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Ventura County Star

Assembly panel will consider WellPoint sale

Consumer group wary of merger

by Deborah Crowe
May 21, 2004

An Assembly committee will weigh in on the pending sale of Blue Cross of California's parent company to an out-of-state competitor, Speaker Fabian Nunez announced late Thursday.

Nunez appointed an eight-member select committee, chaired by Assemblyman Manny Diaz, D-San Jose, that will hold at least one public hearing on Indianapolis-based Anthem Inc.'s proposal to acquire Thousand Oaks-based WellPoint Health Networks Inc. for $16.4 billion in cash and stock.

The new company would be called WellPoint Inc., be based in Indianapolis and led by Anthem's current CEO, Larry Glasscock. Blue Cross of California operations are expected to remain in Thousand Oaks.

Nunez's announcement comes as political pressure mounts on the California Department of Managed Health Care to call its own hearings. While the department has held hearings on past managed care company mergers affecting the state, it is not required by law to do so.

A consumer group this week said the merger raises many concerns for Californians, and accused the department of dragging its feet because of WellPoint's good relations with Gov. Arnold Schwarzenegger's administration. Department officials have denied that claim.

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 Santa Monica-based Foundation for Taxpayer and Consumer Rights in a May 18 letter to the department.

"The decision by the Assembly to take the lead in holding hearings does not get the department off the hook," said Jerry Flanagan, the nonpartisan group's consumer advocate.

The department, which regulates HMO and PPO health plans, is one of two state agencies that must sign off on the deal. Insurance Commissioner John Garamendi, who regulates fee-for-service health plans, said Thursday he supports holding a joint hearing with the department.

WellPoint spokesman Ken Ferber said his company will participate in whatever hearings are scheduled. WellPoint and Anthem have been working with department staff reviewing the case for the past six months, he said.

The furor could hurt WellPoint and Anthem's hopes to close the deal by July 1. Federal regulators and nine states already have given their approval. Georgia, the only other state yet to announce its decision, held a short hearing on Wednesday and is expected to rule within 30 days.

Ferber said shareholder meetings scheduled for June 28 likely would still take place even if California's approval was still up in the air.

A date for the Assembly hearing has not been announced. Diaz could not be reached for comment Thursday.