Document 239 : Docket No. 99-14 : Hearing Decision : Bureau of Insurance

STATE OF MAINE

DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION

BUREAU OF INSURANCE

In Re:

Application of Associated Hospital Service of Maine d/b/a Blue Cross and Blue Shield of Maine to convert to a Stock Insurer and Voluntarily Liquidate and Dissolve

)
)
)
)
)
)
)

and

)
)

Certificate of Service

In Re:

Application of Anthem Health Plan of Maine, Inc. to Acquire the Assets of Associated Hospital Service of Maine d/b/a Blue Cross and Blue Shield of Maine and Related Transactions

Docket No. INS-99-14

(CONSOLIDATED)

)
)
)
)
)
)
)
)
)
)

CERTIFICATE OF SERVICE

The above signed person hereby certifies that on January 26, 2000, he caused a copy of the following documents to be served by United States mail, first class postage prepaid, on each of the persons listed below.

James Zimpritch, Esq.

Judith Chamberlain, Esq.

Martin Robles, Esq.

William Laubenstein, Esq.

Gregory A. Brodek , Esq. (Maine Health Alliance)

Andrew B. MacLean, Esq. (Thomas D. Hayward, M.D., Maroulla S. Gleaton, M.D., and the Maine Medical Association)

Joseph P. Ditre, Esq. (Consumers for Affordable Health Care Foundation/Coalition)

John Kane, Esq. (Central Maine Healthcare Corporation)

Robert I. Goldman (Maine Council of Senior Citizens)

Bonnie Post (Sacopee Valley Health Center, Regional Medical Center at Lubec, Eastport Health Care, Inc. and the Maine Ambulatory Care Coalition)

John Dieffenbacher-Krall (Maine People’s Alliance)

Donald E. Quigley, Esq.

Kellie P. Miller, M.S., (Maine Osteopathic Association)

Sandra L. Parker, Esq., (Maine Hospital Association)

Edward F. Miller (American Lung Association of Maine)

STATE OF MAINE

DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION

BUREAU OF INSURANCE

IN RE: APPLICATION OF ASSOCIATED HOSPITAL SERVICE OF MAINE, d/b/a BLUE CROSS AND BLUE SHIELD OF MAINE, TO CONVERT TO A STOCK INSURER AND VOLUNTARILY LIQUIDATE AND DISSOLVE

)
)
)
)
)
)
)
)
)

IN RE: APPLICATION OF ANTHEM HEALTH PLAN OF MAINE, INC., TO ACQUIRE THE ASSETS OF ASSOCIATED HOSPITAL SERVICE OF MAINE, d/b/a BLUE CROSS AND BLUE SHIELD OF MAINE, AND RELATED TRANSACTIONS

Docket NO. INS 99-14 (CONSOLIDATED)

)
)
)
)
)
)
)
)
)
)
)

ASSOCIATED HOSPITAL SERVICES OF MAINE D/B/A/ BLUE CROSS BLUE SHIELD OF MAINE’S RESPONSE TO SECOND DISCOVERY REQUEST OF THE ATTORNEY GENERAL

January 26, 2000

NON-CONFIDENTIAL VERSION

Applicants, Associated Hospital Services of Maine d/b/a/ Blue Cross Blue Shield of Maine ("BCBSME"), hereby responds to the Second Discovery Request of the Attorney General, dated January 11, 2000, as follows:

The following responses by BCBSME are subject to BCBSME’s claims of attorney client and work product privilege, and to the protections (where indicated) of the Superintendent’s Protective Orders. In framing the responses below, BCBSME has not withheld any documents on grounds of privilege. To the extent that any additional responsive documents are located in the future, BCBSME reserves its rights to object to producing such documents to the extent covered by the attorney-client and or work product privileges.

Please provide a copy of all documents submitted by Houlihan Lokey Howard and Zukin Financial Advisors, Inc. ("Houlihan Lokey") to BCBSME related to Houlihan Lokey’s performance of the valuation of BCBSME, including without limitation all information concerning Houlihan Lokey’s relevant experience and expertise and all proposals.

Response:

See Documents B04098 – 04136, previously produced, and B10987 – 11024, attached hereto.

Houlihan Lokey has advised BCBSME that significant portions of the information contained in these documents is proprietary and confidential to Houlihan Lokey, and accordingly the information contained in these documents is deemed

CONFIDENTIAL PURSUANT TO PROTECTIVE ORDER

Please provide a copy of the engagement letter and any other documents related to the retention of Houlihan Lokey by BCBSME to perform the valuation.

Response:

See Documents B00081-86 (engagement letter, as executed) previously produced, and other documents referenced in response to request #1.

Houlihan Lokey has advised BCBSME that the engagement letter contains information that is proprietary and confidential to Houlihan Lokey, and accordingly the information contained in these documents is deemed

CONFIDENTIAL PURSUANT TO PROTECTIVE ORDER

Document B 00071 lists Houlihan Lokey’s valuation opinion engagements. This list does not include any valuation opinion for the health services industry. Please describe in detail the experience of Houlihan Lokey in doing valuation opinions of a health maintenance organization or other health services organization.

Response:

Houlihan Lokey has advised BCBSME that the listing of client engagements set forth below, and reflected in the referenced documents contains information that is proprietary and confidential to Houlihan Lokey, and accordingly the information contained in this response is deemed

CONFIDENTIAL PURSUANT TO PROTECTIVE ORDER

Please state whether Houlihan Lokey has ever served as a consultant to Anthem. If your answer is "yes," please identify the company and explain in detail the nature of the work.

Response:

Houlihan Lokey has advised BCBSME that Anthem Insurance Companies is not a current or former client of Houlihan Lokey.

Based on information provided by Anthem Insurance Companies to BCBSME, BCBSME has requested Houlihan Lokey further to investigate whether it has any records of engagement by "Novalis Corporation", a former subsidiary of Anthem Insurance Companies. Houlihan Lokey has advised BCBSME that according to its records it had an engagement with Novalis Corporation that involved a valuation dated August 31, 1991. In addition to this, Houlihan Lokey has advised BCBSME that it provided valuation services for a company known as Acordia, which may have been a former Anthem subsidiary. This work involved a valuation as of September 30, 1991. Except for the information regarding Novalis and Acordia, BCBSME has received no information that there have been any engagements between Houlihan Lokey and Anthem Insurance Companies or any current or former subsidiaries of Anthem Insurance Companies.

Please state whether Houlihan Lokey has ever served as a consultant to BCBSME or any other Blue Cross Blue Shield company. If your answer is "yes," please identify the company and explain in detail the nature of the work.

Response:

Houlihan Lokey has advised BCBSME that to the best of its knowledge, Houlihan Lokey has not served as a consultant to BCBSME. Senior management of BCBSME is also unaware of any such engagements. Concerning other companies licensed to use to Blue Cross and/or Blue Shield trademark, HLHZ has informed BCBSME that pursuant to an engagement with a law firm representing Blue Cross & Blue Shield of Minnesota, Houlihan Lokey provided expert witness testimony on economic matters in an action in which the Minnesota Plan, with the Minnesota Department of Attorney General as co-plaintiff, sought damages against various tobacco manufacturers for health care benefits paid to, respectively, insured and Medicaid beneficiaries, as a result of smoking-related illnesses.

Please describe in detail any contingency plans of BCBSME if the application of Anthem to purchase the assets of BCBSME is not approved by the Superintendent or the asset purchase agreement as terminated prior to closing. Please provide all documents related to such contingency planning.

Response:

With respect to other affiliation prospects, Section 5.07 (a) of the Asset Purchase Agreement precludes BCBSME from soliciting any other proposals while the Asset Purchase Agreement is in effect, and BCBSME has not done so. BCBSME has not been approached by or received an unsolicited proposal from any other party interested in pursuing an Extraordinary Business Combination, as that term is used in Section 5.07 (b) of the Asset Purchase Agreement. There are no documents related to such contingency planning.

For each state in which Anthem conducts health insurance business, please provide all documents related to any complaint index maintained by such states. Include in your response an explanation of how the complaint index was calculated.

Response: