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1 STATE OF MAINE

2 BUREAU OF INSURANCE

3

4 Docket NO. INS-99-14

5

* * * * * * * * * * * * * * * * * * * * *

6

IN RE: APPLICATION OF ASSOCIATED

7 HOSPITAL SERVICE OF MAINE,

d/b/a BLUE CROSS AND BLUE SHIELD

8 OF MAINE, TO CONVERT TO A STOCK

INSURER AND VOLUNTARILY LIQUIDATE

9 AND DISSOLVE

10 and

11 APPLICATION OF ANTHEM HEALTH

PLAN OF MAINE, INC., TO ACQUIRE

12 THE ASSETS OF ASSOCIATED HOSPITAL

SERVICE OF MAINE, d/b/a BLUE CROSS

13 AND BLUE SHIELD OF MAINE, AND

RELATED TRANSACTIONS

14

* * * * * * * * * * * * * * * * * * * * *

15

16

17 HEARING OFFICER: ALESSANDRO IUPPA

SUPERINTENDENT OF INSURANCE

18

19

20

21

This hearing was held pursuant to Notice of

22 Hearing, at the Sheraton Tara Hotel, 363 Maine

Mall Road, South Portland, Maine, on October 29,

23 1999, beginning at 9:00 a.m.

24

25

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1 (This hearing was held before Alessandro

2 Iuppa, Superintendent of Insurance, at the

3 Sheraton Tara Hotel, 363 Maine Mall Road, South

4 Portland, Maine, on October 29, l999, beginning at

5 9:00 a.m.)

6 * * * * *

7

8 SUPERINTENDENT IUPPA: Good morning, I'm

9 Alessandro Iuppa, the Superintendent of

10 Insurance. We are here today to conduct a

11 pre-hearing conference regarding the application

12 of Associated Hospital Service of Maine, in

13 business as Blue Cross/Blue Shield of Maine, to

14 convert to a stock insurer and voluntarily

15 liquidate and dissolve; and the application of

16 Anthem Health Plan of Maine, Inc., to acquire the

17 assets of Associated Hospital Service of Maine,

18 doing business as Blue Cross/Blue Shield of Maine,

19 and related transactions. The Bureau of Insurance

20 Docket is INS-99-14. In the notice of pending

21 proceeding in the pre-hearing conference, we did

22 note the scheduling of this pre-hearing conference

23 today, and among the issues that we will be

24 addressing today or dealing with include the

25 process and time schedule for further conduct of

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1 the proceeding, be it either additional

2 pre-hearing conferences, which I suspect will be

3 part of this proceeding, some procedural motions

4 that the parties may have filed so far,

5 acknowledging the applications for intervention,

6 the preliminary discussion of issues to be

7 considered, discussion of an appropriate

8 intervention deadline and other matters that the

9 parties may raise. Before we get started, I think

10 it would be helpful to do some introductions. We

11 can start on my left and sort of go around just

12 for purposes -- and if you can identify who you're

13 here on behalf of as well.

14 MS. CHAMBERLAIN: I'm Judith Chamberlain,

15 Assistant Attorney General and counsel to the

16 Superintendent of Insurance.

17 ERIC CIOPPA: I'm Eric Cioppa from the

18 Bureau of Insurance.

19 MR. FRANK: I'm Robert Frank, and I

20 represent Blue Cross and Blue Shield of Maine.

21 MR. ZIMPRITCH: My name is Jim Zimpritch

22 from Pierce, Atwood in Portland. I'm appearing on

23 behalf of Anthem.

24 MS. CONNORS: I'm Cathy Connors, also

25 Pierce, Atwood, also Anthem.

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1 MR. FOUTH: I'm Doug Fouth. I work for

2 Anthem.

3 MR. ROACH: Chris Roach, also from Pierce,

4 Atwood, for Anthem.

5 MR. ROBLES: Martin Robles, Blue Cross/

6 Blue Shield of Maine.

7 MR. PETRUCCELLI: Gerry Petruccelli,

8 Petruccelli & Martin, Patriot Mutual.

9 MR. STEVENS: Everett Stevens on behalf of

10 Patriot Mutual Insurance Company.

11 MR. GOLDMAN: Bob Goldman for the Maine

12 Council of Senior Citizens.

13 MR. DITRE: Joe Ditre, one of the proposed

14 intervenors for Consumers for Affordable Health

15 Care.

16 MR. LAUBENSTEIN: William Laubenstein, from

17 the office of the Attorney General.

18 MR. RECORD: Tom Record, Senior Staff

19 Attorney at the Bureau of Insurance.

20 SUPERINTENDENT IUPPA: Thank you. For

21 purposes of going forward today, the first thing I

22 want to do is identify for the record who the

23 parties are. Again, the pre-hearing conference is

24 -- participation is for the parties at this point

25 in time. I will acknowledge that we have received

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1 several applications for intervention. As of this

2 morning, the only party that has been granted

3 intervention is the Attorney General. The

4 remaining applications for intervention will be

5 considered shortly, but it is -- I can say with

6 certainty that there will not be consideration of

7 those motions today. So there will not be a

8 decision issued today on those. Associated

9 Hospital is also one of the named parties, as is

10 Anthem Health Plan of Maine. One of the

11 procedural administrative issues that we do need

12 to deal with is the issue of confidentiality in

13 the filings that have been made, the assertions

14 and so forth, at this point, and what I'd like to

15 do at this point, if I may, is turn it over to

16 Judy, and she can walk us through where we are at

17 on that.

18 MS. CHAMBERLAIN: The Superintendent on

19 October 18th of this year issued a protective

20 order to guide the assertions of confidentiality

21 for this proceeding. Copies of that protective

22 order are available at the front table, if during

23 a break anyone would like to obtain a copy. In

24 essence, the procedures for the Bureau of

25 Insurance in asserting confidential treatment of a

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1 document is that the party requesting the

2 confidential treatment must very carefully

3 identify the information as being confidential,

4 must provide legal arguments as to why the

5 information should be considered confidential.

6 The superintendent maintains the information as

7 confidential until such time as he rules

8 otherwise. The information will be reviewed by

9 legal staff to determine whether or not any of the

10 information for which an assertion has been made

11 should be made public as opposed to being

12 maintained as confidential. The Superintendent

13 will then rule on a request for confidentiality.

14 Any intervenors which are made a party to this

15 proceeding as well as current parties to the

16 proceeding will be required to complete a

17 confidentiality agreement and consent to

18 jurisdiction which requires them to maintain the

19 confidentiality of any information for which the

20 Superintendent has accepted confidential

21 treatment. In addition, a disclaimer -- a

22 disclosure statement to the confidentiality

23 agreement setting out potential conflicts of

24 interest would need to be completed by parties to

25 the proceeding as well as any consultant for those

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1 parties. Again, the protective order is

2 available. At this time, the Superintendent has

3 ruled that Exhibit 3.06 to the asset purchase

4 agreement which contains financial projections,

5 income statements and assumptions, including

6 financial projections for Anthem Health Plans of

7 Maine, Inc., has been and will remain

8 confidential. No determination has been made by

9 the Superintendent at this point as to the

10 portions of the valuation for which confidential

11 treatment has been asserted. I expect that that

12 order will be coming -- will be issued by the

13 Superintendent within the next week or so.

14 SUPERINTENDENT IUPPA: At this point, it's

15 my understanding that at least one of the parties

16 has some comments or issues they'd like to raise

17 with respect to the protective order. I believe

18 it was Mr. Zimpritch.

19 MR. ZIMPRITCH: Thank you, Mr.

20 Superintendent. We at this time feel that we do

21 not need any further clarification on that.

22 SUPERINTENDENT IUPPA: Very good. Mr.

23 Laubenstein?

24 MR. LAUBENSTEIN: No.

25 SUPERINTENDENT IUPPA: Okay. Mr.

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1 Zimpritch?

2 MR. ZIMPRITCH: Yes, Mr. Superintendent, I

3 wasn't sure if you had mentioned early on at the

4 beginning when you mentioned the parties whether

5 you had mentioned Anthem Insurance Company as well

6 as the Anthem subsidiary being formed, and I think

7 that they are probably both parties.

8 SUPERINTENDENT IUPPA: Thank you. At this

9 point, what I'd like to do is determine if there

10 are other issues that any of the parties wish to

11 have addressed today or at least be considered as

12 part of our session. Mr. Frank?

13 MR. FRANK: Mr. Superintendent, at some

14 point we would like to discuss the type and timing

15 of notice or notices to be given in this

16 proceeding.

17 SUPERINTENDENT IUPPA: Okay.

18 MR. ZIMPRITCH: We have a pending motion

19 for a procedural order, of course.

20 MR. LAUBENSTEIN: We have nothing to raise

21 at this time, Superintendent.

22 SUPERINTENDENT IUPPA: We will be talking

23 about procedural orders a little bit later,

24 although I will say at this point in time, it is

25 my desire and intent that this proceeding be

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1 conducted in as open, efficient and appropriate

2 manner as I can possibly maintain on this

3 transaction. The procedural order will go into, I

4 think, some substantial detail with respect to how

5 I intend to conduct the proceeding, both from the

6 standpoint of how filings are made, when they're

7 made and participation levels, and I think that

8 the -- at the end of the day, meaning the end of

9 this proceeding regardless of how it turns out,

10 that everyone will be able at least to look back

11 on it and indicate and feel comfortable that we've

12 done everything we can to make this, again, an

13 open and efficient process. So with that, just

14 for the record, what I'd like to do is at least

15 identify who has filed motions for intervention.

16 As I noted, the Attorney General has and has been

17 granted intervention, but we have received an

18 application from the Maine Health Alliance; we

19 have received application from the Maine Council

20 of Senior Citizens; we have received application

21 from Consumers for Affordable Health Care

22 Foundation; we've received application from --

23 let's see -- we've received a single application

24 on behalf of the Eastport Health Care,

25 Incorporated, Sacopee Valley Health center, the

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1 Regional Medical center at Lubec and the Maine

2 Ambulatory Care Coalition; we've also received an

3 application from Central Maine Health Care

4 Corporation to intervene; we also received an

5 application from the Maine Medical Association

6 with respect to this transaction on behalf of Dr.

7 Thomas Hayward, Dr. Maroulla Gleaton, as well as

8 the Maine Medical Association; and to the best of

9 our knowledge, that is the extent of those who

10 have filed motions for intervention at this point

11 in time, and I would remind the parties that they

12 do have seven days to respond to the filing of the

13 motions for intervention. I would also ask at

14 this point if the list of the potential

15 intervenors I've identified, can the parties

16 verify that they've also received copies --

17 service of these notices?

18 MR. ZIMPRITCH: We have received copies, I

19 believe, of all of them with the exception of the

20 ones you mentioned at the beginning, Eastport and

21 -- I don't know if that was one or three --

22 SUPERINTENDENT IUPPA: That was one, the

23 Maine Ambulatory Care Coalition.

24 MR. ZIMPRITCH: I have not seen that.

25 SUPERINTENDENT IUPPA: Okay. Bill, have

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1 you received all of the --

2 MR. LAUBENSTEIN: The same one that Jim

3 mentioned, I don't think I've received that one

4 either.

5 MR. FRANK: And for Blue Cross, we have not

6 received that one. We have received the others.

7 SUPERINTENDENT IUPPA: On the subject of

8 parties generally, it has been the Bureau's

9 experience, at least in my tenure over the last

10 five or six years, that when a specific insurer or

11 affiliate insurer has been, if you will, in the

12 chain of the acquisition, that they have had

13 representation, been a party to the transaction.

14 I'd like to spend a little time hearing, if any of

15 the parties have an opinion on it today, why Maine

16 Partners Health Plan and Central Maine Partners

17 Health Plan shouldn't be made parties to the

18 proceeding.

19 MR. FRANK: Mr. Superintendent, if I could

20 speak to that issue, cutting to the quick of the

21 matter, Blue Cross does not have any objection to

22 either of the Partners being made parties to this

23 proceeding.

24 SUPERINTENDENT IUPPA: Mr. Zimpritch?

25 MR. ZIMPRITCH: On behalf of Anthem, we

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1 have no objection to them becoming parties to the

2 proceeding. We didn't see it absolutely required

3 by the law, but I'm certainly familiar with the

4 history on Form A's and the potentially acquired

5 insurer being a party, and we have no objection

6 whatsoever.

7 MR. LAUBENSTEIN: The Attorney General has

8 not objected to them as parties either.

9 SUPERINTENDENT IUPPA: Thank you. I

10 appreciate the lack of objection to that, and I'll

11 reserve judgment on that for later. One of the

12 prerogatives of being the hearing officer and

13 recognizing people in the audience, it does

14 provide me an opportunity to raise some questions,

15 and I believe Michele Garvin is here on behalf of

16 Central Maine Health Care, and I guess I would ask

17 what impact would the -- if Central Maine Partners

18 Health Plan were made a party to the proceeding,

19 would that have on your motion for intervention on

20 behalf of the parent corporation?

21 MS. GARVIN: I believe that Central Maine

22 Health Care would continue to file its motion to

23 intervene as the 50 percent owner of the plan, but

24 Central Maine Health Care has no objection to the

25 plan being added as a part of the proceeding.

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1 SUPERINTENDENT IUPPA: Thank you. With

2 respect to, again, trying to deal through some of

3 the procedural administrative issues here, I do

4 have a list I'd like to go through. Before I get

5 to that, though, I will note that Linda Pistner,

6 Deputy Attorney General, has joined us at the

7 table.

8 MS. PISTNER: Thank you, Mr.

9 Superintendent. I apologize for the

10 interruption.

11 SUPERINTENDENT IUPPA: That's quite all

12 right. As I noted, it is my intention to issue a

13 procedural order shortly after the proceeding

14 today, certainly within the next several days,

15 which will memorialize much of what we've talked

16 about here today. With respect to filings,

17 service of documents, obviously documents do need

18 to be filed at the Bureau, and they may be made by

19 either mail or hand delivery. I do want to make

20 it clear that the document will not be considered

21 filed until it has been received by the

22 Superintendent. We will not be accepting faxed --

23 facsimile documents or documents attached to an

24 e-mail message for purposes of filing. Though we

25 do intend to use electronic means as much as

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1 possible for purposes of filing, it's my intent to

2 limit it to the hard copies, if you will. The

3 other point with respect to the filing of

4 documents is that unlike some of the other

5 proceedings where we would accept documents up

6 until 5:00 and, in fact, 7:00, 8:00, 9:00, 10:00

7 at night through the fax machine, documents filed

8 in this proceeding after three p.m. will be

9 considered filed the next day. If there are

10 documents that are filed at a deadline, again,

11 that deadline will be at three p.m. on that due

12 date. Any time -- any documents received after

13 that time will be considered filed late and will

14 be date stamped as having been received the next

15 business day, and I really implore the parties to

16 be cognizant of that. Just by way of example in

17 some prior proceedings, 5:00, the witching hour

18 shows up, and we have six parties trying to fax to

19 one fax machine and no one is getting their

20 documents in on time, and with respect to the

21 documents that do need to be filed, as I noted, we

22 are intending to make use of electronic media as

23 extensively as possible, but the copies will have

24 to be made both in a hard copy version and an

25 electronic media, two hard copies will have to be

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1 filed with the Superintendent, one copy will have

2 to be filed with Judy Chamberlain at the Attorney

3 General's office. We'll also be asking for

4 electronic media to be filed, one that includes

5 two diskettes or CD-Roms, whichever the filing

6 party is intending to use, containing an

7 electronic copy of the hard copy document. These

8 documents should be in Microsoft Word 97 or an

9 earlier version thereof. Having said that, I

10 recognize that it's conceivable we may have some

11 parties who ultimately come to the table who may

12 not be able to comply with those, in particular,

13 electronic media format, and I'll certainly be

14 willing to consider relief from that on the

15 electronic filing requirements. I guess at this

16 point what I'd like to do is get a sense from the

17 parties if they are aware of or cognizant of or

18 want to bring to my attention some obvious

19 problems I may have missed.

20 MR. ZIMPRITCH: I have one question on the

21 time of receipt of documents which then is the

22 question about documents from the Bureau to the

23 parties so that, for example, a discovery request

24 may come by e-mail unsigned and then a hard copy a

25 day later or depending on the mails, and we start

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1 a 14-day period under the rules normally after

2 receipt, and I didn't know if that was something

3 that would be useful for all parties if it was

4 clarified in the procedural order. Obviously

5 Anthem will and I'm sure Blue Cross will respond

6 to whatever you set, but it's probably

7 advantageous to establish that for clarify for

8 everyone.

9 SUPERINTENDENT IUPPA: We'll make note of

10 that and consider that in the procedural order.

11 On the issue of fairness, I think it probably

12 ought to be consistent on both sides of the

13 table. With respect to the timing and deadline

14 issues, I obviously do have a little more

15 prerogative, but that is a good point, and we will

16 incorporate that into the procedural order. Mr.

17 Frank?

18 MR. FRANK: Mr. Superintendent, on the

19 electronic filing of documents, there may need to

20 be a distinction drawn between those documents

21 that are created for the purpose of the response

22 and those documents that may be attached to a

23 response that are pre-existing documents. The

24 latter are often not in Microsoft Word or Word

25 Perfect form, and my request is, if you thought it

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1 appropriate, to be clear in the order that the

2 requirement of electronic filing is for those

3 documents that exist -- those documents that are

4 created for purposes of response and not what I'll

5 call discovery production documents that

6 pre-existed the request.

7 SUPERINTENDENT IUPPA: Again --

8 MR. ZIMPRITCH: Anthem would join in that

9 request.

10 SUPERINTENDENT IUPPA: Does the Attorney

11 General want to weigh in on that at all?

12 MR. LAUBENSTEIN: No, I don't.

13 SUPERINTENDENT IUPPA: We will take that

14 into consideration. There are a couple of reasons

15 why I'm asking to have as much as possible

16 provided to us in electronic format. One is

17 simply for the ability to manage the volume of

18 documents that I believe we're going to see in

19 this transaction, and the other and probably more

20 salient item is we are making available public

21 documents almost the day we receive them up on our

22 web page so that anybody in the world who is

23 interested in this transaction can have an

24 opportunity to see those documents. To the extent

25 that we receive documents that are not prepared in

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1 electronic format or have to be attached as hard

2 copies, it's our intent to scan those into our

3 system so we can at least have them for purposes

4 of document management. They may not end up on

5 the web page because of that format, but certainly

6 it will -- we'll still be able to take a picture

7 of those and put an image out there of those

8 documents. With respect to, again, the folks who

9 have filed for intervention and happen to be here

10 today, I mean, based on what you've heard today in

11 terms of the filing format and so forth, do you

12 think it's going to create any undue hardship or

13 -- I guess I'll look to you, Joe, first.

14 MR. DITRE: From what you've said so far, I

15 would agree regarding the electronic filing, the

16 point that Bob just made, it's very difficult for

17 our organization to -- in fact, I don't think we

18 have a scanner for discovery documents to scan

19 in.

20 SUPERINTENDENT IUPPA: We would not ask the

21 parties or the intervenors to do the scanning. We

22 have the technology in the office to do that.

23 MR. DITRE: So we would just submit a hard

24 copy to you. That's fine with us. I have

25 reserved judgment on some of the other stuff.

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1 SUPERINTENDENT IUPPA: I'm just trying to

2 get a sense. Today's proceeding, while it is part

3 of the administrative proceeding, I'm willing to

4 entertain some dialogue here if people feel

5 appropriate to do so. Mr. Goldman?

6 MR. GOLDMAN: Mr. Iuppa, I'd like to

7 consider that a little bit further. I'm not sure

8 we can meet the requirement as stated, so I'd like

9 to think about it and get back to you on it.

10 SUPERINTENDENT IUPPA: Ms. Garvin?

11 MS. GARVIN: I believe we can meet the

12 requirements.

13 SUPERINTENDENT IUPPA: I'm not sure who

14 else --

15 MS. MONAHAN: I'm Emmy Monahan with Duane,

16 Morris & Heckschen, and I'm here on behalf of the

17 Maine Health Alliance.

18 MS. POST: Bonnie Post from the Maine

19 Ambulatory Care Coalition. We would have a

20 concern with the attachments, but otherwise, we'd

21 meet the requirements.

22 MR. SMITH: Gordon Smith and Andrew McClain

23 for the Maine Medical Association. We don't see

24 any problems.

25 SUPERINTENDENT IUPPA: Thank you. We will

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1 take those comments that were made into account

2 and try to incorporate it in a procedural order.

3 With respect to service on other parties, in some

4 prior transactions at the Bureau, I have felt like

5 a postman, a fax man, an e-mail man and trying to

6 be sure that people are getting -- all the parties

7 are receiving copies that they're supposed to and

8 being serviced upon. What we will do this time is

9 not wear our postal uniform. We will create a

10 service list, and we're going to ask each party

11 to provide us with the name, address, telephone

12 number, a fax number and e-mail address of one

13 person per each party to whom service can be made,

14 and on any filings that are made, each party must

15 include a certification of service on the other

16 parties as part of any filing or submission made

17 to the Superintendent. Service on other parties I

18 would expect to be simultaneous with the filing to

19 my office, and I just want to make it abundantly

20 clear that the Superintendent, the Bureau of

21 Insurance or any of my staff will be responsible

22 for providing copies and other documents that may

23 be filed with us to the service list -- will not

24 be. Let me make that clear, and if a party fails

25 to serve the other parties on the designated list,

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1 that filing will be not be accepted by me until

2 such certification has been provided. Again, at

3 this point, I would open it up to the parties to

4 get a reaction. Mr. Frank?

5 MR. FRANK: Just a clarification, Mr.

6 Superintendent. If we are delivering something by

7 hand at 2:30 p.m. for a 3:00 deadline with the

8 Superintendent, is it sufficient if our

9 certificate of service reads that that same day we

10 have put in the mail to Eastport a copy of what

11 we're filing with the Superintendent, for

12 example? I think it would be burdensome if we

13 were required to make hand delivery at the same

14 time to all the parties.

15 SUPERINTENDENT IUPPA: I think that's a

16 legitimate observation, and we can take it into

17 consideration. Mr. Zimpritch, anything?

18 MR. ZIMPRITCH: That's the same observation

19 we would have.

20 MR. LAUBENSTEIN: Nothing to add, Mr.

21 Superintendent.

22 SUPERINTENDENT IUPPA: Do any of the

23 parties object to the suggestion that Mr. Frank

24 has put on the table at this point?

25 MR. LAUBENSTEIN: No objection.

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1 SUPERINTENDENT IUPPA: With respect to the

2 documents that I would expect to be filed,

3 obviously we expect them to be appropriately

4 captioned, and to the extent that this may sound

5 like micro-managing to an extent, I beg your

6 indulgence, but I think that I'd like to do the

7 micro-managing for a bit today with respect to

8 this. As I noted in my announcement at the

9 beginning of the proceeding, the Docket Number

10 99-14, and we're going to ask that all filings

11 that are made -- I should say that if there's more

12 than one document within the filing, there would

13 also be included in there a table of contents,

14 and, again, we'll try to spell this out with more

15 specificity in the actual order that will be

16 issued, but if there's more than one document or

17 if there are multiple sections to a document,

18 we're going to ask that a table of contents be

19 appended to it. There will also be a separate

20 cover sheet that should come with that which

21 should indicate the date it's filed, identify the

22 party filing, document title, document type,

23 whether it's a proposed order, a discovery

24 request, response, motion, etcetera, and a

25 notation of whether or not any portion of the

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1 filing is being asserted as confidential; and,

2 again, even with that, I would ask the parties to

3 be as specific as possible with respect to those

4 assertions. It is also my intent to have attached

5 to the procedural order an exhibit which will be a

6 sample of the cover sheet so we can have some

7 consistency with respect to that. We are also

8 asking that -- and, again, I think this may

9 ultimately be with respect to -- certainly with

10 documents that are being created for us that the

11 documents be paginated. I had suggested we have

12 line numbers, too, but my counsel said, Al, that's

13 a little too much; and, again, I guess I'd open it

14 up to the parties if they have any comments or

15 further suggestions with respect to that.

16 MR. LAUBENSTEIN: No, Superintendent.

17 MS. CHAMBERLAIN: On the notation of

18 whether a portion of a filing is asserted to be

19 confidential, I just wanted to caution the parties

20 that we've had difficulties in the past where just

21 a few pages of a document is viewed as

22 confidential. It would be more helpful if you

23 would actually remove those pages and just put a

24 blank page in noting that those pages were removed

25 as confidential, since the confidential pages

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1 themselves will be viewed as a separate document

2 within the Bureau of Insurance.

3 SUPERINTENDENT IUPPA: With respect to --

4 Mr. Ditre?

5 MR. DITRE: Mr. Superintendent, just sort

6 of recognizing the informal nature of this

7 proceeding, I'd like to just, if I could, bring us

8 back to one of the suggestions that Mr. Frank

9 raised, and that was with regards to

10 hand-delivered filings at 2:30 in the afternoon.

11 The only suggestion we could add to that is that

12 if it is a motion or something that requires an

13 immediate ruling by the Superintendent and which,

14 for example, the Eastport Health center would

15 receive the filing maybe two or three days after

16 it was actually hand delivered because it would be

17 dropped in the mail that day, that we recognize

18 that the parties that are receiving it by mail are

19 not going to be able to respond immediately, and

20 where a ruling is requested immediately

21 thereafter, that there be a certain time period

22 given so that parties are not put at a

23 disadvantage.

24 SUPERINTENDENT IUPPA: Okay, well, I think

25 it's safe to say if I'm presented with motions

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1 that are going to require an immediate ruling or

2 an expedited ruling, that I want to be sure

3 everybody has it, and I'll certainly exercise the

4 discretion that I've got to make sure that we can

5 do.

6 MR. DITRE: And maybe the order could

7 require that for those types of things that they

8 be done by fax or by electronic so that we can

9 reach people immediately.

10 MS. CHAMBERLAIN: Mr. Ditri, of course, the

11 Bureau's current rule on procedural matters does

12 allow parties seven days from the date of receipt

13 in order to respond. So unless a party were to

14 request deviation from that rule, that is what the

15 standard rule would be.

16 MR. DITRE: But that's from the date you

17 would receive it?

18 MS. CHAMBERLAIN: Date of receipt by the

19 party.

20 MR. DITRE: By the party, thank you.

21 MS. CHAMBERLAIN: You're welcome.

22 SUPERINTENDENT IUPPA: So I guess really

23 what it comes down to is it would be certainly

24 beneficial to any and all the parties to ensure

25 that filings and documents are made as close to

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1 simultaneously as possible or contemporaneously as

2 possible. For those of you who have participated

3 in proceedings with the Bureau, you do know that

4 we have a standard practice and procedure for

5 dealing with confidential documents with respect

6 to red covers and the like. We will again spell

7 all that out in the procedural order as well as

8 how to deal with confidential material that will

9 be filed electronically. With respect to

10 challenges to assertions of confidentiality, if

11 such an assertion is made -- and, again, this is

12 consistent with prior practice of the Bureau --

13 the party claiming confidentiality will be

14 notified and provided an opportunity to argue in

15 favor of continuing protection. It is the

16 intention of my office that filings containing

17 confidential material will be indexed on the

18 Internet, but that the actual material itself will

19 not be disclosed except upon an order of the

20 Superintendent; and, again, there will be a

21 disclaimer within there that the Superintendent

22 nor the staff of the Bureau will assume

23 responsibility for the public disclosure of any

24 documents other than in accordance with this

25 section that will be articulated in the procedural

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1 order. To the best of my knowledge, in recent

2 years I'm not aware of any breaches of

3 confidentiality, I don't think, in any of the

4 proceedings by either the Bureau or the parties

5 who may have been involved. Any information or

6 documentation for which confidentiality has been

7 asserted, obviously, is going to be subject to the

8 terms of the protective order that I issued on the

9 18th. Any questions or comments, suggestions,

10 relative to confidential material?

11 MR. LAUBENSTEIN: Mr. Superintendent, I

12 guess I do have a question. It goes more or less

13 back to the procedural order that's already been

14 entered with regard to the Office of Attorney

15 General as an intervenor. Do you want us to file

16 additional counsel who will be working on this?

17 The way it reads right now, only myself at current

18 will be able to read confidential documents as

19 opposed to other assistant attorney generals who

20 may be working on this case. Do you want us to

21 identify them, and they will also be counsel of

22 record?

23 SUPERINTENDENT IUPPA: I guess at this

24 point I would look to counsel for Anthem and

25 Associated Hospital to see if they have any

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1 reaction to that.

2 MR. FRANK: If there would be a problem

3 doing it, I'd like to deal with it -- I'd like to

4 -- all things being equal, it would be good, I

5 think, if we had everybody who is receiving this

6 confidential information recorded, but if there's

7 a problem with doing it, I'm sure we can

8 accommodate you.

9 SUPERINTENDENT IUPPA: Mr. Zimpritch?

10 MR. ZIMPRITCH: I think probably we would

11 echo those comments, and if there -- I think it

12 probably is advantageous for everyone, including

13 Mr. Laubenstein's office, to have some control;

14 and, yet, we don't see that as really an obstacle,

15 and if it becomes a problem, I'm sure we can work

16 with it very cooperatively.

17 MR. LAUBENSTEIN: Thank you.

18 SUPERINTENDENT IUPPA: The next topic I

19 want to talk about is essentially dealing with ex

20 parte communications. Unlike some of the other

21 transactions some of you may have been involved

22 with before the Bureau, at this point, it is not

23 my intent to convene an advocacy panel with

24 respect to this proceeding. That decision is

25 always subject to further consideration and

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1 change, but given that it's my intent to move

2 forward without one, I think it's important that

3 all the parties understand how we would be dealing

4 with communications, and clearly it is important

5 that none of the parties communicate directly with

6 me on this particular transaction, certainly not

7 on an ex parte basis. I have, as some of you

8 know, gone to great lengths not to comment on this

9 proceeding. I have declined press interviews,

10 I've declined respectfully to members of our

11 Congressional delegation not to participate in

12 their forum with respect to this proceeding in an

13 effort to remain as unbiased as is humanly

14 possible in today's information age; but the

15 inability to communicate, again, with the

16 Superintendent on an ex parte basis certainly

17 extends to the staff of the Bureau of Insurance

18 and any consultants that I may retain on my behalf

19 without notice and opportunity for all parties to

20 be present for those communications. We will

21 identify in the procedural order if questions of a

22 ministerial nature arise, with respect to

23 conversations, we will have a couple people

24 identified in the Bureau who you can direct those

25 questions to. If they are procedural queries

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1 dealing with matters of law and the like and the

2 procedural aspects of this transaction, I would

3 ask that those queries be directed to Ms.

4 Chamberlain. Recognizing that some of the parties

5 during the proceeding may like to have or would

6 appreciate having some input from the Bureau staff

7 during the proceeding, what I am intending to do

8 is designate on Friday mornings, probably from

9 nine to twelve and this will be on a weekly basis,

10 certain staff and legal counsel who would be

11 available to meet with the parties. Again, this

12 is a little bit different than how we've done

13 things in the past, but, again, I'm trying to have

14 this proceeding move along in an efficient manner

15 and manageable manner and what we'll probably do

16 is probably no later than that Tuesday prior to

17 the Friday meeting, any party who wishes to have

18 an issue placed on the agenda may do so as long as

19 they've provided us with notice by three p.m. on

20 that Tuesday; and, certainly, while all the

21 parties are entitled to attend those meetings,

22 only the party who placed the item on the agenda

23 and staff will be permitted to address the issue

24 raised. Again, they're not meant to be

25 adjudicatory type of sessions. I will not be

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1 attending. These folks will not be entertaining

2 motions and formal procedural requests. Again,

3 it's an effort to allow you to have some access to

4 Bureau staff with respect to the transactions; and

5 if we have no request for agenda items by the

6 deadline, that group will not meet that following

7 Friday. The meeting will be canceled. One of

8 the, I guess, concerns I have had in the past when

9 we've used the Advocacy Panel format, and I think

10 the format has worked well, but what it

11 effectively does is it requires us to set up a

12 Chinese wall within the Bureau of Insurance and

13 oftentimes the hearing officer finds that some of

14 his most senior and knowledgeable staff are no

15 longer available to me as a resource. That's

16 certainly not meant to disparage those who are not

17 on an advocacy panel, but certainly it is a bit of

18 a concern to me that I want to have the best and

19 the brightest available to me from my staff to

20 advise me during this proceeding. So that is what

21 I'm intending to do. Again, I'd entertain

22 comments, suggestions, criticisms and the like to

23 this approach from the parties. Mr. Smith?

24 MR. SMITH: I think that we would like to

25 have you reconsider that approach. I think that

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1 the types of parties that you have intervening,

2 particularly the more public organizations, really

3 do not have the wherewithal to do some of the

4 technical analyses of the financial information

5 and bring to bear all the issues that may come up

6 in the course of this proceeding, and that we

7 would think that it might be necessary during the

8 course to reconsider this decision. We can

9 certainly understand what you've just said

10 concerning losing your best people to the

11 proceeding, but perhaps you could take some of the

12 lesser bright and somehow utilize --

13 SUPERINTENDENT IUPPA: Remember, we have a

14 court reporter here.

15 MR. SMITH: -- and utilize them, but in all

16 seriousness, we have thought about the Advocacy

17 Panel issue, and have not commented on it

18 publicly, but we were surprised to hear of your

19 reluctance to do that, and as soon as we can, we

20 will perhaps, if we are granted intervenor status,

21 more properly brief that issue in writing as to

22 why we think it would be important, but that's our

23 current inclination.

24 SUPERINTENDENT IUPPA: It's not my intent

25 today to take argument whether or not we should

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1 have an advocacy panel Panel or not, but I did

2 want to -- again, I'll reserve judgment on that,

3 and I suspect we may find ourselves in the future

4 entertaining motions or suggestions to do so.

5 Jim?

6 MR. DITRE: Mr. Superintendent, thank you.

7 I would have to echo the concerns raised by the

8 representative of the Maine Medical Association.

9 Having been granted intervenor status in the joint

10 venture proceeding in 1996-1997 and having worked

11 with a very capable Advocacy Panel and reviewing

12 in my mind right now the complexities of that

13 transaction which involved not only financial but

14 corporate structure and management and a myriad of

15 other issues, I would just like to say that we

16 would feel at a loss because of the resource issue

17 for our organization to be in a position where we

18 would have to sort of take that burden on

19 ourselves. So I just wanted to support what he

20 just said.

21 SUPERINTENDENT IUPPA: Obviously this

22 transaction has generated an increasing amount of

23 interest of a number of interested persons and the

24 like, and we are maintaining an interested

25 persons' list at the Bureau. At this point, it is

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1 my intent to provide the interested persons' list

2 with copies of notices of any pre-hearing

3 conferences and hearings with respect to the

4 transaction of the proceeding. It is not my

5 intent to provide everyone on the interested

6 parties' list with other pleadings and

7 correspondence except as I may see fit or

8 appropriate. For folks who are interested in

9 being put on that list, again, the procedural

10 order will identify who to address those to at the

11 Bureau. Again, we're also going to be accepting

12 those by e-mail and for those who have access to

13 the Web, in fact, at this point now if someone is

14 interested, they can go to our home page, go to

15 the Anthem-Blue Cross transaction links and click

16 on a button to send us an e-mail to be added to

17 that list. I do know it is a growing list, and I

18 think you can understand my reluctance to provide

19 every interested party a copy of each and every

20 pleading that we may receive on this.

21 Notwithstanding that, we certainly expect to

22 receive and, in fact, have already begun to

23 receive communications from the general public,

24 and I'm never quite sure the distinction between

25 the general public and the public, but either way,

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1 those types of communications from non-parties and

2 the public will not be subject to the formal

3 filing requirements with respect to service and

4 providing documents electronically and the like;

5 but in the interest of maintaining a complete

6 record, those communications that I do receive

7 will be made part and maintained -- at least

8 maintained as part of the record of the

9 proceeding. In accordance with Maine statute,

10 those communications will not constitute evidence

11 or be considered as evidence unless the author has

12 been sworn and is available for cross-examination

13 by the parties, and it is not my intent to, again,

14 make copies of the communications from the general

15 public to the parties also, though we will be

16 putting them up on our home page so they'll be

17 available there if you're interested in seeing

18 them or certainly if you're interested in coming

19 to the office and seeing those documents during

20 regular business hours. I should also note that

21 we are maintaining a public file in more than one

22 location of the Bureau. I believe we have it at

23 the State Law Library, I believe the Lewiston and

24 Auburn Libraries, the Bangor Public Library, the

25 Portland Public Library, and I guess I'll look to

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1 my associates here if there are any that I'm

2 missing.

3 MR. RECORD: That's it.

4 SUPERINTENDENT IUPPA: Any reactions,

5 comments, suggestions, with regard to

6 communications from the public from either of the

7 parties? As I've noted several times now, we will

8 be making as much information available on the

9 Internet as possible, though I will retain my

10 discretion if I feel that there's some documents

11 that are not appropriate -- appropriately

12 configured to appear on the Internet.

13 With respect to discovery procedures, and

14 I'll beg your indulgence and it's only a couple of

15 paragraphs long that we have sketched out so far,

16 but I'd like to read them verbatim before I get

17 reactions. Copies of all discovery requests and

18 responses to discovery requests must be served on

19 all parties and filed with the Superintendent

20 according to the same standards and procedures

21 applicable to any other filing in this

22 proceeding. All the parties are prohibited from

23 making requests for information that is

24 duplicative of prior requests made by any party.

25 To the extent that the documents have been

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1 previously provided in response to a discovery

2 request, those documents may be referenced in the

3 subsequent responses and need not be produced

4 again. To the extent practicable, all parties are

5 asked to group discovery requests under one or

6 more headings set forth in what will be Exhibit C,

7 and the purpose of this request is to facilitate

8 the document management and indexing of all

9 discovery documents that are going to be filed

10 with my office. Obviously, precise

11 categorization, while desirable, will not be

12 required, and the folks we have doing the actual

13 indexing at the Bureau will be able to make

14 adjustments as necessary, but I do want to again

15 try to make this as seamless and as smooth a

16 process as possible. So with that, I'll look to

17 the parties for any comments on the substantive

18 portion of discovery procedures.

19 MR. ZIMPRITCH: My partner, Cathy Connors,

20 will speak to this.

21 MS. CONNORS: We have -- we think that all

22 makes sense and our one question that we had that

23 we put in our draft procedural order and our

24 motion is the sequencing of discovery. We propose

25 that the Superintendent make initial requests and

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1 that way we could deal with those requests, deal

2 with them comprehensively. The other parties

3 could take a look at them to see what had already

4 been asked and provided, and we might avoid some

5 duplication and we might avoid the problem of

6 having many different requests from many people

7 coming at the same time, and if we had one fell

8 swoop from the Superintendent first and when he

9 had felt that there was a comprehensive -- he was

10 ready to have other people participate, then we

11 could have people ask what they thought hadn't

12 been asked, and that would take advantage of the

13 Superintendent's consultants and so they wouldn't

14 have to re-invent the wheel. There would already

15 be this initial effort done which could help the

16 other intervenors.

17 SUPERINTENDENT IUPPA: Okay, thank you.

18 Mr. Frank?

19 MR. FRANK: Nothing, nothing more to add.

20 MR. LAUBENSTEIN: I think that's an

21 excellent idea, Your Honor -- Mr. Superintendent.

22 SUPERINTENDENT IUPPA: Do you have anything

23 to add?

24 MS. CHAMBERLAIN: No.

25 SUPERINTENDENT IUPPA: Thank you. The next

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1 thing I want to spend a little bit of time on is

2 -- I'm sorry, Joe?

3 MR. DITRE: Mr. Superintendent, I obtained

4 a copy of the proposed procedural order that was

5 filed last night late, and what I believe is being

6 asked is that with initial discovery requests that

7 there be an initial request put out by the

8 Superintendent, and that that will give the

9 parties sort of an opportunity -- those who are

10 allowed to intervene and other parties, an

11 opportunity to see what the request is. I'm

12 wondering if there's not another way that would

13 allow the intervenors also to submit to you their

14 discovery requests so that, in essence, you would

15 have the opportunity to see what discovery the

16 intervenors are interested in also. So I just put

17 that as an idea. It's really a matter of format

18 and timing than anything else, but it might -- it

19 might help further to gain efficiency.

20 SUPERINTENDENT IUPPA: Thank you. Any

21 reaction from the parties to that suggestion?

22 MS. CONNORS: If I understand, the comment

23 is to have an opportunity to have an input into

24 the Superintendent's requests while the initial

25 ones are being made, and in concept, that's not a

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1 difficulty. Our problem is having to respond or

2 object or having many different ones coming at

3 us. So if a comprehensive one is coming from the

4 Superintendent, I don't think we would have an

5 objection, for example, at these weekly meetings

6 having any suggestions about what should be

7 included in the Superintendent's initial requests.

8 MR. ZIMPRITCH: Put another way,

9 Superintendent, if that were followed, it might

10 lead to the situation where the Applicants, if

11 they thought some suggestions were over burdensome

12 or over broad, that we had to start filing

13 objections and we end up having premature sort of

14 discovery battles over what's appropriate to

15 include, I think a better approach is for the

16 Bureau with its administrative expertise to draw

17 on that as to what is really primarily germane

18 particularly as advised by its outside consultants

19 who have been retained for this proceeding,

20 bringing to bear their expertise, and I think

21 that's a much more functional approach.

22 SUPERINTENDENT IUPPA: Mr. Laubenstein, any

23 comment?

24 MR. LAUBENSTEIN: No.

25 SUPERINTENDENT IUPPA: Okay, thank you. As

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1 I started to say, I'd like to spend a little bit

2 of time talking about my schedule for this

3 proceeding. I don't think I need to explain to

4 folks at the table or in the audience that the

5 road map and procedure that the legislature was so

6 smart to have set out a couple years ago with

7 respect to a possible transaction is going to be

8 very helpful. Despite that, this is a rather

9 complex, complicated transaction with a number of

10 steps spelled out in it. There are issues that

11 are ongoing right now with respect to the

12 charitable trust that the Attorney General is in

13 the driver's seat in and with, and I am certainly

14 precluded under the law from issuing any type of

15 final order on this proceeding absent the Superior

16 Court issuing its decision. Despite that, I don't

17 think that it would be prudent on my part to rely

18 upon and wait until we have a final order from

19 Superior Court to even begin this proceeding. So

20 what I am going to put out on the table today is,

21 again, what I'm seeing as my schedule for the

22 proceeding, and some of the points that I'll be

23 making or some of the deadlines that I'll be

24 mentioning here today will not be -- essentially

25 they're not cast in stone yet. They certainly can

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1 be and probably will be affected by what happens

2 in the Superior Court and other circumstances that

3 I have no idea exist out there just yet, but I'm

4 sure will find their way to this proceeding in

5 some unintended way. It's almost inevitable. As

6 I noted earlier, we have received six or seven

7 motions for requests for intervention so far. At

8 this point, I am considering establishing December

9 1st as the final deadline for intervention

10 requests. I'm looking at a January 7th, 2000

11 deadline for serving discovery requests, January

12 21st for providing responses to those discovery

13 requests, and the week of January 24th I am

14 intending to schedule essentially the beginning of

15 the public hearing for this transaction, but what

16 I'm intending to do is setting aside four days

17 that week to take public comment on the

18 proceeding. I will not be taking evidentiary or

19 substantive filings and the like and testimony at

20 that time. Again, for those of you who were

21 involved with the Maine Partners-Central Maine

22 Partners proceedings, we held hearings for public

23 comment in Lewiston and in Portland, I guess it

24 was, and what I'm intending to do during the

25 course of that week is commence, I believe, on

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1 that Monday, the 24th. We are looking at Presque

2 Isle; the following day at the University in

3 Orono; I think we're contemplating that Wednesday

4 as a break to stop at the office and get caught up

5 on what we've missed the prior two days; and then

6 on Thursday in Lewiston; and then a final session

7 in Portland; and at this point of the scheduling

8 items, I will note, again, as I've mentioned that

9 I am going to be somewhat constrained by what I

10 can do and not do by the decision that comes out

11 of Superior Court, and it would not be my intent

12 to immediately after the public portion go into

13 the evidentiary hearing. On my calendar, I'm

14 looking somewhere around the first week of March

15 if we have the order from the Superior Court to

16 continue the public hearing, especially with

17 respect to the evidentiary material and

18 substantive material. Recognizing that I have no

19 control over when the Superior Court is going to

20 issue a decision, it's conceivable that that March

21 -- first week in March date may not occur because

22 it is not my intent to conduct the evidentiary

23 portion absent a ruling from the Superior Court.

24 Getting back to the scheduling, if indeed it turns

25 out that we have to delay the evidentiary portion

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1 beyond that first week in March, I may -- and I'll

2 reserve judgment at this point -- decide to have

3 another public session for public comment. I

4 don't anticipate that it will be a four-day road

5 trip again, but there may be some things that come

6 out of the Superior Court decision that may impact

7 some of the comments or change or affect some of

8 the comments that we've previously received with

9 respect to the earlier public comment we receive.

10 So, again, I just want to put people on notice

11 that even though we'll do four days' worth, if all

12 goes according to plan, in late January that we

13 may have at least one more day of that depending

14 on when the Court issues its rulings.

15 Other dates that I've built into my schedule

16 at this point would be the submission of reports

17 by experts. I will look to have February 2nd

18 setting up a deadline for pre-filed testimony and

19 exhibits; February 29th, again, sometime during

20 that week of March 6th, the continuation of the

21 hearing. At this point, I'm not sure where yet.

22 We're entertaining probably Augusta or Gardiner,

23 but I'm not ruling out the possibility of

24 conducting the hearings here in Portland. One

25 date that I didn't have in my notes that I'm

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1 working from was a deadline for designation of

2 issues for the proceeding, and we will -- it would

3 be my intent to plug in a date to do so. So with

4 those dates out there, I guess I'd look for a

5 reaction from the parties.

6 MR. FRANK: Just a question of

7 clarification, Mr. Superintendent. The public

8 comment period during the week of January 24th,

9 would you envision that also as being part of the

10 record to the extent that public commenters wanted

11 to make their comments under oath?

12 SUPERINTENDENT IUPPA: Absolutely. I mean,

13 it will be part of the formal proceeding and the

14 public hearing. I would also expect that the

15 applicants would be making a presentation at the

16 beginning of those public hearings to explain what

17 is being proposed here so that members in

18 attendance of the public will have a better

19 understanding of what is being proposed. I will

20 also point out that we will probably in some of

21 these locations actually have two sessions, one in

22 the afternoon and then one in the evening, to try

23 and accommodate schedules of the public who may

24 want to comment on that; and certainly if an

25 individual wants to make or a group wants to make

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1 a comment on the record and provide sworn

2 testimony, that they will consent to being

3 cross-examined by any of the parties or the

4 Superintendent, the hearing officer.

5 MS. PISTNER: I would just comment that

6 it's our intent to make our filing as required of

7 Superior Court by November 15th, to be followed as

8 quickly as we can get one with a conference with a

9 Superior Court Justice, that the schedule that's

10 established for consideration of that proceeding,

11 which notwithstanding the road map, is a little

12 vague in the law will obviously impact what you're

13 doing here, but we might have the schedule at

14 least before the intervention deadline so that we

15 could apprise you or would intend to apprise you

16 of what the Superior Court intended to do. I

17 think we're hopeful -- we've been working in a

18 cooperative fashion with everyone who has been

19 interested in providing input on that plan, Blue

20 Cross, with Consumers for Affordable Health Care

21 and others who have given us comment, that it's

22 our hope that that proceeding goes quicker rather

23 than slower. Hope springing eternal,

24 notwithstanding there could be some other factors

25 as you point out. There are always things we

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1 don't know about that cause delays, but I would be

2 hopeful that we'd have a decision fairly early and

3 that might help in finalizing the schedule. So I

4 guess I would just ask that we have opportunities

5 to reconsider the schedule in light of that, and

6 the one thing -- keeping in mind that we would be

7 working toward your discovery request deadline for

8 initial discovery requests at the same time.

9 We've found from our public hearings that the

10 public really needs something to respond to. In

11 our case, it's easier because we don't have ex

12 parte restrictions, where we will put out some

13 information, some simple Q&A type stuff so that

14 people can see what the issues are we're really

15 considering here. With this transaction, I think

16 that's going to be very hard because not too many

17 people are going to read the filing even, much

18 less the discovery and the related materials. So

19 I would think the public hearing opportunity

20 following the evidentiary presentation might be

21 more meaningful to people because they'll be

22 informed by the process that -- all the details.

23 So I guess those are just my thoughts at this

24 point. I'm not whetted to any particular

25 approach.

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1 SUPERINTENDENT IUPPA: Thank you. Any

2 reaction to that from the applicants?

3 MR. ZIMPRITCH: Speaking for Anthem, I

4 would say, Mr. Superintendent, that Anthem is

5 supportive of the schedule that has tentatively

6 been outlined by the Superintendent. There are

7 significant business reasons which we have

8 outlined in some of our filings why we think this

9 is very advantageous to the company, the

10 applicants and actually to the acquired insureds

11 that this be moved forward as expeditiously as

12 possible and, of course, consistent with

13 appropriate deliberation. One of the things that

14 is different in this proceeding from some other

15 Form A proceedings, for example, is that there is

16 not just private interests being affected, and, of

17 course, there are lost revenues to the state and

18 to the foundation that are lost and not recovered

19 if there are some necessary delays, but there are

20 also significant business reasons that we've

21 outlined, and we are very anxious to keeping this

22 kind of schedule and moving forward. So we're

23 supportive of it. We recognize that it may have

24 to move because of Superior Court issues or

25 otherwise, but our hope is it would not be

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1 something that drifted.

2 SUPERINTENDENT IUPPA: Well, I guess the --

3 MR. ZIMPRITCH: And I know you'd be

4 disappointed if I didn't say something like that

5 based on prior transactions.

6 SUPERINTENDENT IUPPA: But I will also say

7 I recognize that, but I'm not going to sacrifice

8 the integrity in the proceeding for the sake of

9 the schedule.

10 MR. ZIMPRITCH: Nor do the applicants

11 request that.

12 SUPERINTENDENT IUPPA: And I recognize that

13 there are business decisions that are being made

14 and have been made. There have been business

15 decisions which have brought us to this point that

16 the Superintendent has had absolutely no affect

17 over, and I just want to make that clear as well,

18 and I think it's safe to say we have a number of

19 different interests in this transaction, both from

20 the business side, if you will, the Attorney

21 General representing the public and the public

22 interest in it, as well as the other potential

23 intervenors in the transaction. Again, I would be

24 thrilled to see the Superior Court act in an

25 expedited basis. In my informal conversations

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1 with members of the bar, being a non-attorney I

2 found out my perception of expedited and what the

3 Court's may be are two different things; but the

4 things that I can control, I intend to; the things

5 I can't, I'll just have to live with.

6 What I'd like to do at this point is take

7 maybe a ten-minute break to allow people to make

8 phone calls or whatever, and we'll reconvene in

9 about ten or fifteen minutes.

10 (OFF RECORD)

11

12 SUPERINTENDENT IUPPA: We are back on the

13 record after a short break. I'll use the short

14 captioning. This is a continuation of a

15 pre-hearing conference on the consolidated Docket

16 Number INS 99-14. Immediately prior to the break,

17 we had run through a number of procedural issues

18 that I wanted to put forth on the table and

19 received what I thought were some good comments

20 and suggestions, and we will take those into

21 consideration with respect to moving this

22 transaction along administratively. One of the

23 dates that I did mention was the deadline for

24 intervention of December 1st, and what that does

25 is it is my understanding and belief that in order

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1 to establish that deadline date for intervention,

2 that it needs to be included in the notice of

3 hearing. I'm not sure that everybody subscribes

4 to that theory, but that's certainly my theory at

5 this point, and I do know there has been some

6 informal discussion about that, and so what I'd

7 like to do is essentially tee it up now to see if

8 there are any comments from the parties with

9 respect to the need for including the intervention

10 date within the order. I will note that that has

11 certainly been the practice of the Bureau for as

12 long as I'm aware of, and I suspect even before

13 that, but I do want to at least allow the parties

14 to comment on that at this point. The reason I

15 say that, again, is a December 1st deadline of

16 intervention would precipitate a notice going out

17 probably within the next week of the public

18 hearing. So with that, I will open it up to the

19 parties if they have comments or reactions to

20 that.

21 MR. FRANK: Mr. Superintendent, your

22 observation raises the question of the kinds of

23 notice to be given in this proceeding and when.

24 Tracking back to your last comment, are you saying

25 that there will be a notice of hearing with an

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1 indication of a deadline for intervention that

2 needs to go out within the week? Did I understand

3 you correctly to say that?

4 SUPERINTENDENT IUPPA: Yes.

5 MR. FRANK: Okay, and do you envision the

6 Bureau's ordering Blue Cross essentially to

7 perform the notice that you direct?

8 SUPERINTENDENT IUPPA: Essentially, yes.

9 MR. FRANK: I just wanted to review with

10 you what's involved from a mechanical perspective

11 as far as getting out the notice is concerned. To

12 publish the kinds of notice that Blue Cross has in

13 the past, a quarter-page ad in six dailies and

14 also a Sunday edition, so, in effect, it appears

15 twice in each newspaper, it would take about five

16 days to place the ad and probably another five

17 days in order to get the ad to appear. So we'd be

18 talking ten business days, I think, from the time

19 that Blue Cross had its notice in hand until the

20 time it started appearing in the newspaper, and

21 one of the things that we're mindful of here,

22 obviously, is cost because in the end we're

23 talking about monies that otherwise would go to

24 the foundation. Based upon our experience, it's

25 about $17,500 to do that kind of notice. The

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1 question that arises is whether or not that --

2 whether or not it will be sufficient to do

3 published notice of the hearing that one time in

4 that format or whether or not additional notices

5 and perhaps even mailed notices might be required

6 down the road, and I wanted to have a dialogue

7 with the Bureau about that. Again, by way of

8 background, we want to comply with the Statute

9 here, 2301, as well as the Administrative

10 Procedure Act, and it seems to me that needs to be

11 the guiding light here as to the kind of notice

12 that needs to be given, and 2301 says there will

13 be notice to the public as well as notice to

14 members, policyholders, boards of directors as

15 well. It does not say mailed notice, and we

16 noticed that elsewhere in the statute when it came

17 time to -- the earlier Superior Court proceeding

18 for the declaration of ownership interest in Blue

19 Cross, the statute did specify mailed notice;

20 2301, however, does not specify mailed notice.

21 The reason that's of some moment is that mailing

22 of notice to policyholders, members, enrollees and

23 the like, would be mailing of notice to about

24 220,000 people, and that would cost if it were

25 just a one-page notice $90,000; and the

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1 turn-around time for that would be roughly a month

2 in order to do all of the publishing, the

3 addressing of the envelopes in really four stages,

4 and mailing out of all the notice. So I'm just

5 laying out the parameters there and in some ways

6 just thinking out loud about this. It seems to me

7 that the notice that you are talking about,

8 publishing sooner rather than later is

9 appropriately a public -- a published newspaper

10 notice of the hearing, and that in our minds

11 should be sufficient to at least set the stage for

12 an intervention deadline, but I think that we will

13 have to separately address the question of the

14 kind of notice that may be required for the

15 purposes of complying with 2301. If we were all

16 satisfied that the statute only required published

17 notice and not individual mailed notice, then we

18 could go with that single notice to be published

19 in the next couple of weeks as the notice of the

20 proceeding for all time, but if we were not

21 satisfied that that was required and if we came to

22 the conclusion that there needed to be mailed

23 notice, then we'd be looking at another notice

24 somewhere further down the line of the hearing.

25 So I don't have a final conclusion to draw for the

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1 Bureau at this point other than to say that we

2 want to make sure whatever we do complies with the

3 statute so there's no question but that we have

4 the appropriate notice here.

5 SUPERINTENDENT IUPPA: Thank you. Any

6 reaction from the Attorney General's Office?

7 MS. PISTNER: Can I ask, will the hearing

8 notice include the issues as designated pursuant

9 to that part of the statute?

10 MS. CHAMBERLAIN: The hearing notice would

11 include the statutory standards for each of the

12 various transactions but would not itemize all of

13 the issues that ultimately would be designated.

14 MS. PISTNER: So there may be then a subset

15 of issues to those statutory issues that go with

16 the notice that we'll be dealing with pursuant to

17 the designation the Superintendent is talking

18 about?

19 MS. CHAMBERLAIN: Correct. The parties

20 would -- in designating issues would have to use

21 the statutory notice and the standards set forth

22 in that notice as a guideline for designating

23 their issues and the Superintendent would exercise

24 his discretion in determining whether or not

25 anyone has designated an issue which is outside

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1 the parameters of those statutory provisions.

2 MR. FRANK: To draw a sharper point on it,

3 only published notice could be given within a time

4 frame that envisioned a -- that the intervention

5 deadline would be December 1st.

6 SUPERINTENDENT IUPPA: A question for you,

7 Bob. On the published ads that you made reference

8 to, the quarter-page ads, are you talking about

9 legal ads or actually display --

10 MR. FRANK: Display ads.

11 SUPERINTENDENT IUPPA: And do you

12 contemplate if -- again, it's a big if at this

13 point -- you're directed to provide notice to all

14 enrollees, members and the like, I just want to be

15 sure I'm correct, you thought you would need about

16 30 days to effect that?

17 MR. FRANK: Yes.

18 SUPERINTENDENT IUPPA: Would you

19 contemplate that being a separate mailing other

20 than some of the routine mailings, the billing

21 notices and things like that, for the company?

22 MR. FRANK: Yes.

23 SUPERINTENDENT IUPPA: Again, in keeping

24 with the discretion I've got, I'm going to pose a

25 question or two to some of the others here. Joe,

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1 you're one of them I'm going to pose a question

2 to. I may be wrong, but I believe that the

3 representation that was made in your motion for

4 intervention that you collectively represent

5 several hundred thousand or at least over two

6 hundred thousand people here in the state, and I

7 apologize if I'm wrong. One of my biggest

8 concerns is that people have an opportunity

9 somewhere down the line to say that, gee, we

10 didn't know about this hearing and, I mean, I

11 think at this point I suspect there are some

12 people out there who don't know this is taking

13 place, but just to sort of get your reaction to

14 what you've heard here so far this morning on this

15 topic in terms of getting the word out.

16 MR. DITRE: I appreciate you asking me. In

17 essence, I mean, with regards to our membership,

18 you know, the organization is basically

19 collectively represented but not all of them are

20 Blue Cross/Blue Shield subscribers, so from our

21 point of view, you'd want to be directing it to

22 the right people if we were -- we only have a

23 segment of the population that are Blue Cross/Blue

24 Shield subscribers. I think the important thing

25 to remember here is that there's the aspect of

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1 this proceeding that involves the voluntary

2 dissolution of a corporation, and in liquidating

3 that corporation, the board has taken -- is

4 basically taking a step to inform all of its

5 members or needs to take a step to inform all of

6 its members of that decision. So it's not simply

7 just, you know, that there is an insurance

8 proceeding that's going forward that may affect

9 subscribers. I mean, the company is basically

10 ceasing to exist and a new company is taking its

11 place. I don't think there could be anything more

12 important, regardless of the cost, that is

13 important to the subscribers of Blue Cross/Blue

14 Shield than that they know, in fact, that this

15 transaction is taking place. I'd like to have

16 further discussion with counsel for Blue

17 Cross/Blue Shield. I know that there are ways of

18 reducing those costs, but, in essence, our

19 position is that this is the most important

20 proceeding that will ever take place for Blue

21 Cross/Blue Shield policyholders, and to have

22 notice of it is absolutely imperative.

23 SUPERINTENDENT IUPPA: I guess maybe I'll

24 direct this question to the Attorney General's

25 Office who's charged with the charitable aspects

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1 of this transaction, and I believe representing

2 the public in this proceeding, at least at this

3 point as well. I mean, what sort of notice have

4 you used with respect to the public meetings the

5 Attorney General has had on this issue, and I

6 realize it's not a formal administrative

7 proceeding, but I'd be interested to hear how the

8 word has been --

9 MS. PISTNER: I think -- I'm sorry.

10 SUPERINTENDENT IUPPA: I was just going to

11 say, how has the word been made out there and the

12 reaction you've gotten?

13 MS. PISTNER: That we've notified people

14 that we think would get -- be effective in getting

15 the schedule out to folks who are interested in

16 coming to the hearing, trying to get some press

17 coverage as well, but the big deal is the court

18 filing, and so we're operating under a whole

19 different set of notice rules.

20 SUPERINTENDENT IUPPA: I understand.

21 MS. PISTNER: We're mindful of the cost

22 element of this. I think at some point there has

23 to be a direct subscriber/enrollee type notice

24 given because of the conversion aspect of this

25 proceeding, and so I would try to find a way for

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1 that to be a single notice, the direct mail one.

2 I would agree that the intervention deadline

3 notice doesn't have to be directly mailed. I'm

4 not sure if the notice of this proceeding today

5 was actually published.

6 MS. CHAMBERLAIN: Yes, it was.

7 MS. PISTNER: So if you use the same

8 publication method for the intervention deadline,

9 I would think that would be sufficient, but the

10 final -- the hearing schedule and the hearing

11 notice when you're comfortable that the dates are

12 fixed, I think is probably the point at which the

13 direct notice to enrollees is important.

14 SUPERINTENDENT IUPPA: Anything further?

15 MR. FRANK: No, thank you.

16 SUPERINTENDENT IUPPA: Well, I guess I'm

17 directing this to you, Joe. I am mindful of the

18 cost, and I'm not going to -- it's certainly not

19 going to be my intent to cage bar the door and --

20 or whatever it costs. I mean, there's also a bit

21 of a two-way street here. I mean, we have tried

22 up to this point not only doing the notices that

23 we had to have published, for instance, for the

24 pre-hearing, but to do press releases, trying to

25 make as much available on our home page, and I

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1 recognize that it's a pretty small subset of

2 people who do have access at home to that, but

3 there's access, I believe, in every public library

4 and darn near every school here in the state now

5 with access to it. I think that the group such as

6 yours, Maine People's Alliance and others, are

7 certainly doing your fine part to make people

8 aware of the fact that this proceeding is going

9 on. So I'm going to -- I guess I'm not going to

10 make a ruling right this second, but I do want to

11 encourage people to be creative in terms of

12 utilizing the media that's available to us in

13 terms of trying to keep the word out. I am

14 mindful, as I said, of the cost. Certainly I

15 would love to be able to have the scheduling cast

16 in as firm a stone as possible as we can, and we

17 may be able to do something there. I mean, it's

18 -- it is an important issue. I certainly see it

19 as one of the more significant transactions that

20 has come before the Bureau in recent years, that

21 impacts not only existing policyholders and

22 members, but there's a public interest as Public

23 Law 344 is spelled out with respect to charitable

24 obligations and the public interest in this

25 proceeding and its potential conversion. So I

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1 want to be sure that anyone who could possibly be

2 interested in this transaction will have had an

3 opportunity either through print media, through

4 formal notice or video-type media that they'll

5 know about it. Mr. Smith?

6 MR. SMITH: Gordon Smith on behalf of the

7 Maine Medical Association. I'm reluctant to say

8 this because I think it's so obvious, but with

9 respect to the company's notification to

10 subscribers, I don't see why they don't take

11 advantage of every opportunity to put information

12 in the bills that they send out. They certainly

13 are capable of sending out routinely periodic

14 bills. We are subscribers, I am personally and

15 through the association I run. In addition they

16 have explanation of benefit forms that I receive

17 at home nearly every week for one thing or

18 another, and my telephone company certainly and

19 the electrical companies seem to take advantage of

20 this, so I don't see -- while I wouldn't consider

21 that to be necessarily the formal one-time notice,

22 I don't see why they don't take advantage of those

23 opportunities because then it's just the

24 incremental cost of printing a piece of paper.

25 Thank you.

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1 MR. ROBLES: If I might be permitted, Mr.

2 Superintendent.

3 SUPERINTENDENT IUPPA: Identify yourself.

4 MR. ROBLES: Martin Robles. I think the

5 court reporter had that already. Those are good

6 suggestions, and I think we've had those

7 discussions in the past. I think the concern we

8 have is that our billing takes so many different

9 forms and in some ways it's consolidate, for

10 example, if it went to a group, it's to the group

11 administrator and the subscriber doesn't get that

12 mailing, that it would be very much hit and miss

13 to work that way. The other issue, of course, is

14 what we're aiming for is satisfying the formal

15 statutory requirement, however that's done, that

16 will have to have some very specific information;

17 and, of course, that information is not available

18 to us as of yet. When it becomes available, we'll

19 then be under a specific time constraint, and we

20 want to make sure that the information that has to

21 be transmitted is received when it needs to be.

22 So that narrows the window very much, and when we

23 get that information available, I think everyone

24 will have a sense of the timing that has to occur,

25 and we can't -- we will then have to be assured --

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1 assure ourselves that it's accomplished in the way

2 it needs to be within the time constraints, and I

3 don't think waiting until we have a mailing that's

4 going to reach a specific segment of our

5 subscribers is going to work with that. That

6 probably overcomplicates it and increases the

7 uncertainty substantially. So I think we would

8 continue to advocate for a defined notice process,

9 however that happens to be developed here.

10 SUPERINTENDENT IUPPA: Setting aside the

11 legal requirements and sort of following up on Mr.

12 Smith's comment, has the company taken any steps

13 in the intervening time since the transaction was

14 filed to even announce or communicate to its

15 members? Sharon, would you identify yourself?

16 MS. ROBERTS: Sharon Roberts from Blue

17 Cross. Yes, Mr. Superintendent, we are using

18 other vehicles that we communicate with our

19 members such as newsletters, and we'll be -- we

20 have put information in there regarding, for

21 instance, the charitable trust hearings and have

22 that available to us; but, again, those are

23 generated only periodically and to different

24 subsets of the population at different times. So

25 while there are additional vehicles for

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1 information to be transmitted, would present some

2 -- and, yes, there is a good deal of information

3 on the web site as well about the transaction in

4 general, questions and answers, as well as

5 additional information about the charitable trust

6 hearings, and we would intend to certainly add

7 information around the public hearing regarding

8 the transaction as well.

9 SUPERINTENDENT IUPPA: So it sounds like

10 you've used a newsletter at this point?

11 MR. ROBLES: And the web site as well.

12 SUPERINTENDENT IUPPA: Right.

13 MR. DITRE: Mr. Superintendent, the only

14 thing that I would add is the conventional modes

15 of information to the public have been used for --

16 without an actual direct mail subscriber notice

17 has been used in the foundation portion of the

18 proceeding and the turnout has been quite low.

19 SUPERINTENDENT IUPPA: Well, you know the

20 old saying, you can lead a horse to water.

21 MR. DITRE: If the horse knows about it.

22 SUPERINTENDENT IUPPA: Okay, before I open

23 it up, just another comment on the public hearing

24 portion, when we do the actual public hearings in

25 particular with respect to public comment, that I

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1 do want to be sure that when we do the scheduling

2 and the locations we're taking into account the

3 need to be accessible for those who may be

4 impacted under the ADA and also looking at the

5 possibility of bringing in some deaf

6 interpreters. If we can possibly be made aware

7 ideally ahead of time if some people are going to

8 have special needs and so forth for that, again,

9 in the interest of being as accessible as

10 possible. Some of the other things that we may be

11 considering or looking at, possibly even using the

12 State's IVS system or AST system which might allow

13 for the hearing to take place simultaneously and

14 in several different spots throughout the state

15 and allow us to be somewhat interactive as well.

16 Again, that's something we're taking a look at to

17 try to determine the feasibility and practicality

18 of doing something like that but, again, in an

19 effort to allow as many people to participate as

20 may be interested in this.

21 We've run through my list of items today,

22 and now at this point I would entertain if the

23 parties have any issues that they would like to

24 put before us or -- and at this point we are

25 limiting it to the parties.

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1 MR. FRANK: Nothing further, Mr.

2 Superintendent.

3 MR. ZIMPRITCH: Anthem has nothing further.

4 SUPERINTENDENT IUPPA: Attorney General?

5 MS. PISTNER: Could I just ask a question

6 before I try to answer your question, which is the

7 procedural order that you're intending to issue

8 would cover all the items that we discussed this

9 morning but not, for example, some of the other

10 items that are in the proposal that came in from

11 Anthem and Blue Cross that we have not yet

12 discussed?

13 SUPERINTENDENT IUPPA: Well, the only way I

14 can answer that, I have never read the proposal

15 that came in from Anthem and Blue Cross. I've

16 been working from my proposed procedural order, so

17 the answer is maybe yes, maybe no.

18 MS. PISTNER: There's an issue that's

19 raised in the proposal about cooperative discovery

20 efforts, that if you were going to impose such a

21 requirement, I would just like an opportunity to

22 speak to that; and if you are not going to do that

23 in your order, then I don't need to do that now,

24 and we have nothing further.

25 SUPERINTENDENT IUPPA: Why don't we go

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1 ahead and give you the opportunity to address it

2 now because --

3 MS. PISTNER: Okay. I guess what I would

4 say about that, as I mentioned earlier, we've been

5 working cooperatively with everybody. It would

6 certainly be our intention to continue to do

7 that. It's not in our best interest or in the

8 interest of the beneficiaries we represent to

9 prolong the proceeding. So we will certainly try

10 to minimize any additional discovery requests that

11 we have. In addition to those the Superintendent

12 puts out, we'd look closely at those to see if we

13 need information beyond that. We'll be working

14 with the other intervenors to the extent that time

15 permits, but I do think that as a state entity,

16 we're in a somewhat different situation than other

17 intervenor parties for whom I do not speak, and I

18 would not like to be subject to a requirement that

19 we have to cooperatively engage in forwarding

20 discovery requests because there may be some

21 issues on which we would take a somewhat different

22 position, and I think if you think of it --

23 turning the table and maybe this is a little

24 unfair -- but if you were seeking to intervene in

25 a proceeding as the Superintendent of Insurance

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1 before another agency, it would be burdensome to

2 you, I think, to have to cooperate with all the

3 intervenors or it could be. We hope it won't be.

4 We will do it to the extent we can, but I would

5 like to have the latitude to do it where it's

6 feasible.

7 SUPERINTENDENT IUPPA: Thank you. Any

8 reaction?

9 MR. ZIMPRITCH: Ms. Conners will address

10 that.

11 MS. CONNORS: In our procedural order, we

12 didn't specify who we thought should need any

13 coordination with anyone because no one knew who

14 would be intervening at that point, and without

15 dealing with this in the abstract, perhaps the

16 best way to deal with this is in our responses to

17 the individual intervention motions if we think

18 there is any particular one that coordination

19 would be helpful, but as to the AG, we understand

20 that they have different interests, statutory

21 interests, and we wouldn't expect any formal

22 coordination rules coming as to them.

23 SUPERINTENDENT IUPPA: Mr. Frank?

24 MR. FRANK: I have nothing further.

25 SUPERINTENDENT IUPPA: Thank you. We also

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1 have, I believe, a motion that was filed on behalf

2 of the applicants.

3 MS. CHAMBERLAIN: Relative to the

4 procedural order.

5 MS. CONNERS: I think there's nothing more

6 we need to discuss. We've dealt with each of the

7 issues.

8 SUPERINTENDENT IUPPA: Any other issues

9 that need to be put before me today? With that,

10 we will close this portion of the pre-hearing

11 conference. As noted during the course of the

12 morning, there will be a procedural order that

13 will be issued and begin looking at the motions

14 for intervention, and so I think you can expect

15 that there will be some rulings coming out shortly

16 with respect to the procedural order and soon with

17 respect to the intervention. I'll reserve the

18 likelihood of having another pre-hearing

19 conference. My intuition tells me we'll probably

20 have several between now and the time the ball

21 really starts rolling. I'll keep the parties

22 advised. Anything else, Judy?

23 MS. CHAMBERLAIN: No.

24 SUPERINTENDENT IUPPA: I thank everybody

25 for coming.

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1 MR. DITRE: Mr. Superintendent, just in the

2 interest of those applications for intervention

3 that have been submitted, can you give us a sense

4 of when you anticipate ruling on those motions

5 that you've received to date?

6 SUPERINTENDENT IUPPA: Well --

7 MS. CHAMBERLAIN: Some of the applications

8 were filed with the Superintendent on October 27th

9 and some were filed on October 28th, and we did

10 receive one this morning as well. Those filed on

11 the 27th, the parties have until November 3rd to

12 react to; on the 28th, they have until November

13 4th; and for the one we received from the Maine

14 People's Alliance this morning, they would have

15 until November 5th -- I don't have a calendar --

16 assuming that's a business day, and the

17 Superintendent would plan on ruling immediately

18 after that. If the parties have no objection to

19 any of the applications, if they could notify the

20 Superintendent immediately, that would be

21 helpful.

22 SUPERINTENDENT IUPPA: Once again, thank

23 you for taking the time this morning.

24 (Whereupon, the above-named hearing was concluded

25 at 11:30 a.m.)

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1 CERTIFICATE

2

3 I, Joanne P. Alley, a Notary Public in and

4 for the State of Maine, hereby certify that the

5 foregoing is a true and accurate record as taken

6 by me by means of computer-aided machine

7 shorthand.

8

9 I further certify that I am a disinterested

10 person in the event or outcome of the

11 aforementioned cause of action.

12

13 IN WITNESS WHEREOF, I have hereunto set my

14 hand this 30th day of November, 1999.

15

16 ____________________________

17 Joanne P. Alley

18 Court Reporter/Notary Public

19

20 My commission expires: July 18, 2001

21

22

23

24

25

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