Maryland regulator's departure won't delay ruling on CareFirst's reserves
■ An initial report prepared for the insurance commissioner said the reserves were not excessive.
By Emily Berry — Posted Jan. 6, 2010
Maryland Insurance Commissioner Ralph Tyler is leaving for a post at the Food and Drug Administration, effective Jan. 8. But he said he plans to issue a report gauging the financial reserves of his state's largest health insurer before leaving office.
CareFirst BlueCross BlueShield, based in Owings Mills, Md., sells health insurance in Maryland, Virginia and the District of Columbia. The health plan has long argued that it needs substantial reserves set aside in case of a health-related or financial emergency.
In 2009, Tyler and Gennet Purcell, his counterpart at the District of Columbia Dept. of Insurance, Securities and Banking, agreed to coordinate their efforts to determine whether CareFirst and its subsidiaries are keeping an excessive amount of money in reserve.
CareFirst's D.C. subsidiary, Group Hospitalization and Medical Services, reported reserves of $687 million at the end of 2008. Its Maryland subsidiary, CareFirst of Maryland, reported reserves of $394 million for the same time period.
A report commissioned by Tyler's office and released Oct. 30, 2009, said CareFirst's reserves are not excessive. Tyler is expected to release his final findings the first week in January. Tyler will be chief counsel to the FDA after serving for two years as head of the Maryland Insurance Administration.
Purcell's decision was expected around the same time.
Tyler has been critical of CareFirst and its leadership in the past, particularly former Chief Executive Officer William Jews, who lost his job in November 2006 but left with an $18 million severance package.
Tyler ordered that amount cut in half, but his ruling was reversed in November 2009 by a Circuit Court judge. Tyler appealed that decision to the state's Court of Special Appeals, and that appeal is still pending.