Premera Blues appeals for-profit conversion denial

The insurer is arguing that the Washington state insurance commissioner ignored potential benefits outlined in its application.

By Robert Kazel, AMNews staff. Sept. 6, 2004.

Premera Blue Cross' request to convert to a for-profit company was declared dead by regulators in its home state of Washington. But the company is taking its case before a state court to get a second opinion.

Mountainlake Terrace, Wash.-based Premera asked a judge in August to overturn Insurance Commissioner Mike Kreidler's July 15 denial of its conversion application. A conversion, Kreidler had concluded, could raise premiums for some patients and might pave the way for an acquisition by a big out-of-state insurer.

Premera's lawyers argued that Kreidler ignored many potential benefits of a conversion, such as the planned creation of two large nonprofit health care foundations using money from the initial public stock offering. Premera has more than 800,000 fully insured members in Washington and about 100,000 in Alaska.

In the nearly two years since the Blues plan filed for permission to trade stock, it has spent about $35 million making its case. An appeal could take several more months, said Scott Forslund, Premera spokesman.

In the appeal, Premera's lawyers complain that Kreidler "belittled" the company's assertion that it needs to bolster capital accumulation through stock sales to compete with out-of-state, for-profit insurers. Kreidler, through a spokesman, declined to comment.