Attorney General Liz Murrill Issues Strong Rebuke of Blue Cross’ Plan

In a strongly worded letter to Louisiana Insurance Commissioner Tim Temple, Attorney General Liz Murrill outlined grave concerns about the proposed Blue Cross reorganization plan.

Her letter was issued on Mardi Gras day, Feb. 13, 2024.  Later that day, Blue Cross notified Temple they were withdrawing their proposal.

Here are excerpts from the Attorney General’s letter:

“Pursuant to La. R.S. 236.2 (A), the reorganizing mutual seeking to reorganize ‘shall submit’ certain information in the plan reorganization, including a statement analyzing the benefits and risks of the proposed reorganization, including the rationale for it. La. R.S. 236.2(A)(1). The statement must indicate how the reorganization will protect the immediate and long-term interests, and serve the best interests of policyholders. La. R.S. 236.2((2). The Plan also must include information sufficient to demonstrate that the financial condition of any reorganized insurer will not be diminished upon reorganization. La. R.S. 236.2(A)(4). The reorganization ‘shall’ require ‘distribution of consideration, in a fair and equitable manner, to all eligible members upon extinguishment of their membership interests’ and ‘shall…specify the manner in which the aggregate value of the consideration shall be determined and the method by with the consideration shall be allocated among eligible members.’ See La. R.S. 22:236.2(B)(2)-(4).” 

“Based upon my review of the materials submitted, and in particular the Feb. 8 Senate letter issued after a lengthy joint public hearing, it is unclear whether BCBS-LA has met these requirements.” 

“Modifying the plan of reorganization falls outside the purview of my review. However, I am deeply concerned by the Senate report following the February 5 committee meeting, which noted the financial interests of BCBS board members in the transaction on which they voted and the bias favoring the transaction contained in information being distributed to policy holders. The law requires an honest assessment of the benefits and risks of the transaction (and of no transaction), not a sales pitch.”

“The fact that votes are allegedly being obtained now is also of particular concern, as the statutes are very clear that the ‘meeting of qualified voters to consider the plan of reorganization shall occur after the public hearing before the commissioner’ La. R.S. 22:236.5 (B). Moreover, the notice of opportunity to vote on the plan of reorganization or a summary of it, ‘shall be in a form that the commissioner has determined is adequate and may be provided to qualified voters.’ La. R.S. 22:236(C).” 

“Information provided at the February 5 joint committee hearing suggested votes are being actively solicited in advance of this crucial public hearing. Some of the problems noted in the Senators’ letter could be addressed in materials you approve. I encourage you to find out whether La. R.S. 22:236 is being violated and ensure that a proper vote occurs, using materials approved by you that thoroughly and accurately summarize the transaction, the consideration paid to policyholders and the rationale for that decision, the interest of board members who approved it, and the benefits/risks to policyholders of the transaction or no transaction.”

“The Senators’ letter identifies numerous concerns about inadequate or incomplete information related to lawsuits and fines assessed against Elevance. This information is directly relevant to the post-reorganization financial health of the reorganized insurer and merits additional investigation to obtain the full financial and performance picture. The management and payment of claims is also relevant to policy holders’ best interests.”

“With regard to the Foundation/Trust, I have concerns about newly-disclosed information at the Senate hearing regarding possible proposed legislation that appears intended to dilute and/or limit current tools for legal oversight of trusts and charitable foundations (or this one in particular). Should you approve this transaction, I specifically request that it be a condition of approval that the trust/charitable foundations laws in effect as of this date apply to any foundation or trust that may be created with the $3.1 billion in proceeds of this transaction. I will vigorously oppose proposed legislation that would limit the authority of the Attorney General to protect the beneficiaries of trusts and to ensure charitable foundations are managed in accordance with their terms of creation. In this case, the purported beneficiaries are identified as the people of Louisiana rather than the policyholders. The lack of specificity with regard to the use of these funds for policy holders, which is the focus of your inquiry, is also a matter meriting more examination. If you and the policy holders approve this structure, there is ample reason to ensure the Attorney General’s oversight is retained