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The Indianapolis Star

Group seeks hearing on Anthem deal

Watchdog has concerns about WellPoint, suitor's practices, wants California to scrutinize the merger

by Jeff Swiatek
May 20, 2004

A consumer group today called on California Gov. Arnold Schwarzenegger to order regulators in his state to hold a public hearing on Indianapolis-based Anthem's proposal to buy WellPoint Health Networks.

A hearing would help "doctors, patients, employers, nurses, other health plans and pharmacists to guide your decision-making about approval of the acquisition," said the letter from the Foundation for Taxpayer and Consumer Rights, a nonpartisan advocacy group.

Anthem has proposed a $16.4 billion purchase of WellPoint, based in Thousand Oaks, Calif. WellPoint is the No. 1 seller of health insurance in California, mainly with its Blue Cross policies.

The consumer group said "serious concerns" have been raised about both companies' practices, including lawsuits by doctors' groups alleging Anthem and WellPoint have underpaid doctors for caring for plan members.

"There are serious corporate governance and executive compensation issues that Anthem and WellPoint executives must answer to the California public for," the letter said.

Anthem recently disclosed that its top executive, Larry C. Glasscock, was given a three-year cash and stock award of $42.5 million.

California's Department of Managed Health Care, which has jurisdiction over WellPoint's handing control of its insurance plans to Anthem, hasn't decided whether to hold a public hearing on the deal, said G. Lewis Chartrand, chief deputy director.

"If we think there are issues that need airing, then we'll do that," he said.

The department likely will issue its order in the next several weeks, Chartrand said.

The consumer group said records show that WellPoint and its top executives have made $92,400 in political donations to Schwarzenegger and his committees.

Anthem spokeswoman Deborah New said, "We will abide by whatever the regulators think is necessary and in the best interest of the process" to getting approval for the merger.

Anthem and WellPoint shareholders are scheduled to vote on the merger June 28. If they approve the deal and regulatory approval also is given by then, the merger could be final as early as July 1.

Among states with a say in the merger, only California and Georgia have yet to give regulatory approval.