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December 13, 2007

Blue Cross to pay $20 million to resolve probe

Blue Cross & Blue Shield of Rhode Island has reached an agreement with the U.S. Attorney's Office to pay $20 million to resolve a federal investigation.

The money will be put into a trust fund administered by the Rhode Island Foundation and used to improve the quality and affordability of health care in the state.

Under the agreement, the state's dominant health insurer has also consented to make ethical reforms.

The agreement announced this morning comes just two days after four top executives at Blue Cross were dismissed.

Blue Cross has been under investigation in a widespread probe into influence peddling at the State House; the company will not face criminal charges if it complies with the terms of the agreement.

“We understand the position that Blue Cross is in in the state,” said U.S. Attorney Robert Corrente. “They hold a predominant market share in insurance. They insure a lot of Rhode Islanders. That was one of the things we looked at when we arrived at the agreement.”

As part of the agreement, Blue Cross cannot seek rate increases to cover the $20 million payment.

Extra: Read the full agreement.

-- With reports from Journal staff writer Brandie Jefferson

Two former state legislators have been convicted for their roles in the federal corruption investigation that has come to be known as Operation Dollar Bill. Blue Cross acknowledged the former lawmakers actions in the agreement.

Former House Majority Leader Gerard M. Martineau, of Woonsocket, pleaded guilty to accepting $900,000 worth of paper and plastic bag contracts from CVS and Blue Cross in exchange for influencing legislation.

Former Senator John A. Celona, a North Providence Democrat who had served as chairman of the powerful Senate Corporations Committee, two years ago admitted selling his office to Roger Williams Medical Center, the drugstore chain CVS and Blue Cross and Blue Shield of Rhode Island. He gained $319,000.

The company also acknowledges in the agreement that it paid $400,000 in insurance brokerage commissions to former Rhode Island Senate President while also lobbying him for legislation.

The state ethics panel has accused former Senate President William V. Irons of breaking state ethics laws by voting on pharmacy legislation while he had a conflict of interest.


The company confirmed yesterday that two senior vice presidents, Lynne A. Urbani and Matthew T. Brannigan, and two longtime State House lobbyists, Scott A. Fraser and Brian Jordan, had “departed” the insurance company on Tuesday
. Urbani and Brannigan had been promoted earlier this year.

Posted by Jack Perry  at 2:30 PM | Permalink

Comments

Yup, just like I said. The investigation has now been politicised.

The $20 million goes where? Back to ratepayers? Ha! Doubtful. Probably headed to some out of state slush fund like the DuPont lead paint settlement.

Ratepayers will simple return the $20 million to BCBS in the form of higher rates. I'm sure its already been secretly agreed on. So we punish ourselves.

Justice will be harshly doled out to those without the means to rob $20 million from their customers to pay fines.

The four that were let go will be prosecuted most likely (thats no certainty however) but the question is how many won't be due to the $20 million payment?

I can't wait to see how CVS squirms out of this.

Bob | December 13, 2007 12:35 PM link

The chairman of the board should also be fired and put in jail for his many criminal activites.
Talk about wearing more than one hat,jeez.
The arbitrators award for the Prov. firefighters should also be thown out for his conflicts of interest,
and all parties involved should be investigated because they all knew what was going on.
614290.

d. walsh | December 13, 2007 1:36 PM link

$20 million is peanuts. I am extremely disappointed. An organization that practically has a monopoly gets to pay its way out of trouble like this. They probably made $200,000,000 from the bribes they paid and for the results those bribes bought!!!

Very disappointed US Attorney Corrente.

Paul | December 13, 2007 1:39 PM link

It's about time the spotlight was turned on Blue Cross. As a member and as a citizen of RI, I feel abused by their board, which has all kinds of conflicts of interest, their willingness to spend outrageous sums to board members and their attempts to influence the legislature. If the governor has the power, he should step in and appoint a whole new board. I hope Corrente nails a bunch of them and that Judge Torres gets to try them.

Susan E. Geary | December 13, 2007 1:57 PM link

You people are missing it.....this is to put BC rates above United, so the Governor can say 'see, BC is more expensive than United", then everyone will move to United.......putting the monopoly in place, where United has no competition and we all pay what they want us to pay for less services...At least 2 of the 4 people fired, are just scapegoats.....BC is non profit so the $20 million in penalty is RI taxpayer money.....not Blue Cross' This State is unbeleivable...Celona gets to go free in a couple of years....this wreaks of the RIHMFC.....I guess history does repeat itself in this state...time to move to a better place!!!!

Robin B | December 13, 2007 3:35 PM link

It's nice to know some things never change.
I am a small business owner who moved my busnisses and myself OUT of RI because I was sick of the corruption. I’m in SC now and although I have a larger home, more land and much better roads (infrastructure) I am paying $2000.00 less in property taxes per year. Now I can afford health insurance!
In RI, I couldn’t afford health insurance.

Perhaps they should reimburse the people/companies that were paying higher premiums because of the corrupt politicians instead of putting the money into a “fund” of which the people who were affected will never see the benefit of. They might even be able to afford their taxes if they received a refund of the extra money for health care they were forced to pay.

Last one out, shut off the lights!

Elaine | December 13, 2007 3:38 PM link

How does a non-profit corporation such as BC/BS pay a fine without it eventually without it effecting its rate payers premiums or the prudent reserves that they should maintain? Sounds like magical thinking to me.

Mikeal | December 13, 2007 3:56 PM link

This is what happens when you allow a monopoly to operate in a small state.

As far as the chairman's activities are concerned, we will be seen by the rest of the world as clueless rubes.

Pathetic.

Peter | December 13, 2007 5:00 PM link

This is such a disgrace. The Blue Cross Blue Shield Association should recind their Charter. They are an embarrassment to the Blues Plans across the country.

BAB | December 13, 2007 5:18 PM link

Blue Cross WINS! They raised rates justifying that they needed to have a reserve so that the time when an emergency presented itself they could pay the bills. Smells real bad. The weak DBR and its Weaker administrator should close up shop.
The 200mil should be paid for by all the hi ups like Ron B,Lynn U, Scott F and the likes.
The legislature created this non profit it is time they take control and see that the people of RI get a fair deal. Maybe the state should ask the courts to oversee the remake of BCBSRI!


Fran | December 13, 2007 7:04 PM link

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