Attorney General's News Release

Sept. 15, 1998

Court says Blue Cross of KC is public benefit corporation; Nixon protects assets devoted to public purpose

Jeffeson City, Mo. — Attorney General Jay Nixon won a major victory for Missouri consumers on Sept. 11 when Cole County Circuit Court Judge Thomas Brown ruled that the assets of Blue Cross and Blue Shield of Kansas City (BCBSKC), a nonprofit corporation, were held for the benefit of the public.

The ruling will prohibit BCBSKC from conducting any activities including a proposed merger with Blue Cross and Blue Shield of Kansas that are inconsistent with the status of BCBSKC as a public benefit corporation, whose assets must remain devoted to a public purpose.

BCBSKC had sued the Attorney General to obtain a ruling declaring it a mutual benefit corporation, with no continuing obligation to have its assets remain devoted to a public purpose.

"This is a critically important victory," Nixon said, "because it comes at at time when many are trying to convert nonprofit assets that belong to the public to for-profit uses not benefitting the general public."

"(T)hroughout its history BCBSKC has operated as a public benefit corporation," Judge Brown wrote in his conclusion. "It was organized for a public purpose and its assets, in the event of dissolution, have been required to go for a similar use.

"This dedication of assets to a public purpose with assets going on dissolution to a corporation for similar uses was the scheme adopted by BCBSKC for more than 50 years," the ruling continued.

"In that time, BCBSKC took advantage of tax considerations and status in the community based on its pledge to serve a public benefit mission, and the general public consistently had been and was until very recently represented on the BCBSKC Board of Directors.

"BCBSKC has consistently held itself out as a public benefit corporation in its articles, tax filings and public pronouncements," the judge concluded. "It may not now be deemed anything else." "Judge Brown's decision sends a strong, clear signal charitable nonprofits cannot escape their obligation to use their assets to benefit the public," Nixon said.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818