New York’s highest court has dismissed an attempt to block the plan to convert Empire Blue Cross and Blue Shield into a for-profit company. The planned conversion is projected to provide the state with as much as $4 billion in revenues, funds that Gov. George Pataki and lawmakers say the state needs to pay for health programs and raises for hospital and nursing home workers.
In Consumers’ Union of the U.S., et. al. vs. The State of New York and Empire HealthChoice, Inc., (d/b/a Empire Blue Cross Blue Shield), the court concluded that the plaintiffs’ allegations were legally insufficient to support any cause of action. The court granted the defendants’ motion to dismiss the amended complaint alleging that the conversion legislation violated the state constitution on the ground that it is a local law granting an exclusive privilege, immunity and/or franchise.
The suit was brought in 2002, by Consumers Union, the publisher of Consumer Reports, as well as three individual Empire policyholders. The court rejected their contentions that the deal was unconstitutional because it benefited only a single insurer and that it was a breach of Empire’s directors’ fiduciary responsibilities.
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