The District's insurance commissioner ordered the region's largest health insurance provider to defy the Maryland General Assembly and not comply with a measure that would reorganize CareFirst BlueCross BlueShield.
As Maryland Gov. Robert L. Ehrlich Jr. (R) mulls whether to sign a bill passed in the waning hours of the legislature, Commissioner Lawrence H. Mirel reiterated his concerns that the legislation would compromise the independence and the financial health of the company, which insures 3.2 million subscribers in the District, Maryland, Virginia and Delaware.
"The Maryland law would require the removal of 10 members of the CareFirst board, all of whom were elected in accordance with the bylaws of that organization, and replace them with persons selected by Maryland political leaders," Mirel said in a statement released yesterday. "It would also require the company to be run in a way that contributes to the overall health of Maryland residents."
The bill calls for a nominating commission, appointed by Ehrlich and Maryland legislative leaders, to immediately choose replacements for 10 of the Maryland members of CareFirst's 21-member board of directors. It also gives regulators increased powers to ensure that CareFirst, which has received substantial tax subsidies over the years, adheres to its nonprofit mission.
The legislation was drafted after Maryland Insurance Commissioner Steven Larsen rejected a deal to sell the firm, saying the CareFirst board had shirked its fiduciary responsibility with a deal that undervalued the company and would have enriched a few executives.
Yesterday, Larsen questioned Mirel's order, suggesting that the D.C. insurance commissioner "may wish to consult with a lawyer" because his order "would not override an act of the General Assembly in Maryland."
Larsen, who is working with the national BlueCross BlueShield Association to assuage their concerns about the bill, said Mirel's news releases aren't "adding much to the debate" and that he would welcome the chance to discuss the matter with his D.C. counterpart.
"It's not clear to me why the District of Columbia has assumed the role of protectorate of a management team and board that violated Maryland state law by approving more than $ 100 million in bonuses to executives," Larsen said.
CareFirst was created when Maryland's largest nonprofit insurer merged with BlueCross BlueShield of the National Capital Area, which covers subscribers in the District and some Maryland and Virginia suburbs.
Mirel earlier called on Ehrlich to veto the bill. Yesterday, he said the Maryland legislation could cripple the D.C. insurer's ability to compete against for-profit firms and ultimately force it to shut down, leaving thousands of subscribers without insurance.
Earlier this month, the national BlueCross BlueShield Association said CareFirst could lose its coveted BlueCross BlueShield designation, expressing concern that the Maryland law might violate one of its licensure provisions partly aimed at ensuring that such companies remain free from political influence.
Larsen said that the problems can be worked out long before that happens. If necessary, he has said, the legislature can fix provisions when it reconvenes in January.
Ehrlich is coming under pressure from all sides, but he has not yet decided whether to sign the bill into law, aides said. |
