Anthem's lawsuit filed today challenging California Insurance Commissioner John Garamendi's decision to block part of the proposed buyout of WellPoint Health Networks "ignores the fact that California courts have given Insurance Commissioners broad discretion to protect policyholders," according to Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR).
Commissioner Garamendi cited the merger's $4 billion or more cost to California patients as the reason for his refusal to allow WellPoint's subsidiary, Blue Cross Life and Health, to transfer to Anthem's control. Previously confidential documents acquired by FTCR through a Public Records Act request disclosed that under the terms of the proposed merger executives would receive up to $607 million in cash and stock, including $76 million in cash for WellPoint CEO Leonard Schaefer alone.
"Anthem could easily spin off the part of their California business that Commissioner Garamendi said "no" to but they clearly want to keep the company intact. However, an Insurance Commissioner's discretion to protect policy holders is very clear under the law. Traditionally the courts have deferred to Insurance Commissioners to determine what is in the best interest of policyholders," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). "Unless the companies are willing to shed $600 million in executives bonuses and $3.4 billion in shareholder dividends and Wall Street financing charges patients will be prejudiced by the merger."
The Foundation for Taxpayer and Consumer Rights is a non-profit and non-partisan consumer advocacy organization. For more information, visit us on the web at http://www.consumerwatchdog.org