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> Document 65 : INS 99-14 : Hearing Decision
November 22, 1999 Alessandro A. Iuppa Superintendent of Insurance c/o Lyndy Morgan Docket No. INS-99-14 Maine Bureau of Insurance 34 State House Station Augusta, ME 04333-0034 RE: Application of Associated Hospital Service of Maine and Anthem Health Plan of Maine, Docket No. INS-99-14 Dear Superintendent Iuppa: Please find enclosed for filing the following: 1. Filing Cover Sheet 2. Two paper copies of this filing and two diskettes 3. Memorandum of Attorney General on Application of 24-A M. R. S. A. §§ 4203-4204 4. Certificate of Service Thank you for your assistance in this matter. Sincerely,
WILLIAM H. LAUBENSTEIN, III Assistant Attorney General WHL:sw Enclosures cc: Service List FILING COVER SHEET RE: Anthem-Blue Cross Blue Shield of Maine (BCBSME) Proceeding Docket No. INS-99-14 Submitting Party: Office of the Attorney General Date Submitted: November 22, 1999 Title of Document: Memo of AG re 24-A MRSA §§ 4203-4204 Document Type: Notice Subject Index: Certificate of Authority Number of Hard Copies Submitted: 2 Number of Floppy Disks Submitted: 2 Confidential Information Submitted: No
STATE OF MAINE
Consolidated Docket No. INS-99-14
Associated Hospital Service of Maine, d/b/a Blue Cross and Blue Shield of Maine ("BCBSME"), a nonprofit hospital and medical service organization, has filed an application pursuant to 24 M.R.S.A. § 2301(9-D) and 5 M.R.S.A. § 194-A to convert to a stock company and voluntarily liquidate and dissolve. BCBSME owns and operates a health maintenance organization (Maine Partners and Central Maine Partners) as a line of business as permitted by 24 M.R.S.A. § 2301(3-A)(E). Section 2301(3-A)(E) grants such a health maintenance organization ("HMO") all the rights and privileges of an HMO separately organized under 24-A M.R.S.A. §§ 4202 et seq. and subjects the HMO to the duties and obligations of a separately organized HMO. 24 M.R.S.A. § 2301(3-A)(E). BCBSME’s application to convert and voluntarily liquidate and dissolve is consolidated with the application of Anthem Health Plans of Maine, Inc. ("Anthem BCBSME") to acquire the assets of BCBSME. Anthem BCBSME is a Maine domestic health insurer to be formed by Anthem Insurance Companies, Inc. ("Anthem"), an Indiana mutual insurance company, and to be a wholly owned subsidiary of Anthem East, Inc., which is a wholly owned stock subsidiary of Anthem. The consolidated filing includes the application of Anthem BCBSME for a certificate of authority as a stock domestic health insurer "to conduct accident and health business and to operate a health maintenance organization as a line of business that BCBSME presently operates . . .." Initial Consolidated Filing, Tab 5, page 2. The consolidated filing is pursuant to an asset and purchase agreement between BCBSME and Anthem whereby Anthem agrees to purchase, and BCBSME agrees to sell all the assets of the business of BCBSME and Anthem agrees to assume certain liabilities. Included in the business assets to be transferred are BCBSME’s HMO and all the rights of BCBSME under all contracts, licenses and sublicenses, to the extent such rights are transferable, including all provider contracts held by BCBSME. Initial Consolidated Filing, Tab 6(A). In its application for a certificate of authority, Anthem BCBSME, by way of introduction, states that the policy and contract holders of Maine Partners and Central Maine Partners will continue as policy and contract holders of these HMO’s and that Anthem BCBSME will acquire BCBSME’s existing network of physicians and other providers. Initial Consolidated Filing, Tab 5, pp. 1-2. It is against this background that Anthem BCBSME takes the position that it is not required to comply with the filing requirements of 24-A M.R.S.A. §§ 4203 and 4204 and that the Superintendent has requested a statement of position from parties to this proceeding. The Attorney General has reviewed the statutory scheme applicable to the issue raised by the Superintendent. This review has focused on 24-A M.R.S.A. § 4203(1) which states that a person may not establish, own or operate a health maintenance organization as a line of business without obtaining a certificate of authority from the Superintendent and 24-A M.R.S.A. § 4204(2-A) which requires a determination by the Department of Human Services whether a certificate of need is required to operate an HMO. Anthem BCBSME has not identified any explicit statutory exemption from these requirements. Nevertheless, before taking a position on the question raised by the Superintendent, the Attorney General would need to understand fully Anthem BCBSME’s plans for operating an HMO "as a line of business that BCBSME presently operates" and the basis of Anthem BCBSME’s position that it does not have to comply with the filing requirements of 24-A M.R.S.A. §§ 4203-4204. BCBSME and Anthem BCBSME have presented to the Superintendent a complex transaction involving the dissolution and liquidation of a nonprofit hospital and medical service organization and the transfer of its business to a stock health insurer which is not licensed to conduct insurance business in Maine. The consolidated filing describes only in general terms how Anthem BCBSME plans to operate an HMO line of business. The filing does not explain how Anthem BCBSME will meet or comply with the conditions set forth in Sections 4203 and 4204 regarding the establishment and operation on an HMO line of business. The Attorney General therefore recommends that the Superintendent require Anthem BCBSME to clarify its plans to operate an HMO as a line of business in accordance with Title 24-A and explain the basis of its position that it does not have to file an application for a certificate of authority and certificate of need to operate an HMO. It is only with this information will the Superintendent and the Attorney General be able to thoroughly evaluate the issue of whether Anthem BCBSME is exempt from the certificate of authority and certificate of need filing requirements. Respectfully submitted,
DATED: November 22, 1999 _____________________________
CERTIFICATE OF SERVICE I, William H. Laubenstein, III, Assistant Attorney General, hereby certify that I have this day caused a copy of the Attorney General’s Memorandum on the Application of 24-A M. R. S. A. § 4203-4204 to be served upon persons listed below, by having the referenced document deposited in the United States mail, postage prepaid. James B. Zimpritch, Esq. Pierce Atwood One Monument Square Portland, ME 04101-1110 Robert S. Frank, Esq. Harvey & Frank P.O. Box 126 Portland, ME 04112-0126 Judith Shaw Chamberlain, AAG Department of Attorney General 6 State House Station Augusta, ME 04333-0006 Robert I. Goldman Maine Council of Senior Citizens 27 Bowery Beach Road Cape Elizabeth, ME 04107 John Dieffenbacher-Krall Maine People’s Alliance 192 State Street Portland, ME 04101 Andrew B. MacLean, Esq. Maine Medical Association 30 Association Drive P.O. Box 190 Manchester, ME 04351 Michelle M. Garvin, Esq. Ropes & Gray One International Place Boston, MA 02110 Gregory A. Brodek, Esq. Duane, Morris & Heckscher, LLP 15 Columbia Street Fourth Floor Bangor, ME 04401-6355 Joseph P. Ditre, Esq. Consumer Health Law Program One Weston Court, Level One P.O. Box 2490 Augusta, ME 04338-2490 Bonnie Post Executive Director of the Maine Ambulatory Care Coalition P.O. box 390 Manchester, ME 04351 John C. Kane, Jr. Central Maine Health Care Corporation Ropes & Gray One International Place Boston, MA 02110-2624 Dated at Augusta, Maine this 22d day of November, 1999. _____________________________ WILLIAM H. LAUBENSTEIN, III
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