WellPoint to Rethink CareFirst Bid

Facing a raft of criticisms from legislators, consumers and doctors, WellPoint Health Networks Inc. said Friday that it would reconsider the terms of its $1.3-billion bid for CareFirst Inc., a nonprofit health insurer with 3.2 million members in the Eastern United States.

The bid is a key part of WellPoint’s strategy to expand into the East and solidify its position as the nation’s largest provider of Blue Cross Blue Shield health plans. The biggest, Blue Cross of California, is owned by WellPoint, a publicly traded company based in Thousand Oaks.

But WellPoint’s plans to buy CareFirst, which is based in Maryland, has come under increasing fire after a report prepared for Maryland’s insurance commissioner said the bid was low. Citizens groups, meanwhile, have pounced on the deal, saying the conversion of CareFirst into a for-profit enterprise would hurt the public interest while resulting in a fat payoff to CareFirst executives and WellPoint.

On Friday, WellPoint signaled that it would press ahead with the deal, saying it has asked regulators in Maryland and Washington, D.C., to continue their review of the merger. Maryland’s insurance chief, Steven Larsen, had given WellPoint until Friday to say whether it would keep pursuing the takeover after the consultant report valued CareFirst between $1.38 billion and $2.25 billion.

Larsen’s office also has commissioned experts, at WellPoint’s expense, to examine the finances and the fairness of the transaction. A spokeswoman for Larsen said Friday that the commissioner planned to announce a decision next year. WellPoint also needs approval from officials in Washington, Delaware and Virginia.

In a joint statement issued Friday, WellPoint and CareFirst said they would evaluate revisions in the next 60 days. Company representatives declined to elaborate.

Some analysts viewed the statement as a sign that WellPoint may raise its bid. WellPoint’s stock rose $1.11 to $74.26 on the New York Stock Exchange.