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Opinion: Thanks to a tiny nonprofit, CareFirst will live up to its obligations to D.C. residents

It has been 17 years since a D.C. advocacy group found that the giant insurance company CareFirst was hoarding excess surpluses and shirking its responsibility as a nonprofit insurer to provide services that benefited the community. “Its mission is to serve [the] public. It is clear that it could and should do much more to carry out that mission,” read the group’s report. “We believe it is time for it to do so.”

At last, CareFirst will finally pay some of its due to D.C. residents — agreeing to pay $95 million to create a fund to address health disparities — and that, in large measure, is because of D.C. Appleseed, the small nonprofit that first took on CareFirst and never gave up. Its litigation hinged on the company’s obligation as a nonprofit to commit the maximum feasible amount of its surplus to addressing community health needs. In its 2004 report, D.C. Appleseed determined the company should be spending $50 million to $100 million to fulfill its charitable mission but in reality was spending only $1 million. CareFirst fought the lawsuit, arguing it had no excess surplus but only the reserves needed to protect the interests of its policyholders in the event of possible catastrophes that could cause a surge in claims.

At times during the long legal battle, D.C. Appleseed found itself at odds with the District government, which sided with CareFirst in hearings before the D.C. insurance commissioner and during the group’s two successful appeals to the D.C. Court of Appeals. It found an ally in D.C. Council member Mary M. Cheh (D-Ward 3), who wrote 2009 legislation designed to hold CareFirst accountable to its nonprofit mission, and had able representation with its pro bono partners at Covington & Burling, Harkins Cunningham and Mathematica.

Under terms of the settlement announced by Mayor Muriel E. Bowser (D), who helped bring the two sides to agreement, a seven-member Health Equity Committee will be created to oversee expenditures from the fund during the mandated five-year period. The money is seen as a potential game-changer, coming at a time when the pandemic has exacerbated inequalities in health care. “The disparities in health outcomes affecting underserved populations in the District are huge," said Walter Smith, D.C. Appleseed executive director. “CareFirst has both the resources and the legal obligation to help address those disparities. We are glad they have at last agreed to do that.”

Before the settlement was finalized, Maryland and Virginia, also served by CareFirst, gave their approval. Which is good, but officials in those states should also be questioning their decisions to pass laws that precluded spending down CareFirst reserves. The smart thinking and tenacity of D.C. Appleseed to get CareFirst to live up to its obligations to D.C. residents should prod Maryland and Virginia to do the same for their residents.



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