DC Blue Cross in the Crosshairs

District of Columbia officials have launched an investigative probe into the affairs of CareFirst Blue Cross Blue Shield and, at the same time, have filed a lawsuit that would force the health insurer to donate millions of dollars to the community. CareFirst has members in DC, Northern Virginia, and parts of Maryland. Some observers believe the lawsuit and the probe, which has been given subpoena power, are partial payback for CareFirst’s failure to contribute an expected $5 million to a District universal healthcare program.

The lawsuit accuses CareFirst of amassing huge surpluses and spending money on executive salaries and perks instead of returning some of those surpluses to the community. CareFirst posted a $754 million surplus last year, and Maryland officials have investigated an $18 million severance package awarded to a former CareFirst CEO. The District’s lawsuit claims the insurer is required to give back some of its surplus to the community under its federal charter as a “charitable and benevolent institution.”

A statement issued by CareFirst asserts that the company has given more than $32 million to various community efforts in D.C., Maryland, and Northern Virginia, but the lawsuit filed by the District is looking for more. The suit alleges that, under its charter, CareFirst is required to put at least $100 million into charitable efforts in the communities it serves.