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News Coverage

Associated Press

Health care regulatory agency to hold hearing on WellPoint merger

by State & Local Wires
June 24, 2004

LOS ANGELES -- A consumer advocacy group said Wednesday that Gov. Arnold Schwarzenegger's administration has agreed to hold a public hearing on a pending $16.4 billion merger between Anthem Inc. and WellPoint Health Networks.

Jerry Flanagan, a consumer advocate with the Foundation for Taxpayer and Consumer Rights, said his group had been pressing the Schwarzenegger administration for a hearing for the past seven months.

Calls to Schwarzenegger's office after hours were not immediately returned.

The merger of Thousand Oaks-based WellPoint, which owns Blue Cross of California, and Indianapolis-based Anthem would create an HMO with about 26 million patients. The proposed deal has been opposed by some state officials.

The group is still seeking the release of documents providing details of the proposed merger and communications between Schwarzenegger's office and the CEOs of the merging companies, Flanagan said.

The consumer advocacy group recently posted documents online that showed executives at the companies were slated to receive up to $600 million in cash and stock if the merger is approved.

Officials with the state Department of Managed Health Care said the July 9 public hearing on the merger will be held in Sacramento. The hearing is part of the department's review process to determine how the merger would impact the delivery of health services in California.

Patrick Dorinson, a spokesman for the executive branch's Business, Transportation & Housing Agency, which oversees the managed health care department, said late Wednesday that the "decision to hold a public meeting was based upon the facts under their review and were not influenced by any other issue."

State Insurance Commissioner John Garamendi, who has said he has "grave concerns" over the merger, previously scheduled a separate hearing for Friday in Los Angeles.

Garamendi and other officials, including those from the California Public Employees' Retirement System, have asked major shareholders to oppose the deal.

Shareholders of Anthem and WellPoint are scheduled to vote next week on the merger.

California lawmakers earlier this month held a public hearing on the merger, in part, to spur state regulators to hold their own hearings.

Regulators from the U.S. Department of Justice already have approved the merger.