AG sues to reverse Blue Cross insurance deal

Chris Rizo Jul. 2, 2008, 1:00pm

Mike Cox (R)

LANSING, Mich. (Legal Newsline)-Michigan Attorney General Mike Cox said Wednesday he will file a lawsuit against Blue Cross Blue Shield of Michigan for giving $125 million last year to its for-profit subsidiary to buy a California insurance company.

Lansing, Mich.-based Accident Fund used the $125 million toward the $127 million purchase of CompWest Insurance Co., a California workers compensation insurer.

Cox said the money should have instead been used by the nonprofit side of the company, which has been established by state law as Michigan's insurer of last resort.

Cox said state law bars Blue Cross from giving a for-profit subsidiary $125 million it collected from customers as a nonprofit insurer. The money should have gone to lower health care costs for consumers, he added.

"Michigan consumers are being squeezed by high gas prices, mortgage foreclosures and high unemployment rates," Cox said in a statement.

"They shouldn't have to pay higher health care premiums so Blue Cross can go on a spending spree and grab up for-profit insurance companies."

The lawsuit, filed in Ingham Circuit Court, asks that Blue Cross and Accident Fund sell CWI Holdings, Inc. and two other for-profit companies the Accident Fund has purchased since 2005.

"The bottom line is Blue Cross broke the law and we're going to rectify it," Cox said.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at

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