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November 18, 2015

Calif. Says Blue Shield Backing Out on $140 Million Pledge

California officials and consumer advocates are accusing nonprofit health insurer Blue Shield of California of reneging on a promise to donate an additional $14 million a year to charity for 10 years as part of a merger agreement, the Los Angeles Times writes.

State regulators last month touted the $140 million commitment as part of deal to approve Blue Shield's $1.2 million acquisition of Care1st Health Plan. Officials contend the pledge represented contributions above what Blue Shield already gives to its foundation and other charities — about $35 million a year.

But the San Francisco-based insurer says it agreed only to a $14 million yearly minimum donation and is not obligated to exceed current giving. "We are honoring the agreement that was negotiated with the state," Blue Shield spokesman Steve Shivinsky said. In a letter to the company last week, Shelley Rouillard, head of the California Department of Managed Health Care, expressed dismay over Blue Shield's stance but said the state would not enforce the extra-giving proviso.

Blue Shield has come in for greater regulatory scrutiny since the California Franchise Tax Board revoked its state tax exemption last year, with state auditors criticizing it for maintaining a multibillion-dollar surplus and California's insurance commissioner investigating its executive compensation.