District Sues CareFirst, Says Provider Must Donate Millions

[MountainLaurel]

This asks a good question: "When a charitable organization is raking in almost a billion dollars, is it really a charity?"

The District government hit the region's largest health insurance provider on two fronts yesterday, launching a subpoena-powered investigation and a lawsuit that asserts the nonprofit organization is obligated to donate millions to the community.

For a decade, authorities in the District and Maryland have criticized CareFirst BlueCross BlueShield for hoarding its annual surpluses despite its federal charter as a "charitable and benevolent institution."

During the past year, animosity between District officials and the insurance provider intensified because CareFirst did not participate in a universal health care program that was counting on it for an annual $5 million contribution. Most important, officials said, CareFirst posted a $754 million surplus in 2007 and did not spread the wealth to needy District residents. Yesterday, interim Attorney General Peter Nickles announced the filing of the lawsuit just hours after the D.C. Council Committee on Public Services and Consumer Affairs voted unanimously to begin an investigation and to give chairman Mary M. Cheh (D-Ward 3) the authority to issue subpoenas.

"They are required to put $100 million into the community," Nickles said. "But instead of providing charitable institution to the community, they have been putting money into surpluses and paying large executive salaries. We're basically asking for a reshaping of the entire CareFirst organization in D.C."

The lawsuit mounts pressure on CareFirst, already at odds with Maryland. Earlier this year, the Maryland Insurance Administration investigated an $18 million severance package given to former CareFirst chief executive William L. Jews. In 2003, a commissioner thwarted CareFirst's plans for a lucrative merger with a for-profit organization.

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/24/AR2008062401536.html