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 ATTORNEY GENERAL’S MOTION FOR ENLARGEMENT OF TIME AND COMMENTS ON ATTORNEY GENERAL’S LETTER OF APRIL 10, 2000           April 12, 2000

 

 

 

Introduction

The Attorney General has requested that the Superintendent provide yet another session for public comment and that the deadline for filing written closing statements in this proceeding should be delayed "by at least two weeks." Anthem opposes these requests for the reasons set forth below. As requested by the Superintendent, Anthem also offers comments on the points addressed in the April 10, 2000 letter from the Attorney General to the Superintendent.

 

Response to Motion for Further Delay

1. Anthem adopts and joins in the arguments of BCBCME in its Response to the Attorney General’s Motion for Further Delay. In addition, it points out the information which follows.

2. An unprecedented amount of information has been available to the public for many months, including through many public hearings, the media, and the Internet. Five days of administrative hearings, all open to the public, were held last week. The Attorney General and other active intervenors cross examined Anthem and BCBSME witnesses, offered many exhibits as evidence and offered evidence from at least ten witnesses of their own. At the request of the Attorney General, the record remained open until 5:00 p.m. on Monday, April 10. It is now time for the Superintendent to consider the evidence presented and render a decision based upon the applicable statutory standards outlined in his November 4, 1999 Notice of Hearing.

2. In Titles 24 and 24-A, the Legislature established the substantive inquiries applicable to this proceeding. The Superintendent has before him all of the evidence necessary to make the substantive rulings under the statutes. The applications are ripe for resolution, and the applicants are entitled to a decision in accordance with existing statutes. The requests for delay promise only delay.

3. In its Response to the Attorney General’s March 27, 2000 Motion for Additional Public Comment Period ("Anthem’s Response"), Anthem set forth in detail the many opportunities the Superintendent provided for public comment, and the vast amount of information that has been available, throughout this proceeding. Anthem incorporates that response and chronology by reference.

4. The Superintendent’s recent rulings, in response to the Attorney General’s prior requests, allowing further public comment on Saturday, April 8, and extending the time for written closing statements to April 14, have already provided additional time and opportunity for comment.

On April 8, the Superintendent held a day long hearing to allow any interested member of the public the opportunity to voice concerns or comments about the proposed transaction. A total of 16 members of the public attended, several of whom had already testified at least once during prior public hearings. For the last 5 hours of this session, there was only approximately 15 minutes of public comment. For most of the afternoon, only the Superintendent, his staff, and counsel for the Applicants were in attendance.

5. The parties do not need time beyond Friday April 14, 2000 to submit written closing statements concerning their respective views of the evidence:

• the intervenors have been parties to the proceeding since November;
• they engaged in extensive discovery resulting in the production of thousands of pages of documents and responses to more than 300 multi-part questions, the vast majority of which have been available since December 1999;
• they had a full opportunity to prepare for the hearing, including review of prefiled testimony from nine lay witnesses for the Applicants, and testimony and/or reports from five financial experts from nationally recognized financial firms; and
• listened to the evidence first hand, and were afforded ample opportunity for cross-examination.

In short, an entire week to prepare a writing closing statement focusing on matters of concern to them is ample.

6. The Attorney General apparently sees no harm in delaying this proceeding – "what’s the hurry" he says. The harm from further delay is obvious. In addition to the general harm of delay inherent in any transaction of this type (e.g., risk of loss of key employees, inability to enhance systems or products, etc.), delays in this particular transaction create additional harm, including harm to the Maine citizens that the charitable trust is meant to serve because, as long as this transaction remains pending, the charitable trust will not receive income amounting to at least $400,000 per month. BCBSME is also financially distressed and, as long as this transaction is delayed, Anthem is prevented from taking an active role in turning around BCBSME’s poor financial condition.

 

 

Further Comments on Attorney General’s Letter of April 10, 2000

1. As noted above, the extensive information concerning the proposed transaction has been available to the pubic on an ongoing basis. The Intervenors, including the Attorney General as the representative of the public interest, have actively participated in the proceeding since November, 1999, and they have purported to represent every conceivable interest of the public. They fully and actively represented those interests in the administrative hearings last week.

2. The characterization of "extreme rapidity" with which the proceedings have been conducted cannot withstand even a cursory examination of the facts. The Applicants filed their applications on September 15, 1999; the Superintendent noticed the hearings on November 4, 1999; the Applicants began the process of making available extensive documents and written responses to discovery beginning in December, 1999; and the first round of public hearings was held in late January 2000. Written testimony for lay and expert witnesses for the Applicants, intervenors, and Bureau was filed and available for review prior to the hearing. During the seven months during which these proceedings have been pending, any member of the public, including any member of the Maine Legislature, has been free at any time to make his or her opinions or concerns known to the Superintendent in writing, and many have.

3. Some of the issues in the proceeding are complex. That is why the Maine Legislature created the Bureau of Insurance as the repository of the expertise to review matters concerning the regulation of insurance. And that is presumably why the Legislature authorized the Superintendent, as the independent representative of the public, with expertise in insurance and finance, to review the evidence and apply the applicable statutory standards under the Maine Insurance Code. Not including the hearing, the Superintendent and his staff have already logged over 6,000 hours reviewing this transaction. In addition to the Superintendent’s individual expertise in these matters, the Superintendent’s staff in this proceeding included lawyers, actuaries, financial analysts and representatives from Arthur Andersen, all of whom assisted the Superintendent in ensuring an accurate, thorough, and expert review of the proposed transaction.

4. The asserted fears of lawmakers concerning Anthem Health Plans of Maine providing adequate geographic and product coverage are wholly unfounded. These issues were considered extensively in the administrative hearings, and will be addressed in Anthem’s closing statement.

5. Extensive information concerning Anthems’ record of service in other states was made available in discovery. While several intervenors cross-examined Anthem witnesses on this point at the hearing, the intervenors offered little evidence contrary to the conclusion that Anthem’s level of service in other states is generally very good. Exhibit A to the testimony of James Parker notes the many honors, awards and recognitions which Anthem Blue Cross and Blue Shield Plans have received.
6. The issue of valuation was extensively reviewed during three days of the administrative hearings. Five experts, one retained by the Attorney General himself, opined on the issue. The Attorney General’s own valuation expert concluded that the valuation methodology of Houlihan Lokey and Salomon Smith Barney were appropriate. The Attorney General has raised no question concerning the independence of Houlihan Lokey, and there is no basis for anyone else to do so. In any event, all interested parties can be expected to address the valuation issue in their closing statements.
7. In 1997, after much debate and input from all interested parties, the Maine Legislature enacted the very statutes which permit the conversion of Blue Cross and Blue Shield of Maine to a for-profit company, and which also require the establishment of a charitable trust benefiting Maine citizens and receiving the value of the company upon conversion. The applicants relied on those statutes in negotiating the Asset Purchase Agreement, in filing their applications for approval of the transaction, and in participating for more than seven months in these proceedings. With due respect, Anthems suggests that the Superintendent is obligated, by the law and Constitution, to apply the law as it existed at the time the applications were filed (and as it still exists today). The same statutes, also enacted by the Maine Legislature, compel the Superintendent to expeditiously make his decision when the record has been closed. The record is now closed, and the Superintendent should be permitted, without further delay, to render his decision.

 

DATED: April 12, 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 April 12, 2000 a copy of Anthem Insurance Companies, Inc.’s Response to the Attorney General’s Motion for Enlargement of Time and Legislative Comments was served by email, fax, 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)

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)

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.

John Doyle, Jr., Esq.

Attorneys for MHA, Inc.

150 Capitol Street

Augusta, Maine 04330

e-mail: sparker@themha.org

 

jdoyle@preti.com

(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)

 

 

DATED: April 12, 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.

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