Doctor takes a step back to fight proposed insurance merger

In a green-glass-domed court room in Harrisburg last week, it was as if Rip Van Winkle had awakened after a decade of sleep, but instead of the world changing, it remained exactly the same.

There were the lawyers, talking about the mergers of two of the state's largest Blue Cross Blue Shield health insurers.

There were the black-garbed judges, listening to arguments about the threat of competition, about an intense regulatory process, about the role of nonprofits and the insurance department.

But instead of talking about the proposed Independence Blue Cross and Highmark Inc. merger announced two weeks earlier, the case involved the merger that created Highmark in 1996.

Anyway, Rip had been too busy fighting to sleep.

"They've got to unscramble the egg," said Robert B. Sklaroff, 56, an Elkins Park internist and oncologist who has been battling the merger since the day Blue Cross of Western Pennsylvania and Pennsylvania Blue Shield proposed it back in 1995.

By his own estimate, he has spent $100,000 of his own money on the fight.

Sklaroff and his wife, who is also a doctor, split up in 1998, two years after he began his epic battle against the Blues. "She said my causes were my mistresses," Sklaroff said.

"We all have our passions in life," said his ex, Patricia Loudis, who, ironically, works for a health insurer, although not one of the Blues. "He certainly spends his time, resources and energy on those causes which engage him. He's a very unusual person."

The divorce was finalized last year.

While all the physicians' groups that originally opposed the merger have faded away, Sklaroff, who says he sees about 50 patients a month, is still fighting. "You only live once," he said. "I do things that no one else does that have to be done."

Sklaroff's battle began in 1995, on the day after Christmas. Blue Cross of Western Pennsylvania and Blue Shield announced plans to merge.

On Nov. 27, 1996, Linda Kaiser, then the insurance commissioner, approved the merger, which created one of the nation's biggest health insurers. Highmark filed its incorporation papers Dec. 6.

Doctors' groups immediately petitioned the court for a review of the decision.

In 1997, the Commonwealth Court ordered the insurance commissioner to hold hearings on the merger case. The one hearing was held five years later, in December 2002. The insurance commissioner at that time, M. Diane Koken, did not issue an adjudication on those hearings until May 26, 2006 - just as rumors were beginning to mount about Highmark's possible merger with Independence.

Wednesday's hearing was a petition to overturn Koken's 2006 ruling in Sklaroff's case.

During the hearing, Highmark's lawyer, Jack Stover, characterized Sklaroff's prior testimony as "mostly his opinion and the scattered facts." Highmark refused to comment further on the case or Sklaroff.

Meanwhile, Sklaroff, who scurried about the courtroom passing notes to his lawyers, pursued the same issues he has for 11 years:

The insurance commissioner should have considered the nonprofit parent companies and not just their subsidiaries in judging the legality of the Highmark merger, he said. The Insurance Department said that the law does not allow the department to oversee mergers of nonprofit insurers.

The insurance commissioner didn't properly evaluate the marketplace for monopoly issues, he said. She should have looked at their market share in Western Pennsylvania, where they dominated, instead of calculating competitive impact based on the entire state. The insurance department said it used the proper formula.

As a new company, Highmark should have had to apply for a new "certificate of authority" to sell insurance. "Highmark was not required to apply for a new certificate of authority because it already had two," one from each company, insurance department lawyer Amy G. Daubert argued.

Pennsylvania Blue Shield, an organization run by doctors, needed their approval for the merger. Sklaroff said it had to be approved by 75 percent of the governing body. The vote fell short at 74.77 percent. Stover said that a simple majority was sufficient.

It may take months for the Commonwealth Court to rule on Sklaroff's latest petition.

This hasn't been Sklaroff's only battle.

"People either basically love me or they hate me," Sklaroff said. "Some people express resentment that I'm a whirling dervish.

"People who support me honor the kinds of interventions I suggest because of their merit," he said.

In 2000, Sklaroff inserted himself into the battle over the funding of the new sports stadiums in Philadelphia, bringing enough litigation to delay the process for more than a year.

At one point, Mayor Street's former aide John D. Christmas moved to block Sklaroff's e-mails.

"He has a tendency to send so many, and they were always pretty large e-mails," Christmas said then. "The volume was such, it was causing me not to be able to send e-mail."

Christmas inadvertently set off a First Amendment crisis because, when he asked City Hall's tech people to block Sklaroff's e-mail messages to him, they blocked his messages to everyone.

The American Civil Liberties Union intervened.

In 1999, Sklaroff made headlines in the tobacco settlement case when his solitary slog through the courts blocked, for a time, Pennsylvania's $11.3 billion cut from Big Tobacco.

"I wouldn't sleep at night if I didn't do it," he said. He thought that Pennsylvanians would be giving up their right to sue.

And he persistently argues that doctors should join, as he has, the Federation of Physicians & Dentists union, in part to better negotiate with insurers.

The federation, which is part of the Philadelphia-based National Union of Hospital and Health Care Employees, has helped to bankroll Sklaroff's efforts against Highmark, even as other doctors' organizations have dropped out.

"We didn't feel there was much that was going to serve either our members or our subscribers," said Mark Piasio, who heads the Pennsylvania Medical Society. "It did not look as if the chance of success would be high, and, as you see, the merger did go through."

Sklaroff's "a very bright guy and he's been very clairvoyant," Piasio said. "Sometimes you know when you are right, but you have to know what's a fight that you can't win."

Jack Seddons, the federation's executive director, says that "all the specialty groups should be joining this fight" against the 1996 Highmark merger and the fact that they've dropped out reveals "a weakness in organized medicine."

Sklaroff's lawyer agrees.

"I'm helping him because his motives are pure," M. Mark Mendel said. "He's never gained one cent on this, and he's spent his money. He's taken up the laborer's oar of the people" against powerful health insurance companies.

Now Sklaroff's ready to speak out against the marriage of Highmark and Independence.

Last Monday, at a public hearing before Sens. Arlen Specter and Bob Casey in Philadelphia's National Constitution Center, he sought a chance to deliver his testimony on stage.

Instead he delivered a brief to Specter's staff.

"We all know what happened when such claims were made by the Blues a decade ago; promises were broken, premiums were increased, obscene fiscal reserves accrued," he wrote, explaining that the Blues will merely need to show that their merger will be efficient, "and, presto, you have your approval of a grossly monopolistic company.

"In short," his brief continued, "the proposed marriage of Highmark and [Independence] is illegitimate, if for no other reason than . . . Highmark itself is a bastard-child."

"It's really scary," he said in an interview later. "I'm going to function as a truth squad again. I hope people will understand it and act on it."