edward J. Kane
Senior Vice President
Blue Cross Blue Shield of Maine
STATE OF MAINE
CUMBERLAND, SS.
______________
Personally appeared the above-named Edward J. Kane and took oath that
the foregoing statements were true to the best of his knowledge.
____________________________________
Notary Public
My Commission Expires: ______________
Last Updated:
October 1, 2008
|
