Cox's lawsuit against insurance deal OK'd

Nick Rees Oct. 10, 2008, 11:57am

Mike Cox (R)

LANSING, Mich. (Legal Newsline)-Attempts by Blue Cross Blue Shield of Michigan to have a lawsuit filed by the Michigan attorney general thrown out were rejected this week by an Ingham County judge.

Judge Paula Manderfield Blue Cross Blue Shield of Michigan's motion for dismissal of Attorney General Mike Cox's charges that laws were violated during the purchase of three for-profit insurance companies.

The company gave $125 million to its for-profit subsidiary Accident Fund to use toward the $127 million purchase of the for-profit CompWest Insurance Co., a California workers compensation insurer.

Cox argues that the money should have been used instead to lower health care costs for consumers by the nonprofit portion of the company, established by state law as Michigan's insurer of last resort.

"This ruling supports my charges that Blue Cross broke the law when it bought for-profit companies and when it used $125 million of their customers' money to do it," Cox said.

"Blue Cross has built a huge surplus with the help of state tax breaks and rapidly rising insurance premiums. They should be cutting health costs for Michigan families instead of diving deeper into the for-profit insurance industry," the Republican added.

In her ruling this week, Manderfield disagreed with the Michigan Insurance Commissioner's decision of the validity of the purchase and referred the case back to the commissioner for reconsideration of his earlier approval.

In his lawsuit, the attorney general asserts that Blue Cross Blue Shield of Michigan gave $125 million to a for-profit subsidiary last year to buy a workers' compensation insurer, CompWest Insurance Co., in California.

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