As Expected, Consumer Groups Sue To Block For-Profit Conversion of Empire Blue Cross and Blue Shield

As expected, a consortium of consumer and health care advocates on Aug. 21 sued New York state to block the conversion of Empire Blue Cross and Blue Shield from not-for-profit to for-profit, the AP/Albany Times Union reports. Calling the conversion "unconstitutional," Yonkers-based Consumers Union, Disabled Action of Metropolitan New York, Housing Works, New York Senior Action Council, the New York Chapter of the National Multiple Sclerosis Society and five current Empire BCBS beneficiaries filed suit against Gov. George Pataki (R), the state Legislature and Superintendent of Insurance Greg Serio in New York State Supreme Court (Gormley, AP/Albany Times Union, 8/22). In many states, money raised from the sale of stock after a Blue Cross plan conversion "belongs to the former not-for-profit agency's former constituency." Several Blue Cross plans that have converted to for-profit companies in the past few years have used funds from the conversions to establish "enormous health care foundations." Analysts expect the conversion to raise more than $1 billion (Kaiser Daily Health Policy Report, 8/21). However, in the Empire Blue Cross conversion, Pataki, state Senate Majority Leader Joseph Bruno (R) and state Assembly Speaker Sheldon Silver (D) negotiated a deal that would use much of the conversion profit on wage increases to "retain and attract" health care workers. The state Legislature approved the deal in January. Some health advocates have criticized the deal as a "political favor" for Dennis Rivera, president of the Service Employees International Union 1199, because Rivera's union represents many of the health care workers who would benefit from the increased wages. In "a rare backing," the union has endorsed Pataki in his re-election bid. New York "cannot simply take $1 billion of charitable assets that were dedicated to increasing New Yorkers' access to health care and divert those funds for other purposes," Mark Scherzer, attorney for the groups suing the state, said. But John Signor, spokesperson for the New York Health Department, said that attracting and retaining health care workers and supporting health care programs are "critically important components of ensuring the overall public health of New Yorkers," adding that the state is "confident the conversion will be allowed to go forward" (AP/Albany Times Union, 8/22).