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

Updated: Nov 24, 2021


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 p