Blue Cross Statement on Minnesota Supreme Court Ruling on Blue Cross' Tobacco Proceeds Plan

Blue Cross, Department of Commerce to Revise Plan for Landmark Settlement



Apr 12, 2001, 01:00 ET from Blue Cross and Blue Shield of Minnesota

    EAGAN, Minn., April 12 /PRNewswire/ -- Blue Cross and Blue Shield of
 Minnesota (Blue Cross) remains optimistic it can develop a plan for its
 $469 million tobacco settlement that is mutually agreeable with its
 regulators, will meet its statutory obligations and at the same time fulfill
 its health improvement objectives, following a Minnesota Supreme Court ruling
 today.
     At the conclusion of its opinion, the Court said, "Our conclusion that the
 deputy commissioner's decision was reasoned and sufficiently supported by the
 evidence of record is based upon well established rules relating to agency
 proceedings, but it does not reflect any particular view as to the substance
 or merits of BCBSM's plan to reduce its excess surplus."
     "Our purpose in suing the tobacco industry was to hold the industry
 accountable and to prevent a new generation of smokers, so investing in health
 improvement is not only the best use of these monies, it's also the right
 thing to do," said Mark Banks, M.D., Blue Cross president and CEO. "We are
 optimistic that with our regulators we can develop a mutually agreeable plan
 to meet our statutory obligations and help us make Minnesota a healthier place
 to live and work."
     Blue Cross has maintained a dialogue with the Department of Commerce and
 will continue to work with the Department on a revised plan.
     In 1994, Blue Cross and the state of Minnesota filed an unprecedented
 lawsuit against cigarette manufacturers and their trade associations on
 grounds the industry deceived consumers about the health risks of tobacco
 products, which resulted in higher health care costs for Blue Cross and the
 state.  In 1998, Blue Cross also became the first health plan to settle with
 the industry and recover damages.
     In October 2000 the Minnesota Supreme Court heard oral arguments from Blue
 Cross, the Department of Commerce and another intervenor on the administrative
 process used for reviewing and approving the Blue Cross plan for spending its
 tobacco settlement funds.
     Today's ruling addressed those issues and reversed a February 2000
 Minnesota Court of Appeals decision ordering the Department of Commerce to
 approve implementation of Blue Cross' original tobacco settlement proceeds
 plan.
     "Minnesotans understand the value of investing in good health," said
 Banks. "For the past several months, Blue Cross has been hosting Minnesota
 Decides -- a series of town hall meetings throughout the state to talk about
 the kind of health system Minnesotans want. One of the most recurring messages
 we have heard is the importance of preventive health care. Our tobacco
 proceeds plan supports tobacco reduction and prevention efforts."
     Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul
 suburb of Eagan, was chartered in 1933 as Minnesota's first health plan and
 continues to carry out its charter mission today:  to promote a wider, more
 economical and timely availability of health services for the people of
 Minnesota. A not-for-profit, taxable organization, Blue Cross is the largest
 health plan based in Minnesota, covering 2 million members in Minnesota and
 nationally through its health plans or plans administered by its affiliated
 companies. Blue Cross and Blue Shield of Minnesota is an independent licensee
 of the Blue Cross and Blue Shield Association, headquartered in Chicago.
 
              Timeline:  Blue Cross Tobacco Lawsuit and Settlement
 
     Aug. 17, 1994   Blue Cross and Blue Shield of Minnesota and the state of
                     Minnesota file an unprecedented lawsuit against cigarette
                     manufacturers and their trade associations on grounds the
                     industry deceived consumers, resulting in higher health
                     care costs for Blue Cross and the state.
 
     July 1996       Minnesota Supreme Court upholds lower court decisions that
                     Blue Cross has standing in its own right to sue the
                     tobacco industry.
 
     January 1998    The historic tobacco trial begins.
 
     May 8, 1998     Blue Cross announces its landmark settlement with the
                     tobacco industry. Four days later, attorneys begin filing
                     class-action lawsuits claiming Blue Cross' settlement
                     should be paid directly to members.
 
     June 1998       As required by state law, Blue Cross begins creating a
                     plan for using the settlement funds to submit to its state
                     regulator, the Minnesota Commerce Department.
 
     September 1998  Blue Cross files a tobacco proceeds plan with the Commerce
                     Department. Then-Commerce Commissioner Dave Gruenes
                     requests a public hearing before an administrative law
                     judge. The district court dismisses class-action lawsuits
                     seeking to have the tobacco settlement paid directly to
                     Blue Cross members.
 
     November 1998   HealthPartners files opposition to the Blue Cross proceeds
                     plan, but later withdraws its opposition after Blue Cross
                     addresses those concerns.
 
     December 1998   Commerce Commissioner Gruenes issues a consent order
                     allowing Blue Cross to pay taxes on the settlement income
                     and transfer $21 million to the Blue Cross Foundation.
 
     January 1999    A three-day public hearing is held in St. Paul.  Nearly
                     all testimony and evidence submitted support the Blue
                     Cross proceeds plan.
 
     March 1999      The administrative law judge, after reviewing the evidence
                     and testimony regarding the Blue Cross proceeds plan,
                     recommends the plan in its entirety to the Commerce
                     Department for approval. The Minnesota Court of Appeals
                     affirms district court decision to dismiss class-action
                     lawsuits seeking to have the tobacco settlement paid
                     directly to Blue Cross members.
 
     July 1999       Deputy Commerce Commissioner Gary LaVasseur issues an
                     order rejecting the Blue Cross tobacco proceeds plan. Blue
                     Cross requests reconsideration of the order, but LaVasseur
                     denies that request. The Minnesota Supreme Court refuses
                     to hear appeal of class-action lawsuits against Blue Cross
                     for attorneys seeking to have the tobacco settlement paid
                     directly to Blue Cross members.
 
     August 1999     Blue Cross files an appeal to the Minnesota Court of
                     Appeals to overturn the Commerce Department's rejection of
                     its tobacco proceeds plan.
 
     February 2000   Minnesota Court of Appeals issues its ruling reversing
                     Commerce Department and orders the department to approve
                     implementation of Blue Cross' proceeds plan.
 
     March 2000      The Commerce Department petitions the Minnesota Supreme
                     Court to review the Court of Appeals Decision ordering the
                     department to approve implementation of the Blue Cross
                     plan.
 
     Oct. 31, 2000   The Minnesota Supreme Court hears oral arguments from the
                     Commerce Department and Blue Cross.
 
     April 12, 2001  The Minnesota Supreme Court reverses the Court of Appeals'
                     decision.  Blue Cross will continue to work with the
                     Commerce Department on a revised plan.
 
 

SOURCE Blue Cross and Blue Shield of Minnesota
    EAGAN, Minn., April 12 /PRNewswire/ -- Blue Cross and Blue Shield of
 Minnesota (Blue Cross) remains optimistic it can develop a plan for its
 $469 million tobacco settlement that is mutually agreeable with its
 regulators, will meet its statutory obligations and at the same time fulfill
 its health improvement objectives, following a Minnesota Supreme Court ruling
 today.
     At the conclusion of its opinion, the Court said, "Our conclusion that the
 deputy commissioner's decision was reasoned and sufficiently supported by the
 evidence of record is based upon well established rules relating to agency
 proceedings, but it does not reflect any particular view as to the substance
 or merits of BCBSM's plan to reduce its excess surplus."
     "Our purpose in suing the tobacco industry was to hold the industry
 accountable and to prevent a new generation of smokers, so investing in health
 improvement is not only the best use of these monies, it's also the right
 thing to do," said Mark Banks, M.D., Blue Cross president and CEO. "We are
 optimistic that with our regulators we can develop a mutually agreeable plan
 to meet our statutory obligations and help us make Minnesota a healthier place
 to live and work."
     Blue Cross has maintained a dialogue with the Department of Commerce and
 will continue to work with the Department on a revised plan.
     In 1994, Blue Cross and the state of Minnesota filed an unprecedented
 lawsuit against cigarette manufacturers and their trade associations on
 grounds the industry deceived consumers about the health risks of tobacco
 products, which resulted in higher health care costs for Blue Cross and the
 state.  In 1998, Blue Cross also became the first health plan to settle with
 the industry and recover damages.
     In October 2000 the Minnesota Supreme Court heard oral arguments from Blue
 Cross, the Department of Commerce and another intervenor on the administrative
 process used for reviewing and approving the Blue Cross plan for spending its
 tobacco settlement funds.
     Today's ruling addressed those issues and reversed a February 2000
 Minnesota Court of Appeals decision ordering the Department of Commerce to
 approve implementation of Blue Cross' original tobacco settlement proceeds
 plan.
     "Minnesotans understand the value of investing in good health," said
 Banks. "For the past several months, Blue Cross has been hosting Minnesota
 Decides -- a series of town hall meetings throughout the state to talk about
 the kind of health system Minnesotans want. One of the most recurring messages
 we have heard is the importance of preventive health care. Our tobacco
 proceeds plan supports tobacco reduction and prevention efforts."
     Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul
 suburb of Eagan, was chartered in 1933 as Minnesota's first health plan and
 continues to carry out its charter mission today:  to promote a wider, more
 economical and timely availability of health services for the people of
 Minnesota. A not-for-profit, taxable organization, Blue Cross is the largest
 health plan based in Minnesota, covering 2 million members in Minnesota and
 nationally through its health plans or plans administered by its affiliated
 companies. Blue Cross and Blue Shield of Minnesota is an independent licensee
 of the Blue Cross and Blue Shield Association, headquartered in Chicago.
 
              Timeline:  Blue Cross Tobacco Lawsuit and Settlement
 
     Aug. 17, 1994   Blue Cross and Blue Shield of Minnesota and the state of
                     Minnesota file an unprecedented lawsuit against cigarette
                     manufacturers and their trade associations on grounds the
                     industry deceived consumers, resulting in higher health
                     care costs for Blue Cross and the state.
 
     July 1996       Minnesota Supreme Court upholds lower court decisions that
                     Blue Cross has standing in its own right to sue the
                     tobacco industry.
 
     January 1998    The historic tobacco trial begins.
 
     May 8, 1998     Blue Cross announces its landmark settlement with the
                     tobacco industry. Four days later, attorneys begin filing
                     class-action lawsuits claiming Blue Cross' settlement
                     should be paid directly to members.
 
     June 1998       As required by state law, Blue Cross begins creating a
                     plan for using the settlement funds to submit to its state
                     regulator, the Minnesota Commerce Department.
 
     September 1998  Blue Cross files a tobacco proceeds plan with the Commerce
                     Department. Then-Commerce Commissioner Dave Gruenes
                     requests a public hearing before an administrative law
                     judge. The district court dismisses class-action lawsuits
                     seeking to have the tobacco settlement paid directly to
                     Blue Cross members.
 
     November 1998   HealthPartners files opposition to the Blue Cross proceeds
                     plan, but later withdraws its opposition after Blue Cross
                     addresses those concerns.
 
     December 1998   Commerce Commissioner Gruenes issues a consent order
                     allowing Blue Cross to pay taxes on the settlement income
                     and transfer $21 million to the Blue Cross Foundation.
 
     January 1999    A three-day public hearing is held in St. Paul.  Nearly
                     all testimony and evidence submitted support the Blue
                     Cross proceeds plan.
 
     March 1999      The administrative law judge, after reviewing the evidence
                     and testimony regarding the Blue Cross proceeds plan,
                     recommends the plan in its entirety to the Commerce
                     Department for approval. The Minnesota Court of Appeals
                     affirms district court decision to dismiss class-action
                     lawsuits seeking to have the tobacco settlement paid
                     directly to Blue Cross members.
 
     July 1999       Deputy Commerce Commissioner Gary LaVasseur issues an
                     order rejecting the Blue Cross tobacco proceeds plan. Blue
                     Cross requests reconsideration of the order, but LaVasseur
                     denies that request. The Minnesota Supreme Court refuses
                     to hear appeal of class-action lawsuits against Blue Cross
                     for attorneys seeking to have the tobacco settlement paid
                     directly to Blue Cross members.
 
     August 1999     Blue Cross files an appeal to the Minnesota Court of
                     Appeals to overturn the Commerce Department's rejection of
                     its tobacco proceeds plan.
 
     February 2000   Minnesota Court of Appeals issues its ruling reversing
                     Commerce Department and orders the department to approve
                     implementation of Blue Cross' proceeds plan.
 
     March 2000      The Commerce Department petitions the Minnesota Supreme
                     Court to review the Court of Appeals Decision ordering the
                     department to approve implementation of the Blue Cross
                     plan.
 
     Oct. 31, 2000   The Minnesota Supreme Court hears oral arguments from the
                     Commerce Department and Blue Cross.
 
     April 12, 2001  The Minnesota Supreme Court reverses the Court of Appeals'
                     decision.  Blue Cross will continue to work with the
                     Commerce Department on a revised plan.
 
 SOURCE  Blue Cross and Blue Shield of Minnesota