Feds looking into Maryland Blues conversion bid

A grand jury has issued subpoenas relating to the attempted for-profit conversion.

By Robert Kazel, AMNews staff. Sept. 8, 2003.

A bad year for CareFirst BlueCross BlueShield and its executives keeps getting worse.

A federal grand jury issued a subpoena to Owings Mills, Md.-based CareFirst in August, demanding extensive records relating to the company's ill-fated attempt to convert to a for-profit operation and be acquired for $1.4 billion by WellPoint Health Networks of California.

CareFirst, in a news release, said it is cooperating in the investigation by the U.S. Attorney's Office for the District of Maryland, based in Baltimore. "A fair and reasonable examination of the requested material," the company said, "will clearly demonstrate that CareFirst's actions have been lawful."

The plan noted that a subpoena "is not evidence of wrongdoing."

A subpoena also was issued to WellPoint for files on the attempted purchase, a bid that was made moot when in March the Maryland insurance commissioner turned down CareFirst's request to turn into a shareholder-owned corporation, saying the deal would work against the public interest. WellPoint is "going to cooperate fully, and we have no reason to believe we are the subject of the [investigation]," spokesman Ken Ferber said.

The U.S. attorney's office in Baltimore declined to comment on the issuance of any subpoenas, nor has it revealed why it sought them.