Anthem Files Lawsuit Targeting Calif. Commissioner

Anthem Inc. on Tuesday filed a lawsuit against California Insurance Commissioner John Garamendi in the Superior Court of the State of California for the County of Los Angeles.

The suit seeks to set aside the Commissioner’s decision to disapprove Anthem’s application to acquire control of BC Life & Health Insurance Company in connection with the proposed merger of WellPoint Health Networks Inc. with Anthem.

The suit also requests the Court to declare that Anthem’s application
to acquire control of BC Life satisfied all the legal standards for approval and enjoin the Commissioner from blocking the completion of the merger between Anthem and WellPoint. BC Life, a WellPoint subsidiary, would represent approximately 4% of the combined revenues of the merged companies.

“The Commissioner is required to follow California law in making his
decision and he failed to do that,” said David Frick, chief legal officer
of Anthem, Inc. “That is why we have unfortunately had to file this lawsuit.”

“Filing this lawsuit is something we did not want to do,” added Larry
Glasscock, chairman, president and CEO of Anthem Inc. “However, we genuinely feel we have met all the legal requirements necessary
for approval of the merger.”

According to Frick, “The Commissioner’s denial of the merger blocks Anthem’s voluntary commitment that will generate as much as $450 million of investments over a 20-year period aimed at enhancing the availability of health care facilities and services in underserved California communities. The Insurance Commissioner has gone beyond the scope of authority granted to him under California law in denying our merger and in doing so he has hurt the very people he states he is trying to help.”

The proposed merger of Anthem and WellPoint has already been reviewed and approved by regulators in Texas, Illinois, Delaware, Virginia, Georgia, Missouri, Oklahoma, West Virginia, Wisconsin and Puerto Rico.

Each of those regulators reportedly applied substantially identical standards contained in laws adopted by virtually all states, including California.

The proposed merger has also been reviewed by the California Attorney General, the United States Department of Justice and the Federal Trade Commission. It has been approved by the
California Department of Managed Health Care (DMHC), which regulates approximately 90% of WellPoint’s California business and is responsible for ensuring that covered Californians have appropriate access to quality health care, and unanimously approved by the directors of the Blue Cross Blue Shield Association. In addition, shareholders of both companies, by a vote of 97%, overwhelmingly approved the merger in separate shareholder meetings earlier this year.

“We have met all of the standards necessary for approval by the California Department of Insurance, just as we have met the demanding standards of the DMHC and the standards of regulators in every one of the 10 other jurisdictions where approval was required. Each of those other regulators, after a careful and thorough review, has ruled in favor of this merger,” said Frick. “The Commissioner’s decision is unlawful and we are asking the court to overturn his action and assure approval for the merger.”

Anthem Inc. is an Indiana-domiciled publicly traded company that, through its subsidiary companies, provides health care benefits to more than 12.6 million people.