BEFORE THE COMMISSIONER OF INSURANCE

OF THE STATE OF KANSAS

 

 

In the Matter of the Conversion and )

Acquisition of Blue Cross and Blue Shield ) Docket No. 3014-DM

of Kansas, Inc. )

 

 

Notice of Public Hearing

 

You are hereby notified that Kathleen Sebelius, the Kansas Commissioner of Insurance, will hold a public hearing on the proposed Plan of Conversion and Acquisition (the "Plan") of Blue Cross and Blue Shield of Kansas, Inc., a Kansas mutual insurance company ("BCBSKS") pursuant to Kansas Statutes Annotated 40-4004, 40-3304(d)(1) and 77-501 et seq. The Commissioner will hold the hearing between the hours of 9:00 A.M. and 5:00 P.M. beginning on the following dates and at the following place:

 

January 7-9, 2001

Capital Plaza Hotel

Emerald Ballroom

1717 S.W. Topeka Boulevard

Topeka, Kansas

 

Eligible policyholders qualified to vote on the Plan and any other interested persons may attend. You do not need to appear at the public hearing or submit any statements to the Commissioner to continue your insurance policy, or to vote on the plan (if you are qualified to vote).

 

Any party who fails to attend or participate in a prehearing conference, hearing or other stage of an adjudicative proceeding my be held in default pursuant to K.S.A. 77-520 of the Kansas Administrative Procedure Act. If you are unable to attend the proceedings, notify the Commissioner immediately.

 

Under the proposed Plan, BCBSKS would convert from a mutual insurance company to a stock insurance company. The Plan would provide for, and be contingent upon, the acquisition of all BCBSKS stock by Anthem West, Inc. ("Anthem BCBS") at the same time as the conversion pursuant to the terms and conditions of an Alliance Agreement between BCBSKS and Anthem BCBS. Together, this conversion and acquisition are sometimes referred to as a "sponsored demutualization." The purpose of the hearing is to receive comments, information and other evidence based upon which the Commissioner will decide whether to approve or disapprove the Plan. The effectiveness of the Plan is subject to the Commissioner's approval. Under the statute, the Commissioner shall approve the conversion if she finds that:

 

 

(1)               The plan of conversion is fair and equitable to policyholders;

(2)               the plan of conversion complies with the provisions of the conversion statute;

(3)               the plan of conversion does not unjustly enrich any director, officer, agent or employee of BCBSKS; and

(4)               the new stock insurer would meet minimum requirements to be issued a certificate of authority by the Commissioner to transact business in this state and the continued operations of the new stock insurer would not be hazardous to existing or future policyholders or the public.

 

The statute requires that the Commissioner approve the acquisition unless she finds that:

 


(A)After the change of control BCBSKS would not be able to satisfy the requirements for the issuance of a license to write the lines of insurance for which it is presently licensed;

(B)Anthem BCBS financial condition is such as might jeopardize the financial stability of BCBSKS or prejudice the interest of its policyholders;

(C)Anthem BCBS plans or proposals to liquidate BCBSKS, sell its assets or consolidate or merge it with any person, or to make any other material changes in its business or corporate structure or management, are unfair and unreasonable to BCBSKS' policyholders and not in the public interest;

(D)the competence, experience and integrity of those persons who would control the operation of BCBSKS are such that it would not be in the interest of BCBSKS' policyholders and of the public to permit the merger or other acquisition of control; or

(E)the acquisition is likely to be hazardous or prejudicial to the insurance-buying public.

 

Subject to Kansas Statutes Annotated 77-523(c), any interested person who is not a party may make oral or written statements or comments upon the proposed conversion and acquisition at the hearing to be included in the formal record for these proceedings. While all those who wish to testify may do so, the Commissioner may, in order to accommodate all interested persons, limit the time that any individual or group may speak.

 

Any person wishing to testify at the public hearing should register with the Commissioner between the hours of 9:00 A.M. and 5:00 P.M. Central Standard Time on or before January 2, 2002, five (5) days before the public hearings. Written statements, under oath, may also be sent to the Commissioner if an interested person is unable to or does not wish to attend the public hearing. Interested persons should contact:


 

 

Brent Getty

Staff Attorney

Kansas Insurance Department

420 S.W. 9th St.

Topeka, KS 66612-1678

(785) 368-7164

 

The location of the public hearing is accessible to people with disabilities. Please contact the Commissioner's office to make arrangements for special accommodations. All written statements submitted under oath must be received prior to the close of the public hearing in order for any such written statement to be included in the public hearing record.

Information about this proposed sponsored demutualization is available on Blue Cross' web site at www.bcbsks.com, or by calling Blue Cross' Policyholder Information Center toll-free at 1-800-756-8400.

 

IT IS SO ORDERD.

 

Dated: November 9, 2001

 

 

 

 

 

 

KATHLEEN SEBELIUS

Commissioner of Insurance


NOTIFICATION OF SERVICE

 

A true and correct copy of the foregoing Notice of Public Hearing dated November 9, 2001, has this 9th day of November 2001, been sent to the below identified counsel or parties.

 

________________________________________

Staff Attorney to the Commissioner

 

SERVICE LIST

 

Kathy Greenlee, Esq.

General Counsel

Kansas Insurance Department

420 S.W. 9th Street

Topeka, Kansas 66612-1678

(785) 296-3071

(785) 296-2283 Fax

COUNSEL FOR THE KANSAS INSURANCE DEPARTMENT

 

Patrick H. Cantilo, Esq.

Cantilo & Bennett, L.L.P.

7501 C. North Capital of Texas Highway, Suite 200

Austin, Texas 78731

(512) 478-6000

(512) 404-6550 Fax

COUNSEL FOR THE KANSAS INSURANCE DEPARTMENT

 

Gary D. McCallister, Esq.

Gary D. McCallister & Associates, Ltd.

29 S. La Salle Street, Suite 1210

Chicago, Illinois 60603

(312) 345-0611

(312) 345-0612 Fax

COUNSEL FOR BLUE CROSS AND BLUE SHIELD OF KANSAS, INC.

 

James C. Scoville, Esq.

Debevoise & Plimpton

919 Third Avenue

New York, New York 10022

(212) 909-6655

(212) 909-6836 Fax

COUNSEL FOR BLUE CROSS AND BLUE SHIELD OF KANSAS, INC.

Doug Fauth, Esq.

Anthem Blue Cross and Blue Shield

120 Monument Circle

Indianapolis, Indiana 46204-4903

(317) 488-6259

(317) 488-6891 Fax

COUNSEL FOR ANTHEM BLUE CROSS AND BLUE SHIELD

 

Randy J. Forbes, Esq.

Frieden, Haynes & Forbes

555 S Kansas Ave, Suite 303

P.O. Box 639

Topeka, Kansas 66601-0639

(785) 232-7266

(785) 232-5841 Fax

COUNSEL FOR ANTHEM BLUE CROSS AND BLUE SHIELD

 

Douglas S. Laird, Esq.

Polsinelli, Shalton & Welte PC

700 W 47th St, Suite 1000

Kansas City, MO 64112-1802

(816) 360-4341

(816) 753-1536 Fax

COUNSEL FOR KANSAS MEDICAL SOCIETY

 

Jerry Slaughter

Kansas Medical Society

623 SW 10th St

Topeka, KS 66612

(785) 235-2383

(785) 235-5114 Fax

EXECUTIVE DIRECTOR FOR KANSAS MEDICAL SOCIETY

 

Charles R. Hay, Esq.

Goodell, Stratton, Edmonds & Palmer LLP

515 S. Kansas Ave.

Topeka, KS 66603-3999

(785) 233-0593

(785) 233-8870 Fax

COUNSEL FOR KANSAS HOSPITAL ASSOCIATION

 

 

 

Donald Wilson

Kansas Hospital Association

215 SE 8th Ave.

Topeka, KS 66603

(785) 233-7436

(785) 233-6955 Fax

PRESIDENT FOR KANSAS HOSPITAL ASSOCIATION

 

Karen A. Eager, Esq.

Law Offices of Theodore J. Lickteig

16 E. 13th St.

Lawrence, KS 66044

(785) 842-6401

(785) 842-8258 Fax

COUNSEL FOR KANSAS STATE NURSES ASSOCIATION & KANSAS ASSOCIATION OF THE MEDICALLY UNDERSERVED

 

Terri Roberts

Kansas State Nurses Association

1208 SW Tyler

Topeka, KS 66612-1735

(785) 233-8638

(785) 233-5222 Fax

EXECUTIVE DIRECTOR FOR KANSAS STATE NURSES ASSOCIATION

 

Joyce Volmut

Kansas Association for the Medically Underserved

112 SW 6th St.

Topeka, KS 66603

(785) 233-8483

(785) 233-8403 Fax

EXECUTIVE DIRECTOR FOR KANSAS ASSOCIATION FOR THE MEDICALLY UNDERSERVED