THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, March 24, 1996 TAG: 9603230021
SECTION: COMMENTARY PAGE: J5 EDITION: FINAL
TYPE: Opinion
SOURCE: MARGARET EDDS
LENGTH: Medium: 88 lines
Nowhere in the nifty little handout ``How A Bill Becomes A Law'' do they tell it like it was on House Bill 1471.
Nowhere in the description of a bill's orderly passage through committee is there mention of thousands of dollars in campaign contributions and lobbying fees or the too-tantalizing-to-refuse offer of $165 million to balance the state budget.
Nowhere does it cite the advantage that might come from having friends in high places: say, for instance, a House majority leader who, while abstaining on this particular bill, last year earned almost $400,000 in legal fees for related work.
H.B. 1471, a major part of Trigon Blue Cross Blue Shield's bid to become a profit-earning company owned by stockholders, was a textbook study in bill-making in at least one way, however.
It sailed with relative ease through the first 18 steps of the 20-step process. All that's lacking are Steps 19 and 20: the governor's signature and the law's taking effect on July 1.
While there are no handouts to chart the way, the Trigon legislation is also a study in power politics. The transformation of Trigon, which still must be approved by the State Corporation Commission, will change a policyholder-owned company with the stated mission of serving the ``social welfare,'' into an insurance giant with an estimated worth of $1 billion to $1.75 billion.
What H.B. 1471 did was to reduce the SCC's role in evaluating the Trigon application. Now, the commission's job primarily is to ensure that the plan is ``fair and equitable'' to Trigon's 200,000 policyholders. About 1.8 million Virginians are insured under those policies.
The bill strips away the commission's broader challenge of determining that the conversion is good for the public at large. The legislature has already decided on its own that a $175 million payment to the state from Trigon would compensate for more than a half-century of tax breaks.
As part of a deal worked out with Attorney General James Gilmore last fall, Trigon agreed to form a $159 million foundation for medical and educational research. The sum was later adjusted to $165 million for technical reasons. That was the value of Trigon in 1988 when the state started taxing the company as a commercial venture.
Lawmakers upped the price to $175 million, partially because no interest had been applied. Trigon hasn't committed to the higher sum but is expected to accept it.
This may be a fantastic deal for the state; it may not be. But in passing H.B. 1471 the legislature has robbed Virginians of their best chance to know.
Two weeks of hearings, replete with charts, graphs and expert witnesses, were due to begin at the SCC on May 6. That would have been a more-thoughtful and dispassionate venue for evaluating the public interest than a time-starved, politicized Assembly session.
Minus that review, here are some of the causes for comfort or concern: On the plus side, some attorneys familiar with the case say it was never clear that the SCC had the right to evaluate Trigon's bid in terms of the public at large. ``It's a gray area in the law,'' said one.
There was, in short, no guarantee that the SCC would have required Trigon to pay anything into the public coffers. That's the reason Gilmore, who represents consumers at the SCC and who has a track record of aggressively questioning the company, agreed to settle.
The experience in other states where conversions have occurred is mixed. Laws vary. A California company was ordered to turn over the entire value of its assets; a Georgia company paid nothing.
On the minus side, Trigon's record of looking out for the public interest is bleak. Worse, the political deck was stacked to Trigon's advantage.
As a backdrop, last year Trigon was fined $5 million and ordered to pay customer refunds that will eventually total $75 million for deceptive billing practices. Gilmore accused Trigon of ``callous disregard'' for the public.
Politically, Trigon donated $67,000 to legislative candidates in the past election. The company brought a contingent of well-paid lobbyists to the legislature. Important lawmakers from House Majority Leader Dick Cranwell to Norfolk Del. George Heilig, who chaired a subcommittee evaluating the proposal, had prior business relationships with the firm.
And in a year when lawmakers were desperate for cash to fund college-faculty salaries and other needs, $165 million or $175 million in hand proved too tempting to resist. The idea of a foundation was scuttled along the way.
Asked recently for an interpretation of H.B. 1471, an SCC official deferred to Trigon: ``This is their plan, their bill, their law that they got the General Assembly to pass.''
Precisely. MEMO: Ms. Edds is an editorial writer for The Virginian-Pilot. by CNB