Making Sure that CareFirst Meets Its Obligations to the District

I wanted to let you know about the latest developments in our efforts to ensure that CareFirst meets its nonprofit mission to serve the healthcare needs of residents of the National Capital area.

We expect that the D.C. Insurance Commissioner will proceed soon with a plan to require CareFirst to begin investing $56 million of its excess surplus in community reinvestment in the District, as required by the Commissioner’s decision last December. Once the Commissioner issues that plan, we hope to move expeditiously before the D.C. Court of Appeals to seek a ruling that the actual amount of the excess that CareFirst should be spending in the District is not $56 million, but $200 million.

Here are the latest developments.

On April 28, the Court determined that it will not review the Commissioner’s decision from last December until he has issued his final order requiring the spending of the $56 million in excess surplus he has determined.

Earlier, on April 15, the Virginia Insurance Commissioner determined that CareFirst investing $56 million of excess surplus is not contrary to Virginia’s interests. Since in reaching her determination the Virginia Commissioner relied on the same actuarial firm that has been engaged by the Maryland Insurance Commissioner, it seems that there is a good chance that the Maryland commissioner will soon reach the same determination.

These two developments are good news for the District. They mean that the D.C. Commissioner can go forward with his determination that a plan should now be put in place to ensure that CareFirst actually directs the $56 million toward community healthcare needs in the District, as the law requires.

In addition, because CareFirst failed to file a plan to spend down the $56 million by March 16 as ordered by the Commissioner, under District law the Commissioner can convene a public hearing and develop his own plan. We believe that is the right step for the Commissioner to take now to ensure that CareFirst follows the law.

More good news for District residents is that we think the ultimate community reinvestment in the District that CareFirst will be required to make is much greater than $56 million-probably upwards of $200 million. That is because, on appeal of the Commissioner’s final order, we think the Court will find that the Commissioner did not consistently apply the standards by which to measure how much surplus CareFirst is entitled to hold, and how much of its excess surplus was built by overcharging District residents. We expect the Court to expedite review of the Commissioner’s decision so that a final determination of CareFirst’s obligation to the community can be made promptly.

Meanwhile, we look forward to the Commissioner’s development of a plan to spend the $56 million in excess surplus he has already determined, and we hope he will call for public comment concerning a fair and equitable way to spend that $56 million in the District.

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