THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, May 1, 1996 TAG: 9605010447
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Short : 50 lines
It's official: Goliath won.
A tiny consumer group gave up the fight Tuesday against insurance giant Trigon Blue Cross Blue Shield's proposed conversion to a for-profit stock company.
The Virginia Citizens Consumer Council planned to ask the State Corporation Commission to let the public benefit from an estimated $1 billion windfall when Trigon sells stock on Wall Street.
The group's objections were rendered moot earlier this year when a lobbying effort by Trigon won General Assembly approval of a law restricting SCC oversight in the case.
``They cut our case right out from under us,'' said Jean Ann Fox, Consumer Council president.
Trigon has delayed an SCC hearing on the case until after the new law takes effect July 1.
Brooke Taylor, a Trigon spokesperson, said the company was disappointed by the consumer group's decision to withdraw as a formal objector to their petition.
``We continue to welcome their participation in keeping with the longstanding rules of the SCC,'' Taylor said.
The Richmond-based insurer is seeking to raise capital to compete in a rapidly consolidating health care industry. The company, which now controls about one-third of the Virginia market, wants to expand.
Fox contends Trigon gained its dominant market position because of tax breaks and its special status as a charitable organization. The public, which paid for the tax breaks, should benefit from the Trigon stock sale, Fox said.
To head off such a move, Trigon offered the General Assembly a deal: In exchange for legislation restricting the SCC's authority to structure a conversion plan, Trigon would provide more than $150 million worth of stock to balance the cash-starved 1996-98 state budget.
Trigon enlisted some of the Assembly's most powerful members. The company paid House Majority Leader C. Richard Cranwell of Vinton more than $500,000 over two years for legal advice. Trigon also paid $9,581 for legal work by a Norfolk firm that includes Del. George Heilig, a Democrat who headed a special House subcommittee on Trigon legislation.
``This has been a very educational year for us,'' Fox said. ``We have decided to stop our single-minded focus on consumer protection laws and turn our attention to how laws get made.'' by CNB