READINGS
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Independent Living Challenges the Bluesby Patricia L. Puckett Background In the late 1920s and early 1930s, Blue Cross/Blue Shield organizations formed as nonprofit, charitable organizations to provide low cost hospitalization (Blue Cross) and medical insurance (Blue Shield) for people who had no other insurance. The Georgia Blue was established in the 1950s. Historically, some Georgians with disabilities secured this insurance during periods of “open enrollment” when any person in a given community could obtain insurance regardless of age or health status.1 In the mid 90s, the Blue insurance companies began converting from nonprofit to for-profit companies. These conversions happened all over the nation. In all states except Georgia, insurance commissioners or attorneys general monitored these conversions to assure that the Blues’ corporate assets were legally distributed. In California, for example, $3.2 billion in assets were transferred to two health care foundations.2 When nonprofit companies are dissolved, IRS code requires the distribution of assets to similar, nonprofit corporations. The Problem in Georgia The 1995 session of the Georgia legislature passed a bill enabling Georgia Blue to convert to for-profit status without a distribution of assets to other nonprofit organizations. Neither the insurance commissioner nor the attorney general challenged this action. In the winter/spring of 1996, the nonprofit Georgia Blue became the for-profit Cerulean. At the time of this conversion, the fair market value of the Georgia Blue was estimated to be in excess of $250 million dollars.3 The Response At the same time that Georgia Blue converted to Cerulean, health care advocates were searching for attorneys to challenge the legality of the conversion. One of these advocacy groups was Georgians for a Common Sense Health Plan or “Common Sense.” Common Sense is an unincorporated health care advocacy group that includes disability rights activists as members. Both the SILC director and the (then) chair of the Atlanta CIL board are core members of Common Sense. By spring of 1997, a well-respected law firm had been located. Carr, Tabb and Pope accepted the case on a contingency basis, meaning that legal fees would be paid only upon winning or settling the case. Given the low risk and potentially high gain, the independent living network spread the word. As a consequence, Carr, Tabb & Pope represented eight (8) nonprofit organizations, five of which are disability organizations--the SILC, three CILs and a brain injury support group. In September 1997, Carr, Tabb and Pope filed a class action law suit on behalf of the eight plaintiffs “and others similarly situated” because “Georgia (officials) failed to preserve the public trust on the assets of Georgia Blue....”4 The defendants were the Insurance Commissioner of Georgia, Blue Cross Blue Shield of Georgia and Cerulean Companies, Inc. The Settlement After almost a year of depositions, hearings and meetings with lawyers, the plaintiffs and defendants reached a settlement. The terms of the settlement call for the establishment of Healthcare Georgia, Inc., a foundation whose “purpose shall be the advancement of healthcare for all Georgians.” Funding for the foundation includes one million dollars in cash and roughly 20% of the total equity of Cerulean.5 This stock is estimated to be worth between $40 million and $120 million, depending on market price at the time stock is sold.6 The plaintiff attorneys’ fees are not more than 10% of the settlement fund plus expenses. While $40 to $120 million is an impressive sum, it is important to keep in mind that the actual amount that could have (and probably should have) been distributed is in the neighborhood of $250 million! From the viewpoint of the plaintiffs, naming the board of directors was every bit as important as the financial settlement. Clear values and strong leadership can have profound impact even with modest financial investment. The initial board of directors for the Foundation includes three board members named by the plaintiffs, three named by Georgia Blue and one each from the Carter Center, the Metropolitan Foundation of Greater Atlanta and the Savannah Foundation. One of these nine board members is a person with a disability, the former board chair of the Atlanta CIL. The Good News & The Bad News The good news is that the disability/ independent living community revealed themselves as fearless leaders. With literally hundreds of nonprofit agencies in the state, our community stepped up to the plate to challenge a multi-million dollar insurance company, the insurance commissioner and the constitutionality of a state law. It put disability rights and independent living on the radar screen and in the news as a modern day “David & Goliath” story. The bad news is that there were times when we were anything but “fearless.” One of the first and most frightening reactions from the defendants was to counter sue each of the plaintiffs for filing a “nuisance” lawsuit. Our lawyers were prepared for this; they helped us remain calm and unified. Not a single plaintiff group withdrew as a result of that threat. But the worst news is that the Foundation is still not operational. Shortly after the settlement agreement was reached, another lawsuit was filed on behalf of the policyholders of the Georgia Blue. The basis for this lawsuit is that these policyholders should have automatically been issued stock in Cerulean. What actually happened is that the Georgia Blue sent a letter to its policyholders announcing the conversion to Cerulean and offering stock in the new company. Approximately 70,000 policyholders accepted the offer while 74,000 declined or did not respond. The board of the Foundation awaits the resolution of this lawsuit before issuing grant applications or guidelines. So What? Why is a Health Care Foundation Important? Georgia (and much of the South) does not have the most progressive health care policy:
For all these reasons, health care policy is a significant goal in our State Plan for Independent Living. Specifically, the Georgia SILC’s health care goal is to “increase access to health care coverage, and improve the quality of health care coverage for Georgians with disabilities.” To achieve this goal, a “menu” of possible activities was outlined:
Key Indicators of Success:
About the Author Patricia L. Puckett is the executive director of the Statewide Independent Living Council of Georgia, a nonprofit organization working to promote the equal participation of people with disabilities in their communities. Pat graduated from Valdosta State College in 1972 and attended graduate school in public administration at the University of Georgia. Pat is a graduate of the Leadership DeKalb class of 1998. She is a pioneer in the area of disability services, a very active advocate in many disability organizations as well as the Women’s Policy Group, a network that deals with women’s issues in the Georgia General Assembly. Contact Information Patricia L. Puckett 1 Pope, David. The Legal Background Leading to the Creation of HealthCare Georgia, Inc. Unpublished briefing materials, August 1998. 2 Miller, Andy. “Blue Cross to Endow Foundation.” The Atlanta Journal-Constitution. 9 July 1998, morning ed: F1. 3 Let’s Get Together, Inc. et al. V. Blue Cross and Blue Shield of Georgia, Inc. et al., Civil Action No. E-61714, Class Action Complaint. September 1997. 5 Let’s Get Together, Inc. et al. V. Blue Cross and Blue Shield of Georgia, Inc. et al., Civil Action No. E-61714, Notice of Pendency of Class Action, of Proposed Settlement of Class Action, of Settlement Hearing and of Right to Appear. September 1997. 6 Miller, Andy. “Blue Cross to Endow Foundation.”
The Atlanta Journal-Constitution. 9 July 1998, morning ed: F1. ©2000 ILRU |
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| This document may be reproduced for noncommercial use without prior permission if the author and ILRU are cited. The mission of the IL NET is to provide training and technical assistance on a variety of issues central to independent living today--understanding the Rehab Act, what the statewide independent living council is and how it can operate most effectively, management issues for centers for independent living, systems advocacy, computer networking, and others. Training activities are conducted conference-style, via long-distance communication, webcasts, through widely disseminated print and audio materials, and through the promotion of a strong national network of centers and individuals in the independent living field. ILRU is a program of The Institute for Rehabilitation and Research (TIRR), a nationally recognized, free-standing medical rehabilitation facility for persons with physical and cognitive disabilities. TIRR is part of TIRR Systems, which is a not-for-profit corporation dedicated to providing a continuum of services to individuals with disabilities. Substantial support for development of this publication was provided by the Rehabilitation Services Administration, U.S. Department of Education. The content is the responsibility of ILRU and no official endorsement of the Department of Education should be inferred. ©2005 ILRU Program, All rights
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