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December 19, 2005 at 07:00 PM
Golden State regulators have persuaded a suitor for a commercial managed care company to make the kinds of commitments that buyers of nonprofit health plans often make.[@@]
California Insurance John Garamendi says he is approving plans by UnitedHealth Group Inc., Minnetonka, Minn., to acquire PacifiCare Life and Health Insurance Company, a subsidiary of PacifiCare Health Systems Inc., Cypress, Calif.
UnitedHealth announced plans in July to pay $9.2 billion to acquire PacifiCare and its subsidiaries.
The Lutheran Hospital Society founded PacifiCare in 1975, but the current company is the successor to a for-profit corporation formed in 1983.
In 2004, Garamendi persuaded Anthem Inc., Indianapolis, and WellPoint Health Networks Inc., Thousand Oaks, Calif., to make hundreds of millions of dollars in investments and charitable contributions to win his blessing for Anthem’s efforts to acquire WellPoint. Garamendi relied in part on arguments about ambiguities in WellPoint’s tax arrangements resulting from the fact that WellPoint had started out as a nonprofit carrier, Blue Cross of California, and completed its conversion to for-profit status only in 1996.
Regulators often require buyers of nonprofit organizations to make large contributions to charity, on the understanding that the owner of a nonprofit organization is the general public.
