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Read Making a Killing

home / healthcare / in the media

Sacramento Bee
Nov 24, 2004

by Thuy-Doan Le

Make Blue Cross pay, group's suit demands

The Foundation for Taxpayer and Consumer Rights has filed a lawsuit to force the state to collect what the foundation says is $500 million in unpaid taxes from Blue Cross of California, a subsidiary of WellPoint Health Networks Inc.

The foundation, a consumer advocacy group based in Santa Monica, filed the complaint Monday in Los Angeles Superior Court.

The suit alleges that Blue Cross has not paid the state's gross premium tax since it become a for-profit company. The civil lawsuit seeks to force Controller Steve Westly and the state Board of Equalization to collect the tax from the insurer.

"By failing to pay the gross premium tax, Blue Cross is operating at a unique and unfair competitive advantage to other for-profit entities that are required to pay gross premium taxes on their PPO (preferred provider organization) products," according to the complaint.

"We're not party to the lawsuit. We have not reviewed the lawsuit, and we're not commenting on it," Blue Cross spokesman Michael Chee said Tuesday.

Blue Cross is not exempted from state taxes that other insurers and health care service plans pay in California, Wellpoint general counsel Thomas Geiser said in a July 8 letter to state Sen. Deborah Ortiz, D-Sacramento, in response to allegations of unpaid taxes.

"Since 1996, when Blue Cross became a taxpaying entity, it has paid all required state taxes and its tax payments have been audited" by the state, he wrote.

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