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 |
)
)
)
)
)
)
)
) |
|
| 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) |
)
)
)
)
)
)
)
)
)
)
) |
ANTHEM INSURANCE COMPANIES, INC.’S RESPONSE TO FIRST
DISCOVERY REQUEST OF THE ATTORNEY GENERAL
January 24, 2000 |
NON-CONFIDENTIAL VERSION
Applicants, Anthem Insurance Companies, Inc., on behalf of its subsidiary to be formed,
Anthem Health Plans of Maine, Inc., d/b/a Anthem Blue Cross and Blue Shield (collectively
"Anthem"), hereby responds to the First Discovery Request of the Attorney
General, dated January 7, 2000, as follows:
The following responses by Anthem are subject to the objections filed by Anthem on
January 18, 2000. To the extent that any additional responsive documents are located in
the future, Anthem reserves its rights to object to producing such documents to the extent
covered by the attorney-client and or work product privileges.
- Please provide all documents related to Anthem’s plans to establish a New England
operating region that includes BCBSME. Include in your response all business plans related
to such an operating region.
| Response: |
CONFIDENTIAL RESPONSE REDACTED |
- Please provide a detailed explanation for the exclusion from liabilities in Section 2.02
of the Asset Purchase Agreement of any liabilities in excess of 3% of the total
consideration related to services/actions of BCBSME under Medicare. Include in your
response the basis for acceptance of responsibility by Anthem of 3% of the risk rather
than a lower or higher percentage; an estimate of the potential risk to which BCBSME is
exposed; and all documents related to this provision in the Asset Purchase Agreement.
Response:
|
While Anthem and BCBSME are in the final
stages of amending the Asset Purchase Agreement. It is contemplated that the amendment
will eliminate the provision referenced in the question and accordingly render this
question moot. Notwithstanding the pending amendment, a brief explanation will be
provided.
The parties’ agreement to exclude from the liabilities assumed by Anthem all
Medicare liabilities in excess of 3% of the total consideration was the result of
negotiation. Anthem’s initial offers and drafts proposed that all of the Medicare
liabilities be excluded, but BCBSME would not agree to that position and demanded that
Anthem assume some level of "first dollar" responsibility. The final language
was agreed upon as a compromise by both parties. |
- Assuming a closing date of December 31, 1999, please estimate, and provide supporting
documentation for, the Total Consideration (after adjustments) that would be payable by
Purchaser to Seller under Sections 2.03 through 2.08 of the Asset Purchase Agreement.
Include in your response an estimate of the amount, if any, that would be paid to Seller
from the Escrow Amount and an estimate of all Adjustments to Total consideration.
|
Response: |
Please refer to the response to this question prepared and
submitted by BCBSME. |
- Please provide all documents related to Anthem’s decision to purchase the assets of
BCBSME and the consideration to be paid, including without limitation copies of any
valuation or similar analysis of BCBSME.
Response:
|
CONFIDENTIAL RESPONSE REDACTED |
- Please provide a copy of the Corporate Business Plan identified in document BC 00112.
Response: |
Anthem incorporates by reference the response to this
question prepared and submitted by BCBSME. |
- For each state in which Anthem conducts health insurance business, please provide a copy
of any market conduct examination performed in the last five years by state regulatory
authorities.
Response:
|
Anthem understands this question to seek market conduct
examinations covering periods in which Anthem was affiliated with the subject company. The
responsive documents, AN-02190 to AN-02566, are attached hereto. |
- Please provide copies of all transaction plans and all other documents related to the
combination and integration of the businesses of Anthem and BCBSME.
Response:
|
After discussions with counsel for the Attorney General,
Anthem now understands that "transaction plans" should read "transition
plans." With that understanding, please see Anthem’s response to Question #1 and
the Form A (p. 17 et seq. in particular). Anthem also incorporates by reference the
response to this question prepared and submitted by BCBSME. |
- Please provide all documents that support the Pro Forma Income statement, document
AN-02051, and a detailed analysis of the basis for the projections included on the
statement.
Response: |
CONFIDENTIAL RESPONSE REDACTED |
- Please provide a copy of any shareholder agreements between and among BCBSME, Maine
Partners Health Plan, Inc., Central Maine Partners Health Plan, Inc., and Patriot Mutual
Insurance Company, d/b/a Blue Alliance Mutual Insurance Company.
Response: |
Anthem incorporates by reference the response to this
question prepared and submitted by BCBSME. |
- Please provide all documents related to the nature and amount of consideration to be
paid by Anthem pursuant to the Asset Purchase Agreement, including the amount to be paid
for the common stock of Maine Partners and Central Maine Partners and the common stock of
Machigonne.
Response:
|
Anthem objects to this question for the reasons set forth
in its January 18, 2000 Objections to the First Discovery Request of the Attorney General.
Subject to and without waiving these objections, please see Anthem’s response to
Question No. 4. Anthem does not have any documents allocating the total consideration
among the amounts to be paid for the common stock of Maine Partners and Central Maine
Partners and the common stock of Machigonne. |
- Please provide all documents related to and describing the "new service model"
for customer service identified on page 27 of Form A.
Response: |
Anthem incorporates by reference the response to this
question prepared and submitted by BCBSME. |
- Please provide all documents related to, and describe in detail, any modifications to
the "new service model" (or customer service platform) that may be made by
Anthem post-closing.
Response:
|
It is Anthem’s intent, post-closing, to integrate the
BCBSME operations into a regional structure supported by corporate, shared service and
local operations (see pages 17-19 of the Form A filed by Anthem). To date, however,
Anthem has no specific plans to modify the "new service model" for customer
service identified on page 27 of the Form A. See also Anthem’s Response to
Question No. 1. |
- Please provide all documents related to, and describe in detail, any change in product
offerings or product mix being considered by Anthem post-closing. Include in your response
any plans to change or integrate product offerings as the New England regional structure
is implemented.
Response:
|
Anthem has no plans to eliminate any of the product
categories currently offered by BCBSME. Regional teams that include representatives from
Maine have made preliminary examinations and recommendations for standardizing certain
product design features where practicable, subject to local statutes, regulations or
market conditions. Those examinations and recommendations are filed confidentially herein
in response to Question No. 1 of the Attorney General’s First Discovery Request. See
also the Form A filed by Anthem under the heading "Item 5, Future Plans of the
Insurer—Benefits Design, Marketing and Sales" (pages 19-22) for a description of
Anthem’s approach to product portfolio design.
|
- Please provide a copy of "Seller’s then current Business Plan (as presented to
Purchaser)" identified in Section 5.01(c) of the Asset Purchase Agreement.
Response: |
Anthem incorporates by reference the response to this
question prepared and submitted by BCBSME. |
DATED: January 24, 2000
_____________________________
James B. Zimpritch, Esq.
Jeffrey M. White, Esq.
Catherine R. Connors, Esq.
PIERCE ATWOOD
One Monument Square
Portland, Maine 04101
(207) 791-1100
Attorneys for Anthem Insurance Companies, Inc
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on January 24, 2000 a copy of the
Non-Confidential Version of Anthem Insurance Companies, Inc.’s Response to the First
Discovery Request of the Attorney General was served by United States mail, first class
postage prepaid, or, where indicated, by hand delivery, on each of the persons listed
below.
Robert S. Frank, Esq.
Harvey & Frank
Two City Center
P.O. Box 126
Portland, Maine 04112
e-mail: frank@harveyfrank.com
(Blue Cross/Blue Shield of Maine)
Judith Chamberlain, Esq.
State of Maine
Department of the Attorney General
6 State House Station
Augusta, Maine 04333-0006
e-mail: judy.chamberlain@state.me.us
(Bureau of Insurance)
William H. Laubenstein, Esq.
State of Maine
Department of the Attorney General
6 State House Station
Augusta, Maine 04333-0006
e-mail: bill.laubenstein@state.me.us
(Office of the Attorney General)
Gregory A. Brodek, Esq.
Duane, Morris & Heckscher, LLP
15 Columbia Street, 4th Floor
Bangor, Maine 04401-6355
e-mail: gabrodek@duanemorris.com
(Maine Health Alliance)
Joseph P. Ditre, Esq.
Consumer Health Law Program
One Weston Court, Level One
P.O. Box 2490
Augusta, Maine 04338-2490
e-mail: jditre@mainecahc.org
(Consumers for Affordable Health Care Foundation/Coalition)
Michele M. Garvin, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
e-mail: Mgarvin@Ropesgray.com
(Central Maine Healthcare Corporation; Central Maine Partners Health Plan)
Robert I. Goldman
Maine Council of Senior Citizens
27 Bowery Beach Road
Cape Elizabeth, Maine 04107
e-mail: Rgoldma1@maine.rr.com
(Maine Council of Senior Citizens)
Bonnie Post
Executive Director of the Maine Ambulatory Care Coalition
P.O. Box 390
Manchester, Maine 04351
e-mail: bdpmacc@mint.net
(Sacopee Valley Health Center, Regional Medical Center at Lubec, Eastport Health Care,
Inc., and the Maine Ambulatory Care Coalition)
John Dieffenbacher-Krall
Executive Director
Maine People’s Alliance
192 State Street
Portland, Maine 04101
e-mail: MPA@gwi.net
(Maine People’s Alliance)
Gordon H. Smith, Esq.
Maine Medical Association
30 Association Drive
P.O. Box 190
Manchester, Maine 04351
e-mail: gsmith@ctel.net
(Thomas D. Hayward, M.D.,
Maroulla S. Gleaton, M.D.,
And the Maine Medical Association)
Donald E. Quigley, Esq.
General Counsel
465 Congress Street, Suite 600
Portland, Maine 04101-3537
e-mail: quigld@mail.mmc.org
(Maine Medical Center)
Sandra L. Parker, Esq.
Attorney for MHA, Inc.
150 Capitol Street
Augusta, Maine 04330
e-mail: sparker@themha.org
(MHA, Inc.)
Kellie P. Miller, M.S.
Executive Director
Maine Osteopathic Association
693 Western Avenue
Manchester, Maine 04351
e-mail: meosteo@mint.net
(Maine Osteopathic Association)
Edward Miller
Executive Director
American Lung Association of Maine
122 State Street
Augusta, Maine 04330
e-mail: emiller@mainelung.org
(American Lung Association of Maine)
DATED: January 24, 2000
_____________________________
James B. Zimpritch, Esq.
Jeffrey M. White, Esq.
Catherine R. Connors, Esq.
PIERCE ATWOOD
One Monument Square
Portland, Maine 04101
(207) 791-1100
Attorneys for Anthem Insurance Companies, Inc.
