July 25, 2000

Daniel Zingale

Director, Department of Managed Care

980 9th Street, Ste 2450

Sacramento, CA 95814

VIA FACSIMILE & U.S. MAIL

Secure Restraining Order Against UnitedHealth‘s Sale Of Patients

Dear Daniel:

The Foundation for Taxpayer and Consumer Rights urges the Department to seek a restraining order precluding UnitedHealth Group from selling its patients to Blue Shield. Such a sale would violate the terms of the Knox Keene Act, which requires a stable environment for patient care.

Under Section 1352(b) of the Act, this is a Material Modification of UnitedHealth‘s plan. Evidence faxed to the Foundation suggests that UnitedHealth is moving forward with its transfer of patients as early as July 31st, which would preclude the Department from having adequate time to review and approve the material modification.

Even if UnitedHealth‘s contract allows the company to cancel patients’ coverage on a month by month basis, such a provision would violate Section 1367, requiring availability, accessibility and continuity of health care coverage. As you know, the Knox Keene Act requires a stable environment for patients and if some of UnitedHealth‘s contracts allow a month-by-month cancellation, those provisions would be contrary to the provisions of the Act.

This modification will have a major impact on a large number of subscribers and providers. The stability of patients’ health care coverage will be imperiled. We urge the Department to go to court to preserve its right to review this modification and then reject the material modification as contrary to patients’ interests.

Sincerely,

Jamie Court