Judge Approves Agreement Allowing CareFirst To Continue To Use Blue Cross Blue Shield Trademark

U.S. District Judge J. Frederick Motz on June 6 signed a settlement between Maryland, CareFirst Blue Cross Blue Shield and Blue Cross Blue Shield Association officials that will allow CareFirst to continue to keep its BCBS affiliation, ending "weeks of legal wrangling and tense negotiations," the Washington Post reports (Brubaker, Washington Post, 6/7). BCBSA had filed a lawsuit in an Illinois federal court to prevent CareFirst from using the BCBS trademark in response to a bill signed last month by Maryland Gov. Robert Ehrlich (R) that requires the replacement of 10 members of the CareFirst board and reaffirms the not-for-profit mission of the company. Ehrlich signed the legislation after state Insurance Commissioner Steven Larsen in March rejected the $1.37 billion sale of CareFirst, the largest not-for-profit insurer in the Washington, D.C., area, to California-based WellPoint Health Networks over concerns that the sale would not benefit the public. The legislation requires CareFirst to replace 10 of 12 Maryland board members by December; a committee of individuals appointed by Ehrlich and state lawmakers will name new board members. The bill also regulates compensation for CareFirst board members and executives and prohibits efforts to convert the company to for-profit status for five years (Kaiser Daily Health Policy Report, 6/5).

Terms of Settlement
Under the agreement, the state would revise the new law to require CareFirst to replace five, rather than 10, Maryland board members to CareFirst's 21-member corporate board by Jan. 1. The five new members would work with Maryland board members to replace seven more by the end of July 1, 2004. Further, the settlement would give the state insurance commissioner the ability to challenge new executive compensation guidelines drafted by CareFirst; under the law, the insurance commissioner would have regulated the compensation. In addition, the agreement would ensure that 3.2 million CareFirst members do not lose access to BCBS providers outside of the Washington, D.C., area. Maryland Attorney General J. Joseph Curran (D) said, "The law is being changed a bit, but this agreement should relieve CareFirst's 3.2 million policyholders of any anxiety of whether they can continue being covered in the national network" (Washington Post, 6/7). Curran said the agreement "satisfies the association's concerns and accomplishes many of the reform goals set by state legislators," the Baltimore Sun reports. CareFirst released a statement that said, "[W]e at CareFirst are hopeful that the distractions of recent months can be set aside and we can refocus our energies on providing the quality, cost-effective health care our members expect and deserve." However, CareFirst officials said they "still have concerns" about several provisions in the law, but said they will work with the Maryland General Assembly next session to resolve any problems, according to the Sun. The agreement needs approval from Ehrlich, who said he approves of the settlement, as well as from other Maryland officials, including House Speaker Michael Busch (D), Senate President Thomas Miller (D) and new Insurance Commissioner Alfred Redmer (Thanh Dang, Baltimore Sun, 6/7).