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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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 26, 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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| 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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ASSOCIATED HOSPITAL SERVICE OF MAINE, d/b/a
BLUE CROSS AND BLUE SHIELD OF MAINE’S RESPONSE TO FIRST DISCOVERY REQUEST OF THE
ATTORNEY GENERAL
January 25, 2000 |
NON-CONFIDENTIAL VERSION
Associated Hospital Services of Maine d/b/a/ Blue Cross Blue Shield of
Maine ("BCBSME") hereby responds to the First Discovery Request of the Attorney
General, dated January 7, 2000, as follows:
The following responses by BCBSME are subject to BCBSME’s claims
of attorney client and work product privilege, and to the protections (where indicated) of
the Superintendent’s Protective Orders. In framing the responses below, BCBSME has
not withheld any documents on grounds of privilege. To the extent that any additional
responsive documents are located in the future, BCBSME 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.
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Response:
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BCBSME references the response of Anthem Insurance Companies to
this request, because the request asks for information concerning Anthem’s plans. |
- 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:
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This question is now moot.
The charitable trust plan submitted to the Superior Court for the State of Maine provides
that the charitable foundation created as a result of the plan will not bear any
liabilities as a result of services performed by BCBSME under Medicare. |
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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: |
See Document B10525. |
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The following addresses the items mentioned in Section 2.03 through
2.08, plus the expenses described in Section 11.01. Certain administrative and other
expenses are foreseeable, although estimates may not be available at this time. Please see
footnotes 5 and 6 below.
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($in millions) |
Footnotes |
| Purchase Price per Section 2.03 |
$120.00 |
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| Adjustments: |
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| Escrow Account |
(17.5) |
(1) |
| Purchase of Patriot Mutual’s 43% interest in Machigonne, Inc. |
(4.2) |
(2) |
| Repayment of Patriot Mutual Insurance Company Note
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(3.9) |
(3) |
| Repayment of Patriot Life Insurance Company Note
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(1.2) |
(3) |
| Closing Tax Reserve
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(1.2) |
(4) |
| BCBSME Transaction Expenses |
(1.8) |
(5) |
| Other |
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(6) |
| Net |
$90.2 |
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- BCBSME management anticipates that the full Escrow Amount will be an adjustment to the
purchase price, based upon unaudited 1999 financial results.
- Assumes Patriot Mutual’s 43% ownership interest in Machigonne, Inc. will be
purchased at net book value of $4.2 million (as reflected in Patriot Mutual’s
unaudited financial statements) at December 31, 1999. The actual adjustment will be a
negotiated value.
- Represents full payment of principal and related accrued interest outstanding as of
December 31, 1999.
- Reflects BCBSME’s current best estimate of the seller’s Closing Tax Reserve.
The amounts are based upon many current assumptions and estimates. Such estimates are
subject to change based upon actual results which may differ from these estimates as well
as other future tax-related developments such as audits by taxing authorities.
- Represents transaction-related costs incurred by BCBSME as of December 31, 1999. This
amount does not include estimated costs for: 1) BCBSME transaction-related costs that will
be incurred after December 31, 1999, or 2) BCBSME’s share of the fees of any
consultants, accountants, actuaries or actuaries retained by any governmental authority in
connection with the transaction (as described in Section 11.01 of the APA, and 3) general
and administrative costs of the Seller and the liquidation trusts after the closing of the
transaction. BCBSME does not have a reasonable basis for estimating such costs at this
time.
- This analysis does not include the cost of setting up any contingency reserves or a
reserve to purchase insurance relating to Medicare contingent liabilities.
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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.
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Response:
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CONFIDENTIAL RESPONSE REDACTED |
- Please provide a copy of the Corporate Business Plan identified in document BC 00112.
| Response:
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CONFIDENTIAL RESPONSE REDACTED |
- 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.
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Response:
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BCBSME references the response of Anthem Insurance Companies to this
request, because the request asks for information concerning Anthem’s activities in
other states. |
- Please provide copies of all transaction plans and all other documents related to the
combination and integration of the businesses of Anthem and BCBSME.
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Response:
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CONFIDENTIAL RESPONSE REDACTED |
- 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.
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Response:
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BCBSME references the response of Anthem Insurance Companies to
this request, because the request asks for information concerning an Anthem pro forma
statement. |
- 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:
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CONFIDENTIAL RESPONSE REDACTED |
- 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: |
CONFIDENTIAL RESPONSE REDACTED |
- Please provide all documents related to and describing the "new service model"
for customer service identified on page 27 of Form A.
| Response:
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CONFIDENTIAL RESPONSE REDACTED |
- 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: |
BCBSME references the response of Anthem Insurance Companies to this
request, because the request asks for information concerning Anthem’s post-closing
plans. |
- 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: |
CONFIDENTIAL RESPONSE REDACTED |
- 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:
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CONFIDENTIAL RESPONSE REDACTED |
DATED: January 25, 1999
________________________
Robert S. Frank
HARVEY & FRANK
Two City Center
Suite 402
Portland, Maine 04112-0126
(207) 775-1300
Attorneys for Associated Hospital Services of Maine
d/b/a/ Blue Cross Blue Shield of Maine
