Blue Cross and Blue Shield of Minnesota Wednesday received state approval that allows the insurer to spend $412 million in tobacco settlement funds.

Although Blue Cross said it will refund $60 million to about 220,000 policyholders and 18,700 businesses, those refunds could be delayed if new lawsuits are filed seeking more money for a larger group of current and former Blue Cross members. But the Minnesota Commerce Department ruling Wednesday ends the state's oversight of the 1998 Blue Cross settlement award. In 1999, state regulators struck down the first proposal because it didn't do enough for policyholders and gave Blue Cross a competitive advantage. Commerce Commissioner James Bernstein had nothing but praise for the new plan Wednesday. In addition to the $60 million in refunds, the plan approved by Bernstein will give $30 million to nonprofit community clinics that provide care to the uninsured and $70 million to the Minnesota Comprehensive Health Association, the state's health insurance program for residents who can't get private coverage because of their pre-existing medical conditions. The plan accounted for $160 million, which is roughly the amount of money that Blue Cross reserves exceed state-mandated limits. The company will use the remaining $252 million, which lies outside regulators' jurisdiction, to bankroll a 10-year program to reduce tobacco use, improve cardiovascular health and prevent cancer in Minnesota. "We are incredibly excited that this day has come," said Dr. Mark Banks, Blue Cross chief executive. He said letters will go out soon to organizations that might be interested in applying for grants or contracts. The company will give highest priority during the first 18 months to programs in tobacco reduction, he said. However, several local attorneys are eyeing the Commerce Department's decision, saying the door has been left open for them to revive class-action lawsuits that a Dakota County judge dismissed in 1998. At the time, Blue Cross was seeking regulatory approval on the entire settlement amount. The judge ruled that as long as the department was reviewing the Blue Cross plan, the court would stay out of the matter. But because Blue Cross has only sought approval on part of the lawsuit settlement amount in its second proposal, some lawyers may sue to get more money for subscribers. "We are interested in making sure that the policyholders get their overcharges back," said Karl Cambronne, a Minneapolis attorney who filed one of the lawsuits in 1998 on behalf of subscribers. Cambronne said he and other lawyers will review Bernstein's ruling before deciding whether to launch new litigation. Blue Cross said it will delay paying out the $160 million approved by Bernstein if new suits are filed. Under the proposal approved Wednesday, $30 million would go to nearly 220,000 Blue Cross subscribers who had individual or Medicare supplement policies as of June 15, 2001. Each qualified subscriber would receive an average payment of $138, but payments would go as high as $260 for longtime policyholders. Blue Cross has not outlined the rebate process. The $30 million for businesses would go to fully insured groups, primarily small businesses, that had policies as of June 15, 2001. Blue Cross estimates that each of about 18,700 groups would get an average payment of $1,600, with maximum payments of $978,600. However, the rebate to employers still needs to be approved by federal regulators because of federal labor laws. If approval is denied, the $30 million would be split between the community clinics and the Minnesota Comprehensive Health Association.

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