- The Washington Times - Monday, April 1, 2002

BALTIMORE (AP) The state insurance commissioner is threatening to block the pending Carefirst merger if the region's largest health insurer doesn't stop transferring control of its assets to a Washington affiliate.
The moves put the state, which has invested in the nonprofit for 60 years, at risk of losing the $800 million it would realize from the merger with California-based WellPoint Health Networks Inc., Insurance Commissioner Steven B. Larsen says.
"If we don't resolve this issue by April 4, then I will terminate the [merger] proceedings, on the grounds that Maryland's public assets will be at risk," Mr. Larsen said in a letter to Carefirst executives,
Mr. Larsen says that CareFirst BlueCross BlueShield has recently been shifting control of the company's assets to its D.C. affiliate, Blue Choice.
CareFirst executives have told lawmakers that the $1.3 billion dollar deal offered by WellPoint would generate about $800 million for the state. However, Mr. Larsen says if the company's assets are shifted to its D.C. subsidiary, and the District commissioner does not recognize Maryland's controlling position in the deal, the state could risk losing its stake in the deal, Mr. Larsen says.
A CareFirst spokesman said the company is moving members of its Maryland plan, called FreeState, into the District-based BlueChoice plan "for solid business reasons."
"There are no hidden motivations here," Carefirst spokesman Jim Day says.
Mr. Day, however, says CareFirst executives have not ruled out trying to merge its D.C. company with WellPoint if the Maryland merger is not approved.
Mr. Larsen says he has been seeking confirmation from the D.C. insurance commissioner since December that Maryland is the majority stakeholder in the company, which operates in both jurisdictions as well as in Delaware.
Maryland lawmakers, meanwhile, have been critical of the plan and have drafted bills that could threaten the deal.
Critics of the deal say Carefirst is the state's only insurer designed to serve the poor and hard-to-insure. Allowing Carefirst to convert to a for-profit status would leave those residents with nowhere to turn.

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