Judge confirms KPS sale

Thurston County Superior Court Judge Richard D. Hicks upheld the transfer of KPS Health Plans of Bremerton to non-profit Group Health Cooperative late Friday, Aug. 19. This move ends the Insurance Commissioner’s six-year receivership over KPS and will pump about $19 million into the company.

The transfer is expected to occur within the next 30 days.

This, despite efforts from the City of Bremerton, the Kitsap County Medical Society and two local physicians to intervene in the case. The group filed a motion in Thurston Superior Court a few weeks ago asking for a 90-day continuance so they could further investigate the reasons behind the sale, Group Health’s intentions for operating KPS and the recent decision from the state insurance commissioner to reject a plan by the Bremerton Community.

“We’re not happy with the results, but we respect the judge’s ruling,” said Roger Lubovich, city attorney. He added the that the city would not pursue the case further.

Insurance Commissioner Mike Kreidler approved the sale of KPS to Group Health Cooperative in July and submitted a petition to Thurston County Superior Court to lift the receivership order it imposed in 1999.

The transfer allows KPS Health Plans to continue serving its 55,000 subscribers and to maintain a separate corporate identity and presence in the community according to a statement released by the insurance commissioners office.

Hicks stated in his ruling that he did not find the commissioner’s actions capricious, untenable or unlawful and Washington law does not allow the court to second-guess the judgment of the elected insurance commissioner.

“KPS Health Plans could not have emerged as a healthy carrier without the tremendous support of the Bremerton-area community, including subscribers, medical providers and health facilities,” Insurance Commissioner Mike Kreidler stated.

“With the help of the community and the innovative offer of Group Health, KPS will continue to provide superior health care to the greater-Bremerton area for years to come.”

As of June 30, KPS reported a net worth of $4 million. Under the approved transfer, Group Health will infuse $19 million into KPS to meet the required minimum standards for capital reserves. In addition to meeting the minimum financial requirements, Group Health had to abide by four other criteria:

• Keep KPS as a non-profit company.

• Maintain KPS as a separate corporate entity for at least four years with the intent to continue indefinitely.

• Continue operations in Bremerton for at least four years with the intent to continue indefinitely.

• Immediately pay 50 percent of the $6 million that has been owed to surplus note holders since 1999. The remaining 50 percent will be paid over the next three years, based on the company’s specific financial performance.

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