Virginia is for givers – Trigon Blue Cross Blue Shield; political and public relations behavior

Virginia is for givers – Trigon Blue Cross Blue Shield; political and public relations behavior – No Sacred Cows

Deborah Lutterbeck

The wrongfully accused often ask, “Where do I go to get back my reputation?” Maybe they should go to Virginia, where they might not have lost it in the first place.

Take Trigon, Virginia’s Blue Cross Blue Shield health insurance firm. Trigon’s press clippings from the past year look like a study in nonprofit bungling, or worse. Trigon paid a $5 million fine to the state and had to refund some $73 million to policyholders,. who were paying more than their share in co-payments. And the federal government slapped Trigon with a $525,000 fine, the second-largest ever, for violating glass-ceiling laws.

In addition, it turned out that Trigon had paid Virginia House Majority Leader Richard Cranwell (D) and his law firm more than $385,000 in 1995, a legal arrangement that raises serious “appearance” questions. And the federal government has accused Trigon of pocketing some $58 million in discounts it squeezed out of providers and was supposed to pass on to customers. “We’ve had some difficult issues,” says Trigon spokesperson Brooke Taylor, “but we are moving forward.”

They certainly are. Trigon is well on its way to becoming a public for-profit that sells stock. With help from the state.

“Positively, it’s a good idea,” says state Sen. Joseph Benedetti (R), one of the sponsors of a bill to take Trigon public. “I think Blue Cross Blue Shield is going to be eaten up if they don’t become one of the players, and the only way they can become a player is to become a stock company,” he says.

Others are worried about how a public Trigon might operate. “If this is how they behave as a nonprofit, imagine what they’ll do if there’s a profit motive,” says Jean Ann Fox, president of the Virginia Citizens Consumer Council.

How has lawbreaker Trigon generated so much lawmaker support? For one thing, Trigon promised to put more than $175 million into the state’s general fund for Virginia officials to spend at their discretion, a small payback for decades of special nonprofit tax treatment.

Others believe years of generous campaign contributions also played a role. Last year the company contributed almost $45,000 to 108 of 140 General Assembly members, a move company officials consider part of “good corporate citizenship,” Taylor says.

Gov. George Allen (R) was so quick to accept Trigon’s “trust fund” offer that he wrote $95 million of the Trigon “gift” into next year’s higher education budget. And that was before the General Assembly voted on whether Trigon could go public.

Virginia law stipulates that nonprofits that go public have to turn over all their assets to another nonprofit that performs a similar function. When the California Blues converted, for example, they set up two foundations worth a total of about $3 billion to provide health care services.

In Virginia, on top of the $175 million going to the state, much more money will be divided among individual policyholders and companies, governments, schools and churches that bought Trigon policies. The exact amount, which will depend on the market price of Trigon stock, could be worth as much as $1.5 billion, according to Wall Street estimates. It’s “like finding money on the street,” says Sen. Benedetti.

Virginia residents, meanwhile, have had little say in the matter, although the General Assembly and the governor approved the plan in February. Trigon’s Taylor says citizens had a chance to attend hearings, and they can send recommendations to state insurance regulators and write letters to the editor. And they can always eat cake,

Some legislators believe the state–and its residents–have been left with the short end of the stick. “I didn’t vote for the bill because we should have gotten a better deal,” says Sen. Richard Saslaw (D). But other factors took precedent. “Some people just went on blind faith, saying, `We need the money and this is the best we’re going to get,'” he adds.

Virginia lawmakers say campaign contributions from Trigon didn’t influence their votes. Benedetti says the $1,500 contribution he got from Trigon last year was of “no significance,” adding, “what would influence me a whole lot more is that I know the people who are in control [at Trigon] very well, socially as well as business-wise.”

In fact, Benedetti’s done legal work for Trigon. While “promis[ing]” that the work was “very insignificant,” Benedetti says he’s “been raising hell ever since [in hopes of getting] some more.”

And if the new Trigon keeps doing business the same way the old one did, Benedetti may just get his wish.

COPYRIGHT 1996 Common Cause Magazine

COPYRIGHT 2004 Gale Group