THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, February 18, 1996 TAG: 9602180062
SECTION: LOCAL PAGE: B4 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium: 58 lines
Trigon Blue Cross Blue Shield has asked the State Corporation Commission to prevent the state's main consumer group from contesting the health insurer's bid to become a for-profit company.
While the Virginia Senate was approving a plan Friday that clears the way for Trigon to become for-profit, the company was asking the SCC to keep the Virginia Citizens Consumer Council from being a party to the case.
Under terms of the plan approved by the Senate, Trigon would pay the state $175 million in exchange for becoming a for-profit company.
Trigon hopes to keep the council from filing briefs, presenting experts and questioning Trigon about the conversion, which needs SCC approval.
Trigon's stakes are high. Converting to a for-profit company would allow the state's largest health insurer to sell stock, a move the attorney general's office has said could create a $1.75 billion insurance giant.
The consumer council claims the plan would give Trigon, which controls 30 percent of the state's health insurance market, too much financial muscle.
Last year, Trigon came under fire and was forced to refund to its customers $70 million in excess copayments made by customers.
The General Assembly is backing Trigon's conversion because the $175 million would help ease the state's budget crunch.
Attorney General James S. Gilmore III dropped his opposition after reaching an agreement with Trigon in which the company agreed to fund a charitable foundation dedicated to education and medical research, as well as appoint two directors nominated by the foundation to its 18-member board.
``People are aghast. Nobody is standing up, nobody with power like a legislator or public official, for the people of Virginia,'' said Julie Lapham, executive director of Common Cause of Virginia.
``Nobody is looking out for their interest.''
Trigon's opposition to the consumer group was sparked by its request for detailed information about the plan and its impact on the company's finances.
The consumer group, and others, have criticized the attorney general's settlement, saying it does not demand enough money from Trigon to compensate for more than a half-century of privileged tax treatment.
Kenworth E. Lion Jr., attorney for the consumer council, says Trigon is the first company to challenge the group's standing with the SCC.
Thomas H. Tullidge Jr., Trigon general counsel and senior vice president, said the company objected to the council's standing simply to get SCC guidance as to whether it had to give documents to the consumer group.
The bills now go to Gov. George F. Allen for approval. Allen has said he wants to see the final version of the bill before commenting, but he said allowing Trigon to convert would be good for policyholders and the state.
``Having Trigon here in Virginia as a strong company will make sure that their headquarters is here,'' Allen said. ``As much as anything, this is an economic development effort.'' by CNB