State Officials Probe Payment From Blue Cross to WellPoint

The California Department of Managed Health Care is investigating whether a $950-million dividend paid by Blue Cross of California to its parent company violates a state agreement, according to officials, the Los Angeles Times reports.

State officials said Blue Cross's dividend to WellPoint, its parent company, should not have exceeded $141 million.

DMHC Director Cindy Ehnes said the dividend "is out of the bounds of propriety and certainly the spirit of" a three-year agreement the companies made with state officials when they approved Anthem's acquisition of WellPoint.

Ehnes said, "We are concerned that [the payment] reflects a viewpoint of California being [WellPoint's] own ATM machine, while, at the same time, Californians are struggling to get health insurance for their families."

The state could assess fines and penalties for WellPoint, as well as order the company to return to California policyholders any dividends that officials determine were taken improperly.

Shannon Troughton, WellPoint spokesperson, said, "Blue Cross communicated clearly with the DMHC in advance our plans for the dividend and the amount." She added, "In fact, we've been working with DMHC since 2006 to come up with this figure."

Troughton said WellPoint never was notified that state regulators were going to challenge the payment or the amount of the dividend. WellPoint requested the payment in March and Blue Cross paid it this month, according to Troughton (Girion, Los Angeles Times, 5/26).