THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, February 15, 1996 TAG: 9602150375
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY MARGARET EDDS AND DAVID M. POOLE, STAFF WRITERS
DATELINE: RICHMOND LENGTH: Medium: 97 lines
Everyone agrees that Trigon Blue Cross Blue Shield is the goose of the cash-strapped 1996 General Assembly.
What they couldn't decide Wednesday was the size of the golden egg.
The leaders of the House of Delegates were prepared to accept $175 million from Trigon in exchange for the Assembly's blessing of the insurance giant's controversial bid to become a for-profit company.
But the price tag was thrown into doubt when a back-bench banker from Rocky Mount put pencil to paper and calculated the state could drive a harder bargain. The figure could as easily be $230 million, said Republican Del. Allen W. Dudley.
He added a tantalizing detail: A Trigon lobbyist told him the company would not object to the higher figure, except that a lower settlement already had been worked out with Attorney General James S. Gilmore III.
Supporters of the negotiated agreement briefly urged lawmakers to go forward. Trying to squeeze more money out of Trigon might result in collapse of the financial agreement, they said.
``If the (deal) fails, we are going to have to strip $175 million out of the budget, it's that simple,'' warned Chesterfield Del. John Watkins.
But other lawmakers said Dudley's claim deserved overnight scrutiny, and a majority agreed. The prospect of extra money for the budget apparently held sway.
Wednesday's debate is the latest twist in Trigon's unprecedented lobbying effort. By tradition, the Assembly stays out of matters pending before the State Corporation Commission.
Trigon, however, has tempted lawmakers with an irresistible plum: $175 million that will go a long way toward meeting critical needs in higher education.
If lawmakers bite, Trigon will succeed in narrowing the SCC's authority to alter the company's application when hearings begin in May.
Consumer advocates say that effectively would muzzle public comment about a company that overcharged policyholders $70 million in medical co-payments and paid $5 million in fines for misleading billing practices.
``There won't be anything for the commission to do except check Trigon's math,'' said Jean Ann Fox, director of the Virginia Citizens Consumer Council.
Wednesday, some lawmakers challenged the company's trustworthiness as well.
``We're dealing with somebody who on the surface, you have to question anything they tell you,'' said Bedford Del. Lacey E. Putney, who described Trigon's consumer record as ``atrocious.''
Legislators alluded to the disclosure this week that Trigon may have deprived businesses enrolled in its health-care benefits programs of about $59 million. The U.S. Labor Department is investigating.
Last fall, Gilmore was so concerned about Trigon's behavior that he suggested he might argue against the company before the SCC.
In December - just before Gov. George F. Allen was to present his two-year state budget - Gilmore dropped his opposition after Trigon agreed to allow two outside investors to sit on its board and to invest $159 million into a foundation for education and medical research.
The figure was based on Trigon's net worth at the end of 1987, when the company lost its tax-exempt status. Trigon later adjusted the figure to $165 to reflect an accounting change. The Assembly's money committees increased the figure to $175 million, all of which would go directly into the 1996-98 budget or the state's three medical school foundations.
The money represents one-quarter of the company's current net worth, estimated at $700 million. The balance of the money would go to shareholders, made up largely of companies with group insurance plans.
Dudley said he recognized that Gilmore was more concerned about gaining oversight of Trigon than in maximizing the state's share.
``He thought it was more important to have someone on the board looking over their shoulder than to squeeze the last dollar out of them,'' he said. ``And I don't think my plan would squeeze the last dollar out of them.''
Dudley said the $175 million is undervalued because of inflation since 1987. Putting the company's assets in a passbook savings account earning 5 percent would be worth about $230 million now.
Trigon spokesperson Brooke Taylor declined to comment on Dudley's claim that a company lobbyist had not ruled out his interest-bearing plan.
``In our discussions with Del. Dudley and other members of the Assembly, Trigon's only position has been that the only agreement we're supporting is our agreement with the attorney general,'' she said.
Does that mean Trigon might withdraw its SCC application if the Assembly raises the state's share above $175 million?
Taylor would only say the company's board would review the final version before deciding what to do.
By late Wednesday, lawmakers were left pondering just how much money they could safely wring out of Trigon. The matter is scheduled for debate today in the full House and Senate.
Dudley said he was prepared to call the company's bluff.
But, Stafford Sen. John H. Chichester, a co-chairman of the Senate Finance Committee said he opposed raising Trigon's payment because it would take money from the shareholders. <
KEYWORDS: GENERAL ASSEMBLY by CNB