EXHIBIT
10.51  BLUE
SHIELD CONTROLLED AFFILIATE LICENSE AGREEMENT (Includes
revisions adopted by Member Plans through their November 15, 2001 meeting)  This Agreement by and among Blue Cross and Blue Shield
Association (BCBSA) and Healthy Alliance Life Insurance Company.  (Controlled Affiliate), a Controlled
Affiliate of the Blue Shield Plan(s), known as WellPoint Health Networks Inc.
(Plan), which is also a Party signatory hereto.  WHEREAS, BCBSA is the owner of the BLUE SHIELD and
BLUE SHIELD Design service marks;  WHEREAS, Plan and Controlled Affiliate desire that the
latter be entitled to use the BLUE SHIELD and BLUE SHIELD Design service marks
(collectively the Licensed Marks) as service marks and be entitled to use the
term BLUE SHIELD in a trade name (Licensed Name);  NOW THEREFORE, in consideration of the foregoing and
the mutual agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:  1.             GRANT
OF LICENSE  Subject to the terms and conditions of this Agreement,
BCBSA hereby grants to Controlled Affiliate the right to use the Licensed Marks
and Name in connection with, and only in connection with:  (i) health care plans and related services,
as defined in BCBSAs License Agreement with Plan, and administering the
non-health portion of workers compensation insurance, and (ii) underwriting
the indemnity portion of workers compensation insurance, provided that
Controlled Affiliates total premium revenue comprises less than 15 percent of
the sponsoring Plans net subscription revenue.  This grant of rights is non-exclusive and is limited to the Service
Area served by the Plan.  Controlled
Affiliate may use the Licensed Marks and Name in its legal name on the
following conditions: (i) the legal name must be approved in advance, in
writing, by BCBSA; (ii) Controlled Affiliate shall not do business outside the
Service Area under any name or mark; and (iii) Controlled Affiliate shall not
use the Licensed Marks and Name, or any derivative thereof, as part of any name
or symbol used to identify itself in any securities market.  Controlled Affiliate may use the Licensed
Marks and Name in its Trade Name only with the prior, written, consent of
BCBSA.  2.             QUALITY
CONTROL  A.            Controlled
Affiliate agrees to use the Licensed Marks and Name only in connection with the
licensed services and further agrees to be bound by the conditions regarding
quality control shown in attached Exhibit A as they may be amended by BCBSA
from time-to-time. Amended
as of November 15, 2001  
   B.            Controlled
Affiliate agrees to comply with all applicable federal, state and local laws.  C.            Controlled
Affiliate agrees that it will provide on an annual basis (or more often if
reasonably required by Plan or by BCBSA) a report or reports to Plan and BCBSA
demonstrating Controlled Affiliates compliance with the requirements of this
Agreement including but not limited to the quality control provisions of this
paragraph and the attached Exhibit A.  D.            Controlled
Affiliate agrees that Plan and/or BCBSA may, from time-to-time, upon reasonable
notice, review and inspect the manner and method of Controlled Affiliates
rendering of service and use of the Licensed Marks and Name.  E.             As
used herein, a Controlled Affiliate is defined as an entity organized and
operated in such a manner, that it meets the following requirements:  (1)           A Plan or Plans
authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to separate License Agreement(s) with BCBSA, other than such
Controlled Affiliates License Agreement(s), 
(the Controlling Plan(s)), must have the legal authority directly or
indirectly through wholly-owned subsidiaries to select members of the
Controlled Affiliates governing body having not less than 50% voting control
thereof and to:  (a)           prevent
any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling
Plan(s) do(es) not concur;  (b)           exercise
control over the policy and operations of the Controlled Affiliate at least
equal to that exercised by persons or entities (jointly or individually) other
than the Controlling Plan(s); and  Notwithstanding anything to the contrary in (a) through (b) hereof, the
Controlled Affiliates establishing or governing documents must also require
written approval by the Controlling Plan(s) before the Controlled Affiliate
can:  (i)change
its legal and/or trade names;  (ii)change
the geographic area in which it operates;  (iii)change
any of the type(s) of businesses in which it engages;  2 
   (iv)create,
or become liable for by way of guarantee, any indebtedness, other than
indebtedness arising in the ordinary course of business;  (v)sell
any assets, except for sales in the ordinary course of business or sales of
equipment no longer useful or being replaced;  (vi)make
any loans or advances except in the ordinary course of business;  (vii)enter
into any arrangement or agreement with any party directly or indirectly
affiliated with any of the owners or persons or entities with the authority to
select or appoint members or board members of the Controlled Affiliate, other
than the Plan or Plans (excluding owners of stock holdings of under 5% in a
publicly traded Controlled Affiliate);  (viii)conduct
any business other than under the Licensed Marks and Name;  (ix)take
any action that any Controlling Plan or BCBSA reasonably believes will
adversely affect the Licensed Marks and Name.  In addition, a Plan or Plans directly or indirectly through wholly
owned subsidiaries shall own at least 50% of any for-profit Controlled
Affiliate.  Or  (2)           A Plan or Plans
authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to separate License Agreement(s) with BCBSA, other than such
Controlled Affiliates License Agreement(s), (the Controlling Plan(s)), have
the legal authority directly or indirectly through wholly-owned subsidiaries to
select members of the Controlled Affiliates governing body having more than
50% voting control thereof and to:  (a)prevent
any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling
Plan(s) do(es) not concur; (b)exercise
control over the policy and operations of the Controlled Affiliate.  3 
   In addition, a Plan or Plans directly or indirectly through
wholly-owned subsidiaries shall own more than 50% of any for-profit Controlled
Affiliate.  3.             SERVICE
MARK USE  A.            Controlled
Affiliate recognizes the importance of a comprehensive national network of
independent BCBSA licensees which are committed to strengthening the Licensed
Marks and Name.  The Controlled
Affiliate further recognizes that its actions within its Service Area may
affect the value of the Licensed Marks and Name nationwide.  B.            Controlled
Affiliate shall at all times make proper service mark use of the Licensed Marks
and Name, including but not limited to use of such symbols or words as BCBSA
shall specify to protect the Licensed Marks and Name and shall comply with such
rules (generally applicable to Controlled Affiliates licensed to use the
Licensed Marks and Name) relative to service mark use, as are issued from
time-to-time by BCBSA.  Controlled
Affiliate recognizes and agrees that all use of the Licensed Marks and Name by
Controlled Affiliate shall inure to the benefit of BCBSA.  C.            Controlled
Affiliate may not directly or indirectly use the Licensed Marks and Name in a
manner that transfers or is intended to transfer in the Service Area the
goodwill associated therewith to another mark or name, nor may Controlled
Affiliate engage in activity that may dilute or tarnish the unique value of the
Licensed Marks and Name.  D.            If
Controlled Affiliate meets the standards of 2E(1) but not 2E(2) above and any
of  Controlled Affiliates advertising
or promotional material is reasonably determined by BCBSA and/or the Plan to be
in contravention of rules and regulations governing the use of the Licensed
Marks and Name,  Controlled Affiliate
shall for ninety (90) days thereafter obtain prior approval from BCBSA of
advertising and promotional efforts using the Licensed Marks and Name, approval
or disapproval thereof to be forthcoming within five (5) business days of
receipt of same by BCBSA or its designee. 
In all advertising and promotional efforts, Controlled Affiliate shall observe
the Service Area limitations applicable to Plan.  E.             Controlled
Affiliate shall use its best efforts in the Service Area to promote and build
the value of the Licensed Marks and Name.  4 
   4.             SUBLICENSING
AND ASSIGNMENT  Controlled Affiliate shall not, directly or
indirectly, sublicense, transfer, hypothecate, sell, encumber or mortgage, by
operation of law or otherwise, the rights granted hereunder and any such act
shall be voidable at the sole option of Plan or BCBSA.  This Agreement and all rights and duties
hereunder are personal to Controlled Affiliate.  5.             INFRINGEMENT  Controlled Affiliate shall promptly notify Plan and
Plan shall promptly notify BCBSA of any suspected acts of infringement, unfair
competition or passing off that may occur in relation to the Licensed Marks and
Name.  Controlled Affiliate shall not be
entitled to require Plan or BCBSA to take any actions or institute any
proceedings to prevent infringement, unfair competition or passing off by third
parties.  Controlled Affiliate agrees to
render to Plan and BCBSA, without charge, all reasonable assistance in
connection with any matter pertaining to the protection of the Licensed Marks
and Name by BCBSA.  6.             LIABILITY
INDEMNIFICATION  Controlled Affiliate and Plan hereby agree to save,
defend, indemnify and hold BCBSA harmless from and against all claims, damages,
liabilities and costs of every kind, nature and description (except those
arising solely as a result of BCBSAs negligence) that may arise as a result of
or related to Controlled Affiliates rendering of services under the Licensed
Marks and Name.  7.             LICENSE
TERM  A.            Except
as otherwise provided herein, the license granted by this Agreement shall
remain in effect for a period of one (1) year and shall be automatically
extended for additional one (1) year periods unless terminated pursuant to the
provisions herein.  B.            This
Agreement and all of Controlled Affiliates rights hereunder shall immediately
terminate without any further action by any party or entity in the event that
Plan ceases to be authorized to use the Licensed Marks and Name.  C.            Notwithstanding
any other provision of this Agreement, this license to use the Licensed Marks
and Name may be forthwith terminated by the Plan or the affirmative vote of the
majority of the Board of Directors of BCBSA present and voting at a special
meeting expressly called by BCBSA for the purpose on ten (10) days written
notice to the Plan advising of the specific matters at issue and granting the
Plan an opportunity to be heard and to present its response to  5 
   the Board for:  (1) failure to
comply with any applicable minimum capital or liquidity requirement under the
quality control standards of this Agreement; or (2) failure to comply with the
Organization and Governance quality control standard of this Agreement; or
(3) impending financial insolvency; or (4) for a Smaller Controlled Affiliate
(as defined in Exhibit A), failure to comply with any of the applicable
requirements of Standards 2, 3, 4, 5 or 7 of attached Exhibit A; or (5) the
pendency of any action instituted against the Controlled Affiliate seeking its
dissolution or liquidation of its assets or seeking appointment of a trustee,
interim trustee, receiver or other custodian for any of its property or
business or seeking the declaration or establishment of a trust for any of its
property or business, unless this Controlled Affiliate License Agreement has
been earlier terminated under paragraph 7(e); or (6) failure by a Controlled
Affiliate that meets the standards of 2E(1) but not 2E(2) above to obtain
BCBSAs written consent to a change in the identity of any owner, in the extent
of ownership, or in the identity of any person or entity with the authority to
select or appoint members or board members, provided that as to publicly traded
Controlled Affiliates this provision shall apply only if the change affects a
person or entity that owns at least 5% of the Controlled Affiliates stock
before or after the change; or (7) such other reason as is determined in good
faith immediately and irreparably to threaten the integrity and reputation of
BCBSA, the Plans, any other licensee including Controlled Affiliate and/or the
Licensed Marks and Name.  D.            Except
as otherwise provided in Paragraphs 7(B), 7(C) or 7(E) herein, should
Controlled Affiliate fail to comply with the provisions of this Agreement and
not cure such failure within thirty (30) days of receiving written notice
thereof (or commence a cure within such thirty day period and continue diligent
efforts to complete the cure if such curing cannot reasonably be completed
within such thirty day period) BCBSA or the Plan shall have the right to issue
a notice that the Controlled Affiliate is in a state of noncompliance.   If a state of noncompliance as aforesaid is
undisputed by the Controlled Affiliate or is found to exist by a mandatory
dispute resolution panel and is uncured as provided above, BCBSA shall have the
right to seek judicial enforcement of the Agreement or to issue a notice of
termination thereof.   Notwithstanding
any other provisions of this Agreement, any disputes as to the termination of
this License pursuant to Paragraphs 7(B), 7(C) or 7(E) of this Agreement shall
not be subject to mediation and mandatory dispute resolution.  All other disputes between BCBSA, the Plan
and/or Controlled Affiliate shall be submitted promptly to mediation and
mandatory dispute resolution.  The
mandatory dispute resolution panel shall have authority to issue orders for
specific performance and assess monetary penalties.  Except, however, as provided in Paragraphs 7(B) and 7(E) of this
Agreement, this license to use the Licensed Marks and Name may not be finally
terminated for any reason without the affirmative vote of a majority of the
present and voting members of the Board of Directors of BCBSA.  6 
   E.             This
Agreement and all of Controlled Affiliates rights hereunder shall immediately terminate
without any further action by any party or entity in the event that:  (1)           Controlled
Affiliate shall no longer comply with item 2(E) above;  (2)           Appropriate
dues, royalties and other payments for Controlled Affiliate pursuant to
paragraph 9 hereof, which are the royalties for this License Agreement, are
more than sixty (60) days in arrears to BCBSA; or  (3)           Any
of the following events occur:  (i) a
voluntary petition shall be filed by Controlled Affiliate seeking bankruptcy,
reorganization, arrangement with creditors or other relief under the bankruptcy
laws of the United States or any other law governing insolvency or debtor
relief, or (ii) an involuntary petition or proceeding shall be filed against
Controlled Affiliate seeking bankruptcy, reorganization, arrangement with
creditors or other relief under the bankruptcy laws of the United States or any
other law governing insolvency or debtor relief and such petition or proceeding
is consented to or acquiesced in by Controlled Affiliate or is not dismissed
within sixty (60) days of the date upon which the petition or other document
commencing the proceeding is served upon the Controlled Affiliate, or (iii) an
order for relief is entered against Controlled Affiliate in any case under the
bankruptcy laws of the United States, or Controlled Affiliate is adjudged
bankrupt or insolvent as those terms are defined in the Uniform Commercial Code
as enacted in the State of Illinois by any court of competent jurisdiction, or
(iv) Controlled Affiliate makes a general assignment of its assets for the
benefit of creditors, or (v) the Department of Insurance or other regulatory
agency assumes control of Controlled Affiliate or delinquency proceedings
(voluntary or involuntary) are instituted, or (vi) an action is brought by
Controlled Affiliate seeking its dissolution or liquidation of its assets or
seeking the appointment of a trustee, interim trustee, receiver or other
custodian for any of its property or business, or (vii) an action is instituted
by any governmental entity or officer against Controlled Affiliate seeking its
dissolution or liquidation of its assets or seeking the appointment of a
trustee, interim trustee, receiver or other custodian for any of its property
or business and such action is consented to or acquiesced in by Controlled
Affiliate or is not dismissed within one hundred thirty (130) days of the date
upon which the pleading or other document commencing the action is served upon
the Controlled Affiliate, provided that if the action is stayed or its
prosecution is enjoined, the one hundred thirty (130) day period is tolled for
the duration of the stay or injunction, and provided further, that the
Associations Board of Directors may toll or extend the 130 day period at any
time prior to its expiration, or (viii) a trustee, interim trustee, receiver or
other custodian for any of Controlled Affiliates property or business is
appointed or the Controlled Affiliate is ordered dissolved or liquidated.  Notwithstanding any other provision of this
Agreement,  7 
   a declaration or a request for declaration of the existence of a trust
over any of the Controlled Affiliates property or business shall not in itself
be deemed to constitute or seek appointment of a trustee, interim trustee,
receiver or other custodian for purposes of subparagraphs 7(e)(3)(vii) and
(viii) of this Agreement.  F.             Upon
termination of this Agreement for cause or otherwise, Controlled Affiliate
agrees that it shall immediately discontinue all use of the Licensed Marks and
Name, including any use in its trade name.  G.            Upon
termination of this Agreement, Controlled Affiliate shall immediately notify
all of its customers that it is no longer a licensee of BCBSA and, if directed
by the Associations Board of Directors, shall provide instruction on how the
customer can contact BCBSA or a designated licensee to obtain further
information on securing coverage.  The
notification required by this paragraph shall be in writing and in a form
approved by BCBSA.  The BCBSA shall have
the right to audit the terminated entitys books and records to verify
compliance with this paragraph.  H.            In
the event this Agreement terminates pursuant to 7(b) hereof, or in the event
the Controlled Affiliate is a Larger Controlled Affiliate (as defined in
Exhibit A), upon termination of this Agreement, the provisions of Paragraph
7.G. shall not apply and the following provisions shall apply:  (1)           The
Controlled Affiliate shall send a notice through the U.S. mails, with first
class postage affixed, to all individual and group customers, providers,
brokers and agents of products or services sold, marketed, underwritten or
administered by the Controlled Affiliate under the Licensed Marks and Name.  The form and content of the notice shall be
specified by BCBSA and shall, at a minimum, notify the recipient of the
termination of the license, the consequences thereof, and instructions for
obtaining alternate products or services licensed by BCBSA.  This notice shall be mailed within 15 days
after termination.  (2)           The
Controlled Affiliate shall deliver to BCBSA within five days of a request by
BCBSA a listing of national accounts in which the Controlled Affiliate is
involved (in a control, participating or servicing capacity), identifying the
national account and the Controlled Affiliates role therein.  (3)           Unless
the cause of termination is an event respecting BCBSA stated in paragraph 15(a)
or (b) of the Plans license agreement with BCBSA to use the Licensed Marks and
Name, the Controlled Affiliate, the Plan, and any other Licensed Controlled
Affiliates of the Plan shall be jointly liable for payment to BCBSA of an
amount equal to $25 multiplied by the number of Licensed Enrollees of the
Controlled Affiliate; provided that if any other Plan is permitted by BCBSA to
use marks or names licensed by BCBSA in the Service Area  8 
   established by this Agreement, the payment shall be multiplied by a
fraction, the numerator of which is the number of Licensed Enrollees of the
Controlled Affiliate, the Plan, and any other Licensed Controlled Affiliates
and the denominator of which is the total number of Licensed Enrollees in the
Service Area.  Licensed Enrollee means
each and every person and covered dependent who is enrolled as an individual or
member of a group receiving products or services sold, marketed or administered
under marks or names licensed by BCBSA as determined at the earlier of (i) the
end of the last fiscal year of the terminated entity which ended prior to
termination or (ii) the fiscal year which ended before any transactions causing
the termination began.  Notwithstanding
the foregoing, the amount payable pursuant to this subparagraph H. (3) shall be
due only to the extent that, in BCBSAs opinion, it does not cause the net
worth of the Controlled Affiliate, the Plan or any other Licensed Controlled
Affiliates of the Plan to fall below 100% of the capital benchmark formula, or
its equivalent under any successor formula, as set forth in the applicable
financial responsibility standards established by BCBSA (provided such
equivalent is approved for purposes of this sub paragraph by the affirmative
vote of three-fourths of the Plans and three-fourths of the total then current weighted
vote of all the Plans); measured as of the date of termination, and adjusted
for the value of any transactions not made in the ordinary course of
business.  This payment shall not be due
in connection with transactions exclusively by or among Plans or their
affiliates, including reorganizations, combinations or mergers, where the BCBSA
Board of Directors determines that the license termination does not result in a
material diminution in the number of Licensed Enrollees or the extent of their
coverage.  (4)           BCBSA
shall have the right to audit the books and records of the Controlled
Affiliate, the Plan, and any other Licensed Controlled Affiliates of the Plan
to verify compliance with this paragraph 7.H.  (5)           As
to a breach of 7.H.(1), (2), (3) or (4), the parties agree that the obligations
are immediately enforceable in a court of competent jurisdiction.  As to a breach of 7.H.(1), (2) or (4) by the
Controlled Affiliate, the parties agree there is no adequate remedy at law and
BCBSA is entitled to obtain specific performance.  I.              In
the event the Controlled Affiliate is a Smaller Controlled Affiliate (as
defined in Exhibit A), the Controlled Affiliate agrees to be jointly liable for
the amount described in H.3. hereof upon termination of the BCBSA license
agreement of any Larger Controlled Affiliate of the Plan.  J.             BCBSA
shall be entitled to enjoin the Controlled Affiliate or any related party in a
court of competent jurisdiction from entry into any transaction which would
result in a termination of this Agreement unless the Plans license from BCBSA
to use the Licensed Marks and Names has been terminated  9 
   pursuant to 10(d) of the Plans license agreement upon the required 6
month written notice.  K.            BCBSA
acknowledges that it is not the owner of assets of the Controlled Affiliate.  L.             In
the event that the Plan has more than 50 percent voting control of the
Controlled Affiliate under Paragraph 2(E)(2) above and is a Larger Controlled
Affiliate (as defined in Exhibit A), then the vote called for in Paragraphs
7(C) and 7(D) above shall require the affirmative vote of three-fourths of the
Plans and three-fourths of the
total then current weighted vote of all the Plans.  8.             DISPUTE
RESOLUTION  The parties agree that any disputes between them or
between or among either of them and one or more Plans or Controlled Affiliates
of Plans that use in any manner the Blue Shield and Blue Shield Marks and Name
are subject to the Mediation and Mandatory Dispute Resolution process attached
to and made a part of Plans License from BCBSA to use the Licensed Marks and
Name as Exhibits 5, 5A and 5B as amended from time-to-time, which documents are
incorporated herein by reference as though fully set forth herein.  9.             LICENSE
FEE  Controlled Affiliate will pay to BCBSA a fee for this
License determined pursuant to the formula(s) set forth in Exhibit B.  10.          JOINT
VENTURE  Nothing contained in the Agreement shall be construed
as creating a joint venture, partnership, agency or employment relationship
between Plan and Controlled Affiliate or between either and BCBSA.  Amended
as of March 11, 1999  10 
   11.          NOTICES
AND CORRESPONDENCE  Notices regarding the subject matter of this Agreement
or breach or termination thereof shall be in writing and shall be addressed in
duplicate to the last known address of each other party, marked respectively to
the attention of its President and, if any, its General Counsel.  12.          COMPLETE
AGREEMENT  This Agreement contains the complete understandings of
the parties in relation to the subject matter hereof.  This Agreement may only be amended by the affirmative vote of
three-fourths of the Plans and three-fourths of the total then current weighted
vote of all the Plans as officially recorded by the BCBSA Corporate Secretary.  13.          SEVERABILITY  If any term of this Agreement is held to be unlawful
by a court of competent jurisdiction, such findings shall in no way affect the
remaining obligations of the parties hereunder and the court may substitute a
lawful term or condition for any unlawful term or condition so long as the
effect of such substitution is to provide the parties with the benefits of this
Agreement.  14.          NONWAIVER  No waiver by BCBSA of any breach or default in
performance on the part of Controlled Affiliate or any other licensee of any of
the terms, covenants or conditions of this Agreement shall constitute a waiver
of any subsequent breach or default in performance of said terms, covenants or conditions.  14A.       VOTING  For all provisions
of this Agreement referring to voting, the term Plans shall mean all entities
licensed under the Blue Cross License Agreement and/or the Blue Shield License
Agreement, and in all votes of the Plans under this Agreement the Plans shall
vote together.  For weighted votes of
the Plans, the Plan shall have a number of votes equal to the number of
weighted votes (if any) that it holds as a Blue Cross Plan plus the number of weighted
votes (if any) that it holds as a Blue Shield Plan.  For all other votes of the Plans, the Plan shall have one
vote.  For all questions requiring an
affirmative three-fourths weighted vote of the Plans, the requirement shall be
deemed satisfied with a lesser weighted vote unless six (6) or more Plans fail
to cast weighted votes in favor of the question.  Amended
as of June 16, 2000  11 
   THIS PAGE IS
INTENTIONALLY BLANK.  12 
   15.          GOVERNING
LAW  This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Illinois.  16.          HEADINGS  The headings inserted in this agreement are for
convenience only and shall have no bearing on the interpretation hereof.  IN WITNESS WHEREOF, the parties have caused this
License Agreement to be executed and effective as of the date of last signature
written below.  Healthy
  Alliance Life Insurance Company:By:
  /s/ John A. O'RourkeDate:
  January 31, 2002WellPoint
  Health Networks Inc.:By:
  /s/ Leonard D.
  SchaefferDate:
  January 31, 2002BLUE
  CROSS AND BLUE SHIELD ASSOCIATIONBy:
  /s/ Scott P. SerotaDate:
  January 31, 2002   13 
   EXHIBIT
A  CONTROLLED
AFFILIATE LICENSE STANDARDS November 2001 PREAMBLE  The standards for licensing Controlled Affiliates are established by
BCBSA and are subject to change from time-to-time upon the affirmative vote of
three-fourths (3/4) of the Plans and three-fourths (3/4) of the total weighted
vote.  Each licensed Plan is required to
use a standard Controlled Affiliate license form provided by BCBSA and to
cooperate fully in assuring that the licensed Controlled Affiliate maintains
compliance with the license standards.  The Controlled Affiliate License provides a flexible vehicle to
accommodate the potential range of health and workers compensation related
products and services Plan Controlled Affiliates provide.  The Controlled Affiliate License collapses
former health Controlled Affiliate licenses (HCC, HMO, PPO, TPA, and IDS) into
a single license using the following business-based criteria to provide a
framework for license standards:  Percent of
Controlled Affiliate controlled by parent: 
Greater than 50 percent or 50 percent?  Risk
assumption:  yes or no?  Medical care
delivery:  yes or no?  Size of the
Controlled Affiliate:  If the Controlled
Affiliate has health or workers compensation administration business, does
such business constitute 15 percent or more of the parents and other licensed
health subsidiaries contract enrollment?  14 
   For purposes of definition:  A smaller
Controlled Affiliate:  (1) comprises
less than fifteen percent (15%) of Plans and its licensed Controlled
Affiliates total contract enrollment (as reported on the BCBSA Quarterly
Enrollment Report, excluding rider and freestanding coverage, and treating an
entity seeking licensure as licensed);* or (2) underwrites the indemnity portion
of workers compensation insurance and has total premium revenue less than 15
percent of the sponsoring Plans net subscription revenue.  A larger
Controlled Affiliate comprises fifteen percent (15%) or more of Plans and its
licensed Controlled Affiliates total contract enrollment (as reported on the
BCBSA Quarterly Enrollment Report, excluding rider and freestanding coverage,
and treating an entity seeking licensure as licensed.)*  Changes in Controlled Affiliate status:  If any Controlled Affiliates status changes regarding:  its Plan ownership level, its risk
acceptance or direct delivery of medical care, the Controlled Affiliate shall
notify BCBSA within thirty (30) days of such occurrence in writing and come
into compliance with the applicable standards within six (6) months.  If a smaller Controlled Affiliates health and workers compensation
administration business reaches or surpasses fifteen percent (15%) of the total
contract enrollment of the Plan and licensed Controlled Affiliates, the
Controlled Affiliate shall:  15 
   1.Within thirty (30)
days, notify BCBSA of this fact in writing, including evidence that the
Controlled Affiliate meets the minimum liquidity and capital (BCBSA Health Risk-Based Capital (HRBC) as
defined by the NAIC and state-established minimum reserve)
requirements of the larger Controlled Affiliate Financial Responsibility
standard; and  2.Within six (6)
months after reaching or surpassing the fifteen percent (15%) threshold,
demonstrate compliance with all license requirements for a larger Controlled
Affiliate.  If a Controlled Affiliate that underwrites the indemnity portion of
workers compensation insurance receives a change in rating or proposed change
in rating, the Controlled Affiliate shall notify BCBSA within 30 days of
notification by the external rating agency.  
 * For purposes of this calculation,  The numerator equals:  Applicant Controlled Affiliates contract enrollment, as defined in
BCBSAs Quarterly Enrollment Report (excluding rider and freestanding
coverage).  The denominator equals:  Numerator PLUS Plan and all other licensed Controlled Affiliates
contract enrollment, as reported in BCBSAs Quarterly Enrollment Report
(excluding rider and freestanding coverage).  Amended
November 15, 2001  16 
   STANDARDS FOR LICENSED CONTROLLED AFFILIATES As described in Preamble
section of Exhibit A to the Affiliate License Agreement, each controlled
affiliate seeking licensure must answer four questions.  Depending on the controlled affiliates
answers, certain standards apply: 1.     What
percent of the controlled affiliate is controlled by the parent Plan?  More than 50%
  Standard 1A, 4
  
  50%
  Standard 1B, 4
  
  100% and Primary
  Business is
  Government Non-Risk
  Standard 4*,10A  
 *    Applicable
only if using the names and marks. IN ADDITION, 2.     Is risk
being assumed? Yes
  
  
  
  
  
  NoControlled Affiliate underwrites any indemnity
  portion of workers compensation insurance
  
  Standards 7A-7E
  
  Controlled Affiliate comprises < 15% of total
  contract enrollment of Plan and its licensed affiliates, and does not
  underwrite the indemnity portion of workers compensation insurance
  
  Standard 2 (Guidelines 1.1,1.2) and Standard 11
  
  Controlled Affiliate comprises > 15% of
  total contract enrollment of Plan and its licensed affiliates, and does not
  underwrite the indemnity portion of workers compensation insurance
  
  Standard
  6H
  
  Controlled Affiliate comprises < 15% of total
  contract enrollment of Plan and its licensed affiliates
  
  Standard 2 (Guidelines 1.1,1.3) and Standard 11
  
  Controlled Affiliate comprises > 15% of
  total contract enrollment of Plan and its licensed affiliates
  
  Standard 6H
  
  Controlled Affiliates Primary Business is
  Government Non-Risk
  
  Standard 10B IN ADDITION, 3.     Is medical
care being directly provided? Yes
  Standard 3A
  
  No
  Standard 3B IN ADDITION, 4.     If the
controlled affiliate has health or workers compensation administration
business, does such business comprise 15% or more of the total contract
enrollment of Plan and its licensed controlled affiliates? Yes
  
  
  
  NoStandards 6A-6I
  
  Controlled Affiliate is
  a former primary
  licensee
  
  Standards 5,8,9,11
  
  Controlled
  Affiliate is not a
  former primary
  licensee
  
  Standards 5,8
  
  Controlled Affiliates
  Primary Business is
  Government Non-Risk
  
  
  Standards 8, 10(C)  17 
   Standard
1 - Organization and Governance  1A.)        The Standard for more than 50% Plan
control is:  A Controlled Affiliate
shall be organized and operated in such a manner that a licensed Plan or Plans
authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to separate License Agreement(s) with BCBSA, other than such
Controlled Affiliates License Agreement(s), (the Controlling Plan(s)), have
the legal authority, directly or indirectly through wholly-owned subsidiaries:
1) to select members of the Controlled Affiliates governing body having more
than 50% voting control thereof; and 2) to prevent any change in the articles
of incorporation, bylaws or other establishing or governing documents of the
Controlled Affiliate with which the Controlling Plan(s) do(es) not concur; and
3) to exercise control over the policy and operations of the Controlled
Affiliate.  In addition, a Plan or Plans
directly or indirectly through wholly-owned subsidiaries shall own more than
50% of any for-profit Controlled Affiliate.  1B.)         The Standard for 50% Plan control is:  A Controlled Affiliate
shall be organized and operated in such a manner that a licensed Plan or Plans
authorized to use the Licensed Marks in the Service Area of the Controlled Affiliate
pursuant to separate License Agreement(s) with BCBSA, other than such
Controlled Affiliates License Agreement(s), (the Controlling Plan(s)), have
the legal authority, directly or indirectly through wholly-owned subsidiaries:  1)to
select members of the Controlled Affiliates governing body having not less
than 50%  voting control thereof ; and  2)to
prevent any change in the articles of incorporation, bylaws or other
establishing or governing documents of the Controlled Affiliate with which the Controlling
Plan(s) do(es)  not concur; and  3)to
exercise control over the policy and operations of the Controlled Affiliate at
least equal to that exercised by persons or entities (jointly or individually)
other than the Controlling Plan(s).  18 
   Notwithstanding anything
to the contrary in 1) through 3) hereof, the Controlled Affiliates
establishing or governing documents must also require written approval by the
Controlling Plan(s) before the Controlled Affiliate can:  change
the geographic area in which it operates  change
its legal and/or trade names  change
any of the types of businesses in which it engages  create,
or become liable for by way of guarantee, any indebtedness, other than indebtedness
arising in the ordinary course of business  sell
any assets, except for sales in the ordinary course of business or sales of
equipment no longer useful or being replaced  make
any loans or advances except in the ordinary course of business  enter
into any arrangement or agreement with any party directly or indirectly
affiliated with any of the owners or persons or entities with the authority to
select or appoint members or board members of the Controlled Affiliate, other
than the Plan or Plans (excluding owners of stock holdings of under 5% in a
publicly traded Controlled Affiliate)  conduct
any business other than under the Licensed Marks and Name  take
any action that any Controlling Plan or BCBSA reasonably believes will
adversely affect the Licensed Marks and Name.  In addition, a Plan or
Plans directly or indirectly through wholly-owned subsidiaries shall own at
least 50% of any for-profit Controlled Affiliate.  19 
   Standard 2 - Financial Responsibility  A Controlled Affiliate
shall be operated in a manner that provides reasonable financial assurance that
it can fulfill all of its contractual obligations to its customers.  If a risk-assuming Controlled Affiliate ceases
operations for any reason, Blue Cross and/or Blue Cross Plan coverage will be
offered to all Controlled Affiliate subscribers without exclusions, limitations
or conditions based on health status. 
If a nonrisk-assuming Controlled Affiliate ceases operations for any
reason, sponsoring Plan(s) will provide for services to its (their) customers.  Standard 3 - State Licensure/Certification  3A.)The
Standard for a Controlled Affiliate that employs, owns or contracts on a
substantially exclusive basis for medical services is:  A Controlled Affiliate
shall maintain unimpaired licensure or certification for its medical care
providers to operate under applicable state laws.  3B.)The
Standard for a Controlled Affiliate that does not employ, own or contract on a
substantially exclusive basis for medical services is:  A Controlled Affiliate
shall maintain unimpaired licensure or certification to operate under
applicable state laws.  Standard 4 - Certain Disclosures  A Controlled Affiliate
shall make adequate disclosure in contracting with third parties and in
disseminating public statements of 1) the structure of the Blue Cross and Blue
Shield System; and 2) the independent nature of every licensee; and 3) the
Controlled Affiliates financial condition.  Standard 5 - Reports and Records for Certain Smaller
Controlled Affiliates  For a smaller Controlled
Affiliate that does not underwrite the indemnity portion of workers
compensation insurance, the Standard is:  20 
   A Controlled Affiliate
and/or its licensed Plan(s) shall furnish, on a timely and accurate basis,
reports and records relating to these Standards and the License Agreements
between BCBSA and Controlled Affiliate.  Standard 6 - Other Standards for Larger Controlled Affiliates  Standards 6(A) - (I) that
follow apply to larger Controlled Affiliates.  Standard 6(A):      Board of Directors  A Controlled Affiliate
Governing Board shall act in the interest of its Corporation in providing
cost-effective health care services to its customers.  A Controlled Affiliate shall maintain a governing Board, which
shall control the Controlled Affiliate, composed of a majority of persons other
than providers of health care services, who shall be known as public
members.  A public member shall not be
an employee of or have a financial interest in a health care provider, nor be a
member of a profession which provides health care services.  Standard 6(B):       Responsiveness to Customers  A Controlled Affiliate
shall be operated in a manner responsive to customer needs and requirements.  Standard 6(C):       Participation in National Programs  A Controlled Affiliate
shall effectively and efficiently participate in each national program as from
time to time may be adopted by the Member Plans for the purposes of providing
portability of membership between the licensees and ease of claims processing
for customers receiving benefits outside of the Controlled Affiliates Service
Area.  Such programs are
applicable to licensees, and include:  1.      Transfer
Program;  2.      BlueCard
Program;  21 
   3.      InterPlan
Teleprocessing System (ITS)  4.      Electronic
Claims Routing Process; and  5.      National
Account Programs, effective January 1, 2002.  Standard 6(D):      Financial Performance Requirements  In addition to
requirements under the national programs listed in Standard 6C:  Participation in National Programs, a
Controlled Affiliate shall take such action as required to ensure its financial
performance in programs and contracts of an inter-licensee nature or where
BCBSA is a party.  Standard 6(E):       Cooperation with Plan Performance
Response Process  A Controlled Affiliate
shall cooperate with BCBSAs Board of Directors and its Plan Performance and
Financial Standards Committee in the administration of the Plan Performance
Response Process and in addressing Controlled Affiliate performance problems
identified thereunder.  Standard 6(F):       Independent Financial Rating  A Controlled Affiliate
shall obtain a rating of its financial strength from an independent rating
agency approved by BCBSAs Board of Directors for such purpose.  Standard 6(G):       Best Efforts  During each year, a
Controlled Affiliate shall use its best efforts in the designated Service Area
to promote and build the value of the Blue Cross Mark.  Standard 6(H):      Financial Responsibility  A Controlled Affiliate
shall be operated in a manner that provides reasonable financial assurance that
it can fulfill all of its contractual obligations to its customers.  Amended
November 15, 2001  22 
   Standard 6(I):        Reports and Records  A Controlled Affiliate
shall furnish to BCBSA on a timely and accurate basis reports and records
relating to compliance with these Standards and the License Agreements between
BCBSA and Controlled Affiliate.  Such
reports and records are the following:  A)BCBSA
Controlled Affiliate Licensure Information Request; and  B)Biennial
trade name and service mark usage material, including disclosure material; and  C)Changes
in the ownership and governance of the Controlled Affiliate, including changes
in its charter, articles of incorporation, or bylaws, changes in a Controlled
Affiliates Board composition, or changes in the identity of the Controlled
Affiliates Principal Officers, and changes in risk acceptance, contract
growth, or direct delivery of medical care; and  D)Quarterly
Financial Report, Semi-annual Health Risk-Based Capital (HRBC) Report as
defined by the NAIC, Annual Financial Forecast, Annual Certified Audit Report,
Insurance Department Examination Report, Annual Statement filed with State
Insurance Department (with all attachments), and  E)Quarterly
Enrollment Report, Semi-Annual Benefit Cost Management Report.  Amended
November 15, 2001  23 
   Standard 6(J):        Control by Unlicensed Entities
Prohibited  No Controlled Affiliate
shall cause or permit an entity other than a Plan or a Licensed Controlled
Affiliate thereof to obtain control of the Controlled Affiliate or to acquire a
substantial portion of its assets related to licensable services.  Standard 7 - Other Standards for Risk-Assuming Workers
Compensation Controlled Affiliates  Standards 7(A) - (E) that
follow apply to Controlled Affiliates that underwrite the indemnity portion of
workers compensation insurance.  Standard 7 (A):     Financial Responsibility  A Controlled Affiliate
shall be operated in a manner that provides reasonable financial assurance that
it can fulfill all of its contractual obligations to its customers.  Standard 7(B):       Reports and
Records  A Controlled Affiliate shall furnish, on a timely and accurate basis,
reports and records relating to compliance with these Standards and the License
Agreements between BCBSA and the Controlled Affiliate.  Such reports and records are the following:  A.BCBSA Controlled
Affiliate Licensure Information Request; and  B.Biennial trade name
and service mark usage materials, including disclosure materials; and  C.Annual Certified
Audit Report, Annual Statement as filed with the State Insurance Department
(with all attachments), Annual NAICs Risk-Based Capital Worksheets for
Property and Casualty Insurers, Annual Financial Forecast; and  Amended June 16, 2000  24 
   Quarterly Financial
Report, Quarterly Estimated Risk-Based Capital for Property and Casualty
Insurers, Insurance Department Examination Report.  D.Notification of all
changes and proposed changes to independent ratings within 30 days of receipt
and submission of  a copy of all rating
reports; and  E.Changes in the
ownership and governance of the Controlled Affiliate including changes in its
charter, articles of incorporation, or bylaws, changes in a Controlled
Affiliates Board composition, Plan control, state license status, operating
area, the Controlled Affiliates Principal Officers or direct delivery of
medical care.  Standard 7(C):       Loss
Prevention  A Controlled Affiliate shall apply loss prevention protocol to both new
and existing business.  Standard 7(D):      Claims
Administration  A Controlled Affiliate shall maintain an effective claims
administration process that includes all the necessary functions to assure
prompt and proper resolution of medical and indemnity claims.  Standard 7(E):       Disability
and Provider Management  A Controlled Affiliate shall arrange for the provision of appropriate
and necessary medical and rehabilitative services to facilitate early
intervention by medical professionals and timely and appropriate return to
work.  Amended
November 16, 2000  25 
   Standard 8 - Cooperation with Controlled Affiliate License
Performance Response Process Protocol  A Controlled Affiliate
and its Sponsoring Plan(s) shall cooperate with BCBSAs Board of Directors and
its Plan Performance and Financial Standards 
Committee in the administration of the Controlled Affiliate License
Performance Response Process Protocol (ALPRPP) and in addressing Controlled
Affiliate compliance problems identified thereunder.  Standard
9 - Participation in National Programs by Smaller Controlled Affiliates  A smaller Controlled Affiliate for which this standard applies pursuant
to the Preamble section of Exhibit A of the Controlled Affiliate  License Agreement shall effectively and
efficiently participate in certain national programs from time to time as may
be adopted by Member Plans for the purposes of providing ease of claims
processing for customers receiving benefits outside of the Controlled
Affiliates service area and be subject to certain relevant financial and
reporting requirements.  A.National
program requirements include:  BlueCard
Program;  Inter-Plan
Teleprocessing System (ITS);  Transfer
Program;  Electronic
Claims Routing Process, effective until the mandated date for implementation of
the HIPAA standard transaction; and  National
Account Programs, effective January 1, 2002.  B.Financial
Requirements include:  Standard
6(D): Financial Performance Requirements and Standard 6(H): Financial
Responsibility; or  A
financial guarantee covering the Controlled Affiliates BlueCard Program
obligations in a form, and from a guarantor, acceptable to BCBSA.  26 
   Standard
9 - Participation in National Programs by Smaller Controlled Affiliates  C.Reporting
requirements include:  The
Semi-annual Health Risk-Based Capital (HRBC) Report.  Amended
November 15, 2001  27 
   Standard
10 - Other Standards for Controlled Affiliates Whose Primary Business is
Government Non-Risk  Standards 10(A) - (C) that follow apply to Controlled Affiliates whose
primary business is government non-risk.  Standard 10(A) -
Organization and Governance  A Controlled Affiliate shall be organized and operated in such a manner
that it is 1) wholly owned by a licensed Plan or Plans and 2) the sponsoring
licensed Plan or Plans have the legal ability to prevent any change in the
articles of incorporation, bylaws or other establishing or governing documents
of the Controlled Affiliate with which it does not concur.   28 
   Standard 10(B) -
Financial Responsibility  A Controlled Affiliate shall be operated in a manner that provides
reasonable financial assurance that it can fulfill all of its contractual
obligations to its customers.  Standard 10(C):- Reports
and Records  A Controlled Affiliate
shall furnish, on a timely and accurate basis, reports and records relating to
compliance with these Standards and the License Agreements between BCBSA and
the Controlled Affiliate.  Such reports
and records are the following:  A.BCBSA
Affiliate Licensure Information Request; and  B.Biennial
trade name and service mark usage materials, including disclosure material; and  C.Annual
Certified Audit Report, Annual Statement (if required) as filed with the State
Insurance Department (with all attachments), Annual NAIC Risk-Based Capital
Worksheets (if required) as filed with the State Insurance Department (with all
attachments), and Insurance Department Examination Report (if applicable)*; and  D.Changes
in the ownership and governance of the Controlled Affiliate, including changes
in its charter, articles of incorporation, or bylaws, changes in the Controlled
Affiliates Board composition, Plan control, state license status, operating
area, the Controlled Affiliates Principal Officers or direct delivery of
medical care.  29 
   Standard 11:  Participation in Electronic Claims Routing
Process  The Standard is:  A smaller controlled affiliate for which this standard applies pursuant
to the Preamble section of Exihibit A of the Controlled Affiliate License
Agreement shall effectively and efficiently participate in certain national
programs from time to time as may be adopted by Member Plans for the purposes
of providing ease of claims processing for customers receiving benefits outside
of the controlled affiliates service area.  National program requirements include:  A.  Electronic
Claims Routing Process effective upon the mandated date for implementation of
the HIPAA standard transaction.  Amended November 15, 2001   30 
   EXHIBIT B ROYALTY FORMULA FOR SECTION 9 OF THE
CONTROLLED AFFILIATE LICENSE AGREEMENT  Controlled Affiliate will pay BCBSA a fee for this license in
accordance with the following formula:  FOR RISK
AND GOVERNMENT NON-RISK PRODUCTS:  For Controlled Affiliates not underwriting the indemnity portion of
workers compensation insurance:  An amount equal to its pro rata share of each sponsoring Plans dues
payable to BCBSA computed with the addition of the Controlled Affiliates
subscription revenue and contracts arising from products using the marks.  The payment by each sponsoring Plan of its
dues to BCBSA, including that portion described in this paragraph, will satisfy
the requirement of this paragraph, and no separate payment will be necessary.  For Controlled Affiliates underwriting the indemnity portion of
workers compensation insurance:  An amount equal to 0.35 percent of the gross revenue per annum of
Controlled Affiliate arising from products using the marks; plus, an annual fee
of $5,000 per license for a Controlled Affiliate subject to Standard 7.  For Controlled Affiliates whose primary business is government
non-risk:  An amount equal to its pro-rata share of each sponsoring Plans dues
payable to BCBSA computed with the addition of the Controlled Affiliates
government non-risk beneficiaries.  31 
   FOR
NONRISK PRODUCTS:  An amount equal to 0.24 percent of the gross revenue per annum of
Controlled Affiliate arising from products using the marks; plus:  1)An annual fee
of $5,000 per license for a Controlled Affiliate subject to Standard 6 D.  2)An annual fee
of $2,000 per license for all other Controlled Affiliates.  The foregoing shall be reduced by one-half where both a BLUE CROSS® and
BLUE SHIELD® License are issued to the same Controlled Affiliate.  In the event that any license period is
greater or less than one (1) year, any amounts due shall be prorated.  Royalties under this formula will be
calculated, billed and paid in arrears.  32