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NEWS RELEASE
May 02, 2005


CONTACT: Jerry Flanagan, (310) 392-0522 ext. 319

46,786 Blue Cross Members Hit With Overcharges

Consumer Group Calls for Repayments & Penalties
Blue Cross should be required to provide refunds and pay fees and a fine for overcharging 46,786 enrollees two, three or even five times the premiums they owed on April 1, according to the Foundation for Taxpayer and Consumer Rights (FTCR). FTCR warned that many Blue Cross members may be unaware of the overcharges, which could exceed $20 million, and are at risk of overdrawn accounts as they begin to pay bills this month.

The Blue Cross members affected pay their monthly premiums by direct withdrawals from bank accounts or automatic charges on their credit cards. In addition to requiring immediate refunds, payments for other costs incurred by enrollees, and interest, FTCR called on the Department of Managed Health Care (DMHC) to levy a fine against Blue Cross and include the issue in an upcoming public hearing. FTCR will send a similar demand to Blue Cross.

In a letter sent today to the DMHC, FTCR wrote:

"Simply repaying the overcharges, fees and interest is not enough however. Blue Cross must be punished to ensure the company gets the message that egregious mistakes such as this cannot be allowed to happen again. You must levy a fine, or bring a civil action against Blue Cross, in an amount no less than the total dollar amount inappropriately removed from enrollees' bank accounts."

Irene Arnold of Stockton whose bank account was debited 5 times her monthly premium first brought the overcharges to public attention. The $888 overcharge was not refunded to Ms. Arnold's bank account for nearly 2 weeks -- following more than 20 hours Ms. Arnold spent calling Blue Cross and her local bank.

FTCR called on DMHC to add the overcharges to the agenda of an upcoming public meeting to investigate Blue Cross rate increases in the wake of the company's recent merger with Anthem. DMHC announced the investigation following a request made by FTCR citing premium increases of 20-30% and more. Under public scrutiny, Blue Cross' parent company, WellPoint, guaranteed regulators last November that premiums would not be raised to pay for executive payouts and other expenses associated with the merger.

FTCR wrote:

"These overcharges provide more evidence that Blue Cross has violated the explicit commitments it made to you, the Department of Managed Health Care, the Department of Insurance and the people of California that rates would not increase as a result of the company's merger with Anthem. The question must be asked: are the overcharges a by-product of the merger, as the recent rate increases are apparently the result of the $4 billion in finance costs and $265 million in executive pay-outs associated with the merger?"

FTCR encouraged Blue Cross members -- and others concerned about the high cost of health care -- to send written comments to the DMHC about the overcharges and rate increases and to attend the public meeting in Sacramento on Friday, May 13.

Public comments must be submitted no later than May 11th to the California Department of Managed Health Care, Attention: Debra Monier, by e-mail to dmonier@dmhc.ca.gov; by fax to (916) 322-2579; or by mail to 980 9th Street, Suite 500, Sacramento, CA, 95814. The public hearing will be held on Friday, May 13th at 10:00am at: the Joe Serna Jr. Cal/EPA Headquarters Building, Byron Sher Hearing Room, 1001 I Street, Sacramento, CA, 95814.

In recent months, patients and business owners around the state have contacted FTCR frustrated by massive rate increases to their Blue Cross policies. The group is conducting health care town halls throughout the state with patients, business owners, doctors, nurses and hospital executives to find solutions for affordable health care available to all Californians.

FTCR's letter:

Monday, May 2, 2005

Cindy Ehnes
Director
Department of Managed Health Care
980 9th Street, Suite 500
Sacramento, CA 95814-2725

RE: Blue Cross Overcharges

Dear Ms. Ehnes,

We are deeply disturbed to learn that the credit cards and bank accounts of 46,786 Blue Cross of California enrollees were overcharged two, three or even five times the amount of premiums they owed on April 1.

We are writing to insist that in addition to immediately refunding these overcharges, which could easily exceed $20 million, Blue Cross be required to pay any late fees, returned check fees, overdraft fees, lost interest or any other expenses incurred by enrollees as a result of Blue Cross' improper conduct. Blue Cross should also be required to turn over to affected members any interest Blue Cross obtained on the misappropriated funds.

Simply repaying the overcharges, fees and interest is not enough however. Blue Cross must be punished to ensure the company gets the message that egregious mistakes such as this cannot be allowed to happen again. You must levy a fine, or bring a civil action against Blue Cross, in an amount no less than the total dollar amount inappropriately removed from enrollees' bank accounts.

Finally, this issue should be added to the agenda for the public meeting you have called on May 13 in Sacramento to discuss the system-wide premium increases Blue Cross has instituted in recent months. These overcharges provide more evidence that Blue Cross has violated the explicit commitments it made to you, the Department of Managed Health Care, the Department of Insurance and the people of California that rates would not increase as a result of the company's merger with Anthem.

The question must be asked: are the overcharges a by-product of the merger, as the recent rate increases are apparently the result of the $4 billion in finance costs and $265 million in executive pay-outs associated with the merger?

Please do not miss this opportunity to demand a detailed accounting of Blue Cross' rate increases and overcharges, require full refunds, and send a clear message that California will not stand for this kind of treatment.

Sincerely,

Jerry Flanagan
(310) 392-0522 ext. 319

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