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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BCBSME’s PROVISIONAL OBJECTIONS TO
CAHC’S SECOND DISCOVERY REQUEST |
| 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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Pending further conferences with counsel for CAHC, one of which has
already occurred, BCBSME provisionally objects to CAHC’s Second Discovery Request on
the grounds stated below. Counsel for Anthem, BCBSME and the CAHC have had one conference
on Monday, February 14th to discuss the request in an attempt to resolve
objections, and are scheduling a follow up conference.
Per agreement of counsel, Anthem and BCBSME agreed to file their
respective objections to the request on or before February 16th.
- Objections to Definitions and Instructions
- Paragraphs A & C of the Definitions and Instructions
define "BCBSME" to include "former officers, directors, consultants,
employees, agents, representatives, counsel and all persons or entities acting or
purporting to act on its behalf or under its control."
Objection: To the extent the instructions refer to
"former" officers, directors, etc. of BCBSME , BCBSME’s burden in
attempting to comply with this request far outweighs the likely benefit to be garnered in
terms of locating information directly relevant to the issues identified for decision in
this proceeding.
- Paragraph L of the Definitions and Instructions provides:
If a request is made for production or identification of documents
which are no longer in the possession or subject to the control of the Applicants, state
when such documents were most recently in the possession of or subject to the control of
the Applicants and what disposition was made of them, including an identification of the
person presently in possession or control of such documents. If the documents have been
destroyed, identify the person who destroyed the documents, the person who directed that
the documents be destroyed, state the reason(s) the documents were destroyed, and the date
and manner of their destruction.
Objection: The burden of attempting to comply with this request far
outweighs the likely benefit to be garnered in terms of locating information directly
relevant to the issues identified for decision in this proceeding.
- Paragraph M of the Definitions and Instructions provides:
When a request seeks documents or things from a corporate entity, such
corporate entity includes its present and former directors, officers, employees,
representatives, agents, consultants, contractors, legal counsel and all persons or
entities acting or purporting to act on its behalf or under its control.
Objections: The burden of attempting to comply with this request far
outweighs the likely benefit to be garnered in terms of locating information directly
relevant to the issues identified for decision in this proceeding.
- Paragraph N requires specific information if/when BCBSME claims a
privilege in any response.
Objections: If BCBSME objects to any request on the basis of privilege,
it will provide a privilege log identifying the privileged documents and objects to the
instruction requiring "the name and employment at the time of viewing of each person
who has seen the document." To do more is unnecessarily burdensome to BCBSME.
- Privilege/Supplemental Protective Order and Other Objections
BCBSME objects to the requests to the extent they call for
production of information or documents subject to attorney-client, work product or other
applicable privilege. If BCBSME withholds any otherwise unobjectionable response or
document on the grounds of privilege, BCBSME will identify the privileged information as
set forth above.
BCBSME has filed a motion for supplemental protective order, a ruling
on which will be forthcoming. To the extent that any of the requested information falls
into the categories covered by the motion, BCBSME objects to producing the information
except as provided in the protective order issued in response to the motion.
Certain of the discovery requests seek information about Anthem that is
likely to be found, if at all, only in Anthem’s possession. Because the request did
not appear to be directed to BCBSME, BCBSME has not objected to such requests. But insofar
as the requests were read to require BCBSME to search its records for such information
relating to Anthem, then BCBSME incorporates and endorses Anthems objections to the
request.
- Relevance / Scope / Burdensome
- Please provide all documents related to financial projections developed by or for the
applicants since July 13, 1999 that take into account changes in and/or anticipated
changes in enrollment.
Objection: |
BCBSME objects because the request is
overbroad. Literal compliance with the request all documents "related" to
projections is monumentally and unreasonably burdensome. Notwithstanding this objection,
as set forth in BCBSME’s objections to the Attorney General’s 3rd
Discovery Request, ¶ 5, BCBSME will undertake to update its financial forecasts. The
updated forecasts will reflect, among other things, current expectations with respect to
the State employees contract, any changes in results or projections as a result of the
exit from the market in Maine of Tufts Health Plan of New England, and the current
marketplace activity of Harvard/Pilgrim Health Plan. BCBSME expects that it may have this
forecast completed by March 1, 2000, and will produce the forecast when it is completed. |
- Please provide all documents related to the state employee health insurance contract for
calendar year 2000 and beyond. Please provide all documents prepared by or for the
applicants related to financial projections regarding this contract. Please describe in
detail the total number of insureds that will be covered under that contract, the contract
term, the total anticipated premium incurred for the first contract year and all contract
provisions that allow for increases during or subsequent to the first contract year.
Objection: |
BCBSME objects to the scope of this
request as overbroad, and as requesting information that reflects attorney-work product
created as a result of pending legal review and challenges of the tentative award of the
Maine State employees health insurance contract to BCBSME.
After a conference with the Attorney General’s counsel regarding a
similar request, BCBSME understands that the production of the bid information submitted
to the State, and information recently submitted by BCBSME to the State’s consultant,
Mercer & Associates, will suffice for the Attorney General at this time. BCBSME will
supply the same information in response to CAHC’s request. This information will
include all of the detail requested: projections; the total number of insureds that will
be covered under that contract, the contract term, the total anticipated premium incurred
for the first contract year and all contract provisions that allow for increases during or
subsequent to the first contract year. |
- Please provide all documents prepared by or for the applicants related
to grand total enrollment figures, with and without the ASO, for each of the months
December 1999, January 2000, and February 2000.
Objection: |
BCBSME objects that the request is
overbroad insofar as it requests "all documents" related to "enrollment
figures." Understanding from a conference with Consumer Intervenor’s counsel
that Intervenors actually seek enrollment totals, BCBSME’s response to Consumers
Second Request # 5 will include December 1999 figures and January 2000 estimates, the
latest month for which results are known. |
- Please provide all documents related to "rules of thumb" used
by the applicants in determining the value of BCBSME. Please include all documents
prepared by or for the applicants related to the value of BCBSME on a "per
subscriber" or "per insured" basis.
Objection: |
BCBSME objects in that the request is
overbroad. Literal compliance with the request all documents "related" to
valuation is extravagantly and unreasonably burdensome. The term "rules of
thumb" is vague, and of little or no relevance in light of the financial advisor and
independent appraisal work already performed. BCBSME’s answer will cross-reference
these valuations. |
- Provide the names of all entities which expressed an interest in purchasing and/or
providing surplus notes to and/or providing surplus notes with an option to purchase
BCBSME from January 1996 to the present. Please provide all documents related to the terms
and conditions of each of these separate proposals from January 1996 to the present.
Objection: |
BCBSME objects to this scope of this
request. "Expressing an interest" is subject to interpretation and therefore
ambiguous. At this eleventh hour of the discovery period, the burden of searching for and
reproducing documents relating to a period earlier than the third quarter of 1998, when
BCBSME decided actively to explore affiliation opportunities, outweighs the utility of
such information. Notwithstanding these objections, BCBSME’s answers will
cross-reference those documents containing or analyzing proposals for affiliation with
BCBSME generated since September 1998. |
- What share of Maine’s private health insurance market do the applicants
anticipate having by December 31, 2001? By December 31, 2002? Please provide the
calculations underlying these projections.
Objection: |
BCBSME objects that the request is
overbroad, and that the request is unnecessarily burdensome, in that the marginal utility
of "market share" projections is small when weighed against the projections that
have been produced and updated financial forecast that will be produced, referenced in the
response to Request 1. Beyond this undertaking, BCBSME objects to having to create new
projections, on the grounds that the creation of such documents is beyond the obligations
of a responding party in discovery, requires more time than contemplated by the time
periods governing discovery responses, and is not relevant to the valuation of BCBSME as
of the date of the Asset Purchase Agreement. |
- Please provide all documents related to all changes to the Asset
Purchase Agreement agreed to by the applicants since July 13, 1999.
Objection: |
BCBSME objects in that the request is
overbroad. Literal compliance with the request for all documents "related" to
changes in the Asset Purchase Agreement is extremely burdensome
After a conference with the Attorney General’s counsel regarding a
similar request, BCBSME understands that the submission of the amendment to the Asset
Purchase Agreement, and correspondence and other information submitted to and received
from prospective liability insurers for insurance contemplated by the Amendment, will
suffice for the Attorney General for the present. BCBSME will cross-reference this
information in its response. |
- Please describe in detail BCBSME’s decisionmaking process that may
or will lower the purchase price by increasing BCBSME ‘s liability for Medicare
claims under the Asset Purchase Agreement. Provide all documents prepared by or for BCBSME
related to the decision. Please state the expected amount of those liabilities and provide
all documents estimating the costs of those potential liabilities.
Objection: |
BCBSME objects that the request is
overbroad. Literal compliance with the request for all documents "related" to
the decision is impossible, and substantial compliance with the request would generate
many pages of documents of no pointed relevance to the issues identified for decision.
Notwithstanding this objection, BCBSME will provide a narrative setting forth the
rationale for the amendment, and reference documents that address the cost of insuring
such liabilities. |
- Please provide a detailed explanation of all the methods and/or types of
valuations that were proposed and/or considered by the applicants? Describe why each
method and/or type of valuation was accepted or rejected as a method for valuation. If any
other valuation was performed, please provide all documents related to it.
Objection: |
BCBSME objects to the request’s call
for a detailed explanation of valuation methodologies. The governing statutes directed
BCBSME to obtain and file an independent appraisal, and specifies methodologies that the
appraiser should consider in the evaluation. |
- Please provide all documents related to all investments made by BCBSME from
January 1997 to the present. Please describe in detail the monetary value of those
investments and the interest or earnings on those investments in each calendar year from
January 1997 to the present.
Objection: |
The request seeks information that is
irrelevant to this proceeding and is overly broad in the extreme. In view of the fact that
BCBSME has already produced detailed financial statements about its condition over the
last two years, BCBSME’s burden in attempting to comply with this request far
outweighs the likely benefit to be garnered in terms of locating information directly
relevant to the issues identified for decision in this proceeding. |
- Please describe in detail the enrollment efforts made by the applicants
in Maine from January 1999 to the present. Provide all documents related to the applicants
enrollment efforts in Maine for that time period.
Objection: |
After a conference with Consumer
Intervenors’ counsel, BCBSME understands that this request has been narrowed to seek
information describing any closing of BCBSME’s enrollment for year end 1999 during
the December 1999 period. BCBSME will answer this request as narrowed. |
DATED: February 16, 2000
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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
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on February 16, 2000 a copy of BCBSME’s
Objections to the Second Discovery Request of the Consumer Intervenors was served by
United States mail, first class postage prepaid, or, where indicated, by hand delivery, on
each of the persons listed below.
James B. Zimpritch
Pierce Atwood
One Monument Square
Portland, Maine 04101
e-mail: jzimpritch@pierceatwood.com
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)
Date:________________
________________________
Robert S. Frank
HARVEY & FRANK
Two City Center
Suite 402
Portland, Maine 04112-0126
(207) 775-1300
