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      FEC Record: Advisory opinions
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      AO 2014-11: Health care PACs no longer affiliated

FEC Record: Advisory opinionsAO 2014-11: Health care PACs no longer affiliatedOctober 15, 2014 The Commission concluded that Health Care Service Corporation Employees’ Political Action Committee (HCSC PAC) is no longer affiliated with BluePAC, the separate segregated fund (SSF) of Blue Cross and Blue Shield Association (BCBSA). As a result, they no longer share limits on contributions, and neither may solicit PAC contributions from the other’s restricted class.  **Background** HCSC PAC’s connected organization, Health Care Service Corporation (HCSC), is a Chicago-based, nonstock health insurance corporation that, among other things, markets health insurance under licensing agreements with BCBSA.  In Advisory Opinion 1990-22 (BCBSA), the Commission concluded that BCBSA is affiliated with each of its licensed plans in the United States. Accordingly, HCSC and BCBSA have treated their SSFs as affiliated PACs for purposes of the Federal Election Campaign Act (the Act). In Advisory Opinion 1999-39 (WellPAC), the Commission determined that the PAC of another BCBSA licensee was no longer affiliated with BBCBSA’s SSF, based in part on the fact that the licensee was not required to conduct its insurance and related businesses exclusively under the BCBSA brand and conducted extensive business under different brands in direct competition with other BCBSA licensees.  HCSC seeks the same conclusion, based on similar changes in its business relationship with BCBSA. By letter, BCBSA indicated it is “neutral as to the merits of this request.”  **Analysis** Under the Federal Election Campaign Act and FEC regulations, political committees, including SSFs, are per se “affiliated” if they are established, financed, maintained or controlled by the same corporation, labor organization, person, or group of persons, including any parent, subsidiary, branch, division, department, or local unit thereof. See 52 U.S.C. § 30116(a)(5) (formerly 2 U.S.C. § 441a(a)(5)); 11 CFR  100.5(g)(2), 110.3(a)(1)(ii). HCSC and BCBSA do not meet these criteria.  In the absence of per se affiliation, the Commission examines other factors set forth in its regulations to determine whether organizations are affiliated, including ownership stake, governance, hiring authority, overlapping personnel or members and ongoing financial involvement between the organizations. 11 CFR 100.5(g)(4). The financial ties between HCSC and BCBSA weigh in favor of affiliation. Nearly all of HCSC’s health insurance revenue comes from BCBSA products. However, the Commission has repeatedly determined that negotiated business arrangements between two entities do not by themselves establish affiliation. Additionally, HCSC over the last decade, has diversified and offers other brands of health insurance through subsidiaries in states across the country. In some cases, these and other non-BCBSA related products, such as life insurance and other services, actually compete directly with other BCBSA licensees. All of the other factors considered suggest disaffiliation. For instance, BCBSA played no role in the formation of HCSC, and neither organization maintains ownership or hiring authority in the other. BCBSA has no voting rights in HCSC, and HCSC—like other licensees—holds just one of the 38 seats on BCBSA’s board of directors. Based on these and other considerations, the Commission concluded that HCSC PAC is no longer affiliated with BCBSA’s SSF. *Date issued: October 2, 2014; Length: 8 pages* **Resources:** Advisory Opinion 2014-11 [PDF]            Commission discussion of AO 2014-11 [mp3]
 Author
          Alex  Knott


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This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public. The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.


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