WellPoint Health Networks Executives To Receive at Least $147 Million After Completion of Anthem Merger
Officials for the Department of Managed Health Care on Tuesday released a document filed by Indianapolis-based Anthem that said executives of Thousand Oaks-based WellPoint Health Networks could receive a combined $147 million to $356 million in bonuses or severance payments after the completion of a proposed $15.5 billion merger between the companies, the Los Angeles Times reports (Girion, Los Angeles Times, 6/9). Under the proposed merger, announced last October, the combined company would use the name WellPoint and have a headquarters in Indianapolis. The combined company would have $27.1 billion in assets, 40,000 employees and 26 million members in 13 states. WellPoint currently provides health insurance for seven million California residents through subsidiary Blue Cross of California (California Healthline, 5/21). According to the document filed with DMHC, if the combined company retains all 293 WellPoint executives after the completion of the proposed merger, they would receive a combined $147 million in bonuses, and if all the executives are dismissed within three years, they would receive a combined $356 million in severance payments. The document also valued the stock options of WellPoint executives at a combined $251 million. WellPoint spokesperson Ken Ferber said that the number of executives who would remain after the completion of the proposed merger remains undetermined.
DMHC released the document one day before a state legislative hearing on the proposed merger (Los Angeles Times, 6/9). Assembly Speaker Fabian Nunez (D-Los Angeles) last month formed a special committee to investigate the proposed merger in response to concerns raised by several lawmakers and consumer advocacy groups that DMHC would approve the agreement without a public hearing. Although the state has held public hearings on similar mergers in the past, state law does not require a hearing. DMHC officials said that the proposed merger between Anthem and WellPoint is different from previous mergers because the agreement would not limit consumer choice or competition as Blue Cross of California would continue to operate. The proposed merger requires approval from Anthem and WellPoint shareholders, as well as from regulators in the states where the combined company would operate. Nine states and the federal government have approved the proposed merger (California Healthline, 5/21). Two WellPoint executives and Anthem President Larry Glasscock plan to testify at the hearing (Swiatek, Indianapolis Star, 6/9).
Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, said that WellPoint should have disclosed the information in the document to the public and that the state DMHC should not have delayed the release of the document until the day before the state legislative hearing. Court added, "This is a question of whether doctors and patients in this state will get a fair shake from the company. If nine-digit compensation is paid out to executives, that significantly increases the chances that policy holders will pay more, that prescription drug choices will shrink and copayments will go up." Officials for the California Medical Association plan to ask DMHC officials to withhold judgment on the proposed merger "until there are answers as to how the size of the payments and bonuses would affect physician reimbursement, premiums and medical care," the Times reports (Los Angeles Times, 6/9). Ferber said that WellPoint "has been working closely with both (insurance) regulatory bodies" on the proposed merger for more than six months (Indianapolis Star, 6/9).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.