IIABW TO HOLD ANNUAL CONFERENCE SEPT. 30 - OCT. 2:
The Independent Insurance Agents & Brokers of Washington will hold its annual conference Sept. 30 - Oct. 2, 2004 at The Davenport Hotel in Spokane, Wash. The conference theme, "Making a Difference," will be highlighted with a keynote address by Mike McGavick, CEO of Safeco, and a welcome by Tom Grau, president-elect of IIABA. Concurrent session topics of agency management, E&O issues, technical insurance topics, D&O and an "ask the experts" question and answer session will be presented by nationally recognized industry experts. Continuing education credits have been applied for in Washington for most of the concurrent sessions. The conference will include an insurance specific trade show with over 30 exhibitors with numerous networking opportunities. A semi-formal dinner with world-class entertainment will cap the conference activities. A pre-conference golf tournament is scheduled for the Creek at Qualchan Golf Course in Spokane. For information on the conference, exhibits and sponsorship opportunities, contact Kim Southworth at (425) 649-0102. Information on the conference and the host property can be found at www.wainsurance.org.
ANTHEM FILES LAWSUIT AGAINST CALIFORNIA INSURANCE COMMISSIONER:
Anthem Inc. filed a lawsuit against the California Insurance Commissioner 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 percent 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 R. Frick, chief legal officer of Anthem Inc. "That is why we have unfortunately had to file this lawsuit. 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 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 percent 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 percent, overwhelmingly approved the merger in separate shareholder meetings earlier this year. A copy of Anthem's complaint is available at www.anthem.com in the section titled Press Room. "I welcome this lawsuit," Garamendi said in a statement issued in response to the lawsuit. "This action will give me an opportunity to present the full story of how the merger of Anthem and WellPoint would be unfair, unreasonable, and prejudicial to California policyholders. My decision to deny Anthem Inc.'s acquisition of BC Life and Health Insurance Company was made solely in the interest of protecting health care consumers. As I have said repeatedly, nothing in this deal benefits California policyholders. It merely saddles them with the cost of the transaction. The merger, valued at $15.5 billion, will require nearly $4 billion in cash payments, resulting in $3.4 billion in debt. Because dividends paid to the new WellPoint by its health care subsidiaries are the only source of funds to repay that debt, it is clear that businesses and individuals who purchase the new company's policies will be stuck with the bill. Anthem and WellPoint argue that I have abused my discretion by making a decision to protect Californians. I welcome this suit, and look forward to the opportunity to present in court all of the facts and the reasons why this deal doesn't work for California policyholders."
WYOMING GOVERNOR SIGNS BILLS AT END OF SPECIAL LEGISLATIVE SESSION:
A special Wyoming legislative session called to address rising medical malpractice insurance rates resulted in the passage of three bills. Governor Dave Freudenthal signed the bills in early August. One bill will help doctors in the state pay for insurance, offering $13 million in low-interest state loans. Another bill will add up to six Wyoming medical students to the University of Washington. Another bill authorized several studies related to Wyoming's health care system, including the geographic distribution of physicians in the state, a self-insurance pool for physicians and a medical errors reporting system.
OREGON MALPRACTICE DAMAGE CAP HEADS TO BALLOT:
A proposed constitutional amendment to limit pain and suffering awards to $500,000 in Oregon medical malpractice cases will be on the ballot this November. Physicians said that rising malpractice insurance costs have made it difficult to recruit doctors in the state. Critics of the initiative said that other factors, including rising healthcare costs, contribute to rising insurance rates. The measure's sponsors, called Oregonians for Quality, Affordable and Reliable Health Care, have raised about $4 million and have spent about $1 million putting their initiative on the ballot. This is the second time in four years that voters have been given the opportunity to limit damage awards. Oregon previously had a $500,000 limit on noneconomic damage awards in civil cases from 1987 to 1999 until the state Supreme Court said the law violated state constitutional rights to a jury trial. Legislators later sent an amendment to voters that would limit damage awards in civil lawsuits, but the measure was defeated by a 3-to-1 margin.
CALIF. SUPREME COURT ISSUES MAJOR RULING ON INSURER BAD-FAITH CLAIMS:
The California Supreme Court threw out a lower court ruling that had resulted in a multi-million dollar damage award against an insurance company. The Association of California Insurance Companies (ACIC) had filed an amicus brief in the case Jonathan Neil & Associates Inc. v. Jones, asking the court to overturn the verdict and throw out the damages. "The Court has issued a major decision dealing with the primary jurisdiction of the Department of Insurance and the scope of bad-faith actions against insurance companies," said Sam Sorich, president of ACIC. "The ruling is consistent with the arguments ACIC made in its brief to the Court." The legal dispute centered around premium payments owed by a trucking company owned by Fred and Mildred Jones. They had obtained insurance coverage for their company through the California Automobile Assigned Risk Plan (CAARP). After the expiration of the policy, CAARP's servicing carrier audited the Joneses and, based on CAARP's rules for charging for subhaulers, determined that the Joneses owed an additional $51,000 in premiums. The Joneses refused to pay. The servicing carrier sued and the Joneses responded by suing the servicing carrier for bad-faith. The trial court ruled in favor of the Joneses and the jury awarded them more than $11 million in punitive damages. The judge reduced that amount to $4 million. The Fifth District Court of Appeal ruled that the trial judge should have stayed the legal action and sent the dispute to the state Department of Insurance. The Supreme Court decided that the trial court should not have taken the case. The trial court should have stayed the proceeding and referred the premium dispute to the Department of Insurance so that the Department could make a timely ruling on the CAARP appeal process. The Court concluded that the doctrine of "primary jurisdiction" of administrative agencies required the trial court to allow the CAARP process to be completed before taking the case. The Court also concluded that the facts of this case did not justify a bad-faith action against the servicing carrier. The legal analysis in the Court's opinion supports the argument that bad-faith actions against insurers should be limited to cases where there are allegations of claims mishandling and should not be extended to disputes over premiums.
IIABOC TO HOST CE SL-2 FORUM ON SEPT. 16:
The Independent Insurance Agents and Brokers of Orange County present: "SL-2 Forum: How to Conduct and Document Diligent Searches," a three-hour continuing education seminar (course number pending approval with the California Department of Insurance). The CE opportunity is sponsored by AFS/IBEX Financial Services, in partnership with R.E. Chaix & Associates. The seminar will be held on Sept. 16 at the Tustin Banquet Center in Tustin, California. Registration begins at 8:00 am and includes a continental breakfast. The program begins at 9:00 am and ends at noon. The cost is $10 for members; $35 for non-members. For more information or to register, please visit www.iiaboc.com. Registration deadline is Sept. 10.
