Former Blue Shield exec sues California, claiming failure to protect nonprofit assets

The former director of Blue Shield of California filed a lawsuit against the state claiming that regulators are being too lax when it comes to guarding charitable assets, according to The San Diego Union-Tribune.

Former Blue Shield executive Michael Johnson filed the lawsuit in January 2020. In the lawsuit, he argued regulators weren't using their legal authority to protect the charitable assets of nonprofit health providers who are pursuing a deal with a for-profit rival. 

Mr. Johnson cited two recent deals where he argued state regulators should have safeguarded a public trust that holds nonprofit assets: Blue Shield of California's acquisition of Care1st and Delta Dental's proposed deal with Moda Health.

In both cases, the California Department of Managed Health Care found the deals didn't warrant more regulatory review because the nonprofits in each case didn't have assets that were subject to charitable trust obligations, according to The San Diego Union-Tribune.

The Department of Managed Health Care hadn't formally responded to the lawsuit as of Feb. 16.

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