News in brief - Sept. 13, 2004

Calif. regulator: Dismiss Anthem suit - Seattle HMO workers strike - Blues plan appeals Alaska decision - Indiana physician-owned hospital in bankruptcy - Ex-HealthSouth executive barred from all boardrooms

Calif. regulator: Dismiss Anthem suit

The insurance commissioner of California Aug. 25 asked a state court to reject Anthem Inc.'s lawsuit charging that he had erred in judgment and overstepped his authority when he declined to sign off on the insurer's proposed merger with WellPoint Health Networks.

Commissioner John Garamendi turned down the deal in July, and Anthem filed its suit Aug. 3. Garamendi's motion, in the California Superior Court for Los Angeles County, reiterated his position that the merger could hurt insurance subscribers in California, where WellPoint is based, because of potential premium increases and corporate debt that could result from the deal.

The commissioner has strongly criticized the companies' plan to pay high bonuses to WellPoint executives as part of the $16.5 billion merger.

Seattle HMO workers strike

Seattle-based Group Health Cooperative, a large consumer-governed, nonprofit HMO, saw about 1,700 of its nurses, medical assistants and other employees walk out on the job in August for a five-day strike over medical benefits.

The strike, which also included therapists and janitors, came about after talks broke down over the plan's decision to increase co-payments, require employees to pay a deductible and charge them premiums for the first time.

"One of the main topics of discussion in our negotiations is how much staff should share in the cost of their own health care," the plan said. "We don't think it's fair to ask our patients to pay more of the rising costs of health care if our own staff aren't contributing their fair share."

The August walkout ended without an agreement and with union organizers leaving open the possibility of another strike.

Blues plan appeals Alaska decision

Premera Blue Cross, whose request to convert to a for-profit plan was turned down by Alaska insurance officials, in August appealed the decision to a state court in Alaska, but said it also is confident it can revise its application to the satisfaction of Alaska Insurance Director Linda Hall so that she will reconsider.

Mountlake Terrace, Wash.-based Premera said it had filed the appeal to preserve its rights in case it ultimately must ask a judge to reverse Hall's decision. But Hall, though rejecting Premera's bid to go for-profit in its current form, left the door open to possibly re-evaluating the application if the health plan built various safeguards into it, such as agreeing to extend the period during which it would limit premium increases.

Premera has customers in Alaska and Washington. Regulators in Washington recently rejected the plan's conversion request; Premera has filed an appeal with a judge in that state.

Indiana physician-owned hospital in bankruptcy

A hospital in Indianapolis has been forced to seek bankruptcy protection less than six months after it was purchased by a group of doctors.

Winona Memorial Hospital announced Aug. 24 that creditors had filed a petition to force it to reorganize its debt under Chapter 11. Robert E. Mehl, MD, PhD, chair of the board of WMH Physicians Hospital LLC, said the hospital would remain open during the reorganization.

"It has always been the intent of the physician ownership to fulfill the hospital's financial commitments to its suppliers," Dr. Mehl said in a written statement. "Unfortunately, the distressed condition of the hospital when the physicians acquired it, and the inability to obtain adequate financing, has resulted in creditors filing the involuntary petition."

"We have constructed a reorganization plan that will allow us to continue operations and maintain control over our hospital, and ask for court-ordered relief from our creditors."

Winona owes about $400,000 to Indianapolis Power & Light Co., said Crystal Livers-Powers, a spokeswoman for the utility. She said the company had cut off electricity to two ancillary hospital buildings in early August, but the action did not result in anything "that would lead us to believe they were going to resolve their debt." She said the firm had filed the bankruptcy petition Aug. 23 with two other creditors.

Ex-HealthSouth executive barred from all boardrooms

Former HealthSouth chief information officer and assistant controller Kenneth K. Livesay has been barred from ever serving again as an officer or director of a public firm as part of a legal settlement with the U.S. Securities and Exchange Commission.

Livesay, who was sued by the SEC for allegedly directing HealthSouth employees to make false accounting statements to inflate the company's earnings, did not deny or admit any wrongdoing as part of the settlement, which was finalized on Aug. 19.

Earlier in the summer, Livesay was sentenced in federal court to six months of home detention and 60 months of probation and was ordered to pay a $10,000 fine and forfeit $750,000 for his role in the massive accounting scandal at HealthSouth. He had pleaded guilty to fraud and conspiracy charges.

Livesay is one of at least 19 former HealthSouth employees who has faced criminal charges since the accounting fraud at the outpatient services giant was first revealed in March 2003.