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Thursday, May 20, 2010
Blue Cross Warns PRC of Legal Action
By Winthrop Quigley
Copyright © 2010 Albuquerque Journal Journal Staff Writer
Attorneys for Blue Cross and Blue Shield of New Mexico on Wednesday warned the Public Regulation Commission it will face legal action if the agency attempts to overturn premium increases recently approved by the state Insurance Division.
In a letter to the division's general counsel, Blue Cross lawyers Paul Bardacke and Kerry Kiernan said that "as a matter of law the commission has no jurisdiction or other authority to review, let alone vacate, a final order issued by the superintendent of insurance in this matter."
The lawyers said they would ask the state Supreme Court to halt any PRC effort to stop the increase.
Blue Cross and Blue Shield said the company wants the PRC to "play by the rules to ensure affordable and accessible health care coverage throughout the state of New Mexico." The company said that for "the 70 years that Blue Cross Blue Shield of New Mexico has served communities throughout the state, we have played by the rules. We believe the PRC must do the same."
The letter arrives at a chaotic time at the Insurance Division. Morris Chavez, the insurance superintendent who approved an average 21 percent increase in premiums last month for Blue Cross products sold to individuals, resigned May 4. The PRC appointed Chavez's deputy, Tom Rushton, to be interim superintendent, then voted to ask him to set aside Chavez's order and hold a hearing on the rate increase. Rushton recused himself from making any decisions in the case and announced he would retire June 15. Division lawyer Brent Moore, to whom the company's letter was sent, also has announced he is resigning at the end of this month.
Late last year, Blue Cross asked the Insurance Division to approve an average 24.6 percent increase in premiums it charges for insurance it sells to individuals to be effective April 1. The company said costs for the customers' care far exceeded the revenue the insurance products delivered. They blamed losses in the individual market for an $11 million loss the company sustained in 2009.
Division staff approved the request, but Chavez, at the urging of the commission, ordered a public hearing. The division, Attorney General's Office and a consumer complainant agreed to an average increase of 21 percent just before the hearing began. Chavez signed the order April 26.
Commissioner Jason Marks called it a "back room deal."
The insurance superintendent is appointed by the PRC and can be removed only for cause. Periodically since the PRC took control of the division in 1998, superintendents and commissioners have struggled to define where the superintendent's authority begins and the commission's authority ends. In 2002, then-Superintendent Don Letherer was fired when he would not take action against a life insurance company accused by a retired broker of cheating him out of commissions. An exhaustive investigation found no basis for the accusation.
The Bardacke-Kiernan letter says the PRC cannot interfere with an Insurance Division case and can't change the outcome of a health insurance case once the superintendent has issued an order.
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