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> Document 340 : INS 99-14 : Hearing Decision
February 18, 2000
Judith Shaw Chamberlain, Esq. Assistant Attorney General State of Maine Department of the Attorney General 6 State House Station Augusta, ME 04333-0006 Re: Anthem/Blue Cross Blue Shield of Maine Docket No. INS-99-14: Articles, Bylaws, Assumed Names, and Name Reservations Dear Judy: This is in response to your letter of January 3, 2000, regarding (1) articles and bylaws for Anthem Health Plans of Maine, Inc. ("AHPM"); (2) the use of an assumed name; and (3) name reservations for AHPM. I believe that in each case, Anthem’s actions or proposed actions are in compliance with the law. Articles and Bylaws Proposed articles of incorporation (certificate of organization) and bylaws for AHPM were in fact included as Appendices B and C, respectively, to AHPM’s Application for Certificate of Authority, and are located at tabs 5B and 5C of the September 15, 1999, Initial Consolidated Filing. I believe that the proposed articles and bylaws provide the Bureau with the materials it needs for a thorough review. As your letter correctly states, the new entity has not yet been incorporated, but I do not believe incorporation of AHPM is legally necessary at this point in the proceeding. Anthem is aware that, pursuant to 24-A M.R.S.A. § 406, it must be incorporated to qualify for and hold authority to transact insurance in Maine, but there is no necessity to incorporate until the conclusion of the proceeding is more imminent. If there is a legal reason AHPM must incorporate immediately, please let me know.
Use of an Assumed Name Anthem intends to use the corporate name "Anthem Health Plans of Maine, Inc." and the assumed name "Anthem Blue Cross and Blue Shield" because under the rules of the Blue Cross and Blue Shield Association ("BCBSA"), a subsidiary (such as AHPM) of a Blue Cross licensee cannot use the words "Blue Cross" or "Blue Shield" in its corporate name, although it can use those words in an assumed name. Thus, Section 2.19-1.20 of the BCBSA Brand Book states: Use of the Brands in Legal and Trade Names 1.19 Licensed Affiliates may not use the Brands as part of a Legal name. 1.20 With BCBSA's prior written approval, Licensees may use the Brands as part of a Trade Name. BCBSA will not approve any Trade Name if its use would be likely to mislead or confuse the public. Likewise, Licensees may not make use of an approved Trade Name in a way that would be likely to mislead or confuse the public. The BCBSA rules effectively bar a situation in which two affiliate health insurers have corporate names that conflict or are deceptively similar. Under Section 408(5) of the Insurance Code, as well as existing Maine Bureau of Insurance precedent, the Superintendent has ample authority to authorize the use by AHPM of the proposed corporate and assumed names. Preventing a subsidiary of a BCBSA licensee from using an assumed name containing the words "Blue Cross and Blue Shield" (thereby forcing that subsidiary to use a corporate name with the words "Blue Cross and Blue Shield") would create not only a conflict with the BCBSA Rule itself, but also a potential conflict of corporate names among BCBSA licensees and their subsidiaries. To prevent such conflict, the Superintendent has the express authority under Section 408(5) to permit an insurer to use an assumed name. Maine Bureau of Insurance precedent with respect to assumed names also supports Anthem's request to use an assumed name for AHPM. Thus, under the authority granted by Section 408(5), the Bureau of Insurance has allowed, and continues to allow, insurers to use assumed names. For example, Patriot Mutual Insurance Company ("Patriot Mutual"), a for-profit insurer, currently uses the assumed name "Blue Alliance Mutual Insurance Company." When Patriot Mutual amended its charter to change its name from "Blue Alliance Mutual Insurance Company" to its current corporate name in November 1996, the Superintendent allowed Patriot Mutual to continue to use its former name as an assumed name pursuant to Section 408(5) of the Insurance Code. Copies of the charter amendment and the statement of intention to do business under an assumed name, both filed on November 14, 1996, are attached. As the attached copies demonstrate, these were expressly (i) approved by the Bureau of Insurance (explicitly citing Section 408(5)), and (ii) certified by the Department of the Attorney General to "compl[y] with the law." There is no reason to distinguish between Patriot Mutual’s use of an assumed name and AHPM’s use of an assumed name. One of the obvious purposes of 24-A M.R.S.A. § 408 is to prevent deception of the public. Patriot Mutual was apparently allowed to use an assumed name in order to prevent consumer confusion or deception. In the case of AHPM, it makes sense to allow it to use its proposed assumed name, containing the words "Blue Cross and Blue Shield," because AHPM will be the successor of the entity that has held that name in Maine for decades. Where consumers have become accustomed to an entity’s use of a particular name over a period of years, it would be deceptive not to allow a successor to operate under an assumed name that is similar to the name of the predecessor. The use of an entirely different name would be likely to create consumer confusion about, among other things, whether insurance contracts were still valid and whether the same provider network remained in place. Furthermore, the purchase of the assets of Blue Cross and Blue Shield of Maine ("BCBSME") is a unique transaction in Maine, for BCBSME is not an "insurer," but a Title 24 "nonprofit hospital and medical service organization" that can operate using an assumed name without running afoul of 24-A M.R.S.A. § 408(6) (and, incidentally, consistent with the BCBSA rule, the existence of which Title 24 appears to acknowledge). BCBSME’s true corporate name is Associated Hospital Service of Maine, but it has long operated under the name "Blue Cross Blue Shield of Maine." The statutory structure that, in part, governs this transaction, 24 M.R.S.A. § 2301(9-D) and 5 M.R.S.A 194-A(5), contemplates the conversion of BCBSME to a for-profit stock insurer. In a straight conversion of BCBSME, it would be incongruous to allow BCBSME to use an assumed name before it converts, but not after conversion. Yet a literal application of Section 408(6) would appear to require such a result, for the converted insurer would be an "insurer" subject to Title 24-A. Allowing BCBSME to convert, but not use its assumed name, would deprive BCBSME of the ability to use in the competitive marketplace the name through which it has developed substantial goodwill. It is highly unlikely that the Legislature, in providing a mechanism for the conversion of BCBSME, intended to deprive BCBSME of the use of the assumed name that Title 24 has allowed it to use since its inception in compliance with BCBSA rules. Likewise, as part of this transaction, Anthem is purchasing the valuable goodwill associated with the Blue Cross and Blue Shield name in Maine. Treating the purchaser/successor differently with respect to the historical treatment BCBSME has received for its assumed name would deprive AHPM of the full benefit of the valuable goodwill it is purchasing from a unique entity that has operated under an assumed name for decades and would compromise AHPM’s competitiveness in Maine. The Bureau and Anthem have previously accommodated the uniqueness of this transaction by adjusting the provisions for a Certificate of Authority, 24-A M.R.S.A. §§ 401-419 and Bureau Rule Chapter 230, which do not by their terms apply to AHPM. Even if using an assumed name were not otherwise expressly permitted by Section 408(5), which it clearly is, allowing AHPM to do so would merely be an additional recognition of the unique circumstances of this transaction, to which the statutory scheme in Title 24-A often applies only with reasonable interpretations that make sense for this unique transaction. In sum, the Bureau allows the use of an assumed name in appropriate circumstances, which, based on both the authority granted in Section 408(5) and past practice, are present here. Furthermore, allowing AHPM to use an assumed name would best serve the needs of consumers and Anthem because it would (1) acknowledge the unique historical treatment of BCBSME, (2) in light of that history, recognize the unique needs and circumstances of this transaction, (3) meet the expectations of Maine consumers and prevent confusion and deception, (4) protect AHPM’s future marketplace competitiveness, and (5) allow Anthem, a Blue Cross and Blue Shield Association member, to use a name containing the words "Blue Cross and Blue Shield" in compliance with BCBSA rules. Name Reservations Thank you for the reminder regarding name reservations. Anthem has reserved the names "Anthem Health Plans of Maine, Inc." (originally reserved on October 6, 1999, and renewed on February 2, 2000) and "Anthem Blue Cross and Blue Shield" (reserved on December 29, 1999) with the Secretary of State. I have enclosed copies of those filings. The Secretary of State notified us that prior approval of the Bureau of Insurance for a name reservation is necessary only if the name includes the words "insurance company." Hence, the Secretary of State refused to allow Anthem to reserve the name "Anthem Life Insurance Company of Indiana" without prior action by the Bureau of Insurance. If an additional reservation is necessary with the Bureau of Insurance for "Anthem Health Plans of Maine, Inc." or "Anthem Blue Cross and Blue Shield," please let me know. I hope this gives you the information you are seeking. Please let me know if I can be of further assistance.
Very truly yours,
James B. Zimpritch Enclosures cc: Lyndy Morgan Service List CERTIFICATE OF SERVICE The undersigned hereby certifies that on February 15, 2000 a copy of a February 15, 2000 letter and attachments addressed to Judith Chamberlain were served by United States mail, first class postage prepaid, on each of the persons listed below. Robert S. Frank, Esq. Harvey & Frank Two City Center P.O. Box 126 Portland, Maine 04112 e-mail: frank@harveyfrank.com (Blue Cross/Blue Shield of Maine)
Judith Chamberlain, Esq. State of Maine Department of the Attorney General 6 State House Station Augusta, Maine 04333-0006 e-mail: judy.chamberlain@state.me.us (Bureau of Insurance)
William H. Laubenstein, Esq. State of Maine Department of the Attorney General 6 State House Station Augusta, Maine 04333-0006 e-mail: bill.laubenstein@state.me.us (Office of the Attorney General)
Gregory A. Brodek, Esq. Duane, Morris & Heckscher, LLP 15 Columbia Street, 4th Floor Bangor, Maine 04401-6355 e-mail: gabrodek@duanemorris.com (Maine Health Alliance)
Joseph P. Ditre, Esq. Consumer Health Law Program One Weston Court, Level One P.O. Box 2490 Augusta, Maine 04338-2490 e-mail: jditre@mainecahc.org (Consumers for Affordable Health Care Foundation/Coalition)
Michele M. Garvin, Esq. Ropes & Gray One International Place Boston, Massachusetts 02110-2624 e-mail: Mgarvin@Ropesgray.com (Central Maine Healthcare Corporation; Central Maine Partners Health Plan)
Robert I. Goldman Maine Council of Senior Citizens 27 Bowery Beach Road Cape Elizabeth, Maine 04107 e-mail: Rgoldma1@maine.rr.com (Maine Council of Senior Citizens)
Bonnie Post Executive Director of the Maine Ambulatory Care Coalition P.O. Box 390 Manchester, Maine 04351 e-mail: bdpmacc@mint.net (Sacopee Valley Health Center, Regional Medical Center at Lubec, Eastport Health Care, Inc., and the Maine Ambulatory Care Coalition)
John Dieffenbacher-Krall Executive Director Maine People’s Alliance 192 State Street Portland, Maine 04101 e-mail: MPA@gwi.net (Maine People’s Alliance)
Gordon H. Smith, Esq. Maine Medical Association 30 Association Drive P.O. Box 190 Manchester, Maine 04351 e-mail: gsmith@ctel.net (Thomas D. Hayward, M.D., Maroulla S. Gleaton, M.D., And the Maine Medical Association)
Donald E. Quigley, Esq. General Counsel 465 Congress Street, Suite 600 Portland, Maine 04101-3537 e-mail: quigld@mail.mmc.org (Maine Medical Center)
Sandra L. Parker, Esq. Attorney for MHA, Inc. 150 Capitol Street Augusta, Maine 04330 e-mail: sparker@themha.org (MHA, Inc.)
Kellie P. Miller, M.S. Executive Director Maine Osteopathic Association 693 Western Avenue Manchester, Maine 04351 e-mail: meosteo@mint.net (Maine Osteopathic Association)
Edward Miller Executive Director American Lung Association of Maine 122 State Street Augusta, Maine 04330 e-mail: emiller@mainelung.org (American Lung Association of Maine)
DATED: February 15, 2000
Last Updated: December 8, 2011 |
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