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> INS 00-3025 : Hearing Decision
STATE OF MAINE
This Decision and Order is made by Alessandro A. Iuppa, Superintendent of the Maine Bureau of Insurance, on the application for approval by Anthem Health Plans of Maine, Inc., d/b/a Anthem Blue Cross and Blue Shield, ("Anthem BCBS") and Central Maine Partners Health Plan, Inc. ("CMPHP") (collectively, the "Applicants") in the above-captioned proceeding. I. BACKGROUND This matter is before the Superintendent upon the application by Anthem BCBS for approval, pursuant to 24-A M.R.S.A. §§ 222 and 3474, of an Agreement and Plan of Merger with CMPHP. The Agreement and Plan of Merger provides that Anthem BCBS and CMPHP will merge on or after January 1, 2001, subject to the approval of the Superintendent. The surviving corporation will be Anthem BCBS. The shareholders of CMPHP and Anthem BCBS have provided unanimous written consent authorizing the merger. If the merger is approved, Anthem BCBS will acquire all of CMPHP’s rights, liabilities and obligations. Following the merger, existing CMPHP members will become Anthem BCBS members and will receive the same benefits they now receive. CMPHP’s enrollees will be provided health care coverage by Anthem BCBS without interruption through its HMO Maine and HMO Choice lines of business. The primary care and hospital provider networks for HMO Maine and HMO Choice include the same providers as currently participate in the CMPHP networks. There will be no network disruption for CMPHP members. Immediately following the merger, all CMPHP group in-force contracts will be honored by Anthem BCBS and all benefit levels will remain unchanged. The merger will require no cash compensation and will not involve any exchange of stock. As of September 1, 2000, CMPHP became a wholly owned, controlled affiliate of Anthem BCBS. The consideration for the transaction will be the acquisition by Anthem BCBS of all of CMPHP’s liabilities, along with its assets. II. PROCEDURAL HISTORY On September 19, 2000, Anthem BCBS submitted an application for approval, which was supplemented with additional materials submitted on October 13, November 1, and November 30, 2000. On October 13, 2000, the Superintendent issued a Notice of Hearing which, among other matters, set November 8, 2000 as the intervention deadline, set December 13, 2000 as the date for public hearing, and identified the various issues to be considered by the Superintendent at the public hearing. No persons filed applications to intervene as parties in this proceeding. On November 7, 2000, the Superintendent issued his First Discovery Request. That information request contained thirty-four numbered items for which Anthem BCBS provided responsive information. On December 13, 2000, prior to the introduction of documentary evidence and testimony, the Superintendent found that the application of Anthem BCBS in this proceeding was complete and ready for hearing. Also on December 13, 2000, the Superintendent issued a Protective Order providing confidential treatment to certain identified material. The hearing was held on December 13, 2000. Anthem BCBS representatives appeared and participated in the proceeding. No other persons, personally or through counsel or other representative, appeared at or participated in the hearing. III. STANDARD OF REVIEW After conclusion of the hearing on the application for approval, the Superintendent is required to issue a decision on the application within thirty days. In making his decision, 24-A M.R.S.A. §§ 222(7)(A) and 3474(2) require that the Superintendent’s determination include consideration of the following legal standards of review: (1) whether the effect of the proposed merger may be substantially or materially to lessen competition in insurance or the insurance business in the State of Maine or elsewhere as to the kinds of insurance involved, or would materially tend to create a monopoly as to such business therein, or would violate the laws of the State of Maine or of the United States relating to monopolies or restraints of trade; (2) whether the proposed merger plan would jeopardize the financial stability of Anthem BCBS or CMPHP, or prejudice the interest of the policyholders or enrollees of Anthem BCBS or CMPHP; (3) whether the proposed plan to merge, or to make any other major change in the business or corporate structure or management of Anthem BCBS or CMPHP, is unfair, inequitable or prejudicial to the policyholders or enrollees of Anthem BCBS or CMPHP; (4) whether the proposed merger plan would substantially reduce the security of and service to be rendered to the policyholders or enrollees of Anthem BCBS or CMPHP in the State of Maine or elsewhere; (5) whether the proposed merger plan is contrary to law, or is subject to other material and reasonable objection. IV. FINDINGS OF FACT and CONCLUSIONS OF LAW At the hearing held on December 13, 2000, the Superintendent admitted into the record certain documentary and testimonial evidence. Testimonial evidence was presented in a panel format by Anthem BCBS witnesses Erin Hoeflinger, Vice President of Health Care Management and Operations; Harry Page, Vice President of Financial Services; James Parker, Vice President and General Manager; and Sharon Roberts, Vice President of Membership Services. A brief summary regarding these witnesses and the subject matter of their testimony is as follows: (a) Among other duties, Ms. Hoeflinger is responsible for the health care management and operations of CMPHP under Anthem BCBS’ current Management Services Agreement with CMPHP. Included in health care management are network development and contracting, credentialing, network management and servicing, utilization review, disease management, case management and health improvement. Included in operations are customer servicing, claims operations, membership enrollment and billing of accounts. Among other matters, Ms. Hoeflinger’s testimony described how the CMPHP and Anthem BCBS provider networks are configured and would be affected by the proposed merger; how Anthem BCBS plans to provide operational services to CMPHP members following the proposed merger, including claims operations and healthcare management services; and what operational issues would be faced by CMPHP if it were to remain a separately licensed HMO operating in Maine. (b) Mr. Page is responsible for internal and external financial reporting, budgeting, and other financial operations activities. He is accountable to CMPHP in a similar capacity under Anthem BCBS’ current Management Services Agreement with CMPHP. Among other matters, Mr. Page’s testimony described Anthem BCBS’ and CMPHP’s current and projected financial condition and projected risk based capital level; whether any capital infusion would be required as a result of the proposed merger; the financial/managerial advantages to the proposed merger; and whether Anthem BCBS and/or CMPHP group and individual rates would be impacted as a result of the proposed merger. (c) Mr. Parker worked closely with representatives of Anthem BCBS on the proposed merger with CMPHP. Among other matters, Mr. Parker’s testimony provided an overview of the proposed merger between Anthem BCBS and CMPHP, including the existing relationship between the companies; the financial status of each of the companies and of the merged company; the effect of the proposed merger on CMPHP enrollees; the fairness of the proposed merger generally; and the effect of the proposed merger on competition in the State of Maine. (d) Ms. Roberts is responsible for product development and management including the compliance of all products with state statutes and regulations. She also is accountable to CMPHP in a similar capacity under Anthem BCBS’ current Management Services Agreement with CMPHP. Among other matters, Ms. Roberts’ testimony described how former CMPHP members would receive coverage within Anthem BCBS’ system, the effect of the proposed merger on CMPHP member benefits and premium rates, and how Anthem BCBS will comply with guaranteed renewal statutes for CMPHP employers and members if the merger is approved. Documentary evidence is comprised of Applicants’ Exhibits 1 through 23 and Hearing Officer Exhibits 1 and 2. Based on the testimonial and documentary evidence presented at the hearing, and upon a review of the record of this proceeding, the Superintendent finds that no issues of material concern exist with respect to the Applicants’ abilities to satisfy the legal standards for approval set forth in 24-A M.R.S.A. §§ 222(7)(A) and 3474(2), summarized as follows: (1) No evidence was presented that demonstrates, and the Superintendent does not find, that any aspect of the proposed merger will substantially lessen competition in insurance or the insurance business in the State of Maine or elsewhere as to the kinds of insurance involved, or would materially tend to create a monopoly as to such business therein, or would violate the laws of the State of Maine or of the United States relating to monopolies or restraints of trade. (2) No evidence was presented that demonstrates, and the Superintendent does not find, that any aspect of the proposed plan of merger would jeopardize the financial stability of Anthem BCBS or CMPHP, or prejudice the interest of the policyholders or enrollees of Anthem BCBS or CMPHP. (3) No evidence was presented that demonstrates, and the Superintendent does not find, that any aspect of the proposed plan to merge or to make any other major change in the business or corporate structure or management of Anthem BCBS or CMPHP is unfair, inequitable or prejudicial to the policyholders or enrollees of Anthem BCBS or CMPHP. (4) No evidence was presented that demonstrates, and the Superintendent does not find, that any aspect of the proposed merger plan would substantially reduce the security of and service to be rendered to the policyholders or enrollees of Anthem BCBS or CMPHP in the State of Maine or elsewhere. (5) No evidence was presented that demonstrates, and the Superintendent does not find, that any aspect of the proposed merger plan is contrary to law or is subject to other material and reasonable objection. For all of the foregoing reasons, the Superintendent concludes that the Applicants’ have met the legal standards for approval set forth in 24-A M.R.S.A. §§ 222(7)(A) and 3474(2). V. ORDER The application of Anthem Health Plans of Maine, Inc., d/b/a Anthem Blue Cross and Blue Shield, and Central Maine Partners Health Plan, Inc. for approval of an Agreement and Plan of Merger is APPROVED. Anthem BCBS shall notify CMPHP certificateholders of the completion of this merger by mailing to each certificateholder the Certificate of Amendment attached hereto. The Certificate of Amendment shall be mailed to CMPHP certificateholders in lieu of the Certificate of Assumption included in Exhibit E of the Applicants’ Initial Consolidated Filing. VI. NOTICE OF APPEAL RIGHTS This Decision and Order is a final agency action of the Superintendent of Insurance within the meaning of the Maine Administrative Procedure Act. It may be appealed to the Superior Court in the manner provided by 24-A M.R.S.A. § 236, 5 M.R.S.A. § 11001, et seq. and M.R. Civ. P. 80C. Any party to the proceeding may initiate an appeal within thirty days after receiving this notice. Any aggrieved non-party whose interests are substantially and directly affected by this Decision and Order may initiate an appeal within forty days of the issuance of this decision. There is no automatic stay pending appeal; application for stay may be made in the manner provided in 5 M.R.S.A. § 11004. PER ORDER OF THE SUPERINTENDENT OF INSURANCE
CERTIFICATE OF AMENDMENT THIS IS TO CERTIFY that, pursuant to the terms of an Agreement and Plan of Merger approved by the State of Maine Superintendent of Insurance, Central Maine Partners Health Plan, Inc. ("CMPHP") has been merged into Anthem Health Plans of Maine, Inc., d/b/a Anthem Blue Cross and Blue Shield ("Anthem BCBS"). As a result, all liability for the medical and health benefits provided by your insurance policy or health care benefit contract and all endorsements thereto (herein called the "Policy") is now the responsibility of Anthem BCBS. All of the terms, conditions, and provisions of the Policy issued to you by CMPHP remain unchanged and in full force and effect except that Anthem BCBS has become the responsible party and has undertaken all liability under the Policy for medical and health benefits. Anthem BCBS conducts its operations from the same offices as those previously used by CMPHP. Accordingly, all premium payments, requests for service, and claim notices should be made to Anthem BCBS at the same address as you currently use with CMPHP. IN WITNESS WHEREOF, Anthem BCBS has caused this Certificate of Amendment to be executed and attested to be effective January 1, 2001 or such later time as the Agreement and Plan of Merger is made effective.
ANTHEM
HEALTH PLANS OF MAINE, INC.
By: ___________________________________ President
THIS CERTIFICATE BECOMES A PART OF AND SHOULD BE
Last Updated: October 28, 2008 |
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