Dear
Editor,
It
would be hard to top the colossal gall exhibited recently by CareFirst's Board
of Directors, which recently announced that they intend to vigorously fight the
civil violations of Maryland's insurance laws charged against the company and
its top leaders.
In
issuing the charges, Maryland Insurance Commissioner Alfred W. Redmer Jr.
pulled no punches.
His
50-page report detailing the charges pointed to the deception, mismanagement
and flagrant attempts to profit from the sale of CareFirst to WellPoint Health
Networks Inc. of California.
To the
charge that CareFirst violated its nonprofit mission by dumping its Medicare
and Medicaid HMOs as well as its subsidiary FreeState and Delmarva HMOs,
CareFirst Board Chairman Daniel J. Altobello had an interesting response.
He
declared, "To me, CareFirst is not really nonprofit."
I
cannot imagine how Mr. Altobello reached that conclusion. It should be
emphasized that these decisions, typical of for-profit corporate behavior, left
thousands of Maryland's poor, elderly and high-risk people without health
coverage and many without a chance of getting coverage at an affordable cost.
Among
the other violations, CareFirst is accused of failing to consider the risks of
a merger to the company's health, willful misrepresentation of the merits of
the two firms bidding on the company and failure to secure an independent
evaluation of the value of the company before agreeing to WellPoint's purchase
price. In addition, CareFirst failed to obtain independent community impact and
fairness reports on the terms of the WellPoint deal.
Former
Insurance Commissioner Steven Larsen's report rejecting the CareFirst/WellPoint
deal made it very clear that the $120 million executive-payout package, which
violated Maryland law, was part of the deal ... that without it, there would be
no deal.
To
these charges, board members have claimed they feel like they are being
chastised for making a company that was insolvent solvent.
Board
members should stop spinning tales about how they and CEO William Jews saved
CareFirst from financial demise. This is simply not true.
CareFirst
was never insolvent, nor on the brink of bankruptcy, nor at a point of negative
net worth, unable to pay its bills.
In
fact, in 1993, a state-ordered independent study by Salomon Brothers gave
CareFirst a clean bill of the health and showed there was more than sufficient
capital to provide a large surplus for meeting claims.
Indeed,
over the past decade, the CEO and the board did make CareFirst a more profitable
company. But it did not take business or financial wizardry to make CareFirst a
more profitable company. All it took was obliterating every insurance program
that did not produce a profit. And the CEO and the board did that to the very
best of their ability.
Let's
face it; CareFirst has fought reform at every turn. Although such companies do
exist, neither the CEO nor the board believes that it is possible to have a
solvent and healthy nonprofit carrier with revenues that exceed expenses. I
believe that Board Chairman Altobello said it all when he declared that, to
him, the company is "not really nonprofit."
Those
who run the CareFirst operation still don't get it. They refuse to comprehend
the company's mission. And they still appear offended at the administrative,
legislative and public outrage their conduct has evoked.
Delegate
Eric Bromwell
8th
District