Franchise Tax Board Should Not Shield Blue Shield’s Loss of Tax-Exempt Status From Public Scrutiny

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Santa Monica, CA — The state’s tax board must make public an audit and other records related to its historic decision to revoke Blue Shield of California’s tax-exempt status, according to letters sent today by Consumer Watchdog. Millions purchased health plans late last year believing Blue Shield was a "non-profit."

Download Consumer Watchdog’s letter sent today calling on Controller Betty Yee, who is also the Chair of the Franchise Tax Board, and the other FTB board members, Jerome E. Horton and Michael Cohen, to release the records here:

Download Consumer Watchdog’s letter explaining the basis for its Public Records Act Request here:

According to the letter sent today:

“Blue Shield calls itself a non-profit and claims it is ‘dedicated to providing Californians with access to high-quality health care at an affordable price’ but has $4 billion in financial reserves, ever-rising premiums and multimillion-dollar executive salaries. Blue Shield purchased an executive skybox at the 49ers’ new Santa Clara stadium that cost $2.5 million. This skybox is just one example of Blue Shield’s abuse of its non-profit status at the expense of California taxpayers and patients.”

Millions of Californians who purchased and renewed their health insurance with Blue Shield during the last Obamacare open enrollment period late last year believed Blue Shield was tax-exempt. Californians only learned that the Franchise Tax Board had stripped California’s third largest health insurer of its tax status on March 18 of this year when the Los Angeles Times published a report—7 months after the Franchise Tax Board had taken action.

“It is bad enough that the Franchise Tax Board failed to immediately announce their decision to revoke Blue Shield’s tax-exempt status, but it's worse that the board is playing defense attorney for Blue Shield and refusing to release public records,” said Consumer Watchdog Legal Fellow Mai Tram Ly.

Consumer Watchdog filed a PRA requesting the audit and other records associated with the revocation of Blue Shield’s tax-exempt status from the Franchise Tax Board.  The Franchise Tax Board has refused to disclose the audit and has failed to provide a legal basis for their refusal.

“The Public Records Act was enacted to enable the public to monitor their government and provide a check and balance against undue influence by powerful corporations,” said Mai Tram Ly of Consumer Watchdog. “The Franchise Tax Board must not be allowed to shield Blue Shield from public accountability.”

Download Consumer Watchdog’s Public Record Act Request here:

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Jerry Flanagan
Jerry Flanagan
Jerry Flanagan is Consumer Watchdog's Litigation Director. Flanagan leads Consumer Watchdog’s litigation efforts in the areas of health insurance coverage and access to treatments. He has over 20 years experience working in public interest and health care policy, legislation and litigation.

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