Update
Court official challenges plan to create foundation from dissolution of Missouri Blues
ST. LOUIS—A court official is challenging a proposal that would create the state’s largest health care foundation from the dissolution of Blue Cross and Blue Shield of Missouri.
Special master Robert G. Russell has asked the Cole County Circuit Court to reopen a proposed settlement negotiated last year between Blue Cross, the Missouri Attorney General’s office, and the Missouri Insurance Department.
Under the proposed settlement, the foundation will not realize the full value of Blue Cross, Mr. Russell said. The proposal calls for the foundation to be funded with 15 million shares of stock of RightChoice Managed Care Inc., a for-profit company that Blue Cross created in 1994, and $175,000 in cash. Blue Cross and Blue Shield of Missouri and its for-profit subsidiary, RightCHOICE Managed Care, are the largest providers of health care benefits in Missouri, serving almost 2 million members. The remaining 20% of the new RightCHOICE stock would continue to be owned by the public shareholders of RightCHOICE. The foundation would liquidate most of its shares of RightCHOICE stock under a divestiture plan over a period of time not to exceed five years. The proceeds would be used for health care purposes.
Restrictions on the shares amounted to the corporate equivalent of "death by a thousand cuts" and would reduce their value, Mr. Russell said. He called for involvement of public interest groups in the reopened negotiations, an invitation quickly accepted by the chair of the Missouri Consumer Health Watch Coalition. The coalition led consumer protests in 1994 when Blue Cross put most of its assets into for-profit RightCHOICE. The conversion later was challenged by state officials and declared illegal by Cole County Circuit Judge Thomas J. Brown III.
The Missouri Attorney General and counsel for RightChoice both decried Mr. Russell’s recommendation and urged a quick approval of the settlement.
"I want the case to be over and health care to continue to be provided to kids who wake up hungry and sick. With this decision, we’re going to send a bunch of lawyers back into another room with corporate types and then we’ll all go back into the courtroom," Mr. Nixon said.
The parties to the case have 30 days to respond to the report, after which Mr. Brown may hold a hearing.
—St. Louis Post-Dispatch, Feb 5, Feb. 11; Blue Cross and Blue Shield release, Feb. 5. See State Health Watch story on conversions, December 1998, p. 3.
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