NU Online News Service, May 23, 2003, 1:30 p.m. EDT – The Blue Cross and Blue Shield Association, Chicago, has responded to Maryland’s efforts to tighten control over CareFirst Inc., Owings Mills, Md., by stripping CareFirst of its right to use the Blue Cross and Blue Shield trademark and names in Delaware, Maryland, northern Virginia and the District of Columbia.

The Blue Cross association, which emphasizes that it owns the rights to the cross and the shield, says it has filed a suit in the U.S. District Court in Chicago to stop “its former licensee” from using the emblems.

Maryland Gov. Robert Ehrlich, a Democrat, signed S.B. 772, the bill at the heart of the dispute, Thursday.

The new law calls for state insurance regulators to replace many of CareFirst’s 21 board members and establish a new oversight body to ensure that CareFirst will carry out its “nonprofit purpose.”

Ehrlich’s “decision to sign the bills illustrates the universal and bipartisan support for reforming Maryland’s Blue Cross and Blue Shield plan,” Maryland Insurance Commissioner Steven Larsen says in a statement about the new reform law.

But the Blue Cross association says the new law has violated CareFirst’s license agreement by shifting control of the company to the state government.

“It was not our desire to terminate CareFirst as a licensee,” Scott Serota, president of the Blue Cross association, says in the association’s statement about the dispute. “We had no choice but to enforce the terms of our license that ensures the independence of Blue Cross and Blue Shield companies and therefore serve our customers best.”

CareFirst customers can still get health insurance from CareFirst, and CareFirst can still provide health insurance even after it leaves the Blue Cross system, the association says.

The association says it will soon give another company the right to use the cross and the shield in the region that CareFirst has been serving.

Maryland regulators recently disrupted efforts by WellPoint Health Networks Inc., Thousand Oaks, Calif., one of the biggest Blue Cross and Blue Shield licensees, to acquire CareFirst. Regulators agreed with consumer groups that the price WellPoint was offering for CareFirst was too low.

More information about S.B. 772 is available at http://mlis.state.md.us/2003rs/billfile/sb0772.htm