Department of Law 120 Broadway New York, NY 10271	Department of Law The State Capitol Albany, NY 12224
For More Information: (518) 473 - 5525	For Immediate Release  September 1, 1999
SPITZER AIRS CONCERNS ON BLUE CROSS/BLUE SHIELD CONVERSION
Legal Prohibitions and Public Trust at Issue
In prepared remarks today at a State Insurance Department hearing, Attorney General Eliot Spitzer outlined his concerns over the proposed conversion of not-for-profit medical insurer Empire Blue Cross and Blue Shield into a for-profit, publicly traded company. While Spitzer is not opposed in principle to Empire's wish to convert itself, he said that existing state insurance laws prohibit such an action. Spitzer also emphasized that the people of New York have a deep interest in the future of Empire, having supported the not-for-profit health plan for more than six decades through tax exemptions, discounted hospital rates and other public subsidies granted by the state and federal governments. This gives New Yorkers a legally protected interest in the current value of Empire which must be safeguarded in any conversion. "It is my duty to ensure that the fair value of Empire -- as in the case of any not-for-profit organization seeking to convert -- is preserved to benefit the people of New York," Spitzer said. "If Empire wants to convert, the Legislature must lift the existing legal prohibition and Empire must get Court approval by showing that the terms of the transaction are fair and reasonable and that the transaction promotes Empire's not-for-profit health purposes." Even if the legal bar were lifted, Spitzer said he does not believe that Empire's conversion proposal would satisfy the Court because it does not adequately preserve the company's fair value for charitable use. However, with the cooperation of all parties, Spitzer said, it should be possible to reach agreement on a conversion transaction that meets all legal requirements and thereby serves the public interest. "To attain these ends, my office will continue to work with the Legislature, Empire, the national Blue Cross and Blue Shield Alliance and the State Insurance Department," said Spitzer. Empire Blue Cross and Blue Shield is the state's largest health insurer, covering 4.1 million members in eastern New York from the Canadian border to New York City and Long Island.