THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, August 3, 1995 TAG: 9508030001
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 52 lines
The state attorney general's office is watching with concern as Trigon Blue Cross and Blue Shield attempts to become the first Blue in the nation to convert entirely from nonprofit to for-profit.
Trigon, which insures about a third of Virginians, was in the news earlier this summer when it was fined $5 million and agreed to repay policyholders more than $22 million for overbillings during a 10-year period. Trigon had secretly negotiated lower rates from health-care providers but had computed the 20 percent charge for policyholders using the higher public rates. Thus the company benefited, not the patients.
After Trigon unsuccessfully attempted in federal court to keep the attorney general from presenting his report on the overbillings to the State Corporation Commission, Attorney General James S. Gilmore III said the public needs some satisfaction that the ``new Trigon will behave better than the old one.''
Last week, Deputy Attorney General Catherine C. Hammond wrote a letter about Trigon to the SCC, which regulates insurance companies and must approve Trigon's conversion to a for-profit company. The letter raised questions whose answers could affect all Virginians.
The big one is who will get all the moola if Trigon is permitted to go public and sell stock?
Currently, Trigon is a mutual company owned by its policyholders. Its net worth is about $650 million. It has asked the SCC to approve its request to divide that among its policyholders in the form of stock that would represent ownership shares.
But Hammond wrote, ``Trigon has suggested that the market value of the capital stock to be distributed upon conversion would fall in a range between $1 billion and $1.75 billion.''
Trigon's wealth, Hammond noted, was built in part on years of tax breaks unavailable to competing insurance companies. She said Trigon's special tax and nonprofit status raises the question of whether all Virginians, not just policyholders, are entitled to some ownership in Trigon. That question needs answering, she said, before Trigon is permitted to convert to for-profit.
The attorney general's office is also concerned that a for-profit Trigon still provide reasonable health-care coverage and that top Trigon officers not get special and lucrative advantages as part of the conversion.
The attorney general's office is on the case, as they say. With so much at stake, the public should cheer it on. by CNB