Regulators say Blue Shield of California backed out of $140M charitable pledge

Blue Shield of California is facing criticism again, this time as state insurance regulators and consumer groups say the company is reneging on a charitable pledge of $140 million that was part of a deal to win approval for its acquisition of a Medicaid health plan, according to the Los Angeles Times.

As part of an deal approving Blue Shield's $1.2 billion acquisition of Medicaid insurer Care1st Health plan, California officials said the insurance company had agreed to give $14 million a year for 10 years to Blue Shield's foundation or another charity to improve healthcare delivery in the state, in addition to its regular charitable contributions. That deal had angered consumer advocates who said it failed to resolve outstanding complaints against the company.

Now Blue Shield is saying the agreement calls for a minimum donation of $14 million a year and says it is not obligated to go beyond its normal foundation giving of about $35 million annually, according to the Times. While the company says it is living up to the language in the agreement, state regulators say the intent was clear in negotiations that the company would increase its charitable contributions. And consumer advocates aren't happy either.

"It's unfortunate the agency and the public got snookered out of $140 million for our safety net," Anthony Wright, executive director of Health Access, which raised the issue with regulators, said to the Times

Blue Shield has been under the microscope since California revoked its long-held tax-exempt status in March. And with $4 billion in surpluses in the nonprofit insurer's coffers, state officials have accused it of "not operating exclusively for the promotion of civic betterment or social welfare." Blue Shield also boosted its executives' pay by $24 million in 2012.

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