WellPoint Health Networks CEO Says Proposed Merger With Anthem Remains ‘Appropriate’
WellPoint CEO Leonard Schaeffer on Tuesday in a conference call with analysts said that although regulators from three states are raising new questions about the proposed merger between the Thousand Oaks-based insurer and Anthem, the deal "still is the most appropriate thing for either of us to do," the Los Angeles Times reports (Tamaki, Los Angeles Times, 10/27).
The proposed merger, announced in October 2003, would combine the companies under the name WellPoint and establish headquarters in Indiana. Insurance Commissioner John Garamendi (D) in July rejected part of the proposed merger because he said Anthem would use as much as $400 million annually in health insurance premiums paid by California residents to finance the proposed merger in the first three years and an unlimited amount after that time. WellPoint and Anthem shareholders have approved the proposed merger (California Healthline, 10/26).
In addition, entities with direct regulatory authority, including the U.S. Department of Justice, the Department of Managed Health Care, nine other states and Puerto Rico initially approved the plan (Colliver, San Francisco Chronicle, 10/27). In August, Anthem filed a lawsuit against Garamendi that seeks to overturn his ruling (Los Angeles Times, 10/27).
Since Garamendi announced that he would not approve the merger, regulators in Georgia, Missouri and Texas have raised new concerns over WellPoint's solvency and the uncertainty of the merger and its terms (California Healthline, 10/26). Although regulators from states such as Illinois, Virginia and Wisconsin have not taken further action, they are "watching to see if any changes are made that affect their original agreements," the Chronicle reports.
Danny Saenz, deputy insurance commissioner in Texas, where regulators set a Dec. 31 deadline for completion of the merger, said, "Since it's getting stale, we'll probably rescind that particular order ... and require [the insurers] to come back to us once everything is settled in California."
Schaeffer said, "It's always been our understanding that every state has a regulatory duty to ensure the deal they approved is the deal that gets done" (San Francisco Chronicle, 10/27). He added, "We will continue to respond to regulatory agencies about any questions they may have about the merger" (Los Angeles Times, 10/27).