Appeals court rejects Premera appeal

The state Court of Appeals has upheld Insurance Commissioner Mike Kreidler’s decision rejecting a request by Premera Blue Cross, the...

The state Court of Appeals has upheld Insurance Commissioner Mike Kreidler’s decision rejecting a request by Premera Blue Cross, the state’s largest health insurer, to convert to a for-profit company.

The court’s three-judge panel unanimously upheld Kreidler’s July 15, 2004, ruling that ended a nearly two-year application process by the Mountlake Terrace-based insurer.

“We hold that the Commissioner did not err in assessing the benefits of Premera’s proposal and in rejecting its conversion plan on the grounds that the plan as a whole was unfair and unreasonable to subscribers, not in the public interest, and likely to be hazardous or prejudicial to the insurance-buying public,” the judges said in an opinion released Wednesday.

Kreidler’s decision followed an extensive review of the company’s application, including two rounds of statewide public meetings, an official record of thousands of pages and an 11-day adjudicative hearing.

“I never had any doubt that the court would recognize the basis and the logic for my ruling,” he said. “I reached my decision following a careful consideration of the law and the evidence. I was confident that it was fair and just.”

Premera filed the application with Kreidler’s office in the fall of 2002, contending that for-profit status was needed to improve the company’s ability to increase capital, improve products and service, support subscriber growth, preserve autonomy and enhance its ability to compete in the industry. The application process cost Premera a reported $34 million.

Premera appealed Kreidler’s decision, arguing that he exceeded his authority under the state holding company acts and misinterpreted the law. The appeal also maintained that the decision was not supported by substantial evidence in the record.

The Court of Appeals disagreed with that contention: “We affirm the Commissioner’s disapproval of Premera’s plan to reorganize and convert from non-profit to for-profit status.”

For a complete history of the conversion request and related documentation, visit http://www.insurance.wa.gov/special/premera/Premera_Index.asp .

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