NU Online News Service, March 6, 2003, 5:23 p.m. EST – Maryland Insurance Commissioner Steven Larsen has denied a request by the CareFirst BlueCross BlueShield unit of CareFirst Inc., Owings Mills, Md., to convert to a for-profit company and submit to an acquisition by WellPoint Health Networks Inc., Thousand Oaks, Calif.
Larsen says the $1.37 billion price that WellPoint has offered is too low.
CareFirst’s board “breached its duty in many ways, in making the initial decision to convert, and it completely failed to recognize the mission of CareFirst as a nonprofit company,” Larsen says in a statement about his decision.
The decision comes after 14 months of negotiations with Maryland insurance regulators.
“The auction appeared designed to, and did, end in a tie on price” between competing bids offered by Trigon Healthcare Inc., Richmond, Va., and WellPoint, Larsen says. “A tie facilitated negotiations on nonprice issues such as bonuses, the role of management in the new organization and board representation. These nonprice issues may have affected price.”
Larsen also argues that CareFirst failed to show that the deal would not hurt Maryland consumers’ access to affordable health care.