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A Baton Rouge state court judge has dismissed a lawsuit seeking to effectively block the proposed sale of the nonprofit Blue Cross and Blue Shield of Louisiana to Indiana-based Elevance Health, one of the country’s largest insurers.
In a decision Thursday, 19th Judicial District Court Judge Don Johnson said his court lacked jurisdiction to rule on the suit, which was filed in early December by Blue Cross policyholder Henry “Tut” Kinney against the Accelerate Louisiana Initiative—a social welfare foundation that would be created with the bulk of proceeds from the Blue Cross sale.
Johnson said the issue was an “administrative matter” because it deals with insurance, which is regulated by the state, and did not belong in civil court.
Under the terms of the proposed sale of Blue Cross to Elevance, more than 90% of the $2.5 billion sale proceeds would be used to create Accelerate Louisiana, which will focus on addressing poverty and poor health outcomes in the state. The other 9% would go to Blue Cross members, who would receive about $3,000 each.
Blue Cross members who have voting rights make up 92,000 of the company’s overall 1.9 million customers.
Kinney’s suit had argued that Blue Cross members, some of whom paid thousands of dollars into the company over many years, are entitled to most or all of the money, not the $350 million or so that would be divided among them.
Accelerate Louisiana’s attorneys argued that membership in Blue Cross, a nonprofit mutual company, is not the same as being a stockholder in a publicly traded company and that members are not entitled to sale proceeds.
Johnson’s ruling comes as state regulators are preparing for a series of public hearings on the controversial deal later beginning Ash Wednesday.
In advance of the hearings, both supporters and opponents of the transaction are speaking out. Earlier this week, the Louisiana State Medical Society, the state’s largest physicians group, came out against the deal, though the Louisiana Hospital Association has yet to weigh in publicly despite days of meetings on the Tuesday and Wednesday.
Prominent community leaders, including Tulane President Mike Fitts, have come out in support of the deal, primarily because of Accelerate Louisiana and its focus on some of the state’s most pressing problems.
Both sides are also waging a media campaign with newspaper and digital ads. And state lawmakers, who have no regulatory oversight over the issue but are hearing from their constituents, have called a hearing for Monday to get some answers.
Blue Cross declined to comment on today’s ruling.
Kinney, who has also filed a separate suit in federal court over the issue, said he is appealing immediately to the First Circuit Court of Appeals.
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