Document:

EXHIBIT 10.12

 

BLUE CROSS LICENSE AGREEMENT

(Includes revisions, if any, adopted
by Member Plans through their November 15, 2001 meeting)

 

This agreement by
and between Blue Cross and Blue Shield Association (“BCBSA”) and The Blue Cross
Plan, known as WellPoint Health Networks Inc. (the “Plan”).

 

Preamble

 

WHEREAS, the Plan
and/or its predecessor(s) in interest (collectively the “Plan”) had the right
to use the BLUE CROSS and BLUE CROSS Design service marks (collectively the
“Licensed Marks”) for health care plans in its service area, which was
essentially local in nature;

 

WHEREAS, the Plan
was desirous of assuring nationwide protection of the Licensed Marks,
maintaining uniform quality controls among Plans, facilitating the provision of
cost effective health care services to the public and otherwise benefiting the
public;

 

WHEREAS, to better
attain such ends, the Plan and the predecessor of BCBSA in 1972 simultaneously
executed the BCA License Agreement (s) and the Ownership Agreement; and

 

WHEREAS, BCBSA and
the Plan desire to supercede said Agreement(s) to reflect their current
practices and to assure the continued integrity of the Licensed Marks and of
the BLUE CROSS system;

 

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 agree as follows:

 

 

Agreement

 

1.             BCBSA hereby grants to the Plan, upon the terms and
conditions of this License Agreement, the right to use BLUE CROSS in its trade
and/or corporate name (the “Licensed Name”), and the right to use the Licensed
Marks, in the sale, marketing and administration of health care plans and
related services in the Service Area set forth and defined in paragraph 5
below.  As used herein, health care
plans and related services shall include acting as a nonprofit health care
plan, a for-profit health care plan, or mutual health insurer operating on a
not–for–profit or for-profit basis, under state law; financing
access to health care services; providing health care management and
administration; administering, but not underwriting, non-health portions of
Worker’s Compensation insurance; and delivering health care services, except
hospital services (as defined in the Guidelines to Membership Standards
Applicable to Regular Members).

 

2.             The Plan may use the Licensed Marks and Name in
connection with the offering of:  a)
health care plans and related services in the Service Area through Controlled
Affiliates, provided that each such Controlled Affiliate is separately licensed
to use the Licensed Marks and Name under the terms and conditions contained in
the Agreement attached as Exhibit 1 hereto (the “Controlled Affiliate License
Agreement”); and:  b) insurance
coverages offered by life insurers under the applicable law in the Service
Area, other than those which the Plan may offer in its own name, provided
through Controlled Affiliates, provided that each such Controlled Affiliate is
separately licensed to use the Licensed Marks and Name under the terms and
conditions contained in the Agreement attached as Exhibit 1A hereto (the
“Controlled Affiliate License Agreement Applicable to Life Insurance
Companies”) and further provided that the offering of such services does not
and will not dilute or tarnish the unique value of the Licensed Marks and Name;
and c) administration and underwriting of Workers’ Compensation Insurance
Controlled Affiliates, provided that each such Controlled Affiliate is separately
licensed to use the Licensed Marks and Name under the terms and conditions
contained in the Agreement attached as Exhibit 1 hereto (the “Controlled
Affiliate License.”).  As used herein, a
Controlled Affiliate is defined as an entity organized and operated in such a
manner that it is subject to the bona fide control of a Plan or Plans and, if
the entity meets the standards of subparagraph B but not subparagraph A of this
paragraph, the entity, its owners, and persons with authority to select or
appoint members or board members, other than a Plan or Plans, have received
written approval of BCBSA.  Absent
written approval by BCBSA of an alternative method of control, bona fide
control shall mean that a Plan or Plans authorized to use the Licensed Marks in
the Service Area of the Controlled Affiliate pursuant to this License
Agreement(s) with BCBSA, other than such Controlled Affiliate’s License
Agreement(s), (the “Controlling Plan(s)”), must have:

 

A.                                   The
legal authority, directly or indirectly through wholly-owned subsidiaries: (a)
to select members of the Controlled Affiliate’s governing body having more than
50% voting control thereof; (b) to exercise control over the policy and
operations of the Controlled Affiliate; (c) 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. In addition, a Plan or Plans directly or indirectly through
wholly-owned subsidiaries shall own more than 50% of any for–profit
Controlled Affiliate; or

Amended
as of March 11, 1999

 

2

 

B.                                     The
legal authority directly or indirectly through wholly-owned subsidiaries (a) to
select members of the Controlled Affiliate’s governing body having not less
than 50% voting control thereof; (b) 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; (c)
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). Notwithstanding anything to
the contrary in (a) through (c) hereof, the Controlled Affiliate’s establishing
or governing documents must also require written approval by the Controlling
Plan(s) before the Controlled Affiliate can:

 

1.             Change its legal and/or trade name;

 

2.             Change the geographic area in which it operates;

 

3.             Change any of the types of businesses in which it
engages;

 

4.             Create, or become liable for by way of guarantee, any
indebtedness, other than indebtedness arising in the ordinary course of
business;

 

5.             Sell any assets, except for sales in the ordinary course
of business or sales of equipment no longer useful or being replaced;

 

6.             Make any loans or advances except in the ordinary course
of business;

 

7.             Enter into any arrangement or agreement with any party
directly or indirectly affiliated with any of the owners of  the Controlled Affiliate 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);

 

8.             Conduct any business other than under the Licensed Marks
and Name;

 

9.             Take any action that any Controlling Plan or BCBSA
reasonably believes will adversely affect the Licensed Marks or Names.

 

In addition, a Plan or
Plans directly or indirectly through wholly owned subsidiaries shall own at
least 50% of any for-profit Controlled Affiliate.

 

Amended
as of June 11, 1998

 

2a

 

3.             The Plan may engage in activities not required by BCBSA
to be directly licensed through Controlled Affiliates and may indicate its
relationship thereto by use of the Licensed Name as a tag line, provided that
the engaging in such activities does not and will not dilute or tarnish the
unique value of the Licensed Marks and Name and further provided that such tag
line  use is not in a manner likely to
cause confusion or mistake.  Consistent
with the avoidance of confusion or mistake, each tag line use of the Plan’s
Licensed Name: (a) shall be in the style and manner specified by BCBSA from
time-to-time; (b) shall not include the design service marks; (c) shall not be
in a manner to import more than the Plan’s mere ownership of the Controlled
Affiliate; and (d) shall be restricted to the Service Area.  No rights are hereby created in any
Controlled Affiliate to use the Licensed Name in its own name or
otherwise.  At least annually, the Plan
shall provide BCBSA with representative samples of each such use of its
Licensed Name pursuant to the foregoing conditions.

 

4.             The Plan recognizes the importance of a comprehensive
national network of independent BCBSA licensees which are committed to
strengthening the Licensed Marks and Name. 
The Plan further recognizes that its actions within its Service Area may
affect the value of the Licensed Marks and Name nationwide.  The Plan agrees (a) to maintain in good
standing its membership in BCBSA; (b) promptly to pay its dues to BCBSA, said
dues to represent the royalties for this License Agreement; (c) materially to
comply with all applicable laws; (d) to comply with the Membership Standards
Applicable to Regular Members of BCBSA, a current copy of which is attached as
Exhibit 2 hereto; and (e) reasonably to permit BCBSA, upon a written, good
faith request and during reasonable business hours, to inspect the Plan’s books
and records necessary to ascertain compliance herewith.  As to other Plans and third parties, BCBSA
shall maintain the confidentiality of all documents and information furnished
by the Plan pursuant hereto, or pursuant to the Membership Standards, and
clearly designated by the Plan as containing proprietary information of the
Plan.

 

5.             The rights hereby granted are exclusive to the Plan
within the geographical area(s) served by the Plan on June 30, 1972, and/or as
to which the Plan has been granted a subsequent license, which is hereby
defined as the “Service Area,” except that BCBSA reserves the right to use the
Licensed Marks in said Service Area, and except to the extent that said Service
Area may overlap areas served by one or more other licensed Blue Cross Plans as
of said date or subsequent license, as to which overlapping areas the rights
hereby granted are nonexclusive as to such other Plan or Plans only.

 

Amended as of November 20, 1997

 

3

 

6.             Except as expressly provided by BCBSA with respect to
National Accounts, Government Programs and certain other necessary and
collateral uses, the current rules and regulations governing which are attached
as Exhibit 3 and Exhibit 4 hereto, or as expressly provided herein, the Plan
may not use the Licensed Marks and Name outside the Service Area or in
connection with other goods and services, nor may the Plan use the Licensed
Marks or Name in a manner which is intended to transfer in the Service Area the
goodwill associated therewith to another mark or name.  Nothing herein shall be construed to prevent
the Plan from engaging in lawful activity anywhere under other marks and names
not confusingly similar to the Licensed 
Marks and Name, provided that engaging in such activity does and will
not dilute or tarnish the unique value of the Licensed Marks and Name.  In addition to any and all remedies
available hereunder, BCBSA may impose monetary fines on the Plan for the Plan’s
use of the Licensed Marks and Names outside the Service Area provided that the
procedure used in imposing a fine is consistent with procedures specifically
prescribed by BCBSA from time to time in regulations of general application.

 

7.             The Plan agrees that it will display the Licensed Marks
and Name only in such form, style and manner as shall be specifically
prescribed by BCBSA from time-to-time in regulations of general application in
order to prevent impairment of the distinctiveness of the Licensed Marks and
Name and the goodwill pertaining thereto. The Plan shall cause to appear on all
materials on or in connection with which the Licensed Marks or Name are used
such legends, markings and notices as BCBSA may reasonably request in order to
give appropriate notice of service mark or other proprietary rights therein or
pertaining thereto.

 

8.             BCBSA agrees that: (a) it will not grant any other
license effective during the term of this License Agreement for the use of the
Licensed Marks or Name which is inconsistent with the rights granted to the
Plan hereunder; and (b) it will not itself use the Licensed Marks in derogation
of the rights of the Plan or in a manner to deprive the Plan of the full
benefits of this License Agreement.  The
Plan agrees that it will not attack the title of BCBSA in and to the Licensed
Marks or Name or attack the validity of the Licensed Marks or of this License
Agreement.  The Plan further agrees that
all use by it of the Licensed Marks and Name or any similar mark or name shall
inure to the benefit of BCBSA, and the Plan shall cooperate with BCBSA in
effectuating the assignment to BCBSA of any service mark or trademark
registrations of the Licensed Marks or any similar mark or name held by the
Plan or a Controlled Affiliate of the Plan, all or any portion of which
registration consists of the Licensed Marks.

 

Amended November 18, 1999

 

4

 

9.             (a).  Should the
Plan fail to comply with the provisions of paragraphs 2–4, 6, 7 and/or
12, and not cure such failure within thirty (30) days of receiving written
notice thereof (or commence curing such failure within such thirty day period
and continue diligent efforts to complete the curing of such failure if such curing
cannot reasonably be completed within such thirty day period), BCBSA shall have
the right to issue a notice that the Plan is in a state of noncompliance.
Except as to the termination of a Plan’s License Agreement or the merger of two
or more Plans, disputes as to noncompliance, and all other disputes between or
among BCBSA, the Plan, other Plans and/or Controlled Affiliates, shall be
submitted promptly to mediation and mandatory dispute resolution pursuant to
the rules and regulations of BCBSA, a current copy of which is attached as
Exhibit 5 hereto, and shall be timely presented and resolved. The mandatory
dispute resolution panel shall have authority to issue orders for specific
performance and assess monetary penalties. If a state of noncompliance as
aforesaid is undisputed by the Plan 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 License Agreement.  Except, however, as provided in paragraphs
9(d)(iii) and 15(a)(i)-(viii) below, no Plan’s license to use the Licensed
Marks and Name may be finally terminated 
for any reason without the affirmative vote of three–fourths of
the Plans and three-fourths of the total then current weighted vote of all the
Plans.

 

(b).  Notwithstanding any other provision of this
License Agreement, a Plan’s license to use the Licensed Marks and Name may be
forthwith terminated by the affirmative vote of three-fourths of the Plans and
three–fourths of the total then current weighted vote of all the Plans 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
Member Plans for: (i) failure to comply with any minimum capital or liquidity
requirement under the Membership Standard on Financial Responsibility; or (ii)
impending financial insolvency; or (iii) the pendency of any action instituted
against the Plan seeking its dissolution or liquidation or 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 of business, unless this License Agreement
has been earlier terminated under paragraph 15(a); or (iv) such other reason as
is determined in good faith immediately and irreparably to threaten the
integrity and reputation of BCBSA, the Plans and/or the Licensed Marks.

 

(c).  To the extent not otherwise provided
therein, neither: (i) the Membership Standards Applicable to Regular Members of
BCBSA; nor (ii) the rules and regulations governing National Accounts,
Government Programs and certain other uses; nor (iii) the rules and regulations
governing mediation and mandatory dispute resolution, may be amended unless and
until each such amendment is first adopted by the affirmative vote of
three-fourths of the Plans and of three-fourths of the total then current weighted
vote of all the Plans.

Amended as of March 11, 1999

 

5

 

9.  (d). 
The Plan may operate as a for-profit company on the following
conditions:

 

(i)            The Plan shall discharge all
responsibilities which it has to the Association and to other Plans by virtue
of this Agreement and the Plan’s membership in BCBSA.

 

(ii)           The Plan shall not use the licensed
Marks and Name, or any derivative thereof, as part of its legal name or any
symbol used to identify the Plan in any securities market.  The Plan shall use the licensed Marks and
Name as part of its trade name within its service area for the sale, marketing
and administration of health care and related services in the service area.

 

(iii)          The Plan’s license to use the Licensed
Marks and Name shall automatically terminate effective: (a) thirty days after
the Plan knows, or there is an SEC filing indicating that, any Institutional
Investor, has become the Beneficial Owner of securities representing 10% or
more of the voting power of the Plan (“Excess Institutional Voter”), unless
such Excess Institutional Voter shall cease to be an Excess Institutional Voter
prior to such automatic termination becoming effective; (b) thirty days after
the Plan knows, or there is an SEC filing indicating that, any Noninstitutional
Investor has become the Beneficial Owner of securities representing 5% or more
of the voting power of the Plan (“Excess Noninstitutional Voter”) unless such
Excess Noninstitutional Voter shall cease to be an Excess Noninstitutional
Voter prior to such automatic termination becoming effective; (c) thirty days
after the Plan knows, or there is an SEC filing indicating that, any Person has
become the Beneficial Owner of 20% or more of the Plan’s then outstanding common
stock or other equity securities which (either by themselves or in combination)
represent an ownership interest of 20% or more pursuant to determinations made
under paragraph 9(d)(iv) below (“Excess Owner”), unless such Excess Owner shall
cease to be an Excess Owner prior to such automatic termination becoming
effective; (d) ten business days after individuals who at the time the Plan
went public constituted the Board of Directors of the Plan (together with any
new directors whose election to the Board was approved by a vote of 2/3 of the
directors then still in office who were directors at the time the Plan went
public or whose election or nomination was previously so approved) (the
“Continuing Directors”) cease for any reason to constitute a majority of the
Board of Directors; or (e) ten business days after the Plan consolidates with
or merges with or into any person or conveys, assigns, transfers or sells all
or substantially all of its assets to any person other than a merger in which
the Plan is the surviving entity and immediately after which merger, no person
is an Excess Institutional Voter, an Excess Noninstitutional Voter or an Excess
Owner:  provided that, if requested by
the affected Plan in a writing received by BCBSA prior to such automatic
termination becoming effective, the provisions of this paragraph 9(d)(iii) may
be waived, in whole or in part,

Amended as of September 17, 1997

 

5a

 

upon the
affirmative vote of a majority of the disinterested Plans and a majority of the
total then current weighted vote of the disinterested Plans.  Any waiver so granted may be conditioned
upon such additional requirements (including but not limited to imposing new
and independent grounds for termination of this License) as shall be approved
by the affirmative vote of a majority of the disinterested Plans and a majority
of the total then current weighted vote of the disinterested Plans.  If a timely waiver request is received, no
automatic termination shall become effective until the later of: (1) the
conclusion of the applicable time period specified in paragraphs
9(d)(iii)(a)-(d) above, or (2) the conclusion of the first Member Plan meeting
after receipt of such a waiver request.

 

In the event that
the Plan’s license to use the Licensed Marks and Name is terminated pursuant to
this Paragraph 9(d)(iii), the license may be reinstated in BCBSA’s sole
discretion if, within 30 days of the date of such termination, the Plan
demonstrates that the Person referred to in clause (a), (b) or (c) of the
preceding paragraph is no longer an Excess Institutional Voter, an Excess
Noninstitutional Voter or an Excess Owner.

 

(iv)          The Plan shall not issue any class or
series of security other than (i) shares of common stock having identical terms
or options or derivatives of such common stock, (ii) non-voting,
non-convertible debt securities or (iii) such other securities as the Plan may
approve, provided that BCBSA receives notice at least thirty days prior to the
issuance of such securities, including a description of the terms for such
securities, and BCBSA shall have the authority to determine how such other
securities will be counted in determining whether any Person is an Excess
Institutional Voter, Excess Noninstitutional Voter or an Excess Owner.

 

(v)           For purposes of paragraph 9(d)(iii),
the following definitions shall apply:

 

(a)     “Affiliate” and “Associate” shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended and in
effect on November 17, 1993 (the “Exchange Act”).

 

(b)     A Person shall be deemed the “Beneficial
Owner” of and shall be deemed to “beneficially own” any securities:

 

(i)         which such Person or any of such
Person’s Affiliates or Associates beneficially owns, directly or indirectly;

Amended as of September 17, 1997

 

5b

 

(ii)        which such Person or any of such
Person’s Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(iii)       which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person’s Affiliates or Associates) has any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities) relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to (b)(ii)(B) above) or
disposing of any securities of the Plan.

 

Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” when used with reference to a Person’s Beneficial Ownership
of securities of the Plan, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.

 

(c)        A Person shall be deemed an
“Institutional Investor” if (but only if) such Person (i) is an entity or group
identified in the SEC’s Rule 13d-1(b)(1)(ii) as constituted on June 1, 1997,
and (ii) every filing made by such Person with the SEC under Regulation 13D-G
(or any successor Regulation) with respect to such Person’s Beneficial
Ownership of Plan securities shall have contained a certification identical to
the one required by item 10 of SEC Schedule 13G as constituted on June 1, 1997.

 

Amended as of September 17, 1997

 

5c

 

(d)        “Noninstitutional Investor” means any
Person who is not an Institutional Investor.

 

(e)        ”Person” shall mean any individual,
firm, partnership, corporation, trust, association, joint venture or other
entity, and shall include any successor (by merger or otherwise) of such
entity.

 

Amended as of September 17, 1997

 

5d

 

10.           This License Agreement shall remain
in effect: (a) until terminated as provided herein; or (b) until this and all
such other License Agreements are terminated by the affirmative vote of
three-fourths of the Plans and three-fourths of the total then current weighted
vote of all the Plans; (c) until terminated by the Plan upon six (6) months
written notice to BCBSA.

 

11.           Except as otherwise provided in
paragraph 15 below or by the affirmative vote of three-fourths of the Plans and
three–fourths of the total then current weighted vote of all the Plans,
or unless this and all such other License Agreements are simultaneously
terminated by force of law, the termination of this License Agreement for any
reason whatsoever shall cause the reversion to BCBSA of all rights in and to
the Licensed Marks and Name, and the Plan agrees that it will promptly
discontinue all use of the Licensed Marks and Name, will not use them
thereafter, and will promptly, upon written notice from BCBSA, change its
corporate name so as to eliminate the Licensed Name therefrom.

 

12.           The license hereby granted to Plan to
use the Licensed Marks and Name is and shall be personal to the Plan so
licensed and shall not be assignable by any act of the Plan, directly or
indirectly, without the written consent of BCBSA.  Said license shall not be assignable by operation of law, nor
shall Plan mortgage or part with possession or control of this license or any
right hereunder, and the Plan shall have no right to grant any sublicense to
use the Licensed Marks and Name.

 

13.           BCBSA shall maintain appropriate
service mark registrations of the Licensed Marks and BCBSA shall take such
lawful steps and proceedings as may be necessary or proper to prevent use of
the Licensed Marks by any person who is not authorized to use the same.  Any actions or proceedings undertaken by
BCBSA under the provisions of this paragraph shall be at BCBSA’s sole cost and
expense.  BCBSA shall have the sole right
to determine whether or not any legal action shall be taken on account of unauthorized
use of the Licensed Marks, such right not to be unreasonably exercised.  The Plan shall report any unlawful usage of
the Licensed Marks to BCBSA in writing and agrees, free of charge, to cooperate
fully with BCBSA’s program of enforcing and protecting the service mark rights,
trade name rights and other rights in the Licensed Marks.

 

6

 

14.           The Plan hereby agrees to save,
defend, indemnify and hold BCBSA and any other Plan(s) harmless from and
against all claims, damages, liabilities and costs of every kind, nature and
description which may arise exclusively and directly as a result of the
activities of the Plan.  BCBSA hereby
agrees to save, defend, indemnify and hold the Plan and any other Plan(s)
harmless from and against all claims, damages, liabilities and costs of every
kind, nature and description which may arise exclusively and directly as a
result of the activities of BCBSA.

 

15.           (a).          This
Agreement shall automatically terminate upon the occurrence of any of the
following events:  (i) a voluntary
petition shall be filed by the Plan or by BCBSA 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
the Plan or BCBSA 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 the Plan or BCBSA 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 Plan or BCBSA respectively, or
(iii) an order for relief is entered against the Plan or BCBSA in any case
under the bankruptcy laws of the United States, or the Plan or BCBSA is
adjudged bankrupt or insolvent (as that term is defined in the Uniform
Commercial Code as enacted in the state of Illinois) by any court of competent
jurisdiction, or (iv) the  Plan or BCBSA
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 the
Plan or delinquency proceedings (voluntary or involuntary) are instituted, or
(vi) an action is brought by the Plan or BCBSA 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 the Plan or
BCBSA 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 and such action is consented to or acquiesced in by
the Plan or BCBSA 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 Plan or BCBSA respectively, 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 the Plan’s or BCBSA’s property or
business is appointed, or the Plan or BCBSA is ordered dissolved or liquidated,
or (ix) the Plan shall fail to pay its dues and shall not cure such failure
within thirty (30) days of receiving written notice thereof.  Notwithstanding any other provision of this
Agreement, a declaration or a request for declaration of the existence of a
trust over any of the Plan’s or BCBSA’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 15(a)(vii)
and (viii) of this Agreement.

Amended March 12, 1998

 

7

 

(b).         BCBSA, or the Plans (as provided and in
addition to the rights conferred in Paragraph 10(b) above), may terminate this
Agreement immediately upon written notice upon the occurrence of either
of the following events:  (a) the Plan
or BCBSA becomes insolvent (as that term is defined in the Uniform Commercial
Code enacted in the state of Illinois), or (b) any final judgment against the
Plan or BCBSA remains unsatisfied or unbonded of record for a period of sixty
(60) days or longer.

 

(c).          If this License Agreement is
terminated as to BCBSA for any reason stated in subparagraphs 15(a) and (b)
above, the ownership of the Licensed Marks shall revert to each of the Plans.

 

(d).         Upon termination of this License
Agreement or any Controlled Affiliate License Agreement of a Larger Controlled
Affiliate, as defined in Exhibit 1 to this License Agreement:

 

(i)                             The
terminated entity 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 terminated entity or its Controlled Affiliates 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 or, if termination is pursuant to
paragraph 10(d) of this Agreement, within 15 days after the written notice
to BCBSA described in paragraph 10(d).

 

(ii)                          The
terminated entity shall deliver to BCBSA within five days of a request by BCBSA
a listing of national accounts in which the terminated entity is involved (in a
Control, Participating or Servicing capacity), identifying the national account
and the terminated entity’s role therein. 
For those accounts where the terminated entity is the Control Plan, the
Plan must also indicate the Participating and Servicing Plans in the national
account syndicate.

 

Amended as of September 19, 1996

 

8

 

(iii)                       Unless the
cause of termination is an event stated in paragraph 15(a) or (b) above
respecting BCBSA, the Plan and its Licensed Controlled Affiliates shall be
jointly liable for payment to BCBSA of an amount equal to $25 multiplied by the
number of Licensed Enrollees of the terminated entity and its Licensed
Controlled Affiliates; provided that if any other Plan is permitted by BCBSA to
use marks or names licensed by BCBSA in the Service Area established by this
Agreement, the payment shall be multiplied by a fraction, the numerator of
which is the number of Licensed Enrollees of the terminated entity and its
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 (a) the end of the last fiscal year of the
terminated entity which ended prior to termination or (b) the fiscal year which
ended before any transactions causing the termination began.  Notwithstanding the foregoing, the amount
payable pursuant to this subparagraph (d)(iii) shall be due only to the extent
that, in BCBSA’s opinion, it does not cause the net worth 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 Plan 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.

 

Amended as of November 19, 1998

 

8a

 

(iv)                      BCBSA shall
have the right to audit the books and records of the terminated entity and its
Licensed Controlled Affiliates to verify compliance with this paragraph 15(d).

 

(v)                         As to a
breach of 15 (d) (i), (ii), (iii) or (iv), the parties agree that the
obligations are immediately enforceable in a court of competent
jurisdiction.  As to a breach of 15 (d)
(i), (ii) or (iv) by the Plan, the parties agree there is no adequate remedy at
law and BCBSA is entitled to obtain specific performance.

 

(e).                  BCBSA shall be entitled to
enjoin the Plan or any related party in a court of competent jurisdiction from
entry into any transaction which would result in a termination of this License
Agreement unless the License Agreement has been terminated pursuant to
paragraph 10 (d) of this Agreement upon the required six (6) month written
notice.

 

(f).                   BCBSA acknowledges that it is
not the owner of assets of the Plan.

 

16.                This Agreement supersedes any
and all other agreements between the parties with respect to the subject matter
herein, and contains all of the covenants and agreements of the parties as to
the licensing of the Licensed Marks and Name. 
This Agreement may be amended only 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.

 

17.           If any provision or any part of any
provision of this Agreement is judicially declared unlawful, each and every
other provision, or any part of any provision, shall continue in full force and
effect notwithstanding such judicial declaration.

 

18.           No waiver by BCBSA or the Plan of any
breach or default in performance on the part of BCBSA or the Plan 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.

 

19a.         All notices provided for hereunder
shall be in writing and shall be sent in duplicate by regular mail to BCBSA or
the Plan at the address currently published for each by BCBSA and shall be
marked respectively to the attention of the President and, if any, the General
Counsel, of BCBSA or the Plan.

 

Amended as of November 20, 1997

 

8b

 

19b.         Except as provided in paragraphs 9(b),
9(d)(iii), 15(a), and 15(b) above, this Agreement may be terminated for a
breach only upon at least 30 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 the Member Plans.

 

19c.         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

 

8c

 

20.           Nothing herein contained shall be
construed to constitute the parties hereto as partners or joint venturers, or
either as the agent of the other, and Plan shall have no right to bind or
obligate BCBSA in any way, nor shall it represent that it has any right to do
so.  BCBSA shall have no liability to
third parties with respect to any aspect of the business, activities,
operations, products, or services of the Plan.

 

21.           This Agreement shall be governed, construed
and interpreted in accordance with the laws of the State of Illinois.

 

IN WITNESS
WHEREOF, the parties have caused this License Agreement to be executed,
effective as of the date of last signature written below.

 

BLUE CROSS AND BLUE SHIELD ASSOCIATION

 

	
  By

  	
  /s/ Scott P. Serota

  	
   

  
	
   

  
	
  Title

  	
  President

  	
   

  
	
   

  
	
  Date

  	
  January 31, 2002

  	
   

  
					

 

 

	
  WellPoint
  Health Networks Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Leonard D.
  Schaeffer

  	
   

  
	
   

  
	
  Title

  	
  Chairman and Chief
  Executive Officer

  	
   

  
	
   

  
	
  Date

  	
  January 31, 2002

  	
   

  
				

 

 

9

 

EXHIBIT
1

BLUE
CROSS

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         (“Controlled
Affiliate”), a Controlled Affiliate of the Blue Cross Plan(s), known as
           (“Plan”),
which is also a Party signatory hereto.

 

WHEREAS, BCBSA is the owner of the BLUE CROSS and BLUE
CROSS Design service marks;

 

WHEREAS, Plan and Controlled Affiliate desire that the
latter be entitled to use the BLUE CROSS and BLUE CROSS Design service marks
(collectively the “Licensed Marks”) as service marks and be entitled to use the
term BLUE CROSS 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 16, 2000

 

 

 

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
Cross and Blue Cross 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.

 

 

	
  Controlled
  Affiliate:

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Date

  	
   

  	
   

  
					

 

 

	
  Plan:

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Date

  	
   

  	
   

  
				

 

 

	
  BLUE
  CROSS AND BLUE SHIELD ASSOCIATION

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Date

  	
   

  	
   

  
					

 

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

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  No

  	
   

  	
   

  
	
  

  	
   

  	
  

  	
   

  	
  

  	
   

  	
  

  	
   

  	
  

  	
   

  	
  

  
	
  Controlled 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

  	
   

  	
   

  	
   

  	
  No

  	
   

  	
   

  
	
  

  	
   

  	
  

  	
   

  	
  

  	
   

  	
  

  
	
  Standards 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, 2000

 

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 Captial (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.

 

 

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.

 

 

EXHIBIT 1A

CONTROLLED AFFILIATE LICENSE
AGREEMENT

APPLICABLE TO LIFE INSURANCE COMPANIES

(Includes revisions adopted by Member
Plans through their Novmeber 15, 2001 meeting) 

This agreement by
and among Blue Cross and Blue Shield Association (“BCBSA”)                                           
(“Controlled Affiliate”), a Controlled Affiliate of the Blue Cross Plan(s),
known as                                                                           
(“Plan”).

 

WHEREAS, BCBSA is
the owner of the BLUE CROSS and BLUE CROSS Design service marks;

 

WHEREAS, the Plan
and the Controlled Affiliate desire that the latter be entitled to use the BLUE
CROSS and BLUE CROSS Design service marks (collectively the “Licensed Marks”)
as service marks and be entitled to use the term BLUE CROSS 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 the Controlled Affiliate
the exclusive right to use the licensed Marks and Names in connection with and
only in connection with those life insurance and related services authorized by
applicable state law, other than health care plans and related services (as
defined in the Plan’s License Agreements with BCBSA) which services are not
separately licensed to Controlled Affiliate by BCBSA, in the Service Area
served by the Plan, except that BCBSA reserves the right to use the Licensed
Marks and Name in said Service Area, and except to the extent that said Service
Area may overlap the area or areas served by one or more other licensed Blue
Cross Plans as of the date of this License as to which overlapping areas the
rights hereby granted are non-exclusive as to such other Plan or Plans and
their respective Licensed Controlled Affiliates only.  Controlled Affiliate cannot use the Licensed Marks or Name
outside the Service Area or, anything in any other license to Controlled
Affiliate notwithstanding, in its legal or trade name.

 

2. QUALITY CONTROL

 

A.        Controlled Affiliate agrees to use the Licensed Marks and
Name only in relation to the sale, marketing and rendering of authorized
products and further agrees to be bound by the conditions regarding quality
control shown in Exhibit A as it may be amended by BCBSA from time–to–time.

Amended as of November 17, 1994

 

1

 

B.            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.

 

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 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 Exhibit A.

 

D.            As used herein, a Controlled Affiliate is defined as an
entity organized and operated in such a manner that it is subject to the bona
fide control of a Plan or Plans.  Absent
written approval by BCBSA of an alternative method of control, bona fide
control shall mean the legal authority, directly or indirectly through wholly–owned
subsidiaries: (a) to select members of the Controlled Affiliate’s governing
body having not less than 51% voting control thereof; (b) to exercise
operational control with respect to the governance thereof; and (c) to prevent
any change in its articles of incorporation, bylaws or other governing
documents deemed inappropriate.  In
addition, a Plan or Plans shall own at least 51% of any for–profit
Controlled Affiliate.  If the Controlled
Affiliate is a mutual company, the Plan or its designee(s) shall have and
maintain, in lieu of the requirements of items (a) and (c) above, proxies
representing 51% of the votes at any meeting of the policyholders and shall
demonstrate that there is no reason to believe this such proxies shall be
revoked by sufficient policyholders to reduce such percentage below 51%.

 

3.             SERVICE
MARK USE

 

Controlled Affiliate
shall at all times make proper service mark use of the Licensed Marks,
including but not limited to use of such symbols or words as BCBSA shall
specify to protect the Licensed Marks, and shall comply with such rules
(applicable to all Controlled Affiliates licensed to use the Marks) relative to
service mark use, as are issued from time–to–time by BCBSA.  If there is any public reference to the
affiliation between the Plan and the Controlled Affiliate, all of the
Controlled Affiliate’s licensed services in the Service Area of the Plan shall
be rendered under the Licensed Marks. 
Controlled Affiliate recognizes and agrees that all use of the Licensed
Marks by Controlled Affiliate shall inure to the benefit of BCBSA.

 

4.             SUBLICENSING
AND ASSIGNMENT

 

Controlled Affiliate
shall not sublicense, transfer, hypothecate, sell, encumber or mortgage, by
operation of law or otherwise, the rights granted 

 

2

 

hereunder and any such act shall be voidable at the
option of Plan or BCBSA.  This Agreement
and all rights and duties hereunder are personal to Controlled Affiliate.

 

5.             INFRINGEMENTS

 

Controlled Affiliate
shall promptly notify Plan and BCBSA of any suspected acts of infringement,
unfair competition or passing off which may occur in relation to the Licensed
Marks.  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, free of charge, all reasonable assistance in
connection with any matter pertaining to the protection of the Licensed Marks
by BCBSA.

 

6.             LIABILITY
INDEMNIFICATION

 

Controlled Affiliate
hereby agrees to save, defend, indemnify and hold Plan and BCBSA harmless from
and against all claims, damages, liabilities and costs of every kind, nature
and description which may arise as a result of Controlled Affiliate’s rendering
of health care services under the Licensed Marks.

 

7.             LICENSE
TERM

 

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 upon evidence
satisfactory to the Plan and BCBSA that Controlled Affiliate meets the then
applicable quality control standards, unless one of the parties hereto notifies
the other party of the termination hereof at least sixty (60) days prior to
expiration of any license period.

 

This Agreement may be
terminated by the Plan or by BCBSA for cause at any time provided that
Controlled Affiliate has been given a reasonable opportunity to cure and shall
not effect such a cure within thirty (30) days of receiving written notice of
the intent to terminate (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). 
By way of example and not for purposes of limitation, Controlled
Affiliate’s failure to abide by the quality control provisions of Paragraph 2,
above, shall be considered a proper ground for cancellation of this Agreement.

 

This Agreement and all
off Controlled Affiliate's rights hereunder shall immediately terminate without
any further action by any party or entity in the event that:

 

3

 

A.            Controlled Affiliate shall no longer comply with Standard
No. 1 (Organization and Governance) of Exhibit A or, following an opportunity
to cure, with the remaining quality control provisions of Exhibit A, as it may
be amended from time–to–time; or

 

B.            Plan ceases to be authorized to use the Licensed Marks;
or

 

C.            Appropriate dues for Controlled Affiliate pursuant to
item 8 hereof, which are the royalties for this License Agreement are more than
sixty (60) days in arrears to BCBSA.

 

Upon termination of this
Agreement for cause or otherwise, Controlled Affiliate agrees that it shall
immediately discontinue all use of the Licensed Marks including any use in its
trade name.

 

In the event of any
disagreement between Plan and BCBSA as to whether grounds exist for termination
or as to any other term or condition hereof, the decision of BCBSA shall
control, subject to provisions for mediation or mandatory dispute resolution in
effect between the parties.

 

Upon termination of this
Agreement, Licensed Controlled Affiliate shall immediately notify all of its customers
that it is no longer a licensee of the Blue Cross and Blue Shield Association
and provide instruction on how the customer can contact the Blue Cross and Blue
Shield Association or a designated licensee to obtain further information on
securing coverage. The written notification required by this paragraph shall be
in writing and in a form approved by the Association. The Association shall
have the right to audit the terminated entity’s books and records to verify
compliance with this paragraph.

 

8. DUES

 

Controlled Affiliate will
pay to BCBSA a fee for this license in accordance with the following formula:

 

• An annual fee of five thousand dollars ($5,000) per
license, plus

 

• .05% of gross revenue per year from branded group
products, plus

 

• .5% of gross revenue per year from branded individual
products plus

 

• .14% of gross revenue per year from branded individual
annuity products.

 

Amended
as of November 20, 1997

 

4

 

The foregoing
percentages shall be reduced by one-half where both a BLUE CROSS® and BLUE
SHIELD® license are issued to the same entity. 
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.

 

Plan will promptly
and timely transmit to BCBSA all dues owed by Controlled Affiliate as
determined by the above formula and if Plan shall fail to do so, Controlled
Affiliate shall pay such dues directly.

 

9. JOINT VENTURE

 

Nothing contained in this
Agreement shall be construed as creating a joint venture, partnership, agency
or employment relationship between Plan and Controlled Affiliate or between
either and BCBSA.

 

9A. 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.

 

10.          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.

 

Amended as of June 16, 2000

 

4a

 

11.          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 a writing executed by all parties.

 

12.          SEVERABILITY

 

If any term of
this Agreement is held to be unlawful by a court of competent jurisdiction,
such finding shall in no way effect 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.

 

13.          NONWAIVER

 

No waiver by BCBSA
of any breach or default in performance on the part of the 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.

 

14.          GOVERNING
LAW

 

This Agreement
shall be governed by, and construed and interpreted in accordance with, the
laws of the State of Illinois.

 

5

 

IN WITNESS
WHEREOF, the parties have caused this License Agreement to be executed,
effective as of the date of last signature written below.

 

BLUE CROSS AND BLUE SHIELD
ASSOCIATION

 

	
  By:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
				

 

 

	
  Controlled Affiliate:

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
				

 

 

	
  Plan:

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
				

 

6

 

EXHIBIT A

CONTROLLED
AFFILIATE LICENSE STANDARDS

LIFE INSURANCE COMPANIES

 

PREAMBLE

 

The standards for
licensing Life Insurance Companies (Life and Health Insurance companies, as
defined by state statute) 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 of all Plans.  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 Life Insurance Company maintains compliance
with the license standards.

 

An organization
meeting the following standards shall be eligible for a license to use the
Licensed Marks within the service area of its sponsoring Licensed Plan to the
extent and the manner authorized under the Controlled Affiliate License
applicable to Life Insurance Companies and the principal license to the Plan.

 

Standard 1 - Organization and
Governance

 

The LIC shall be
organized and operated in such a manner that it is controlled by a licensed
Plan or Plans which have, directly or indirectly: 1) not less than 51% of the
voting control of the LIC; and 2) the legal ability to prevent any change in
the articles of incorporation, bylaws or other establishing or governing
documents of the LIC with which it does not concur; and 3) operational control
of the LIC.

 

If the LIC is a
mutual company, the Plan or its designee(s) shall have and maintain, in lieu of
the requirements of items 1 and 2 above, proxies representing at least 51% of
the votes at any policyholder meeting and shall demonstrate that there is no
reason to believe such proxies shall be revoked by sufficient policyholders to
reduce such percentage below 51%.

 

Standard 2 - State Licensure

 

The LIC must
maintain unimpaired licensure or certificate of authority to operate under
applicable state laws as a life and health insurance company in each state in
which the LIC does business.

 

1

 

Standard 3 - Records and Examination

 

The LIC and its
sponsoring licensed Plan(s) shall maintain and furnish, on a timely and
accurate basis, such records and reports regarding the LIC as may be required
in order to establish compliance with the license agreement.The LIC and its
sponsoring licensed Plan(s) shall permit BCBSA to examine the affairs of the
LIC and shall agree that BCBSA’s board may submit a written report to the chief
executive officer(s) and the board(s) of directors of the sponsoring Plan(s).

 

Standard 4 - Mediation

 

The LIC and its
sponsoring Plan(s) shall agree to use the then-current BCBSA mediation and
mandatory dispute resolution processes, in lieu of a legal action between or among
another licensed controlled affiliate, a licensed Plan or BCBSA.

 

Standard 5 - Financial Responsibility

 

The
LIC shall maintain adequate financial resources to protect its customers and
meet its business obligations.

 

Standard 6 - Cooperation with Affiliate License Performance
Response Process Protocol

 

The
LIC 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 Affiliate License Performance Response Process Protocol
(ALPRPP) and in addressing LIC compliance problems identified thereunder.

 

2

 

EXHIBIT 2

 

Membership Standards

 

Preamble

 

The Membership
Standards apply to all organizations seeking to become or to continue as
Regular Members of the Blue Cross and Blue Shield Association.  Any organization seeking to become a Regular
Member must be found to be in substantial compliance with all Membership Standards
at the time membership is granted and the organization must be found to be in
substantial compliance with all Membership Standards for a period of two (2)
years preceding the date of its application. 
If Membership is sought by an entity which controls or is controlled by
one or more Plans, such compliance shall be determined on the basis of
compliance by such Plan or Plans.

 

The Regular Member
Plans shall have authority to interpret these Standards.  Compliance with any Membership Standard may
be excused, at the Plans’ discretion, if the Plans agree that compliance with
such Standard would require the Plan to violate a law or governmental
regulation governing its operation or activities.

 

A Regular Member Plan
that operates as a “Shell Holding Company” is defined as an entity that assumes
no underwriting risk and has less than 1% of the consolidated enterprise assets
(excludes investments in subsidiaries) and less than 5% of the consolidated
enterprise general and administrative expenses.

 

A Regular Member Plan
that operates as a “Hybrid Holding Company” is defined as an entity that
assumes no underwriting risk and has either more than 1% of the consolidated
enterprise assets (excludes investments in subsidiaries) or more than 5% of the
consolidated enterprise general and administrative expenses.

 

Standard 1:                                    A
Plan’s Board shall not be controlled by any special interest group, and shall
act in the interest of its Corporation in providing cost-effective health care
services to its customers.  A Plan shall
maintain a governing Board, which shall control the Plan, 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.

 

Amended
as of November 19, 1998

 

1

 

 

Standard 2:                                    A
Plan shall furnish to the Association on a timely and accurate basis reports
and records relating to compliance with these Standards and the License
Agreements between the Association and the Plans.  Such reports and records are the following:

 

A.                   BCBSA
Membership Information Request;

 

B.                     Biennial
trade name and service mark usage material, including disclosure material under
Standard 7;

 

C.                     Changes in
the governance of the Plan, including changes in a Plan’s Charter, Articles of
Incorporation, or Bylaws, changes in a Plan’s Board composition, or changes in
the identity of the Plan’s Principal Officers;

 

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), Plan, Subsidiary and Affiliate
Report; and

 

•                                          Plans
that are a Shell Holding Company as defined in the Preamble hereto are required
to furnish only a calendar year-end “Health Risk-Based Capital (HRBC) Report”
as defined by the NAIC.

 

Amended as of November 15, 2001

 

2

 

 

E.                      Quarterly
Enrollment Report, Semi-Annual Benefit Cost Management Report and Member
Touchpoint Measures Index (MTM) starting 12/31/00 and semi-annually thereafter;
and

 

•                                          Plans
that are a Shell Holding Company as defined in the Preamble hereto are not
required to furnish any items identified in Paragraph E.

 

Standard 3:                                    A
Plan shall be operated in a manner that provides reasonable financial assurance
that it can fulfill its contractual obligations to its customers.

 

Standard 4:                                    A
Plan shall be operated in a manner responsive to customer needs and
requirements.

 

Standard 5:                                    A
Plan 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 Plans and ease of claims
processing for customers receiving benefits outside of the Plan’s Service Area.

 

Such programs are
applicable to Blue Cross and Blue Shield Plans, and include:

 

A.                   Transfer
Program;

B.                     Inter-Plan
Teleprocessing System (ITS);

C.                     BlueCard
Program;

D.                    Electronic
Claims Routing Process; and

E.                      National
Account Programs, effective January 1, 2002

 

Amended as of November 15, 2001

 

3

 

Standard 6:                                    In
addition to requirements under the national programs listed in Standard 5:
Participation in National Programs, a Plan shall take such action as required
to ensure its financial performance in programs and contracts of an inter-Plan
nature or where the Association is a party.

 

Standard 7:                                    A
Plan shall make adequate disclosure in contracting with third parties and in
disseminating public statements of (i) the structure of the Blue Cross and Blue
Shield System, (ii) the independent nature of every Plan, and (iii) the Plan’s
financial condition.

 

Standard 8:                                    A
Plan shall cooperate with the Association’s Board of Directors and its Plan
Performance and Financial Standards Committee in the administration of the Plan
Performance Response Process and in addressing Plan performance problems
identified thereunder.

 

Standard 9:                                    A
Plan shall obtain a rating of its financial strength from an independent rating
agency approved by the Association’s Board of Directors for such purpose.

 

Standard 10:                              During
each year, a Plan and its Controlled Affiliate(s) engaged in providing
licensable services (excluding Life Insurance and Charitable Foundation
Services) shall use their best efforts in the designated Service Area to
promote and build the value of the Blue Cross and Blue Shield Marks.

 

Standard 11:                              Neither
a Plan nor any Larger Controlled Affiliate shall cause or permit an entity
other than a Plan or a Licensed Controlled Affiliate thereof to obtain control
of the Plan or Larger Controlled Affiliate or to acquire a substantial portion
of its assets related to licensable services.

 

Amended as of June 18, 1999

 

4

 

EXHIBIT
3

 

GUIDELINES WITH RESPECT TO USE OF

LICENSED NAME AND MARKS IN CONNECTION WITH NATIONAL ACCOUNTS

 

1.             The
strength of the Blue Cross/Blue Cross National Accounts mechanism, and the
continued provision of cost effective, quality health care benefits to National
Accounts, are predicated on locally managed provider networks coordinated on a
national scale in a manner consistent with effective service to National
Account customers and consistent with the preservation of the integrity of the
Blue Cross/Blue Shield system and the Licensed Marks. These guidelines shall be
interpreted in keeping with such ends.

 

2.             A
National Account is an entity with employee and/or retiree locations in more
than one Plan’s Service Area. Unless otherwise agreed, a National Account is
deemed located in the Service Area in which the corporate headquarters of the
National Account is located. A local plant, office or division headquarters of
an entity may be deemed a separate National Account when that local plant,
office or division headquarters 1) has employee locations in more than one
Service Area, and 2) has independent health benefit decision-making authority
for the employees working at such local plant, office or division headquarters
and for employees working at other locations outside the Service Area.  In such a case, the local plant, office or
division headquarters is a National Account that is deemed located in the
Service Area in which such local plant, office or division headquarters is
located.  The Control Plan of a National
Account is the Plan in whose Service Area the National Account is located. A
participating (“Par”) Plan is a Plan in whose Service Area the National Account
has employee and/or retiree locations, but in which the National Account is not
located.

 

3.             The
National Account Guidelines enunciated herein below shall be applicable only
with respect to the business of new National Accounts acquired after January 1,
1991.

 

4.             Control
Plans shall utilize National Account identification cards complying with then
currently effective BCBSA graphic standards in connection with all National
Accounts business to facilitate administration thereof, to minimize subscriber
and provider confusion, and to reflect a commitment to cooperation among Plans.

 

Amended June 15, 2001

 

1

 

 

5.             Disputes
among Plans and/or BCBSA as to the interpretation or implementation of these
Guidelines or as to other National Accounts issues shall be submitted to
mediation and mandatory dispute resolution as provided in the License
Agreement. For two years from the effective date of the License Agreement,
however, such disputes shall be subject to mediation only, with the results of
such mediation to be collected and reported in order to establish more
definitive operating parameters for National Accounts business and to serve as
ground rules for future binding dispute resolution.

 

6.             The
Control Plan may use the BlueCard Program (as defined by IPPC) to deliver
benefits to employees and non-Medicare eligible retirees in a Participating
Plan’s service area if an alternative arrangement with the Participating Plan
cannot be negotiated.  The Participating
Plan’s minimum servicing requirement for those employees and non-Medicare
retirees in its service area is to deliver benefits using the BlueCard Program.  Account delivery is subject to the policies,
provisions and procedures of the BlueCard Program.

 

7.             For
provider payments in a Participating Plan’s area (on non-BlueCard claims),
payment to the provider may be made by the Participating Plan or the Control
Plan at the Participating Plan’s option. If the Participating Plan elects to
pay the provider, it may not withhold payment of a claim verified by the
Control Plan or its designated processor, and payment must be in conformity
with service criteria established by the Board of Directors of BCBSA (or an
authorized committee thereof) to assure prompt payment, good service and
minimum confusion with providers and subscribers. The Control Plan, at the
Participating Plan’s request, will also assure that measures are taken to
protect the confidentiality of the data pertaining to provider reimbursement
levels and profiles.

 

Amended as of June 14, 1996

 

2

 

 

8.             For
claim payments in a Participating Plan’s area (on non-BlueCard claims),
Participating Plans are strongly encouraged, but not required, to pass along to
the Control Plan part or all of local provider discounts and differentials for
use by the Control Plan in negotiating financial arrangements with National
Accounts. However, since the size, basis, form and use of local differentials
can vary substantially among Plans and also by individual National Account
characteristics, the degree and form of any discount or differential passed
along to the Control Plan shall be strictly a matter of negotiated contractual
agreement between a Participating Plan and the Control Plan and may also vary
from one National Account to another. In order to facilitate the quotation of
national account pricing and the offering of a variety of National Account
delivery systems, all Plans are strongly encouraged to periodically publish to
other Plans and the BCBSA their National Account contracting policies with
respect to the handling of differentials.

 

The Control Plan,
in its financial agreements with a National Account, is expected to reasonably
reflect the aggregate amount of differentials passed along to the Control Plan
by all Participating Plans in a National Account. The exact form and substance
of this may vary from one National Account to another and shall be a matter of
explicit negotiation and contractual relationship between the National Account
and the Control Plan. The specifics in an agreement between the Control Plan
and the National Account may vary in form (e.g., a guaranteed offset against
retentions, or a direct pass through, or a guaranteed aggregate percentage
discount, or no pass back at all, etc.), and the Control Plan has the
responsibility and the Authority to negotiate precise arrangements. However,
irrespective of the final arrangements between the Control Plan and the
National Account, a Participating Plan’s liability for passing along
differentials shall be limited to the contractual agreement the Participating
Plan has with the Control Plan on a specific National Account.

 

9.             Other
than in contracting with health care providers or soliciting such contracts in
areas contiguous to a Plan’s Service Area in order to serve its subscribers or
those of its licensed Controlled Affiliate residing or working in its Service
Area, a Control Plan may not use the Licensed Marks and/or Name, as a tag line
or otherwise, to negotiate directly with providers outside its Service Area.

 

3

 

EXHIBIT 4

GOVERNMENT PROGRAMS AND CERTAIN OTHER
USES

 

1.             A
Plan and its licensed Controlled Affiliate may use the Licensed Marks and Name
in bidding on and executing a contract to serve a Government Program, and in
thereafter communicating with the Government concerning the Program. With respect,
however, to such contracts entered into after the 1st day of January, 1991, the
Licensed Marks and Name will not be used in communications or transactions with
beneficiaries or providers in the Government Program located outside a Plan’s
Service Area, unless the Plan can demonstrate to the satisfaction of BCBSA’s
governing body that such a restriction on use of the Licensed Marks and Name
will jeopardize its ability to procure the contract for the Government Program.
As to both existing and future contracts for Government Programs, Plans will
discontinue use of the Licensed Marks and Name as to beneficiaries and
Providers outside their Service Area as expenditiously as circumstances
reasonably permit. Effective January 1, 1995, except as provided in the first
sentence above, all use by a Plan of the Licensed Marks and Name in Government
Programs outside of the Plan’s Service Area shall be discontinued. Incidental
communications outside a Plan’s Service Area with resident or former resident
beneficiaries of the Plan, and other categories of necessary incidental
communications approved by BCBSA, are not prohibited.

 

2.             In
connection with activity otherwise in furtherance of the License Agreement, a
Plan may use the Licensed Marks and Name outside its Service Area in the
following circumstances which are deemed legitimate and necessary and not
likely to cause consumer confusion:

 

a.                                       sending
letterhead, envelopes, and similar items solely for administrative purposes
(e.g., not for purposes of marketing, advertising, promoting, selling or
soliciting the sale of health care plans and related services);

 

b.                                      distributing
business cards other than in marketing and selling;

 

c.                                       contracting
with health care providers or soliciting such contracts in areas contiguous to
a Plan’s Service Area in order to serve its subscribers or those of its
licensed Controlled Affiliate residing or working in its service area;

 

d.                                      issuing
a small sign containing the legal name or trade name of the Plan or its
licensed Controlled Affiliate for display by a provider to identify the latter
as a participating provider of the Plan or Controlled Affiliate;

 

Amended March 16, 2001

 

1

 

e.                                       advertising
in publications or electronic media solely to persons for employment;

 

f.                                         advertising
in print, electronic or other media which serve, as a substantial market, the
Service Area of the Plan or licensed Controlled Affiliate, provided that no
Plan may advertise outside its Service Area on the national broadcast and cable
networks and that advertisements in national print media are limited to the
smallest regional edition encompassing the Service Area;

 

g.                                      advertising
by direct mail where the addressee’s zip code plus 4 includes, at least in
part, the Plan’s Service Area or that of a licensed Controlled Affiliate.

 

h.                                      negotiating
rates with a health care provider for services to a specific member in case
management, provided that:

 

(1)  the health care provider does not contract
with the Licensee   (or any of the
Licensees in the case of overlapping Service Areas) in whose Service Area the
health care provider is located; and

 

(2)  the Licensee(s) in whose Service Area the
health care provider is located consent(s) in advance.

 

Amended November 15, 2001

 

2

 

EXHIBIT 5

 

MEDIATION AND MANDATORY DISPUTE
RESOLUTION (MMDR) RULES

 

The Blue Cross and Blue Shield Plans (“Plans”) and the
Blue Cross Blue Shield Association (“BCBSA”) recognize and acknowledge that the
Blue Cross and Blue Shield system is a unique nonprofit and for-profit system
offering cost effective health care financing and services.  The Plans and BCBSA desire to utilize
Mediation and Mandatory Dispute Resolution (“MMDR”) to avoid expensive and
time-consuming litigation that may otherwise occur in the federal and state
judicial systems.  Even MMDR should be
viewed, however, as methods of last resort, all other procedures for dispute
resolution having failed.  Except as
otherwise provided in the License Agreements, the Plans, their Controlled
Affiliates and BCBSA agree to submit all disputes to MMDR pursuant to these
Rules and in lieu of litigation.

 

1.             Initiation of Proceedings

 

A.            Pre-MMDR
Efforts

 

Before filing a Complaint to invoke the MMDR process,
the CEO of a complaining party, or his/her designated representative, shall
undertake good faith efforts with the other side(s) to try to resolve any
dispute.

 

B.            Complaint

 

To commence a proceeding, the complaining party (or
parties) shall provide by certified mail, return receipt requested, a written
Complaint to the BCBSA Corporate Secretary (which shall also constitute service
on BCBSA if it is a respondent) and to any Plan(s) and/or Controlled
Affiliate(s) named therein.  The
Complaint shall contain:

 

i.             identification of the
complaining party (or parties) requesting the proceeding;

 

ii.          identification of the
respondent(s);

 

iii.       identification of any other
persons or entities who are interested in a resolution of the dispute;

 

iv.      a full statement describing
the nature of the dispute;

 

v.         identification of all of
the issues that are being submitted for resolution;

 

Amended as of November 21, 1996

 

 

vi.      the remedy sought;

 

vii.   a statement as to whether the
complaining party (or parties) elect(s) first to pursue Mediation;

 

viii.any request,
if applicable, that one or more members of the Mediation Committee be
disqualified from the proceeding and the grounds for such request;

 

ix.        any request, if
applicable, that the matter be handled on an expedited basis and the reasons
therefor; and

 

x.           a statement signed by
the CEO of the complaining party affirming that the CEO has undertaken efforts,
or has directed efforts to be undertaken, to resolve the dispute before
resorting to the MMDR process.

 

The complaining party (or parties) shall file and serve with the
Complaint copies of all documents which the party (or parties) intend(s) to
offer at the Arbitration Hearing and a statement identifying the witnesses the
party (or parties) intend(s) to present at the Hearing, along with a summary of
each witness’ expected testimony.

 

C.            Answer

 

Within twenty (20) days after receipt of the
Complaint, each respondent shall serve on the BCBSA and on the complaining
party (or parties) and on the Chairman of the Mediation Committee;

 

i.                  a full Answer to
the aforesaid Complaint;

 

ii.               a statement of any
Counterclaims against the complaining party (or parties), providing with
respect thereto the information specified in Paragraph 1.B., above;

 

iii.            a statement as to
whether the respondent elects to first pursue Mediation;

 

iv.           any request, if
applicable, that one or more members of the Mediation Committee be disqualified
from the proceeding and the grounds for such request; and

 

v.              any request, if
applicable, that the matter be handled on an expedited basis and the reasons
therefor.

 

2

 

The respondent(s) shall file and serve with the Answer or by the date
of the Initial Conference set forth in Paragraph 3.B., below, copies of all
documents which the respondent(s) intend(s) to offer at the Arbitration Hearing
and a statement identifying the witnesses the party (or parties) intend(s) to
present at the Hearing, along with a summary of each witness’ expected
testimony.

 

D.            Reply
To Counterclaim

 

Within ten (10) days after receipt of any
Counterclaim, the complaining party (or parties) shall serve on BCBSA and on
the responding party (or parties) and on the Chairman of the Mediation
Committee, a Reply to the Counterclaim. 
Such Reply must provide the same information required by Paragraph 1.C.

 

2.             Mediation

 

A.            Mediation
Committee

 

To facilitate the mediation of disputes between or
among BCBSA, the Plans and/or their Controlled Affiliates, the BCBSA Board has
established a Mediation Committee. 
Mediation may be pursued in lieu of or in an effort to obviate the
Mandatory Dispute Resolution process, and all parties are strongly urged to
exhaust the mediation procedure.

 

B.            Election
To Mediate

 

If any party elects first to pursue Mediation, and if
it appears to the Corporate Secretary that the dispute falls within the
jurisdiction of the Mediation Committee, as set forth in Exhibit 5-A hereto,
then the Corporate Secretary will promptly furnish the Mediation Committee with
copies of the Complaint, Answer, Counterclaim and Reply to Counterclaim, and
other documents referenced in Paragraph 1, above.

 

C.            Selection
of Mediators

 

The parties shall promptly attempt to agree upon: (i)
the number of mediators desired, not to exceed three mediators; and (ii) the
selection of the mediator(s) who may include members of the Mediation Committee
and/or experienced mediators from an independent entity to mediate all disputes
set forth in the Complaint and Answer (and Counterclaim and Reply, if any).  In the event the parties cannot agree upon
the number of mediators desired, that number shall default to three.  In the event the parties cannot agree upon
the selection of mediator(s), the Chairman will select the mediator(s), at
least one of which shall be an experienced mediator from an independent entity,
consistent with the provisions set forth in this Paragraph.  No member of the Mediation Committee who is
a representative of any party to the Mediation may be

 

3

 

selected to mediate the dispute. 
The Chairman shall also endeavor not to select as a mediator any member
of the Mediation Committee whom a party has requested to be disqualified.  If, after due regard for availability,
expertise, and such other considerations as may best promote an expeditious
Mediation, the Chairman believes that he or she must consider for selection a
member of the Mediation Committee whom a party has requested to be
disqualified, the other members of the Committee eligible to be selected to
mediate the dispute shall decide the request for disqualification.  By agreeing to participate in the Mediation
of a dispute, a member of the Mediation Committee represents to the party (or
parties) thereto that he or she knows of no grounds which would require his or
her disqualification.

 

D.            Binding
Decision

 

Before the date of the Mediation Hearing described
below, the Corporate Secretary will contact the party (or parties) to determine
whether they wish to be bound by any recommendation of the selected mediators
for resolution of the disputes.  If all
wish to be bound, the Corporate Secretary will send appropriate documentation
to them for their signatures before the Mediation Hearing begins.

 

E.             Mediation
Procedure

 

The Chairman shall promptly advise the parties of a
scheduled Mediation Hearing date. 
Unless a party requests an expedited procedure, or unless all parties to
the proceeding agree to one or more extensions of time, the Mediation Hearing
set forth below shall be completed within forty (40) days of BCBSA’s receipt of
the Complaint.  The selected mediators,
unless the parties otherwise agree, shall adhere to the following procedure:

 

i.                  Each party must
be represented by its CEO or other representative who has been delegated full
authority to resolve the dispute. 
However, parties may send additional representatives as they see fit.

 

ii.               By no later than
five (5) days prior to the date designated for the Mediation Hearing, each
party shall supply and serve a list of all persons who will be attending the
Mediation Hearing, and indicate who will have the authority to resolve the
dispute.

 

iii.            Each party will be
given one-half hour to present its case, beginning with the complaining party
(or parties), followed by the other party or parties.   The parties are free to
structure their presentations as they see fit, using oral statements or direct
examination of witnesses.  However,
neither cross-examination nor questioning of opposing representatives will be

 

4

 

permitted.  At the close of each presentation, the
selected mediators will be given an opportunity to ask questions of the
presenters and witnesses.  All parties
must be present throughout the Mediation Hearing.  The selected mediators may extend the time allowed for each
party’s presentation at the Mediation Hearing. 
The selected mediators may meet in executive session, outside the
presence of the parties, or may meet with the parties separately, to discuss
the controversy.

 

iv.           After the close of the
presentations, the parties will attempt to negotiate a settlement of the
dispute.  If the parties desire, the
selected mediators, or any one or more of the selected mediators, will sit in
on the negotiations.

 

v.              After the close of
the presentations, the selected mediators may meet privately to agree upon a
recommendation for resolution of the dispute which would be submitted to the
parties for their consideration and approval. 
If the parties have previously agreed to be bound by the results of this
procedure, this recommendation shall be binding upon the parties.

 

vi.           The purpose of the
Mediation Hearing is to assist the parties to settle their grievances short of
mandatory dispute resolution.  As a
result, the Mediation Hearing has been designed to be as informal as
possible.  Rules of evidence shall not
apply.  There will be no transcript of
the proceedings, and no party may make a tape recording of the Mediation Hearing.

 

vii.        In order to facilitate a
free and open discussion, the Mediation proceeding shall remain
confidential.  A “Stipulation to
Confidentiality” which prohibits future use of settlement offers, all position
papers or other statements furnished to the selected mediators, and decisions
or recommendations in any Mediation proceeding shall be executed by each party.

 

viii.     Upon request of the selected
mediators, or one of the parties, BCBSA staff may also submit documentation at
any time during the proceedings.

 

5

 

F.             Notice
Of Termination Of Mediation

 

If the Mediation cannot be completed within the
prescribed or agreed time period due to the lack of cooperation of any party,
as determined by the selected mediators, or if the Mediation does not result in
a final resolution of all disputes at the Mediation Hearing or within forty
(40) days after the Complaint was served, whichever comes first, any party or
any one of the selected mediators may so notify the Corporate Secretary, who
shall promptly issue a Notice of termination of mediation to all parties, to
the selected mediators, and to the MDR Administrator, defined below.  Such notice shall serve to bring the
Mediation to an end and to initiate Mandatory Dispute Resolution.  Upon agreement of all parties and the
selected mediators, the Mediation process may continue at the same time the MDR
process is invoked.  The Notice
described above would serve to initiate the MDR proceeding and would not
terminate the proceedings.

 

3.             Mandatory
Dispute Resolution  (MDR)

 

If all parties elect not to first pursue Mediation, or
if a notice of termination of Mediation is issued as set forth in Paragraph
2.F., above, then the unresolved disputes set forth in any Complaint and Answer
(and Counterclaim and Reply, if any) shall be subject to MDR.

 

A.            MDR
Administrator

 

The Administrator shall be an independent entity such
as the Center for Public Resources, Inc. or Endispute, Inc., specializing in
alternative dispute resolution.  The
Administrator shall be designated initially, and may be changed from time to
time, by the affirmative vote of a majority of the Plans present and voting and
a majority of the total then current weighted vote of all the Plans present and
voting.

 

B.            Initial
Conference

 

Within five (5) days after a Notice of Termination has
issued, or within five (5) days after the time for filing and serving the Reply
to any Counterclaim if the parties elect first not to mediate, the parties
shall confer with the Administrator to discuss selecting a dispute resolution
panel (“the Panel”).  This Initial
Conference may be by telephone.  The
parties are encouraged to agree to the composition of the Panel and to present
that agreement to the Administrator at the Initial Conference.  If the parties do not agree on the
composition of the Panel by the time of the Initial Conference, or by any
extension thereof agreed to by all parties and the Administrator, then the
Panel Selection Process set forth in subparagraph C shall be followed.

 

Amended September 21, 2000

 

6

 

C.            Panel
Selection Process

 

The Administrator shall designate at least seven
potential arbitrators.  The exact number
designated shall be sufficient to give each party at least two peremptory
strikes.  Each party shall be permitted
to strike any designee for cause and the Administrator shall determine the
sufficiency thereof in its sole discretion. 
The Administrator will designate a replacement for any designee so
stricken.  Each party shall then be
permitted two peremptory strikes.  From
the remaining designees, the Administrator shall select a three member
Panel.  The Administrator shall set the
dates for exercising all strikes and shall complete the Panel Selection Process
within fifteen (15) days of the Initial Conference.  Each Arbitrator shall be compensated at his or her normal hourly
rate or, in the absence of an established rate, at a reasonable hourly rate to
be promptly fixed by the Administrator for all time spent in connection with
the proceedings and shall be reimbursed for any travel and other reasonable
expenses.

 

D.            Duties
Of The Arbitrators

 

The Panel shall promptly designate a Presiding
Arbitrator for the purposes reflected below, but shall retain the power to
review and modify any ruling or other action of said Presiding Arbitrator.  Each Arbitrator shall be an independent
Arbitrator, shall be governed by the Code of Ethics for Arbitrators in
Commercial Disputes, appended as Exhibit “5-B” hereto, and shall at or prior to
the commencement of any Arbitration Hearing take an oath to that effect.  Each Arbitrator shall promptly disclose in
writing to the Panel and to the parties any circumstances, whenever arising,
that might cause doubt as to such Arbitrator’s compliance, or ability to
comply, with said Code of Ethics, and, absent resignation by such Arbitrator,
the remaining Arbitrators shall determine in their sole discretion whether the
circumstances so disclosed constitute grounds for disqualification and for
replacement.  With respect to such
circumstances arising or coming to the attention of a party after an
Arbitrator’s selection, a party may likewise request the Arbitrator’s
resignation or a determination as to disqualification by the remaining
Arbitrators.  With respect to a sole
Arbitrator, the determination as to disqualification shall be made by the
Administrator.

 

There shall be no ex  parte communication
between the parties or their counsel and any member of the Panel.

 

E.             Panel’s
Jurisdiction And Authority

 

The Panel’s jurisdiction and authority shall extend to
all disputes between or among the Plans, their Controlled Affiliates, and/or
BCBSA, except for those disputes excepted from these MMDR procedures as set
forth in the License Agreements.

 

7

 

With the exception of punitive or treble damages, the
Panel shall have full authority to award the relief it deems appropriate to
resolve the parties’ disputes, including monetary awards and injunctions,
mandatory or prohibitory.  The Panel has
no authority to award punitive or treble damages except that the Panel may
allocate or assess responsibility for punitive or treble damages assessed by
another tribunal.  Subject to the above
limitations, the Panel may, by way of example, but not of limitation:

 

i.                  interpret or
construe the meaning of any terms, phrase or provision in any license between
BCBSA and a  Plan or a Controlled
Affiliate relating to the use of the BLUE CROSS® or BLUE SHIELD® service marks.

 

ii.               determine whether
BCBSA, a Plan or a Controlled Affiliate has violated the terms or conditions of
any license between the BCBSA and a Plan or a Controlled Affiliate relating to
the use of the BLUE CROSS® or BLUE CROSS® service marks.

 

iii.            decide challenges as
to its own jurisdiction.

 

iv.           issue such orders for
interim relief as it deems appropriate pending Hearing and Award in any
Arbitration.

 

It is understood that the Panel is expected to resolve
issues based on governing principles of law, preserving to the maximum extent
legally possible the continued integrity of the Licensed Marks and the BLUE
CROSS/BLUE SHIELD system.  The Panel
shall apply federal law to all issues which, if asserted in the United States
District Court, would give rise to federal question jurisdiction, 28 U.S.C. § 1331.  The Panel shall apply Illinois law to all
issues involving interpretation, performance or construction of any License
Agreement or Controlled Affiliate License Agreement unless the agreement
otherwise provides.  As to other issues,
the Panel shall choose the applicable law based on conflicts of law principles
of the State of Illinois.

 

8

 

F.             Administrative
Conference And Preliminary Arbitration Hearing

 

Within ten (10) days of the Panel being selected, the
Presiding Arbitrator will schedule an Administrative Conference to discuss
scheduling of the Arbitration Hearing and any other matter appropriate to be
considered including: any written discovery in the form of requests for
production of documents or requests to admit facts; the identity of any witness
whose deposition a party may desire and a showing of exceptional good cause for
the taking of any such deposition; the desirability of bifurcation or other
separation of the issues; the need for and the type of record of conferences
and hearings, including the need for transcripts; the need for expert witnesses
and how expert testimony should be presented; the appropriateness of motions to
dismiss and/or for full or partial summary judgment; consideration of
stipulations; the desirability of presenting any direct testimony in writing;
and the necessity for any on-site inspection by the Panel.

 

G.            Discovery

 

i.                  Requests for Production of Documents:  All requests for the production of documents
must be served as of the date of the Administrative Conference as set forth in
Paragraph 3.F., above. Within twenty (20) days after receipt of a request for
documents, a party shall produce all relevant and non-privileged documents to
the requesting party.  In his or her
discretion, the Presiding Arbitrator may require the parties to provide lists
in such detail as is deemed appropriate of all documents as to which privilege
is claimed and may further require in-camera inspection of the same.

 

ii.               Requests for Admissions:  Requests for Admissions may be served up to
21 days prior to the Arbitration Hearing. 
A party served with Requests For Admissions must respond within twenty
(20) days of receipt of said request. The good faith use of and response to
Requests for Admissions is encouraged, and the Panel shall have full
discretion, with reference to the Federal Rules of Civil Procedure, in awarding
appropriate sanctions with respect to abuse of the procedure.

 

9

 

iii.            Depositions  As a general rule, the parties will not be
permitted to take deposition testimony for discovery purposes.  The Presiding Arbitrator, in his or her sole
discretion, shall have the authority to permit a party to take such deposition
testimony upon a showing of exceptional good cause, provided that no
deposition, for discovery purposes or otherwise, shall exceed three (3) hours,
excluding objections and colloquy of counsel.

 

iv.           Expert witness(es): If a party intends to
present the testimony of an expert witness during the oral hearing, it shall
provide all other parties with a written statement setting forth the
information required to be provided by Fed. R. Civ. P. 26(b)(4)(A)(i) prior to
the expiration of the discovery period.

 

v.              Discovery cut-off: The Presiding Arbitrator
shall determine the date on which the discovery period will end, but the
discovery period shall not exceed forty-five (45) days from its commencement,
without the agreement of all parties.

 

vi.           Additional discovery:  Any additional discovery will be at the
discretion of the Presiding Arbitrator. 
The Presiding Arbitrator is authorized to resolve all discovery
disputes, which resolution will be binding on the parties unless modified by
the Arbitration Panel.  If a party
refuses to comply with a decision resolving a discovery dispute, the Panel, in
keeping with Fed. R. Civ. P. 37, may refuse to allow that party to support or
oppose designated claims or defenses, prohibit that party from introducing
designated matters into evidence or, in extreme cases, decide an issue submitted
for resolution adversely to that party.

 

H.            Panel
Suggested Settlement/Mediation

 

At any point during the proceedings, the Panel at the
request of any party or on its own initiative, may suggest that the parties
explore settlement and that they do so at or before the conclusion of the
Arbitration Hearing, and the Panel shall give such assistance in settlement
negotiations as the parties may request and the Panel may deem
appropriate.  Alternatively, the Panel
may direct the parties to endeavor to mediate their disputes as provided above,
or to explore a mini-trial proceeding, or to have an independent party render a
neutral evaluation of the parties’ respective positions.  The Panel shall enter such sanctions as it
deems appropriate with respect to any party failing to pursue in good faith
such Mediation or other alternate dispute resolution methods.

 

10

 

I.              Subpoenas
On Third Parties

 

Pursuant to, and consistent with, the Federal
Arbitration Act, 9 U.S.C. § 9 et seq., a party may request the issuance
of a subpoena on a third party, to compel testimony or documents, and, if good
and sufficient cause is shown, the Panel shall issue such a subpoena.

 

J.             Arbitration
Hearing

 

An Arbitration Hearing will be held within thirty (30)
days after the Administrative Conference if no discovery is taken, or within
thirty (30) days after the close of discovery, unless all parties and the Panel
agree to extend the Arbitration Hearing date, or unless the parties agree in writing
to waive the Arbitration Hearing.  The
parties may mutually agree on the location of the Arbitration Hearing.  If the parties fail to agree, the
Arbitration Hearing shall be held in Chicago, Illinois, or at such other
location determined by the Presiding Arbitrator to be most convenient to the
participants.  The Panel will determine
the date(s) and time(s) of the Arbitration Hearing(s) after consultation with
all parties and shall provide reasonable notice thereof to all parties or their
representatives.

 

K.            Arbitration
Hearing Memoranda

 

Twenty (20) days prior to the Arbitration Hearing,
each party shall submit to the other party (or parties) and to the Panel an
Arbitration Hearing Memorandum which sets forth the applicable law and any
argument as to any relevant issue.  The
Arbitration Hearing Memorandum will supplement, and not repeat, the
allegations, information and documents contained in or with the Complaint,
Answer, Counterclaim and Reply, if any. 
Ten (10) days prior to the Arbitration Hearing, each party may submit to
the other party (or parties) and to the Panel a Response Arbitration Hearing
Memorandum which sets forth any response to another party’s Arbitration Hearing
Memorandum.

 

11

 

L.             Notice
For Testimony

 

Ten (10) days prior to the Arbitration Hearing, any
party may serve a Notice on any other party (or parties) requesting the
attendance at the Arbitration Hearing of any officer, employee or director of
the other party (or parties) for the purpose of providing noncumulative
testimony.  If a party fails to produce
one of its officers, employees or directors whose noncumulative testimony
during the Arbitration Hearing is reasonably requested by an adverse party, the
Panel may refuse to allow that party to support or oppose designated claims or
defenses, prohibit that party from introducing designated matters into evidence
or, in extreme cases, decide an issue submitted for mandatory dispute
resolution adversely to that party. 
This Rule may not be used for the purpose of burdening or harassing any
party, and the Presiding Arbitrator may impose such orders as are appropriate
so as to prevent or remedy any such burden or harassment.

 

M.           Arbitration
Hearing Procedures

 

i.                  Attendance at Arbitration Hearing:  Any person having a direct interest in the
proceeding is entitled to attend the Arbitration Hearing.  The Presiding Arbitrator shall otherwise
have the power to require the exclusion of any witness, other than a party or
other essential person, during the testimony of any other witness.  It shall be discretionary with the Presiding
Arbitrator to determine the propriety of the attendance of any other person.

 

ii.               Confidentiality:  The Panel and all parties shall maintain the
privacy of the Arbitration Proceeding. 
The parties and the Panel shall treat the Arbitration Hearing and any
discovery or other proceedings or events related thereto, including any award
resulting therefrom, as confidential except as otherwise necessary in
connection with a judicial challenge to or enforcement of an award or unless
otherwise required by law.

 

iii.            Stenographic Record:  Any party, or if the parties do not object,
the Panel, may request that a stenographic or other record be made of any
Arbitration Hearing or portion thereof. 
The costs of the recording and/or of preparing the transcript shall be
borne by the requesting party and by any party who receives a copy
thereof.  If the Panel requests a
recording and/or a transcript, the costs thereof shall be borne equally by the
parties.

 

12

 

iv.           Oaths: 
The Panel may require witnesses to testify under oath or affirmation
administered by any duly qualified person and, if requested by any party, shall
do so.

 

v.              Order of Arbitration Hearing:  An Arbitration Hearing shall be opened by
the recording of the date, time, and place of the Arbitration Hearing, and the
presence of the Panel, the parties, and their representatives, if any.  The Panel may, at the beginning of the
Arbitration Hearing, ask for statements clarifying the issues involved.

 

Unless otherwise agreed,
the complaining party (or parties) shall then present evidence to support their
claim(s).  The respondent(s) shall then
present evidence supporting their defenses and Counterclaims, if any.  The complaining party (or parties) shall
then present evidence supporting defenses to the Counterclaims, if any, and
rebuttal.

 

Witnesses for each party
shall submit to questions by adverse parties and/or the Panel.

 

The Panel has the
discretion to vary these procedures, but shall afford a full and equal
opportunity to all parties for the presentation of any material and relevant
evidence.

 

vi.           Evidence: 
The parties may offer such evidence as is relevant and material to the
dispute and shall produce such evidence as the Panel may deem necessary to an
understanding and resolution of the dispute. 
Unless good cause is shown, as determined by the Panel or agreed to by
all other parties, no party shall be permitted to offer evidence at the
Arbitration Hearing which was not disclosed prior to the Arbitration Hearing by
that party.  The Panel may receive and
consider the evidence of witnesses by affidavit upon such terms as the Panel
deems appropriate.

 

13

 

The Panel shall be the
judge of the relevance and materiality of the evidence offered, and conformity
to legal rules of evidence, other than enforcement of the attorney-client
privilege and the work product protection, shall not be necessary.  The Federal Rules of Evidence shall be
considered by the Panel in conducting the Arbitration Hearing but those rules
shall not be controlling.  All evidence
shall be taken in the presence of the Panel and all of the parties, except
where any party is in default or has waived the right to be present.

 

Settlement offers by any
party in connection with Mediation or MDR proceedings, decisions or
recommendations of the selected mediators, and a party’s position papers or
statements furnished to the selected mediators shall not be admissible evidence
or considered by the Panel without the consent of all parties.

 

vii.        Closing of Arbitration Hearing:  The Presiding Arbitrator shall specifically
inquire of all parties whether they have any further proofs to offer or
witnesses to be heard.  Upon receiving
negative replies or if he or she is satisfied that the record is complete, the
Presiding Arbitrator shall declare the Arbitration Hearing closed with an
appropriate notation made on the record. 
Subject to being reopened as provided below, the time within which the
Panel is required to make the award shall commence to run, in the absence of
contrary agreement by the parties, upon the closing of the Arbitration Hearing.

 

With respect to complex
disputes, the Panel may, in its sole discretion, defer the closing of the
Arbitration Hearing for a period of up to thirty (30) days after the
presentation of proofs in order to permit the parties to submit post-hearing
briefs and argument, as the Panel deems appropriate, prior to making an award.

 

For good cause, the
Arbitration Hearing may be reopened for up to thirty (30) days on the Panel’s
initiative, or upon application of a party, at any time before the award is
made

 

14

 

N.            Awards

 

An Award must be in writing and shall be made promptly
by the Panel and, unless otherwise agreed by the parties or specified by law,
no later than thirty (30) days from the date of closing the Arbitration
Hearing.  If all parties so request, the
Award shall contain findings of fact and conclusions of law.  The Award, and all other rulings and
determinations by the Panel, may be by a majority vote.

 

Parties shall accept as legal delivery of the Award
the placing of the Award or a true copy thereof in the mail addressed to a
party or its representative at its last known address or personal service of
the Award on a party or its representative.

 

Awards are binding only on the parties to the
Arbitration and are not binding on any non-parties to the Arbitration and may
not be used or cited as precedent in any other proceeding.

 

After the expiration of twenty (20) days from initial
delivery, the Award (with corrections, if any) shall be final and binding on
the parties, and the parties shall undertake to carry out the Award without
delay.

 

Proceedings to confirm, modify or vacate an Award
shall be conducted in conformity with and controlled by the Federal Arbitration
Act.  9 U.S.C. § 1, et seq.

 

O.            Return
Of Documents

 

Within sixty (60) days after the Award and the
conclusion of any judicial proceedings with respect thereto, each party and the
Panel shall return any documents produced by any other party, including all
copies thereof.  If a party receives a
discovery request in any other proceeding which would require it to produce any
documents produced to it by any other party in a proceeding hereunder, it shall
not produce such documents without first notifying the producing party and
giving said party reasonable time to respond, if appropriate, to the discovery
request.

 

15

 

4.             Miscellaneous

 

A.            Expedited
Procedures

 

Any party to a Mediation may direct a request for an
expedited Mediation Hearing to the Chairman of the Mediation Committee, to the
selected Mediators, and to all other parties at any time.  The Chairman of the Mediation Committee, or
at his or her direction, the then selected Mediators, shall grant any request
which is supported by good and sufficient reasons.  If such a request is granted, the Mediation shall be completed
within as short a period as practicable, as determined by the Chairman of the
Mediation Committee or, at his or her direction, the then selected Mediators.

 

Any party to an Arbitration may direct a request for
expedited proceedings to the Administrator, to the Panel, and to all other
parties at any time.  The Administrator,
or the Presiding Arbitrator if the Panel has been selected, shall grant any
such request which is supported by good and sufficient reasons.  If such a request is granted, the
Arbitration shall be completed within as short a time as practicable, as
determined by the Administrator and/or the Presiding Arbitrator.

 

B.            Temporary
Or Preliminary Injunctive Relief

 

Any party may seek temporary or preliminary injunctive
relief with the filing of a Complaint or at any time thereafter.  If such relief is sought prior to the time
that an Arbitration Panel has been selected, then the Administrator shall
select a single Arbitrator who is a lawyer who has no interest in the subject
matter of the dispute, and no connection to any of the parties, to hear and
determine the request for temporary or preliminary injunction.  If such relief is sought after the time that
an Arbitration Panel has been selected, then the Arbitration Panel will hear
and determine the request.  The request
for temporary or preliminary injunctive relief will be determined with
reference to the temporary or preliminary injunction standards set forth in
Fed. R. Civ. P. 65.

 

C.            Defaults
And Proceedings In The Absence Of A Party

 

Whenever a party fails to comply with the MDR Rules in
a manner deemed material by the Panel, the Panel shall fix a reasonable time
for compliance and, if the party does not comply within said period, the Panel
may enter an Order of default or afford such other relief as it deems
appropriate.  Arbitration may proceed in
the event of a default or in the absence of any party who, after due notice,
fails to be present or fails to obtain an extension.  An Award shall not be made solely on the default or absence of a
party, but the Panel shall require the party who is present to submit such
evidence as the Panel may require for the making of findings, determinations,
conclusions, and Awards.

 

16

 

D.            Notice

 

Each party shall
be deemed to have consented that any papers, notices, or process necessary or
proper for the initiation or continuation of a proceeding under these rules or
for any court action in connection therewith may be served on a party by mail
addressed to the party or its representative at its last known address or by
personal service, in or outside the state where the MDR proceeding is to be
held.

 

The Corporate Secretary and the parties may also use
facsimile transmission, telex, telegram, or other written forms of electronic
communication to give the notices required by these rules.

 

E.             Expenses

 

The expenses of witnesses shall be paid by the party
causing or requesting the appearance of such witnesses.  All expenses of the MDR proceeding,
including compensation, required travel and other reasonable expenses of the
Panel, and the cost of any proof produced at the direct request of the Panel,
shall be borne equally by the parties and shall be paid periodically on a
timely basis, unless they agree otherwise or unless the Panel in the Award
assesses such expenses, or any part thereof against any party (or
parties).  In exceptional cases, the
Panel may award reasonable attorneys’ fees as an item of expense, and the Panel
shall promptly determine the amount of such fees based on affidavits or such
other proofs as the Panel deems sufficient.

 

F.             Disqualification
Or Disability Of A Panel Member

 

In the event that any Arbitrator of a Panel with more
than one Arbitrator should become disqualified, resign, die, or refuse or be
unable to perform or discharge his or her duties after the commencement of MDR
but prior to the rendition of an Award, and the parties are unable to agree
upon a replacement, the remaining Panel member(s):

 

i.                  shall designate
a replacement, subject to the right of any party to challenge such replacement
for cause.

 

ii.               shall decide the
extent to which previously held hearings shall be repeated.

 

17

 

If the remaining Panel members consider the
proceedings to have progressed to a stage as to make replacement impracticable,
the parties may agree, as an alternative to the recommencement of the Mandatory
Dispute Resolution process, to resolution of the dispute by the remaining Panel
members.

 

In the event that a single Arbitrator should become
disqualified, resign, die, or refuse or be unable to perform or discharge his
or her duties after the commencement of MDR but prior to the rendition of an
Award, and the parties are unable to agree upon a replacement, the
Administrator shall appoint a successor, subject to the right of any party to
challenge such successor for cause, and the successor shall decide the extent
to which previously held proceedings shall be repeated.

 

G.            Extensions of Time

 

Any time limit set forth in these Rules may be
extended upon agreement of the parties and approval of:   (i) the Chairman of the Mediation Committee
if the proceeding is then in Mediation; (ii) the Administrator if the
proceeding is in Arbitration, but no Arbitration Panel has been selected; or
(iii) the Arbitration Panel, if the proceeding is in Arbitration and the
Arbitration Panel has been selected.

 

H.            Intervention

 

The Plans, their Controlled Affiliates, and BCBSA, to
the extent subject to MMDR pursuant to their License Agreements, shall have the
right to move to intervene in any pending Arbitration.  A written motion for intervention shall be
made to:  (i) the Administrator, if the
proceeding is in Arbitration, but no Arbitration Panel has been selected; or
(ii) the Arbitration Panel, if the proceeding is in Arbitration and the
Arbitration Panel has been selected. 
The written motion for intervention shall be delivered to the BCBSA
Corporate Secretary (which shall also constitute service on the BCBSA if it is
a respondent) and to any Plan(s) and/or Controlled Affiliate(s) which are
parties to the proceeding.  Any party to
the proceeding can submit written objections to the motion to intervene.  The motion for intervention shall be granted
upon good cause shown.  Intervention
also may be allowed by stipulation of the parties to the Arbitration
proceeding.  Intervention shall be
allowed upon such terms as the Arbitration Panel decides.

 

I.              BCBSA
Assistance In Resolution of Disputes

 

The resources and personnel of the BCBSA may be
requested by any member Plan at any time to try to resolve disputes with
another Plan.

Amended September 21, 2000

 

18

 

J.             Neutral
Evaluation

 

The parties can voluntarily agree at any time to have
an independent party render a neutral evaluation of the parties’ respective
positions.

 

K.            Recovery
of Attorney Fees and Expenses

 

                Motions
to Compel

 

Nothwithstanding any other provisions of these Rules,
any Party subject to the License Agreements (for purposes of this Section K and
all of its sub-sections only hereinafter referred to collectively and
individually as a “Party”) that initiates a court action or administrative
proceeding solely to compel adherence to these Rules shall not be determined to
have violated these Rules by initiating such action or proceeding.

 

                Recovery
of Fees, Expenses and Costs

 

The Arbitration Panel may, in its sole discretion,
award a Party its reasonable attorneys’ fees, expenses and costs associated
with a filing to compel adherence to these Rules and/or reasonable attorneys’
fees, expenses and costs incurred in responding to an action filed in violation
of these Rules; provided, however, that neither fees, expenses, nor costs shall
be awarded by the Arbitration Panel if the Party from which the award is sought
can demonstrate to the Arbitration panel, in its sole discretion, that it did
not violate these Rules or that it had reasonable grounds for believing that
its action did not violate these Rules.

 

                Requests
for Reimbursement

 

For purposes of this
Section K, any Party may request reimbursement of fees, expenses and/or costs
by submitting said request in writing to the Arbitration Panel at any time
before an award is delivered pursuant to Section 3-N hereof, with a copy to the
Party from which reimbursement is sought, explaining why it is entitled to such
reimbursement.  The Party from which
reimbursement is sought shall have 20 days to submit a response to such request
to the Arbitration Panel with a copy to the Party seeking reimbursement.

 

Amended
September 21, 2000

 

19

 

EXHIBIT
5-A

 

MEDIATION COMMITTEE

 

REPORTS TO:
Board of Directors

 

CHARGE:                                            1.            Develop and implement processes for
resolving misunderstandings or disagreements between Plans or between Plans and
the Association under the following circumstances:

 

a.             Matters at issue regarding
relationships between Plans or between Plans and the Association.

 

b.             Matters at issue regarding
relationships between Plans or between Plans and the Association.

 

c.             Matters at issue under the
Inter-Plan Bank, Reciprocity, and Transfer Programs.

 

d.             Matters at issue regarding
contractor selection or performance under the Medicare Part A Program.

 

2.            Determination of equalization allowances and/or cost
allowances under FEP shall not be considered by this Committee.

 

MEMBERSHIP:                   Six to Eight

 

STAFF:                                  Senior
Vice President and General CounselQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.18  

  

October
2001 

  

Benefits for

Your Life and Career  

OFFICER BENEFITS ENROLLMENT GUIDE  

  
 

    How to Use This Guide    
  

Your 2002 Officer Benefits Enrollment Guide contains information on the FlexPoint Benefits Program and the  FlexExec Officer Benefits Program of WellPoint Health Networks, Inc. ("WellPoint") and it's affiliates. Your
FlexPoint Enrollment Worksheet lists your options and the costs associated with those options. Use this Enrollment Guide for:  

 • Enrollment Procedures for Newly-Hired Officers  

Enrollment
procedures for new Officers are on page 10 of this Guide. 

• Open Enrollment  

An
overview of the 2002 FlexPoint Benefits Program and enrollment procedures is on pages 5-9. You must enroll through ASC Online
at http://home.wellpoint.com or on the Intranet at http://asconline.wellpoint.com. You only need to enroll if you would like to change your
benefit election(s), make corrections and/or elect Flexible Spending Account(s) for 2002.

Read
the FlexPoint Enrollment Guide carefully to determine the benefits that best suit your needs for
2002. Enroll for 2002 benefits from October 17, 2001 through November 2, 2001.

• Benefit Information  

Explanations
of the 2002 benefits are included for your review. 

FlexPoint  

FlexPoint benefits provide you and your family with health care and life insurance coverage options. You can change most of your benefits once a year in
order to meet your needs for the upcoming year. Read this section carefully because you will not be able to
change your elections during the year except as a result of a qualified mid-year change or if you meet special enrollment requirements. 

FlexExec  

An
overview of the additional benefits provided to WellPoint Officers is included. 

Balanced Life Benefits  

WellPoint
offers you a wide spectrum of benefits in addition to our FlexPoint benefits to assist you in balancing your career and your personal life.
You can take advantage of many of the benefits at any time during the year. 

Financial Future and Retirement  

Brief
descriptions of the Pension Plan, 401(k) Retirement Savings Plan, and Employee Stock Purchase Plan are included. 

• Mid-Year Changes  

WellPoint
Officers experience a number of changes throughout the year that could affect their benefits, including marriage, birth, and change of
employment. Review this section to learn more about mid-year changes and what to do. 

• COBRA  

An
explanation of COBRA coverage is included for your review. 

• Important Information  

An
explanation of important legislation is included. 

• Important Telephone Numbers and Claims Addresses  

A
listing of phone numbers for providers and addresses for submitting claims is included. 

About This Guide  

This Guide does not serve as a guarantee of continued employment or benefits. WellPoint policies on hiring, discharge, layoff, and discipline are in no way affected by the
programs described here. In particular, nothing in this booklet alters WellPoint's at-will employment policy which provides that employment with WellPoint is not for a specified period of time and can
be terminated by either WellPoint or the officer at any time, with or without cause or advance notice.  

In addition, WellPoint reserves the right to amend or discontinue the WellPoint plans—or any part of them—with or without
notice, at any time at WellPoint's sole discretion. If there is a discrepancy between this document and the plan documents, the provisions of the plan documents will govern.  

 2002 Officer Benefits Enrollment Guide  

Benefits For Your Life & Career  

 
 

Table of Contents    
  

	Your 2002 Benefits Program	 	1
	 	
FlexPoint	
 	

1
	 	
FlexExec	
 	

2
	 	

Comprehensive Executive Nonqualified Retirement Plan	
 	

2
	 	

Additional Plans	
 	

2
	
FlexPoint Eligibility	
 	

3
	
How FlexPoint Works	
 	

5
	
Domestic Partner Coverage	
 	

6
	
Open Enrollment Procedures for Current WellPoint Officers	
 	

8
	
Enrollment Procedures for Newly-Hired Officers	
 	

10
	
FlexPoint Benefits Information	
 	

11
	 	

Your Medical Coverage	
 	

11
	 	

Your Dental Coverage	
 	

19
	 	

Your Vision Coverage	
 	

21
	 	

Your Life Insurance Coverage	
 	

23
	 	

Your Dependent Life Insurance Coverage	
 	

24
	

• Spouse/Domestic Partner	
 	

24
	

• Child	
 	

24
	

Your Accidental Death and Dismemberment (AD&D) Coverage	
 	

25
	

Your Flexible Spending Accounts	
 	

26
	

• Health Care	
 	

26
	

• Dependent Day Care	
 	

27
	
FlexExec	
 	

29
	 	

Officer Physical Exams	
 	

29
	 	

Group Universal Life Insurance	
 	

30
	 	

Your Disability Coverage	
 	

30
	 	

Comprehensive Nonqualified Retirement Plan	
 	

31
	
Your Balanced Life Benefits	
 	

34
	 	

Employee Assistance and Work/Life Program	
 	

34
	 	

MedCall	
 	

34
	 	

Tuition Assistance	
 	

34
	 	

Work On Wellness	
 	

35
	 	

Time Off	
 	

35
	
Your Financial Future and Retirement Benefits	
 	

36
	 	

Pension Accumulation Plan	
 	

36
	 	

401(k) Retirement Savings Plan	
 	

36
	 	

Employee Stock Purchase Plan	
 	

37
	
Mid-Year Changes	
 	

38
	
Continuing Health Care Coverage ("COBRA")	
 	

41
	
Important Information	
 	

43
	
Important Telephone Numbers	
 	

44
	
Important Addresses for Claims	
 	

45

  

   Your 2002 Benefits Program  

Here's
a quick look at the benefits offered to Officers of WellPoint Health Networks Inc. 

FlexPoint  

	Plan
 
	 	Options
 

	

	Medical	 	WellPoint Preferred PPO, WellPoint Group, or HMOs

Waive coverage
	

	Dental	 	Dental Net (available only in California)

Standard Dental

Enhanced Dental

Waive coverage
	

	Vision	 	Vision Service Plan

LensCrafters (available only to BCBSGA associates)

Waive coverage
	

	Life Insurance	 	$50,000

1 times your benefit salary

2 times your benefit salary

3 times your benefit salary

4 times your benefit salary

Waive coverage
	

	Accidental Death and Dismemberment (AD&D) Insurance	 	1 times your benefit salary

2 times your benefit salary

3 times your benefit salary

4 times your benefit salary
	

	Dependent Life Insurance	 	 
	 	Spouse/Domestic Partner:	 	$5,000

1/2 your benefit salary

1 times your benefit salary

Waive coverage
	

	 	Each Child*:	 	$5,000

$10,000

$25,000

Waive coverage
	

	Flexible Spending Accounts	 	Health care up to $5,000

Dependent daycare up to $5,000
	

	*
	Amount
payable depends on age of child. See page 24. 

1

 

FlexExec  

These
benefit plans are provided for all WellPoint Officers automatically—no enrollment is required. 

	Plan

	 	Options

	

	Officer Physical Exams	 	Available to Vice Presidents and above with one year of service
	

	Group Universal Life	 	2 times compensation* for Vice Presidents and General Managers

3 times compensation* for Senior Vice Presidents and above
	

	Short-Term Disability	 	Maximum of 26 weeks salary continuance
	

	Long-Term Disability	 	60% of compensation** for Vice Presidents and General Managers

70% of compensation** for Senior and Executive Vice Presidents
	

	*
	Base
salary as of September 1, 2001 plus target management bonus

	**
	Base
salary as of September 1, 2001 plus target management bonus and commissions received from 9/1/2000 through 8/31/2001 

Comprehensive Executive Nonqualified Retirement Plan  

	Plan/Feature

	 	Options

	

	Supplemental 401(k) Deferral	 	You may defer 1% - 6% of your eligible compensation after contributing the annual maximum to the 401(k) plan and also before becoming eligible for the Company match; deferrals receive a Company matching
contribution
	

	Salary Deferral	 	You may defer 1% - 60% of your base salary
	

	Management Bonus Deferral	 	You may defer 1% - 100% of your 2002 bonus to be paid in 2003
	

	Car Allowance Deferral
 (You may elect to defer your car allowance,

receive it as taxable income, or decline it and

receive mileage reimbursement.)	 	$4,800 annually for Vice Presidents and General Managers

$7,200 annually for Senior Vice Presidents

$9,600 annually for Executive Vice Presidents and above
	

	Supplemental Pension Plan	 	WellPoint automatically makes contributions for compensation in excess of $200,000; 5-year vesting applies

Additional Plans  

	Plan

	 	Options

	

	WellPoint 401(k) Retirement Savings Program	 	Highly compensated may defer 2% - 8% of your eligible compensation; Company match applies (see page 36 for details)
	

	Employee Stock Purchase Plan	 	You may contribute between $20 and $817.30 per pay period (see page 37 for details)

2

 

FlexPoint Eligibility  

Officers  

All
full-time Officers are eligible for FlexPoint benefits on the first of the month following or coinciding with one calendar month of employment. For
example, if you begin work on July 15, you will be eligible to participate in FlexPoint on September 1. If you begin work on July1, you will be eligible
to participate on August 1. 

If
you are rehired within one year of termination, you are eligible for FlexPoint benefits on the first of the month following your rehire date. 

Dependents  

You
may only enroll your eligible dependents in FlexPoint benefits. Enrolling dependents that are not eligible is a violation of
Company policy that is subject to disciplinary action up to and including termination of employment. Domestic partner coverage is now available for health and life insurance
benefits. See pages 6-7. 

Eligible
dependents include: 

	•
	Your
spouse/domestic partner

	•
	Your
or your partner's unmarried children through age 18 who are your dependents for income tax purposes. Legally-adopted children, stepchildren, and any
child for whom you or your spouse/ partner is a legal guardian are eligible under the same terms as your own natural children.

	•
	Your
or your partner's unmarried children, age 19 through 24, who are your dependents for income tax purposes and enrolled for 12 or more credits per
semester (or equivalent full-time basis) in an accredited college, university, or post-high-school trade or technical school. You will be required to provide proof of full-time student status.

	•
	Your
or your partner's unmarried children who are your dependents for income tax purposes and who are declared by a physician to be incapacitated or
disabled. A physician's note is required, and generally the child must have been covered under the plan at the time of disability. 

Note:
You may not be covered as an associate and as a dependent on WellPoint's medical, dental, vision, or life insurance plans. For example, if you and your spouse are both employed at WellPoint, you
may elect to cover your spouse for medical, dental, and vision. However, your spouse may not also elect those coverages as an associate. Or, both you and your spouse may each elect to be covered as
associates. Additionally, you may not have duplicate coverage for your children (i.e. both parents may not elect medical, dental, vision, and/or life insurance for the children). 

3

 

When Coverage Ends  

Your
coverage under the medical, dental, and vision plans will end on the last day of the month of termination of your employment with WellPoint. You may be eligible to continue your WellPoint health
coverage through COBRA (see page 41). Life insurance, AD&D, STD, LTD, and dependent life end on your last day of employment with WellPoint. You may be able to convert your life insurance. Other
situations in which your coverage will be terminated are listed below, along with the same kind of information for your dependents. 

All
coverage will terminate at the earliest time specified below: 

	1.
	For the medical, dental, and vision plans, on the last day of the month you cease to be an eligible associate (such as termination of
employment, retirement, or for any other reason).

	2.
	For the life insurance, AD&D, STD, LTD, and dependent life plans, on the date you cease to be an eligible associate (such as termination
of employment, retirement, or for any other reason).

	3.
	Upon discontinuation or termination of any plan, when such plan ends. The plans may be terminated or amended without notice to you.

	4.
	Upon non-payment of any required associate contribution. 

Your
dependent(s) coverage will cease at the earliest time specified below: 

	1.
	When your coverage terminates.

	2.
	On the last day of the calendar month when your dependent(s) cease to be eligible, depending on plan provisions.

	3.
	Upon non-payment of any required associate contribution. 

4

 

How FlexPoint Works  

Coverage Levels  

In
addition to deciding which medical, dental, and vision options you want for yourself, you may also decide if you want dependent coverage. WellPoint offers four levels of coverage. You can select
coverage for: 

	•
	Yourself
only

	•
	Yourself
plus Spouse/Domestic Partner

	•
	Yourself
plus Child(ren)

	•
	Yourself  plus Family (Spouse/Domestic Partner and Child(ren)) 

The Pretax Advantage  

With
FlexPoint, you pay your share of the cost for most of your benefits on a pretax basis (excluding domestic partner coverage). This means your
contributions will be deducted from your pay BEFORE Social Security, Medicare, federal, state, and local income taxes are calculated and withheld. This
way, your taxable income is reduced and you pay less tax. 

Pretax  

	•
	Medical

 
	•
	 Dental

 
	•
	 Vision

 
	•
	 Flexible Spending Accounts—Health Care and Dependent Day Care  

 Post-tax  

	•
	Employee Life Insurance

 
	•
	 Dependent Life Insurance

 
	•
	 Accidental Death and Dismemberment (AD&D)

 
	•
	 Domestic Partner Coverage  

 Coverage During a Leave of Absence  

If
you go out on an unpaid leave of absence, you are given the option to discontinue some or all of your FlexPoint benefits as of the date the leave
begins. You will have the option to reinstate these benefits when you return from the leave. If you continue your coverage during a leave of absence, it is your responsibility to make biweekly
payments for the cost of your benefits to the Leave of Absence Unit. 

Changes to Coverage During a Leave of Absence  

	•
	Changes
to life insurance, spouse/partner life, child life, and AD&D do not become effective until the later of the following:

	•
	January
1, 2002, or

	•
	The
date of your return to active employment status. 

	•
	Changes
that may result in an increase in the amount or volume of life insurance will not take effect while on a leave of absence; they are delayed until
your return to active employment. 

5

 

Domestic Partner Coverage  

FlexPoint offers limited benefits coverage to domestic partners. Officers who are eligible for FlexPoint
may enroll their domestic partners and/or children of domestic partners in medical,* dental, vision, and life insurance coverage. 

For
the purpose of FlexPoint, a domestic partnership consists of two adults of the same or opposite sex who have chosen to share their lives in a
committed relationship equivalent to that of married persons, and who reside together and share a mutual obligation of support for the basic necessities of life. 

Eligibility  

To
qualify for benefits, the associate and domestic partner must meet ALL of the following criteria: 

	•
	Each
person is the other's sole domestic partner and intends to remain so indefinitely.

	•
	Neither
person is married or legally separated from anyone else.

	•
	Each
person is at least 18 years of age and mentally competent to consent to the terms of the Declaration of Domestic Partnership.

	•
	The
associate and domestic partner are not related by blood to a degree of closeness that would prohibit legal marriage in the state in which they reside.

	•
	Both
persons currently reside in the same residence and intend to do so indefinitely.

	•
	Both
persons are jointly responsible for basic living expenses incurred during the domestic partnership.

	•
	Neither
partner has had a different domestic partner within the last six months from the date of the execution of the Declaration of Domestic Partnership
(this condition does not apply if the previous domestic partner is deceased).

	•
	Both
persons have executed a domestic partnership agreement and/or registered as domestic partners in a jurisdiction that authorizes such agreements and/or
registries OR at least TWO of the following statements are true:

	•
	Both
persons have lived together continuously for the past 12 months;

	•
	The
associate has designated the domestic partner as a beneficiary under his/her will, or the domestic partner has designated the associate as a beneficiary
under his/her will;

	•
	The
associate has granted his or her domestic partner powers under a durable power of attorney, or the domestic partner has granted the associate powers
under a durable power of attorney;

	•
	The
associate has previously designated the domestic partner as a beneficiary under his/her life insurance policy, or the domestic partner has previously
designated the associate as a beneficiary under his/her life insurance policy;

	•
	Both
persons share a joint bank account;

	•
	Both
persons are cosigners of a lease or deed;

	•
	Both
persons are named on the same car insurance policy. 

	*
	Not
all HMOs offer domestic partner coverage (see page 18). This coverage is available in all states under the WellPoint Preferred PPO or WellPoint Group Plan. 

6

 

Certification  

If
you wish to elect domestic partner benefits, you must complete a Declaration of Domestic Partnership and return it for approval before any domestic partner benefits can be activated. The
declaration form will be mailed to you when you elect domestic partner benefits. Both you and your domestic partner are required to sign the declaration. 

Eligible Dependents  

In
addition to health and life insurance coverage for your domestic partner, you may also elect health and life coverage for the qualified children of your domestic partner. Your domestic partner's
children are eligible for coverage if they are: 

	•
	Unmarried;

	•
	Primarily
dependent on you or your domestic partner for support;

	•
	Living
with you and your domestic partner in a regular parent-child relationship;

	•
	Within
the age/student requirements of the plan benefits; and

	•
	Eligible
to be claimed by you or your domestic partner as a dependent as defined in Internal Revenue Code section 152. 

Cost of Coverage  

	Coverage
 
	 	Associate

Biweekly Cost
 

	

	•	 	Associate & Domestic Partner	 	Same
	•	 	Associate & Spouse	 	 
	

	•	 	Associate & Domestic Partner(s) Child(ren)	 	Same
	•	 	Associate & Associate's Child(ren)	 	 
	•	 	Associate, Associate's Child(ren), & Domestic Partner's Child(ren)	 	 
	

	•	 	Associate, Spouse, & Child(ren)	 	Same
	•	 	Associate, Domestic Partner, & Associate's Child(ren) and/or Domestic Partner's Child(ren)	 	 

The
portion of your contribution that is attributable to coverage for your domestic partner and/or your domestic partner's child(ren) will be paid on an after-tax basis. 

Tax Consequences  

        The IRS has determined that if you receive health benefits for your domestic partner and/or his or her children,  AND your domestic partner
and his or her children are not your dependents as defined by the IRS, you must pay federal income tax on the value of the
benefits you received. The IRS defines the value of these benefits as the amount it would cost you to obtain the insurance for your partner and each of your partner's children at group policy rates.
Because there are tax consequences associated with domestic partner coverage, we recommend you consult a tax advisor before electing this coverage. 

You may view and print a copy of the Domestic Partner Guide with the Declaration of Domestic Partnership from TAO or WorkSite. In TAO, go to "Bulletin Boards," select
"__HR__Information," and then open "Domestic Partner Guide." From WorkSite (http://home.wellpoint.com) go to Department Links>Human Resources>Library>Benefits. If you are
unable to view or print these materials, call the ASC at (877) 342-5272 to have a copy sent to you.

7

 

Open Enrollment Procedures for Current WellPoint Officers  

Comprehensive Executive Nonqualified Retirement Plan  

As
in prior years, you will make your Comprehensive Executive Nonqualified Retirement Plan elections by completing a FlexExec enrollment form. Web
enrollment is not available for the Comprehensive Executive Nonqualified Retirement Plan. 

FlexPoint  

Your
FlexPoint elections for 2002 will be in effect from January 1 through December 31, provided you remain eligible for benefits. Each year, during the
Open Enrollment period, you have the opportunity to change your coverage for the following plan year. 

Open
enrollment will be from, October 17, 2001 through November 2, 2001. 

When
you log on for Web enrollment to make changes, you must enter your user ID, as well as your password. Using your password serves as both your signature and your authorization to process benefit
changes. 

Before
you enroll, give careful consideration to the benefits you will need for the 2002 calendar year. Unless you have a qualified mid-year change (see Mid-Year Changes on page 38),  you may not make any changes to your enrollment selections until 2003. 

If You Need to Make Changes...  

	1.
	Review this FlexPoint Enrollment Guide and select your benefit coverages. If you have
specific questions about coverages, please contact the plan provider directly. Customer Service telephone numbers are listed in the Medical Comparison Chart (pages 13-16) and the Dental Comparison
Chart (page 20).

	2.
	Complete the Enrollment Worksheet before making changes for 2002. Your 2001 elections are highlighted for your reference.

	3.
	Log on to ASC Online to make your 2002 benefit elections from October 17, 2001 through November 2, 2001.

	4.
	You will receive a Confirmation Statement along with any necessary forms at the end of the Open Enrollment period. If you do not receive
a Confirmation Statement by December 10, 2001, please contact the Associate Service Center immediately.

	5.
	Check your Confirmation Statement carefully. If you need to make any changes or
corrections, call the Associate Service Center at (877) 342-5272 before December 14, 2001. 

Enroll Via ASC Online  

During this Open Enrollment period, you can make FlexPoint changes on ASC Online. Simply type
http://home.wellpoint.com from your browser at work to access the enrollment site from the WellPoint Intranet. You can also access the enrollment site from home at
http://asconline.wellpoint.com. You will be asked to enter your user ID as well as your password.  

Important: After you scroll through and make the changes you want, you must click "Submit." Your elections are not final until
you click the "Submit" button and the summary of elections screen appears.

8

 

If You Do Not Log On to ASC Online to Enroll  

	•
	If
you don't log on to the Web, you will receive your 2001 benefit coverages (except for your Flexible Spending Accounts) at the new 2002 contribution
levels.

	•
	You
will not participate in the Health Care or Dependent Day Care Flexible Spending Accounts. You must log on
to ASC Online to authorize Health Care and Dependent Day Care Spending Account deductions for 2002. 

ASC Online  

 Log on at work at

http://home.wellpoint.com  

 or at home at

http://asconline.wellpoint.com  

Confirmation Statements  

	•
	A
Confirmation Statement will be mailed to your home at the end of the enrollment period. You may also review your elections on-line at any time.

	•
	Check
your Confirmation Statement carefully. If you need to make any changes or corrections, or fix
omissions, call the Associate Service Center before December 14, 2001. You cannot make changes or corrections after December 14, 2001. 

Keep your Confirmation Statement for your records.

Forms  

Depending
upon your elections you may be required to complete and submit additional information. 

	•
	If
you are newly enrolling or are adding a new dependent in an HMO or Dental Net (California associates only), you must complete an HMO and Dental Net
enrollment form.

	•
	A
Declaration of Domestic Partnership is required if you are adding your domestic partner to your coverage for the first time.

	•
	An
Evidence of Insurability (EOI) form is required if you select a life insurance option that is two levels greater than your existing coverage. If you
increase coverage for your spouse/domestic partner by one level or more, an EOI form is required. Should you increase child life insurance by two levels or more, you will need to complete an EOI form
for each child. 

EOI
forms will be sent to your home address after November 15, 2001. 

For
coverage to be effective for January 1, 2002, all forms must be returned by December 14, 2001. 

Deductions and Pay Periods in 2002  

There
will be 26 pay periods in 2002. Your first benefit deductions for 2002 will begin with your January 4, 2002 paycheck. If you notice any errors or omissions on this
paycheck, contact the Associate Service Center immediately. No corrections can be made after January 15, 2002.

Questions?  

If
you have any questions about your FlexPoint options or procedures, contact the Associate Service Center. If you have specific medical or dental
coverage questions, please call the Customer Service numbers listed in the Medical Comparison Chart (pages 13-16) and the Dental Comparison Chart (page 20). 

9

   Enrollment Procedures for Newly-Hired Officers  

Comprehensive Executive Nonqualified Retirement Plan  

You
will make your Comprehensive Executive Nonqualified Retirement Plan elections by completing enrollment forms, which will be sent to you under separate cover. Web enrollment is not available for
the Comprehensive Executive Nonqualified Retirement Plan. 

FlexPoint  

Before
you enroll, give careful consideration to the benefits you will need for the 2002 calendar year. Unless you have a qualified mid-year change (see Mid-Year Changes on page 38),  you may not make any changes to your enrollment selections until 2003. 

Enrollment
will be conducted through ASC Online, a Web enrollment system where associates enter their benefit selections. This system will be available 24 hours a day, 7 days a week, during your
enrollment period. 

Steps  

	1.
	Review this 2002 FlexPoint Enrollment Guide and select your benefit coverages. To assist
you in your provider selections, HMO and PPO directories are available at your local Human Resources office. If you have questions about medical or dental coverage, please contact the providers
directly at the Customer Service phone numbers listed in the Medical Comparison Chart (pages 13-16) and Dental Comparison Chart (page 20).

	2.
	Complete the Enrollment Worksheet and select your coverage levels prior to enrolling.

	3.
	Log on to ASC Online to make your 2002 benefits elections. Simply type http://home.wellpoint.com from your
browser at work to access the enrollment site from the WellPoint Intranet. You can also access the enrollment site from home at http://asconline.wellpoint.com. You will be
asked to enter your user ID as well as your password. Using your password serves as both your signature and your authorization to process benefit elections.

	4.
	You will receive a Confirmation Statement after you complete your enrollment. If you do not receive a Confirmation Statement within two
weeks of enrolling, contact the Associate Service Center. 

Default Coverage—If You Don't Enroll  

If
you do not make your elections within the time period indicated on your Enrollment Worksheet, you will be assigned default coverage automatically.
Default coverage provides minimal benefits for you only—not your dependents. With default coverage, you receive the following benefits: 

	•
	WellPoint
Preferred PPO or WellPoint Group Medical, associate only coverage with $1,000 deductible

	•
	$50,000
in life insurance

	•
	One
times your benefit salary in Accidental Death and Dismemberment (AD&D) insurance

	•
	No
Flexible Spending Account participation 

If
coverage is defaulted, you must wait until the next annual enrollment period to elect other coverage unless you qualify for a mid-year change that allows you to change some, but not all, coverages. 

10

 

FlexPoint Benefits Information  

Your Medical Coverage  

The
medical options in FlexPoint are designed to meet the needs of individuals with varying personal situations. Depending on where you live and work,
you may be able to choose WellPoint Preferred—a preferred provider organization (PPO), a health maintenance organization (HMO), or WellPoint Group if you live where there is no PPO or HMO
available. Your medical options are based on both your home address and your Company mail drop. Please carefully review provider directories (available at your local HR office) before making an
election. In making your choice, it's important that you read and understand the benefits available to you, as well as the limitations and exclusions. The information in this Enrollment Guide is only
a summary—refer to your Summary Plan Description for more information. 

	•
	Consider
the way you now receive—or would like to receive—medical care, and identify your alternatives. HMOs generally require you to
pay a small fee (copay) when you use network services and provide no benefits when you use a provider outside the network. With WellPoint Preferred, you also may have to satisfy a deductible and
coinsurance. However, you may use a non-network provider if you are willing to share more of the cost.

	•
	Also
find out whether your current providers participate in an available HMO or PPO. If you're enrolling in an HMO and will be a new patient with a
particular primary care physician, call the physician's office to determine whether he/she is accepting new patients. 

Special Considerations  

If you have coverage under another group medical plan, you have the option to waive your FlexPoint medical coverage. If you
waive medical coverage, you must certify coverage with another group plan. For example, you may be covered under your spouse's plan. You can waive coverage and receive a credit, which is taxable
income in your paycheck. Part-time associates are not eligible for flex credits.  

If you elect an HMO (for the first time), or add dependents to your HMO coverage, you must submit an HMO Enrollment Form no
later than December 14, 2001 (or the effective date of your coverage for 2002 new hires), or you will be assigned a provider.  

If you have a qualified mid-year change (see page 38), you must notify the Associate Service Center within 31 days of the change.  

11

 

 Claims Procedures  

If
you choose WellPoint Preferred PPO, your provider will file claims for you and your covered dependents when you receive care in-network. For non-network providers or if you choose the WellPoint
Group Plan, your provider may use a universal claim form and mail it to the claims address on your ID card. You can obtain a claim form by calling Customer Service at (800) 234-0111 or by downloading
a claim form from Member Services at www.bluecrossca.com or from WorkSite at
http://home.wellpoint.com›Department Links›Forms›Benefits. 

All
WellPoint Preferred PPO and WellPoint Group claims should be mailed to: WellPoint Health Networks Inc., P.O. Box 4109, Woodland Hills, California 91365, Attn: Associate Claims Unit. Be sure to use
a separate claim form for each patient and provider. 

BCBSGA Associates  

If
you choose WellPoint Preferred PPO, your provider will file claims for you and your covered dependents when you receive care in-network. For non-network providers, your provider may use a universal
claim form and mail it to the claims address on your ID card. You can obtain a claim form by calling Customer Service at (800) 441-2273 or by downloading a claim form from  Members Services at
www.bcbsga.com. 

Claims
should be mailed to: Blue Cross and Blue Shield of Georgia, P.O. Box 9907, Columbus, GA 31908-6007. 

Medical Comparison Chart  

The
Medical Comparison Chart has been designed to help you understand the differences between plans. Carefully review this information before making your benefit selection. 

Note:
You continue to be responsible for all copays, even after you reach the out-of-pocket maximum. 

12

 

Medical Comparison Chart  

	 
	 	WellPoint Preferred (PPO)
 

	Deductible(1)
 
	 	WP250
	 	WP500
	 	WP1000

	Individual	 	$	250	 	$	500	 	$	1,000
	Family	 	$	750	 	$	1,500	 	$	3,000
	

	 
	 	WP250

	 	WP500

	 	WP1000

	Out-of-Pocket Maximum(2)

	 	Network

	 	Non-Network

	 	Network

	 	Non-Network

	 	Network

	 	Non-Network

	Individual	 	$	2,500	 	$	6,900	 	$	3,500	 	$	7,100	 	$	4,500	 	$	7,600
	Family	 	$	7,500	 	$	20,700	 	$	10,500	 	$	21,300	 	$	13,500	 	$	22,800
	

	 
	 	Network Providers

	 	Non-Network Providers

	

	Hospital Services(3)	 	 	 	 	 	 
	Inpatient	 	80% after deductible (85% for WP 250)	 	60% after deductible
	Outpatient	 	80% after deductible (85% for WP 250)	 	60% after deductible
	Skilled Nursing Facility	 	80% after deductible; limited to 100 days/calendar year (85% for WP 250)	 	60% after deductible; limited to 100 days/calendar year
	

	Professional Services	 	 	 	 	 	 
	Office Visits	 	WP 250	 	$15 copay	 	60% after deductible
	 	 	WP 500	 	$20 copay	 	60% after deductible
	 	 	WP 1000	 	80% after deductible	 	60% after deductible
	Well Baby Care:	 	 	 	 	 	 
	• Office Visits	 	WP 250	 	$15 copay	 	60% after deductible
	 	 	WP 500	 	$20 copay	 	60% after deductible
	 	 	WP 1000	 	80% after deductible	 	60% after deductible
	• Immunizations	 	 	 	$0 copay	 	60% after deductible
	Annual Routine Exam
 ($300 maximum, including well woman exam)	 	100% covered (does not apply toward deductible)	 	60% after deductible
	Well Woman Exams:
 ($300 maximum, included in Annual Routine Exam)	 	 	 	 	 	 
	• Office Visit	 	100% covered (does not apply toward deductible)	 	60% after deductible
	• Mammogram	 	100% covered (does not apply toward deductible)	 	60% after deductible
	• Pap smear	 	100% covered (does not apply toward deductible)	 	60% after deductible
	X-ray and lab tests	 	80% after deductible (85% for WP 250)	 	60% after deductible
	

	Emergency Medical Services	 	 	 	 	 	 
	Professional Services (at hospital)	 	80% after deductible (85% for WP 250)	 	80% after deductible
	Hospital Emergency Room	 	80% after deductible (85% for WP 250)	 	80% after deductible
	

	Maternity	 	 	 	 	 	 
	Hospital	 	80% after deductible (85% for WP 250)	 	60% after deductible
	Office Visits	 	WP 250	 	$15 copay	 	60% after deductible
	 	 	WP 500	 	$20 copay	 	60% after deductible
	 	 	WP 1000	 	80% after deductible	 	60% after deductible
	Infertility Diagnostic Procedures	 	80% after deductible (85% for WP 250)	 	 	 	60% after deductible
	

	Mental Health Care/Substance Abuse	 	 	 	 	 	 
	Inpatient (up to 30 days per calendar year)	 	80% after deductible (85% for WP 250)	 	60% after deductible
	Outpatient (50 visit maximum/calendar year)	 	80% after deductible (85% for WP 250)	 	60% after deductible
	 	 	$50 maximum/visit	 	 	 	$40 maximum/visit
	

	Miscellaneous Services	 	 	 	 	 	 
	Chiropractic (26 visit maximum/calendar year)	 	WP 250	 	$15 copay	 	60% ($25 maximum/visit—after deductible has been met)
	 	 	WP 500	 	$20 copay	 	 
	 	 	WP 1000	 	80% after deductible	 	 
	Acupuncture (26 visit maximum/calendar year)	 	WP 250	 	$15 copay	 	60% ($25 maximum/visit—after deductible has been met)
	 	 	WP 500	 	$20 copay	 	 
	 	 	WP 1000	 	80% after deductible	 	 
	Physical Therapy/Physical Medicine	 	80% after deductible (85% for WP 250)	 	60% after deductible
	Allergy Test	 	WP 250	 	$15 copay	 	60% after deductible
	 	 	WP 500	 	$20 copay	 	 
	 	 	WP 1000	 	80% after deductible	 	 
	Allergy Treatment	 	80% after deductible (85% for WP 250)	 	 	 	60% after deductible
	

	Prescription Drugs	 	 	 	 	 	 
	 	 	$15 brand/$7 generic copay; 30-day supply	 	$15 brand/$7 generic copay; 30-day supply
	 	 	$30 brand/$14 generic copay; 90-day supply mail order	 	$30 brand/$14 generic copay; 90-day supply mail order
	 	 	Infertility drugs not covered	 	Infertility drugs not covered
	

	Customer Service Number	 	 	 	(800) 234-0111

	(1)
	Deductible—Deductible
expenses applied to the forth quarter of the previous year will be carried over. Copay amounts do not apply toward the deductible.

	(2)
	Satisfying
the smaller in-network coinsurance and deductible will apply toward, but not satisfy, the larger out-of-network coinsurance and deductible, excluding any copays. Satisfying
the larger out-of-network coinsurance and deductible will automatically satisfy the smaller in-network coinsurance and deductible, excluding any copays. Copays do not apply to the out-of-pocket
maximum.

	(3)
	Hospital
Services—Pre-certification is required. You must initiate; failure to do so will result in a $250 additional deductible for medically necessary care. Under no
circumstances are benefits payable for unnecessary care. 

No pre-existing conditions apply.

13

 

	 
	 	WellPoint Group(1)
	 	Blue Cross HMO

(formerly CaliforniaCare)
	 	Blue Choice Healthcare (GA)

	Deductible	 	 	 Deductible(2)	 	Deductible	 	Deductible
	Individual	 	$	250	 	$	500	 	$	1,000	 	There is no deductible; some services require a copay	 	There is no deductible;some services require a copay
	Family	 	$	750	 	$	1,500	 	$	3,000	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay
	

	Out-of-Pocket Maximum	 	 	 Out-of-Pocket Maximum	 	Out-of-Pocket Maximum	 	Out-of-Pocket Maximum
	Individual	 	$	2,500	 	$	3,500	 	$	4,500	 	$1,500	 	None
	

Family	
 	
$	

7,500	
 	
$	

10,500	
 	
$	

13,500	
 	

$3,000 (2 family members)	
 	

None
	 	 	 	 	 	 	 	 	 	 	 	$4,500 (3 or more family members)	 	 
	

	Hospital Services	 	 	Hospital Services(3)	 	Hospital Services	 	Hospital Services
	Inpatient	 	 	80% after deductible	 	No charge	 	No charge
	Outpatient	 	 	80% after deductible	 	No charge	 	No charge
	Skilled Nursing Facility	 	 	80% after deductible (limited to 100 days/calendar year)	 	No charge (up to 100 days per year)	 	No charge (up to 30 days per year)
	

	Professional Services	 	 	Professional Services	 	Professional Services	 	Professional Services
	Office Visits	 	 	80% after deductible	 	$10 copay	 	$10 copay
	

Well Baby Care:	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	

 	
 	

 
	• Office Visits	 	 	80% after deductible	 	$10 copay	 	$10 copay
	• Immunizations	 	 	100% covered	 	No charge	 	No charge (office visit copay may apply)
	Annual Routine Exam
 ($300 maximum, including well woman exam)	 	 	100% covered (does not apply to deductible)	 	$10 copay	 	$10 copay
	Well Woman Exams
 (included in annual Routine Exam benefit):	 	 	 	 	 	 	 	 	 	 	 	 	 
	• Office Visit	 	 	100% covered (does not apply to deductible)	 	$10 copay	 	$10 copay
	• Mammogram	 	 	100% covered (does not apply to deductible)	 	No charge	 	$10 copay
	• Pap smear	 	 	100% covered (does not apply to deductible)	 	No charge	 	$10 copay
	X-ray and lab tests	 	 	80% after deductible	 	No charge	 	No charge
	

	Emergency Medical Services	 	 	 Emergency Medical Services	 	Emergency Medical Services	 	Emergency Medical Services
	Professional Services (at hospital)	 	 	80% after deductible	 	No charge	 	No charge
	Hospital Emergency Room	 	 	80% after deductible	 	$50 copay, waived if admitted	 	$50 copay, waived if admitted
	

	Maternity	 	 	Maternity	 	Maternity	 	Maternity
	Hospital	 	 	80% after deductible	 	No charge	 	No charge
	Office Visits	 	 	80% after deductible	 	$10 copay	 	$10 copay (first visit only)
	Infertility Diagnostic Procedures	 	 	80% after deductible	 	50% (copay will not be applied to out-of-pocket maximum)	 	$10 copay (artificial insemination and in-vitro fertilization are excluded)
	

	Mental Health Care/Substance Abuse	 	 	 Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse
	Inpatient	 	 	80% after deductible

(up to 30 days per calendar year)	 	$100/day copay, up to 30 days per year (copay will not be applied to out-of-pocket maximum)	 	No charge, up to 30 visits per year; 6 day limit for substance abuse
	

Outpatient	
 	
 	

80% after deductible; $50 maximum/visit (50 visit maximum/calendar year)	
 	

$35 copay, up to 20 visits per year, when ordered by PCP (psychoanalysis excluded)	
 	

$25 copay, up to 20 visits per year
	

	Miscellaneous Services	 	 	 Miscellaneous Services	 	Miscellaneous Services	 	Miscellaneous Services
	Chiropractic	 	 	80% after deductible (26 visit maximum/calendar year)	 	Generally not covered; $10 copay, when approved by PCP	 	Not covered
	

Acupuncture	
 	
 	

80% after deductible (26 visit maximum/calendar year)	
 	

Generally not covered; $10 copay, when approved by PCP	
 	

Not covered
	

Physical Therapy/Physical Medicine	
 	
 	

80% after deductible	
 	

$10 copay, up to 60 visits per year	
 	

$10 copay, up to 20 visits per year
	Allergy Test	 	 	80% after deductible	 	$10 copay	 	$10 copay
	

Allergy Treatment	
 	
 	

80% after deductible	
 	

$10 copay	
 	

$10 copay
	

	Prescription Drugs	 	 	Prescription Drugs	 	Prescription Drugs	 	Prescription Drugs
	 	 	 	$15 brand/$7 generic copay; 30-day supply	 	$15 brand/$7 generic copay; 30-day supply	 	$15 brand/$7 generic copay; 30-day supply
	 	 	 	$30 brand/$14 generic copay; 90-day supply mail order	 	$30 brand/$14 generic copay; 90-day supply
 Infertility drugs not covered	 	$30 brand/$14 generic mail order copay; 90-day supply
 Infertility drugs not covered
	

	Customer Service Number	 	 	 (800) 234-0111	 	(800) 234-0111 or www.bluecrossca.com	 	(800) 441-2273 or www.bcbsga.com

TDD: (404) 842-8073

	(1)
	This
 plan is for associates who live in an area where neither a PPO network nor an HMO network is available.

	(2)
	The
deductible is included in the out-of-pocket maximum.

	(3)
	Hospital
Services—Pre-certification is required. You must initiate; failure to do so will result in a $250 additional deductible for medically necessary care. Under no
circumstances are benefits payable for unnecessary care. 

14

 

	 
	 	UNICARE HMO (Illinois)
	 	HMO Blue (MA)
	 	Blue Care Network of S.E. Michigan

	Deductible	 	Deductible	 	Deductible	 	Deductible
	Individual	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay
	Family	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay
	

	Out-of-Pocket Maximum	 	Out-of-Pocket Maximum	 	Out-of-Pocket Maximum	 	Out-of-Pocket Maximum
	Individual	 	$1,500	 	None	 	None
	

Family	
 	

$3,000	
 	

None	
 	

None
	

	Hospital Services	 	Hospital Services	 	Hospital Services	 	Hospital Services
	Inpatient	 	$250 room & board copay per admission	 	No charge	 	No charge
	Outpatient	 	No charge	 	No charge	 	No charge
	Skilled Nursing Facility	 	No charge (up to 60 days per year)	 	No charge (up to 100 days per year)	 	No charge (up to 45 days per year)
	

	Professional Services	 	Professional Services	 	Professional Services	 	Professional Services
	Office Visits	 	$10 copay	 	$10 copay	 	$10 copay
	

Well Baby Care:	
 	

 	
 	

 	
 	

 
	• Office Visits	 	$10 copay	 	$10 copay	 	$10 copay
	• Immunizations	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)
	Annual Routine Exam
 ($300 maximum, including well woman exam)	 	$10 copay	 	$10 copay	 	$10 copay
	Well Woman Exams
 (included in annual Routine Exam benefit):	 	 	 	 	 	 
	• Office Visit	 	$10 copay	 	$10 copay	 	$10 copay
	• Mammogram	 	$10 copay (if doctor's office visit)	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)
	• Pap smear	 	$10 copay (if doctor's office visit)	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)
	X-ray and lab tests	 	No charge	 	No charge	 	No charge (office visit copay may apply)
	

	Emergency Medical Services	 	Emergency Medical Services	 	Emergency Medical Services	 	Emergency Medical Services
	Professional Services (at hospital)	 	No charge	 	No charge	 	No charge
	Hospital Emergency Room	 	$50 copay	 	$50 copay	 	$25 copay
	

	Maternity	 	Maternity	 	Maternity	 	Maternity
	Hospital	 	No charge	 	No charge	 	No charge
	Office Visits	 	$10 copay (first visit only)	 	No charge	 	$10 copay
	Infertility Diagnostic Procedures	 	No charge (4 attempts for actual infertility per lifetime)	 	$10 per visit	 	$10 copay for first visit, then 50% of covered charges
	

	Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse
	Inpatient	 	No charge, up to 30 days per year	 	No charge, up to 60 days per year for mental health care and up to 30 days per year for substance abuse	 	No charge, up to 30 days per year for mental health care and 50% copay for detoxification
	

Outpatient	
 	

$20 copay, up to 20 visits per year	
 	

20 visits per year ($10 copay for visits 1-10; $15 copay for visits 11-20)	
 	

50% copay, up to 20 visits per year
	

	Miscellaneous Services	 	Miscellaneous Services	 	Miscellaneous Services	 	Miscellaneous Services
	Chiropractic	 	Not covered	 	Not covered	 	Covered when referred by PCP
	

Acupuncture	
 	

Not covered	
 	

Not covered	
 	

Not covered
	

Physical Therapy/Physical Medicine	
 	

$10 copay, up to 60 visits per year	
 	

$10 copay, up to 60 visits per year	
 	

$5 copay, up to 60 days
	Allergy Test	 	No charge (office visit copay may apply)	 	$10 copay	 	50% copay for testing
	

Allergy Treatment	
 	

No charge (office visit copay may apply)	
 	

No charge	
 	

$5 copay for injections (office visit copay may apply)
	

	Prescription Drugs	 	Prescription Drugs	 	Prescription Drugs	 	Prescription Drugs
	 	 	$15 brand/$7 generic copay; 30-day supply

$30 brand/$14 generic copay

90 day supply, mail order	 	$20 brand/$10 generic copay (at HMO Blue-participating pharmacies)—30-day supply

$20 brand/$10 generic mail order copay—90-day supply	 	$5 copay—30-day supply
	

	Customer Service Number	 	(800) 234-0111	 	(800) 588-5509 or www.bcbsma.com

TDD: (800) 522-1254	 	(800) 662-6667 or www.bcbsm.com

TDD: (800) 257-9980

15

 

	 
	 	BlueCare Health Plan (Connecticut)
	 	HealthKeepers of Virginia
	 	HMO Blue Cross

(Dallas/Ft. Worth)

and HMO Blue Texas (Houston)

	Deductible	 	Deductible	 	Deductible	 	Deductible
	Individual	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay
	Family	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay	 	There is no deductible; some services require a copay
	

	Out-of-Pocket Maximum	 	Out-of-Pocket Maximum	 	Out-of-Pocket Maximum	 	Out-of-Pocket Maximum
	Individual	 	None	 	$1,500	 	$1,000
	

Family	
 	

None	
 	

$3,000	
 	

$2,000
	

	Hospital Services	 	Hospital Services	 	Hospital Services	 	Hospital Services
	Inpatient	 	No charge	 	No charge	 	No charge
	Outpatient	 	No charge	 	$50 copay	 	No charge
	Skilled Nursing Facility	 	No charge (up to 90 days per year)	 	No charge (up to 100 days per year)	 	No charge (up to 60 days per year)
	

	Professional Services	 	Professional Services	 	Professional Services	 	Professional Services
	Office Visits	 	$5 copay	 	$10 copay	 	$10 copay
	

Well Baby Care:	
 	

 	
 	

 	
 	

 
	• Office Visits	 	No charge	 	$10 copay	 	$10 copay (under age 2)
	• Immunizations	 	No charge	 	$10 copay	 	No charge
	Annual Routine Exam
 ($300 maximum, including well woman exam)	 	No charge	 	$10 copay (one physical per year)	 	$10 copay
	Well Woman Exams
 (included in annual Routine Exam benefit):	 	 	 	 	 	 
	• Office Visit	 	$5 copay	 	$10 copay	 	$10 copay
	• Mammogram	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)
	• Pap smear	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)	 	No charge (office visit copay may apply)
	X-ray and lab tests	 	No charge (office visit copay may apply)	 	$10 copay	 	No charge
	

	Emergency Medical Services	 	Emergency Medical Services	 	Emergency Medical Services	 	Emergency Medical Services
	Professional Services (at hospital)	 	No charge	 	No charge	 	No charge
	Hospital Emergency Room	 	$50 copay, waived if admitted	 	No charge	 	$100 copay
	

	Maternity	 	Maternity	 	Maternity	 	Maternity
	Hospital	 	No charge	 	No charge	 	No charge
	Office Visits	 	$5 copay (first visit only)	 	No charge	 	$10 copay for first visit only
	Infertility Diagnostic Procedures	 	$5 copay (only diagnostic covered)	 	Not covered	 	No charge
	

	Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse	 	Mental Health Care/Substance Abuse
	Inpatient	 	No charge, up to 60 days per year for mental health and up to 45 days for substance abuse	 	No charge, up to 30 days per year/90 days per lifetime, for mental health and substance abuse combined	 	$50 copay per day, up to 30 days per year, for mental health; no charge, up to 3 treatments per lifetime, for substance abuse
	

Outpatient	
 	

$5 copay per visit;

40 visit maximum for substance abuse	
 	

$15 or $30 copay per therapy session, up to 20 visits per year, for mental health and substance abuse combined	
 	

No charge, up to 20 visits per year, for mental health; no charge, up to 3 treatments per lifetime, for substance abuse
	

	Miscellaneous Services	 	Miscellaneous Services	 	Miscellaneous Services	 	Miscellaneous Services
	Chiropractic	 	$5 copay with PCP approval	 	Not covered	 	$10 copay with PCP approval
	

Acupuncture	
 	

Not covered	
 	

Not covered	
 	

Not covered
	

Physical Therapy/Physical Medicine	
 	

$5 copay, up to 60 visits per year	
 	

$10 copay, up to 90 days from date of injury	
 	

$10 copay
	Allergy Test	 	$5 copay	 	$10 copay	 	50% copay
	

Allergy Treatment	
 	

No charge (office visit copay may apply)	
 	

$10 copay	
 	

50% copay
	

	Prescription Drugs	 	Prescription Drugs	 	Prescription Drugs	 	Prescription Drugs
	 	 	$5 generic copay

$15 brand copay (formulary)

$25 brand copay (non-formulary)

$5/$15 mail order copay	 	$5 generic $10 brand (with generic equivalent)

$25 brand (without generic equivalent)

$10 mail order (generic)

$20 brand mail order (with generic equivalent)

$50 brand mail order (without generic equivalent)	 	$5 generic copay

$10 brand copay (formulary)

$25 brand copay (non-formulary)

$5/$10/$25 mail order copay—30 day supply
	

	Customer Service Number	 	(800) 922-1742 in Conn;

(800) 426-8531 elsewhere

or www.anthem.com	 	(800) 421-1880 or www.trigon.com

TDD: (800) 228-2909	 	Dallas/Ft. Worth: (888) 558-2393

Houston: (888) 882-2390

or www.bcbstx.com

16

 

Pre-Certification  

If you are covered under WellPoint Preferred PPO or the WellPoint Group Medical Plan and need care from a hospital (inpatient only), ambulatory surgical center (outpatient
only), or a chemical dependency rehabilitation facility, you must obtain a pre-certification. This ensures you obtain the maximum benefits available under the Plan.  

You must call for pre-certification three days before your scheduled admission or care. For an emergency
admission, you must call within 48 hours after the start of the confinement. To obtain a pre-certification, call the toll-free phone number listed on your ID card. If treatment will be provided by a
network physician, your physician may make the call for you, but you are responsible if this call does not occur.  

Notes:  

	•
	If a pre-certification is not obtained, an additional deductible of $250 will apply.

	•
	The Plan will not cover services that are not deemed medically necessary.

Pre-Existing Conditions  

Pre-existing
condition exclusions have been eliminated from the WellPoint Preferred PPO and the WellPoint Group Medical Plans. 

Reasonable and Customary Charges  

The
term "reasonable and customary" applies to the WellPoint Preferred PPO (if you use an out-of-network provider) and WellPoint Group Plans. If you are covered by an HMO, please contact the HMO
directly for its definition of reasonable and customary. 

At
the time of service, the Claims Administrator determines whether or not the charges are reasonable and customary. Because of the changing nature of medicine, the definition of reasonable and
customary charges may change over time. 

With
WellPoint Preferred PPO, you have the choice of receiving care from network providers, who accept lower negotiated rates, or from non-network providers. 

Medically Necessary  

The
WellPoint Preferred PPO and WellPoint Group Plans cover expenses deemed "medically necessary." Medically necessary services or supplies must meet certain requirements established by the Claims
Administrator. The fact that a doctor may prescribe, order, recommend or approve a service or supply does not, of itself, make it "medically necessary" or make the charge a covered expense, even if it
has not been listed as an exclusion. 

17

 

Additional Information About HMO Coverage  

Coverage When Traveling  

As
a member of a Blue Cross/Blue Shield HMO, you and your enrolled dependents are eligible for Away From Home Care benefits. These benefits cover urgent care, those not so serious illnesses that need
medical attention, for you and your enrolled family members when traveling outside your HMO service area. 

To
access Away From Home Care, call the toll-free number printed on your ID card. 

Coverage for Temporary Residency Outside of California  

You
can maintain your HMO benefits even when temporarily residing outside California with Guest Membership. It's available to long-term travelers for out-of-state work assignments, students and other
enrolled family members who will be living away from home for three to six months. 

To
apply for Guest Membership, call Blue Cross HMO Customer Service to discuss your changing circumstances. If a participating HMO is available, you or your dependent will become a guest member of
that HMO. 

Additional Information About All FlexPoint Medical Options  

Coordination of Benefits  

If
you have coverage under more than one group medical plan, benefits under the plans will be coordinated such that payments for both programs will be provided up to, but not in excess of, 100% of
charges for actual covered services. 

Binding Arbitration  

Any
dispute between you and the Claims Administrator will be resolved by binding arbitration and not by lawsuit or resort to court process, except as applicable state laws provide for judicial review
of arbitration proceedings or where prohibited by law. 

Questions?  

If
you have specific benefit questions, please call the Customer Service number listed in the Medical Comparison Chart. 

Your
local Human Resources office can provide you with HMO or PPO directories. 

HMOs and Domestic Partner Coverage  

	Blue Cross HMO (formerly CaliforniaCare)	 	Domestic Partner Coverage Allowed
	

	UNICARE HMO (IL)	 	Domestic Partner Coverage Allowed
	

	Blue Choice Healthcare (GA)	 	Domestic Partner Coverage Allowed
	

	HMO Blue (MA)	 	Domestic Partner Coverage Allowed
	

	Blue Care Network of S.E. Michigan	 	Same Sex Domestic Partner Coverage Allowed
	

	BlueCare Health Plan (CT)	 	Domestic Partner Coverage Allowed
	

	HealthKeepers of Virginia	 	No Domestic Partner Coverage
	

	HMO Blue Cross (TX)	 	No Domestic Partner Coverage
	

	HMO Blue Texas	 	No Domestic Partner Coverage
	

18

   Your Dental Coverage  

FlexPoint gives you a choice of dental options. In making your choice, consider how much you can afford to pay out of your own pocket toward dental
expenses. Also, are there any procedures you know you or a family member will need in the upcoming year? Is orthodontic coverage necessary? 

The
information in this Enrollment Guide is only a summary—refer to your Summary Plan Description for more information. 

If You Live in California...  

You
may choose Dental Net, the WellPoint Standard Dental Plan or the WellPoint Enhanced Dental Plan. You also have the option to waive dental coverage. 

Dental Net Plan  

When
you enroll in Dental Net, you and each covered dependent must select your own participating dental office. If you do not use a Dental Net provider, your dental services will not be covered.
Dental Net provider directories are available from your local Human Resources office. The first time you need care, let your dentist know that you're a member of Dental Net. If you are newly enrolling
in Dental Net or adding a new dependent, you must complete an HMO and Dental Net form. You may change
your Dental Net provider by calling the Dental Net Customer Service number listed in the Dental Comparison Chart. 

If
you are currently receiving treatment for orthodontia, you cannot change to the WellPoint Enhanced Dental Plan to continue that treatment. You must be enrolled in the Enhanced Dental Plan at the
beginning of orthodontic treatment for any expenses to be covered under this plan. 

If You Live Outside of California...  

You
can choose the WellPoint Standard Dental Plan or WellPoint Enhanced Dental Plan. 

WellPoint Standard and Enhanced Dental Plans  

The
WellPoint Standard and Enhanced Dental Plans give you the choice to select virtually any licensed dentist, but if you choose a PPO participating dentist, you take advantage of negotiated
discounts. If you use a dentist who does not participate in the National Dental PPO plan network, you may pay more for dental care. For non-network providers, the maximum covered expense is the
reasonable and customary (R&C) charge. You will be responsible for any billed charges that exceed R&C. If you use a network provider, the maximum covered expense is the negotiated rate. Network
providers will not bill you more than the negotiated rate. Orthodontic coverage is available under the Enhanced Dental Plan. 

Associates
can now benefit from the addition of a national PPO dental network. UNICARE dental provider listings are available on the Web enrollment site and at your local Human Resources office. 

Claims Procedures  

If you use a Dental Net or PPO network provider, your provider will file claims for you and your covered dependents. 

If you use a non-network provider, you may be required to complete a dental claim form and mail it to WellPoint Health Networks Inc., P.O. Box 9066,
Oxnard, California 93031-9066. BCBSGA associates should mail dental claim forms to Blue Cross and Blue Shield of Georgia, P.O. Box 9907, Columbus, GA 31908-6007. 

Questions?  

If
you have specific benefit questions you may call the Customer Service number listed in the Dental Comparison Chart below. 

Your
local Human Resources office can provide you with Dental Net or Dental PPO directories. 

19

 

Dental Comparison Chart  

	 
	 	In California
	 	National (including California)

	 	 	Dental Net	 	Standard Plan(1)	 	Enhanced Plan(1)
	

	Annual Deductible	 	None	 	$50/individual

$150/family	 	$50/individual

$150/family
	

	Annual Maximum	 	$500/child for pediatric dentist only	 	$1,000/individual	 	$2,000/individual
	

	Diagnostic/Preventive Care	 	100%	 	100% of covered expenses	 	100% of covered expenses
	

	Oral Surgery	 	100%	 	80% after deductible	 	80% after deductible
	

	Restorative Care (such as fillings)	 	100%	 	80% after deductible	 	80% after deductible
	

	Extractions	 	100%	 	80% after deductible	 	80% after deductible
	

	Surgical Extractions	 	$25—$50 copay	 	80% after deductible	 	80% after deductible
	

	Endodontic Care (such as root canal)	 	$60—$100 copay	 	80% after deductible	 	80% after deductible
	

	Periodontics (such as scaling)	 	$9—$120 copay	 	80% after deductible	 	80% after deductible
	

	Crowns	 	$85—$120 copay	 	Not covered	 	50% after deductible
	

	Bridges	 	$120 copay	 	Not covered	 	50% after deductible
	

	Partial Dentures	 	$160 copay	 	Not covered	 	50% after deductible
	

	Complete Dentures	 	$140 copay	 	Not covered	 	50% after deductible
	

	Orthodontia	 	$1,850 copay for adults (age 18+) or $1,450 for children; treatment limited to 24 months(2)	 	Not covered	 	50% with a $1,250 lifetime benefit/individual
	

	Customer Service	 	(800) 627-0004	 	(800) 627-0004	 	(800) 627-0004
	

	BCBSGA Customer Service	 	 	 	(800) 411-2273	 	(800) 411-2273
	

Note:
Covered expenses are paid based on reasonable and customary charges. Charges in excess of reasonable and customary are your responsibility. 

	(1)
	If
your dental provider anticipates the expense for any course of treatment to exceed $350, you should submit a benefit estimation form before treatment begins. This excludes Dental
Net.

	(2)
	You
must obtain a written referral from Dental Net Customer Service before receiving treatment. Dental Net will not accept patients who are "banded" prior to the effective date of
coverage. Extra fees may be charged for X-rays, models, retention, etc. over and above the copay. 

20

 

YourVision Coverage  

If
you elect vision coverage, you have a choice of network or non-network providers each time you need eye care services or products. Vision coverage is optional. In making your election, think about
how much you can afford to pay out of pocket for vision expenses in the coming year. Also consider whether you or a family member will need eyeglasses or contacts in the coming year. 

Keep
in mind that vision coverage is designed to cover medically necessary eye care. As a result, there are extra charges for the following: 

	•
	Blended
lenses

	•
	Oversize
lenses

	•
	Photochromatic
or tinted lenses

	•
	Frames
that exceed the Plan allowance 

Claims Procedures  

VSP  

	•
	If
you use a VSP provider, he/she will confirm your eligibility and file claims for you and your covered dependents.

	•
	If
you use non-VSP providers, file a claim with VSP to receive your benefits. Claims should be mailed to: Vision Service Plan, P.O. Box 997100, Sacramento,
California 95899-7100. You will be responsible for paying any charges above the limits shown in the chart below. 

To
obtain a list of VSP providers in your area, call (800) 622-7444 or visit www.vsp.com. 

LensCrafters (BCBSGA associates)  

	•
	All
LensCrafters locations in the state of Georgia and in Chattanooga, Tennessee (excluding LensCrafters Optiques) will confirm your eligibility and file
claims for you and your covered dependents.

	•
	If
you use a non-LensCrafters provider, you are responsible for paying the charges at the time of service and for filing the claim for reimbursement. To
obtain a Routine Vision Service Report claim form, please call (800) 377-6436. 

Questions?  

If
you have any questions about your vision coverage, call VSP at (800) 622-7444. BCBSGA associates can call LensCrafters at (800) 377-6436. 

21

 

Your Vision Benefits at a Glance—VSP(1,2)  

	 
	 	VSP Providers
 
	 	Non-VSP Providers
 

	

	Your annual copayment	 	$25	 	$25
	

	What the Plan Pays	 	 	 	 
	Eye examinations

    (once every 12 months)	 	100% after copay	 	$40 maximum
	Lenses (once every 12 months)(3)	 	 	 	 
	 	Single	 	100% after copay	 	$40 maximum
	 	Bifocal	 	100% after copay	 	$60 maximum
	 	Trifocal	 	100% after copay	 	$80 maximum
	 	Lenticular	 	100% after copay	 	$125 maximum
	

	Frames (once every 24 months)(3)	 	100% up to a determined maximum	 	$45 maximum
	

	Contacts (including disposables)	 	 	 	 
	 	If medically necessary	 	100% with prior approval	 	up to $210, in lieu of other benefits
	 	If elective	 	up to $105, in lieu of other benefits	 	up to $105, in lieu of other benefits
	

	(1)
	VSP
members have access to the Laser VisionCare Program, in which laser vision correction is available at a discounted fee. To learn more visit VSP's Laser VisionCare Program at
www.vsp.com/lvc/html/index.htm.

	(2)
	You
must pay your annual copayment the first time you receive services whether you use a VSP or non-VSP provider.

	(3)
	You
and your family may select either one pair of glasses or contact lenses in a calendar year. 

Your Vision Benefits at a Glance—LensCrafters (BCBSGA Associates)  

	 
	 	In-Network
 
	 	Out-of-Network
 

	

	Your annual copayment	 	$20	 	N/A
	

	What the Plan Pays	 	 	 	 
	

	Eye examinations

    (once every 12 months)	 	100% (no copay)	 	Up to $35
	

	Lenses (once every 12 months)	 	 	 	 
	 	Single	 	100%(1)	 	Up to $25
	 	Bifocal	 	100%(1)	 	Up to $35
	 	Trifocal	 	100%(1)	 	Up to $45
	

	Frames (once every 24 months)	 	100%; up to $150	 	Up to $40
	

	Contacts (including disposables)	 	100%; up to $200(2)	 	Up to $90(2)
	

	(1)
	Based
on the mid-range cost of frames and lenses, as defined by the network.

	(2)
	Applicable
to one pair of contact lenses or the equivalent of one year's supply of disposable contact lenses. 

22

 

Your Life Insurance Coverage  

This
section describes the coverage available to you under the FlexPoint life insurance plan. 

As
an Officer of WellPoint, you receive life insurance under the Group Universal Life policy (see FlexExec on page 29). You should consider your level
of FlexPoint life insurance coverage in light of the Group Universal Life coverage you receive as an Officer. 

Benefit Salary  

Benefits are based on your benefit salary, which is your annual base pay as of September 1, 2001 plus commissions or sales incentives paid from September 1, 2000 through August
31, 2001. For Officers hired on or after September 1, 2001, your benefit salary is your annual base pay excluding any commissions. Your benefit salary does not change mid-year with salary increases.
It will be recalculated on September 1, 2002 for an effective date of January 1, 2003.  

Life insurance benefits are rounded to the next higher multiple of $1,000 unless your salary is an even multiple of $1,000. For example, if your benefit salary is $29,300 and
you elect one times your benefit salary, your coverage would be rounded up to $30,000. The maximum amount of your coverage cannot exceed $1,000,000. 

Your
benefit is reduced when you reach age 70 and again at age 75. If you become totally disabled prior to age 60, you will need to apply for a premium waiver. If approved, no premium payments will be
required during this period of disability. 

You
can choose from the following life insurance options: 

	•
	$50,000

	•
	1
times your benefit salary (WellPoint provides this level of coverage at no cost to you.)

	•
	2
times your benefit salary

	•
	3
times your benefit salary

	•
	4
times your benefit salary

	•
	Waive
coverage 

If
you are on a leave of absence on January 1, 2002 and you elect to increase life coverage for 2002, that new coverage level will not take effect until you return from the leave and an Evidence of
Insurability has been approved (if applicable). 

We
offer life insurance coverage when you first become eligible without an Evidence of Insurability form. Increasing your life insurance amount by more than one level during Open Enrollment requires
an Evidence of Insurability form and is subject to approval by the Claims Administrator. 

If,
during Open Enrollment, you select a life insurance option that is two levels greater than your existing coverage, you will need to provide an Evidence of Insurability form. If approved, your
increase in coverage and deductions will take effect on January 1, 2002 or the first of the month after insurance company approval is received, whichever is later. 

If
your request is denied, your 2001 level of coverage will remain in effect for 2002 with the corresponding 2002 cost. 

Life
insurance greater than one times your benefit salary can be purchased only on an after-tax basis. 

Life
insurance coverage is a fully insured plan administered by BC Life & Health Insurance Company. 

Imputed Income  

The
IRS Code states that employee group term life insurance benefits in excess of $50,000 and dependent life insurance may result in taxable income to the associate. This is known as "imputed income."
Imputed income must be reported on your W-2 and is included as earnings in your paycheck. Imputed income is subject to federal, state, and FICA taxes. 

23

 

Your Dependent Life Insurance Coverage  

Dependent
life insurance enables you to insure the lives of your spouse/domestic partner and eligible dependent child(ren). 

If,
during Open Enrollment, you add or increase your dependents' coverage, your dependents must complete an Evidence of Insurability form. When approved, the increase in coverage and deductions will
take effect on January 1 or the first of the month after insurance company approval is received, whichever is later. If your request is denied, the current level of coverage will remain in effect for
2002 with the corresponding 2002 costs. 

If
you are on a leave of absence on January 1, 2002, and you elect to increase dependent life insurance for 2002, the new coverage level will not take effect until you return from the leave and an
Evidence of Insurability has been approved. 

The
information in this Enrollment Guide is only a summary—refer to your Summary Plan Description for more information. 

Spouse/Domestic Partner Life Insurance  

Spouse/domestic
partner life insurance is based on your benefit salary (see page 23 for a definition of benefit salary), and the cost is based on your age as of January 1, 2002. Benefits are paid
directly to you. This coverage cannot exceed the lesser of 50% of your life insurance amount or $125,000. Spouse/domestic partner coverage will be reduced when your life insurance is
reduced—at age 70 and again at 75. 

Spouse/domestic
partner life insurance benefits are rounded down to a multiple of $1,000. For example, if your benefit salary was $29,300 and you elected spouse life of one times your benefit salary,
your spouse's/domestic partner's coverage would be rounded down to $29,000. 

You
may choose from the following options for spouse/domestic partner life insurance: 

	•
	$5,000

	•
	50%
of your benefit salary

	•
	1
times your benefit salary

	•
	Waive
coverage 

Child Life Insurance  

Child
life insurance is a fixed amount depending on the age of your child(ren). 

You
have the following options for child life insurance, or you can waive coverage: 

	For Each Dependent Child
 
	 	Option 1

(1 unit)
 
	 	Option 2

(2 units)
 
	 	Option 3

(5 units)
 

	

	Birth to age 14 days	 	$	500	 	$	1,000	 	$	2,500
	

	14 days to six months of age	 	$	2,500	 	$	5,000	 	$	12,500
	

	6 months through age 18 years of age (24 if full-time student)	 	$	5,000	 	$	10,000	 	$	25,000
	

As
with spouse/domestic partner life insurance, benefits are paid to you, and this coverage cannot exceed 50% of your life insurance amount. All of your eligible children and your domestic partner's
children may be covered if you choose this benefit. If you do not elect to cover a child or if a child does not meet the Evidence of Insurability requirement, that child will not be covered. 

You
must notify the Associate Service Center when dependents no longer qualify for coverage (e.g. an ex-spouse after a divorce) or when they reach the limiting age of 19 (or 25 if a full-time
student). 

If both you and your spouse/domestic partner, or you and your child/parent, are employed at WellPoint, you may not elect multiple coverage under the same
plans. For example, you cannot elect spouse/domestic partner life coverage if your spouse/domestic partner works for WellPoint. 

If
you are on a leave of absence on January 1, 2002, any new elections or increases you make to dependent life will not take effect until you return from the leave and any applicable Evidences of
Insurability have been approved. 

24

 

Your Accidental Death and Dismemberment (AD&D) Coverage  

Accidental
death and dismemberment (AD&D) coverage protects you if you die or are dismembered as the result of an accident. The plan does not pay benefits if you die from natural causes. This benefit
is designed to supplement your life insurance coverage and is a separate election. AD&D coverage is not available for dependents. 

The
information in this Enrollment Guide is only a summary—refer to your Certificate of Insurance for more information. 

AD&D
benefits are rounded to the next higher multiple of $1,000 unless your benefit salary is an even multiple of $1,000. For example, if your benefit salary is $29,300 and you elect one times your
benefit salary, your coverage would be rounded up to $30,000. 

You
can choose from the following AD&D options (see page 23 for a definition of benefit salary): 

	•
	1
times your benefit salary (WellPoint provides this level of coverage at no cost to you.)

	•
	2
times your benefit salary

	•
	3
times your benefit salary

	•
	4
times your benefit salary 

The
maximum amount of AD&D coverage cannot exceed $1,000,000. You cannot waive AD&D coverage. You do not need to submit an Evidence of Insurability form if you increase your level of coverage during
Open Enrollment. 

The
AD&D plan pays the full benefit amount to your beneficiary if you die as the result of an accident. Your beneficiary will be the same as listed on your life insurance beneficiary form. The plan
pays the full amount or a percentage of the full amount if you suffer a dismemberment as the result of an accident. The percentages vary by the seriousness of the injury—refer to the
Certificate of Insurance. 

If
you are on a leave of absence on January 1, 2002, and you elect to increase AD&D coverage for 2002, the new coverage level will not take effect until you return from leave. 

25

 

Your Flexible Spending Accounts  

Flexible
Spending Accounts provide an opportunity for you to save money on your out-of-pocket health care or dependent daycare expenses throughout the year. You are not taxed on the money you
contribute, nor on the reimbursements you receive. 

Tax Savings  

For most associates who elect flexible spending accounts, the tax savings are as much as 35 cents on the dollar—28 cents in federal income tax, 7.65 cents in Social
Security and Medicare taxes, plus any applicable state or local income tax. Your tax savings will be based on your actual tax circumstances.  

 How Flexible Spending Accounts Work  

You
elect an annual amount of money to be deducted from your biweekly paychecks on a pretax basis. Based on your annual election, a prorated amount is subtracted from your paycheck each pay period.
When you have an eligible expense, you file a claim and are reimbursed without paying taxes on this amount. 

The
full annual amount you elect to defer under the Health Care Spending Account is available on the effective date of your coverage. So, if you elect $1,000 for the year and have an eligible expense
of $900 in January, you will be reimbursed the full $900 even though you have only accumulated $38.46 thus far. Contributions, however, will continue to be deducted for the remainder of the year.
Under the Dependent Day Care Spending Account, you can be reimbursed only for the amount actually in your account at the time you submit the claim. 

The
amount you elect to contribute to your accounts over the course of the year is irrevocable. Once you make your election, you must continue to contribute at that amount until the end of the
calendar year, or you experience a qualified mid-year change, or termination of employment. 

Your Health Care Spending Account  

If
you choose to participate, you decide how much to deposit in the Health Care Spending Account to pay for expenses for you and your dependents that are not covered by your medical, dental, and
vision plans. For example, health plan deductibles and copayments, mileage and parking expenses while you're receiving health care, and contact lens solution are normally not reimbursed by your
insurance plan. But they may be eligible for reimbursement under a Health Care Spending Account. 

Some
additional examples of eligible expenses are: 

	•
	Uninsured
medical, dental, vision, and prescription drug expenses and copays

	•
	Chiropractic
expenses

	•
	Hearing
aids and batteries

	•
	Mental
health expenses

	•
	Prescription
glasses and sunglasses

	•
	Orthodontia
expenses 

For
a complete list of expenses eligible for reimbursement, please contact UniAccount at (888) 209-7976. 

You
have through March 31, 2003 to file Health Care Spending Account claims for expenses incurred on or before December 31, 2002. If you terminate employment prior to December 31, 2002, your claims
must be for expenses incurred on or before your termination with WellPoint. 

Please
note that you are eligible for reimbursement of domestic partner expenses only if your domestic partner (or child of the domestic partner) is your dependent for IRS purposes. 

26

 

How Much Can I Elect?  

	 
	 	Minimum
 
	 	Maximum
 

	 
	 	Pay Period
 
	 	Annually
 
	 	Pay Period
 
	 	Annually
 

	

	Health Care Account	 	$	10	 	$	260	 	$	192.31	 	$	5,000
	

	Dependent Day Care Account(1)	 	$	10	 	$	260	 	$	192.31	 	$	5,000
	

	(1)
	Married
associates filing a separate tax return can only elect $2,500 per year. Married associates filing a joint return have a combined maximum of $5,000 per year from all available
plans. 

For purposes of this section, "deductions" are salary reductions used to pay an equivalent amount of your eligible health care and/or dependent daycare expenses. Additionally,
although this section refers to "your accounts," all the deductions are held as part of the general assets of the Company.

You
can participate in the Health Care Spending Account even if you waive medical coverage. Once you enroll in a spending account, you cannot change your election or contributions for the remainder of
that calendar year. The only exception is if you have a qualified mid-year change (such as the birth of a child). Refer to the Mid-Year Changes section of this Enrollment Guide for more details. 

As
you consider participating in the Health Care Spending Account, think about the following: 

	•
	Do
you anticipate any expenses not covered by your (or your spouse's) medical, dental, or vision care plans?

	•
	Do
you anticipate any large out-of-pocket expenses such as orthodontics, crowns, hearing aids, or the birth of a baby? Do you need eyeglasses, contact
lenses, and/or prescription sunglasses? 

Your Dependent Day Care Spending Account  

You
can participate in this account if you need dependent daycare services to enable you to work or, if you are married, for both you and your spouse/ domestic partner (if also your dependent) to
work. A dependent must be under age 13 or a spouse/ domestic partner, child or parent that is physically or mentally incapable of caring for himself or herself and spends at least eight hours per day
in your home. 

If
your spouse/domestic partner (if also your dependent) does not work, your dependent daycare expenses may be reimbursable if your spouse/ domestic partner is a full-time student or physically or
mentally unable to provide care for himself or herself. 

In
general, any expense that qualifies for the Federal Dependent Care Tax Credit may be reimbursed. When filing your dependent daycare claims, you will need to submit the Tax Payer Identification
Number or Social Security Number of the person or entity who provides care. You cannot participate in a Dependent Day Care Spending Account and file for a Federal Dependent Care Tax Credit. 

This
account is for reimbursement of child/elder daycare expenses. It does not provide reimbursement for medical expenses of a spouse/domestic partner or dependent (see "Your
Health Care Spending Account" above).

Note:
According to IRS regulations, deductions by highly compensated associates may be subject to limitations. You will be notified if you are affected by these limitations. 

As
you consider participating in the Dependent Day Care Spending Account, think about the following: 

	•
	Will
you incur expenses from a licensed daycare center or nursery school?

	•
	Will
your child(ren) attend an eligible daytime summer camp or before-school or after-school activities?

	•
	Would
you save more money from the Federal Dependent Care Tax Credit?

	•
	Do
you have an aging dependent parent who may require care? 

27

 

"Use It or Lose It" Rule  

Under this rule, you must use the money in your Health Care and/or Dependent Day Care Account for eligible expenses you incur during the year in which the contributions are
made.  

You have until March 31 of the following year to request your reimbursement. If you terminate during the year, you can request
reimbursement of the balance in your Dependent Day Care Account after you terminate if you incur an eligible expense any time during the calendar year, up to the amount you had withheld from your
paycheck. Under the Health Care Account, if you terminate, you can only request reimbursement for expenses incurred through your termination date. See the COBRA section for participation and
continuing contributions.  

If you have a balance left in your Flexible Spending Accounts after the deadline for requesting reimbursement, the IRS requires it to be forfeited. Any
forfeited amounts are applied to the administration of the Flexible Spending Accounts.  

 How to File a Claim  

Health Care Spending Account  

If
you are covered under the WellPoint Preferred PPO or WellPoint Group medical plan, or Standard or Enhanced Dental Plans, expenses which are only partially covered by your plan(s) are automatically
processed under your Health Care Flexible Spending Account. 

You
must submit an FSA claim form for unreimbursed expenses if you do not elect medical and/or dental coverage from WellPoint and for unreimbursed expenses from an HMO or vision care provider (be sure
to include an itemized statement from the provider of services or an explanation of benefits form). 

Dependent Day Care Spending Account  

To
obtain reimbursement for qualifying dependent daycare expenses, you must submit an FSA claim form (be sure to include an itemized statement from the provider of services and tax identification
number—you cannot substitute a cancelled check for a statement from the provider). 

Claim Form  

After
you enroll, claim forms will be mailed to you. However, if you wish, you may obtain a claim form by calling (888) 209-7976 or, if you have access to TAO, you may print a copy from the TAO FSA
bulletin board. You may also obtain a claim form from WorkSite. 

	Mail claims to:	 	UniAccount

P.O. Box 4381

Woodland Hills, CA 91365-4381
	

Fax claims to:	
 	

(818) 234-4730

Reimbursements
are mailed to your home 7-10 business days after we receive the necessary paperwork for your claim. 

You
may view your UniAccount Flexible Spending Account balances and payment history via the Internet using the Blue Cross of California Member Services website. You may obtain a personal
identification number for direct access at the site (http://www.bluecrossca.com/memberservices/). 

Questions  

If
you have questions about enrolling in a Flexible Spending Account, contact the Associate Service Center. If you have questions about filing a claim or reimbursements, please contact UniAccount
directly at (888) 209-7976 or by e-mail at UNIACCOUNT.FSA@WellPoint.com. 

28

   FlexExec  

WellPoint
provides a number of benefit programs for its Officers. The following information briefly outlines your WellPoint benefits. The legal plan documents prevail in any conflict of
interpretation, and the Company reserves the right to modify or terminate the programs at any time without notice. 

In
addition to the FlexPoint benefits, the Company provides the following benefits to Officers: 

	•
	Officer
Physical Exams

	•
	Group
Universal Life Insurance

	•
	Short-Term
Disability

	•
	Long-Term
Disability

	•
	Comprehensive
Executive Nonqualified Retirement Plan 

To
enroll in the Comprehensive Executive Nonqualified Retirement Plan, you need to complete the FlexExec enrollment form and return it to Charles
Thorburn in the WellPoint Compensation Department at 4553 La Tienda Drive, Thousand Oaks, CA 91362, Mail Stop T1-1C7. 

Officer Physical Exams  

In
addition to your medical options under FlexPoint, Vice Presidents and above with at least one year of service participate in the Officer Physical
Exam Program. 

You
are eligible to receive a physical exam at no cost to you according to this schedule: 

	Your Age
 
	 	How Often You Can Have a Physical Exam*
 

	

	44 and younger	 	Every 24 months
	

	45 and older	 	Every 12 months
	

	*
	Any
exceptions to this schedule must be recommended by a physician and approved by the Company. 

WellPoint
recommends medical centers for the physical exams: 

	•
	Cedars-Sinai
Medical Center Executive Medical Services in Los Angeles

	•
	Scripps
Center for Executive Health in La Jolla 

Both
facilities offer a comprehensive one-day program. The findings of your exam will remain confidential between you and your physician. 

To
make an appointment, call the medical center of your choice: 

	Cedars-Sinai Executive

Medical Services	 	(310) 423-2374
	

Scripps Center for

Executive Health	
 	

(858) 626-4460

29

 

Group Universal Life Insurance  

        In addition to your life insurance options under FlexPoint, the Company provides you with a supplemental life
insurance benefit based upon your total compensation (September 1, 2001 base annual salary plus target management bonus). 

	•	 	Vice Presidents and General Managers	 	2 times total compensation
	

•	
 	

Senior Vice Presidents	
 	

3 times total and above compensation

How do I enroll in this coverage?  

All
current Officers who have completed an application for this coverage in the past are automatically covered. If the amount of coverage increases by more than 10% from the prior year due to an
increase in total compensation, the insurance company may require an Officer to go through medical underwriting for the amount over 10% before providing the full coverage increase. 

Newly-hired
Officers will receive an application in the mail from Clarke Bardes Consulting/CRG. Coverage will not take effect until the first of the month following receipt and acceptance of the
application by the carrier. 

How does Universal Life Insurance work?  

In
addition to receiving a fixed life insurance benefit, you also have the opportunity to make additional premium payments to increase the amount of your insurance and/or make investments with the
earnings accumulating on a tax-deferred basis. 

What is the cost of this benefit?  

The
Company pays the entire cost of this life insurance benefit. Your only cost will be the income tax on the premium paid for the coverage. 

What happens at termination?  

You
will receive an individual policy, which can be continued by paying the premium contributions or surrendered for the cash value, if any. 

Who do I contact for additional information?  

Contact
Rick Davenport at (925) 979-3255 with any questions concerning your Group Universal Life Insurance policy. 

Your Disability Coverage  

Short-term
disability (STD) and long-term disability (LTD) insurance work together to provide you with income if you become disabled by illness or injury and are unable to work. Officers are
automatically enrolled in these plans. 

Short-Term Disability  

In
the event you are disabled and unable to perform all the essential duties of your job, the Company will continue your base annual salary for up to 26 weeks. All disabilities are subject to review.
This benefit payment will be reduced by any benefits payable under Workers' Compensation and/or any other state or federal disability benefits you are eligible to receive. 

Benefits
received under this program are considered taxable income. 

Long-Term Disability  

If
you are disabled longer than 26 weeks, you may be eligible for a Long-Term Disability benefit based upon your total compensation (September 1, 2001 benefit salary (see page 23 for definition) plus
2001 target management bonus). 

Your
disability benefits will be subject to pre-existing condition limitations. No benefits will be payable during the first 12 consecutive months of coverage if you become disabled as the result of a
condition for which treatment was rendered, prescribed, or recommended within three months immediately preceding the date your benefit option became effective. 

Amount of Benefit  

	•	 	Vice Presidents and General Managers	 	60% of Compensation
	

•	
 	

Senior and Executive Vice Presidents	
 	

70% of Compensation

What is the cost of this benefit?  

The
Company pays the entire cost of this coverage. As such, if you receive any LTD benefits, they are fully taxable. 

What happens at termination/retirement?  

Coverage
ceases and cannot be continued or converted. 

30

 

Comprehensive Executive Nonqualified Retirement Plan  

This
Plan provides Officers with an opportunity to defer a portion of their compensation for retirement or other future needs. The Plan also provides an opportunity to recover Company contributions
limited due to IRS regulations. 

Eligibility  

Unless
otherwise notified, an Officer of the Company whose base annual salary plus target management bonus exceeds $125,000 per year is eligible to participate in the Plan. Generally, deferral
elections must be made before the calendar year in which the compensation is earned and cannot be changed until the next calendar year. Associates promoted to an Officer position or newly hired
Officers may elect within 30 days to participate in the Plan for the remaining portion of the calendar year. 

Deferral Elections  

There
are six basic components to the Plan. 

1.    Supplemental 401(k) Deferral  

This
component allows you to receive a Company match on eligible compensation when you have reached the maximum match or are not yet eligible for a match under the qualified 401(k) plan. 

This
component works in two ways: 

	•
	It
replaces deferrals limited due to IRS regulations on contributions to the 401(k) plan. For 2002, the IRS limits eligible 401(k) compensation to $200,000
with a maximum contribution of $11,000. You may defer up to 6% of your compensation earned after reaching $200,000 or after deferring $11,000 into the 401(k) plan, whichever occurs first.

	•
	It
allows newly hired Officers to receive a matching contribution during their first year of service. Newly hired Officers may defer up to 6% of eligible
compensation earned before becoming eligible for the 401(k) match. Please note: newly hired Officers who elect to defer under this component need to enroll in the 401(k) Plan
with Vanguard when they reach one year of service in order to continue their contributions and receive the Company match.

2.    Salary Deferral  

This
component allows you to defer up to 60% of your base salary. 

For
example: 

	 
	 	Before March Increase
	 	After March Increase

	Base salary	 	$	140,000	 	$	147,000
	

Base salary deferral election	
 	
 	

20%	
 	
 	

20%
	

Annual deferred	
 	
$	

28,000	
 	
$	

29,400
	

 	
 	
 	

÷ 26	
 	
 	

÷ 26
	

Amount deferred per pay period	
 	
$	

1,076.92	
 	
$	

1,130.77

Using
the above example, before the March increase, you may elect to defer between 1%—60% of $140,000. The deferral will take place on a per-pay-period basis and will reflect the base
salary paid during that pay period. If you elected to defer 20% of the $140,000, you would defer $1,076.92 per pay period. Additionally, if you were to receive a 5% salary increase in March, bringing
your base salary to $147,000, your deferral would increase to $1,130.77 per pay period ($29,400 ÷ 26 = $1,130.77). 

3.    Bonus Deferral  

This
component allows you to defer all or a portion (1%—100%) of your management bonus. This election is for the management bonus that will be earned in the next
calendar year, but not paid until the following year. 

4.    Bonus Restricted Stock Award Deferral  

Under
the Company's bonus plans, if your earned bonus award is more than $3,000 over 150% of the target award, then any amounts in excess of 150% of the target award will be paid in restricted stock,
which generally vests over three years. You may defer all or a portion (1—100%) of the restricted stock award payable to you for the 2002 performance year. This election is for the
management bonus that will be earned in the 2002 calendar year, but not paid until the following year. 

31

 

5.    Car Allowance  

This
component allows you to defer your car allowance. 

	 
	 	 
	 	Annual*

	•	 	Vice Presidents and General Managers	 	$	4,800
	

•	
 	

Senior Vice Presidents	
 	
$	

7,200
	

•	
 	

Executive Vice Presidents and above	
 	
$	

9,600

You
may elect to defer all of this amount. If you do not defer your car allowance, you will receive it as taxable income each pay period over the calendar year. 

You
may also elect to be paid for mileage in lieu of the set dollar car allowance. 

6.    Supplemental Pension Deferral  

This
component replaces deferrals limited due to IRS regulations on contributions to the Pension Accumulation Plan. The Company will automatically contribute 3%, 4%, or 5% (based on service) of your
earnings in excess of $200,000 per year. There is no election necessary. This component has a vesting feature identical to the Pension Accumulation
Plan: if you leave prior to completing five years of credited service, no benefit is payable. 

Plan Options  

Once
you decide to make deferral elections under the Comprehensive Executive Nonqualified Retirement Plan, you have a number of options, which are summarized below. 

Investment Funds  

Money
deferred under the six components of this Plan is invested in an account with Vanguard. The same 11 Vanguard funds offered in the WellPoint 401(k) Retirement Savings Plan are available for your
nonqualified deferrals in this Plan. New participants must make investment elections on the enrollment form. Current participants can change their investment allocation for new contributions or for
existing balances by calling Vanguard at (800) 523-1188. 

Distribution of Benefits  

Officers
currently enrolled in this Plan have made payment elections for their Plan accounts which are on file with the Company. If you are enrolling for the first time, you must elect the timing of
when to receive the deferral account balance and what form of payment you want to receive. Please complete and submit the Distribution and Beneficiary Election Form. Note that the distribution date is
the day the distribution processing begins and not the day you will receive funds. 

The
timing options are: 

	•
	Termination/retirement
date

	•
	Date
of death

	•
	A
specific date (must be at least 12 months from date of election and not later than your 65th birthday)

	•
	The
earliest of your termination/retirement date, date of death or a specific date

	•
	Other:
this option is used when you elect to receive the distribution at different intervals (e.g. $25,000 on 7/1/2004, with the balance at retirement or one
year after termination/retirement). 

The
payment options are: 

	•
	Lump
sum

	•
	Annual
installments not to exceed 15

	•
	Other:
this option is used if you want a combination of the above (e.g. $25,000 in a lump sum with the balance in 10 annual installments). 

Distribution Processing  

The
Company will begin processing your distribution on the date specified in your distribution election. Investments must be sold, money transferred to the trustee, and a check generated by the
trustee must be processed by WellPoint. Please allow a minimum of two weeks after your distribution date to receive your funds. 

32

 

Changing your Distribution Election  

You
may change an existing distribution election by submitting a written request at least 12 months BEFORE you are originally scheduled to receive the distribution. The new election date must be at
least 12 months after the date we receive your new election form. Please contact Charles Thorburn in the WellPoint Compensation Department for a new form. 

Accelerated Distributions  

	•
	Hardship Withdrawal:    If you have an immediate and heavy financial need and have no other
resources reasonably available to you, you may request a hardship withdrawal. The 401(k) provisions regarding hardship withdrawal will be applied. The amount is limited to the portion of your account
attributable to your salary, management bonus, and supplemental 401(k) deferrals.

	•
	Forfeiture:    Absent a demonstration of immediate and heavy financial need, you may elect to
receive 85% of your entire vested account in an early distribution at any time upon 30 days written request. The remaining 15% will be forfeited. If you elect to receive a forfeiture distribution,
your participation in the Plan will be suspended and you may not again participate in the plan until the Plan Year that is at least 12 months following the Plan Year in which such distribution
occurred. 

Withholding  

The
Company will deduct amounts required by law to be withheld for taxes with respect to benefits under this Plan. 

Beneficiary Election  

Officers
currently enrolled in this Plan have a beneficiary election on file. New enrollees must make a beneficiary election. Your beneficiary election may be changed at any time. 

Suspension of Your Salary, Bonus, and Car Allowance Deferral Elections  

You
may suspend your election for the salary, bonus, and car allowance deferral portions of the Plan. You will be eligible to elect deferrals again for the calendar year following 12 months of
suspension. 

You
may limit this suspension to either salary and car allowance deferrals or bonus deferrals; in either case, future elections will only be limited for the suspended deferrals. 

For
the bonus deferral, a suspension will affect multiple bonuses: any bonus deferral that has already been elected and the bonus deferral that would be elected within 12 months of suspension. 

Suspension of Your Supplemental 401(k) Deferral  

You
may separately suspend your election for the supplemental 401(k) deferral. You will be eligible to elect deferrals again for the calendar year following 12 months of suspension. 

33

   Your Balanced Life Benefits  

WellPoint
knows that you want a career, but you also want balance with your personal life. For this reason, the Company provides a wide range of benefit programs to assist you in balancing your life
and career. 

The
following information briefly outlines some of these current benefits. Please refer to your Associate Handbook for more details. The legal plan documents are controlling in any conflict of
interpretation, and the Company reserves the right to modify or terminate the programs at any time without notice. 

Employee Assistance and Work/Life Program  

WellPoint
offers an Employee Assistance and Work/Life Program to help you find solutions to the problems and difficulties of daily life. WellPoint offers its Employee Assistance Program (EAP) free of
cost, through WellPoint Behavioral Health (WBH). This program is available to all associates from date of hire. 

The
EAP provides confidential, professional assistance when personal problems affect your life and work. EAP counseling and referral services can assist you with emotional difficulties, relationship
issues, family concerns, alcohol and drug abuse, and financial and legal concerns. Associates and eligible family members (including domestic partners and their children) may receive up to six
sessions per incident. 

In
addition to offering confidential counseling, the program is designed to help you make the right decisions about your dependent care needs. Work/Life benefits include resources and referrals for
child
care needs and elder care needs offered through Harris Rothenberg International (HRI). Counselors can be reached through your EAP toll-free number. 

EAP
professionals are available 24 hours a day, 7 days a week. For assistance, call the EAP at (888) 777-6665. 

MedCall  

MedCall
is a 24-hour, 7-day a week nurse line. There is no cost for using this service. All associates and their families have access to nurse counselors who can provide a variety of information
including: 

	•
	Assistance
in determining if you need to see a doctor, 
	•
	What
level of care would be the most appropriate (e.g. hospital vs. urgent care facility), 
	•
	Information
on various health conditions and diagnoses, 
	•
	Information
on medical procedures, 
	•
	Information
on various support groups, medications, and possible side effects, and 
	•
	General
health information. 

MedCall
also provides guidance regarding questions you should ask your provider and access to an audio library of over 200 health-related topics. MedCall can be reached at (888) 629-4000. Your custom
MedCall ID # is 1005. 

These
services are available to BCBSGA associates and dependents by calling BlueChoice On Call at (888) 724-BLUE (2583). 

Tuition Assistance  

WellPoint
encourages you to increase your knowledge and develop your career. All active, full-time regular associates who complete six months of service are eligible to request tuition assistance.
Classes must begin after the 6-month waiting period. To participate in the program, applications for tuition assistance must be approved by your supervisor prior to enrolling in any course. 

The
benefit is 75% of tuition and related expenses up to a $3,000 maximum reimbursement per year. This benefit may be reduced by any grants or scholarships you receive. (Per current IRS rules,
reimbursement for undergraduate courses is not included in income, but graduate level course reimbursement is taxable income.) 

34

 

Academic
courses and degree programs either must be related to a currently held job or to a position at the Company for which you are preparing to qualify. Courses must be taken at an accredited
institution based in the U.S. Upon successful completion of the course (a "C" grade or better for undergraduate courses and a "B" grade or better for graduate courses-or "pass" where the course is
"pass/fail"), you will be reimbursed for registration, tuition, laboratory fees, required books, and required software. Requests for reimbursement must be completed within 90 days of completing the
course. Tuition assistance applications are available at your local Human Resources office. 

For a more detailed description of the policy on the Tuition Assistance Program, please refer to the TAO bulletin board under _HR_INFORMATION or the Intranet at
WorkSite>Department Links>Human Resources>Library and Forms>Training and Education. If you have any questions, contact your supervisor or the Associate Service Center at (877) 342-5272.  

 Work On Wellness (WOW)  

Practicing
a healthy lifestyle cuts down on stress and reduces the likelihood of illness and injury. To support this philosophy, the Company offers Work On Wellness (WOW) to all active, regular
full-time
associates following six months of active employment. WOW provides reimbursement for individual membership dues in a recognized health club, smoking cessation program or weight management program, up
to a maximum of $35 per month. Reimbursement is taxable income and is treated as "other" income and reported on your W-2 form. Reimbursement is made quarterly through your paycheck. 

You
must submit a WOW reimbursement form to the Associate Service Center within 30 days of the close of the calendar quarter for which you are requesting reimbursement. You may print a copy of the WOW
form from HR Information on TAO and on WorkSite. 

Time Off  

Time
off includes Company holidays and paid time off ("PTO"), which can be used for vacation, illnesses, leaves of absence, and other reasons. 

Holidays  

WellPoint
provides eligible Officers 10 paid Company holidays each year. The scheduled days vary somewhat each year because holidays fall on different days of the week from one year to the next. The
Company holiday schedule for 2002 is in the Associate Handbook. 

Paid Time Off  

The
Officers' paid time off accrual schedule will be communicated in the 2002 Associate Handbook. 

Leaves Of Absence  

The
Company provides different leave plans to accommodate associates when certain situations arise that would temporarily make working unduly burdensome. The plans include Medical/Pregnancy Disability
Leave, Family Care/Bonding Leave, Military Leave, and Personal Leave. The Company administers leaves of absence in accordance with the Family Medical Leave Act, the Americans with Disabilities Act,
and all other federal and state laws governing leaves of absence. The plans are discussed in detail in your Associate Handbook. 

35

 

Your Financial Future and Retirement Benefits  

Pension Accumulation Plan  

On
the January 1 or July 1 following one year of service and reaching age 21, you automatically participate in the Pension Accumulation Plan. Benefits under the Plan are fully paid by the Company and
are based on earnings and length of service. For new Officers, the Company contribution is generally 3% of eligible earnings for less than 10 years of service; 4% of earnings during years 10 through
19; and 5% of earnings for any years of service after 20. Officers who complete five years of credited service are fully vested. There is no partial vesting for less than five years of service.
Statements will be mailed to your home address on an annual basis. 

WellPoint 401(k) Retirement Savings Plan  

WellPoint's
401(k) Retirement Savings Plan is a retirement plan designed to help you save for long-term financial goals, especially retirement. You contribute to the Plan through automatic payroll
deductions and benefit from special tax advantages. 

Contributions  

You
may start contributions on the first of the month following one month of completed service. An enrollment package will be mailed to your home from Vanguard, our plan trustee. Please refer to the
enrollment material, Summary Plan Description/ Prospectus, and plan document for a description of this Plan and before making any decision to participate in the Plan. 

Contributions
are made on a pretax basis and are based on your eligible compensation. You can contribute between 2% and 15% of your eligible compensation, subject to the following limitations: 

	•
	Officers
who earn more than $85,000 are considered by the IRS to be highly compensated. This limit will be adjusted periodically by the IRS. This plan
currently limits highly compensated Officers to a maximum contribution of 8% of eligible compensation and may be adjusted as necessary.

	•
	The
IRS limits pretax contributions to an annual limit of $11,000 in 2002. This limit will be adjusted periodically by the IRS.

	•
	You
may continue your contributions, subject to the $11,000 limit, until your eligible earnings reach $200,000, or as adjusted by the IRS. 

Company Match  

Generally,
after one year of employment, the Company matches a portion of your eligible contributions. Beginning with the pay period in which you reach one year of employment, the Company will
generally match 75% on the first 6% of your eligible earnings contributed to the plan. One-third of the Company match will be invested in the WellPoint Common Stock Fund. You determine the investment
direction for the rest of the Company match. In order to maximize the Company match, you must contribute 6% to the Plan. 

	Example:	 	 
	

Eligible Biweekly

Compensation:	
 	

$400
	Contribution of 6%:	 	$24
	Company Match of 41/2%	 	$18
	(75% of 6%)	 	($6 invested in WellPoint

Common Stock; $12 you

choose how to invest)

36

 

Vesting  

You
are 100% vested in pretax contributions as well as the Company matching contributions. So, when you retire or terminate employment, you may receive all the assets in your Plan account. The portion
of the Company match directed to the WellPoint Common Stock Fund must be maintained in that fund for the period specified in the Plan. 

Investment Choices  

When
you enroll in the Plan, you choose how to invest your contributions. There are many investment choices available. You may change your fund selection or transfer contributions between funds daily
by calling Vanguard's VOICE Network at (800) 523-1188, 24 hours a day or by visiting Vanguard's web site at www.Vanguard.com. If you prefer, a Vanguard associate can
assist you with investment changes during normal business hours (M-F from 8:30 a.m. to 9 p.m. Eastern Time). To access your account, you must have your Social Security number and your assigned
Personal Identification Number (PIN). 

Access to Your Savings  

The
Plan is designed to encourage long-term savings, but you may access money from the Plan under certain circumstances. The Plan offers loans and hardship withdrawals. Please see your enrollment
materials and the Summary Plan Description/Prospectus for details and before making any decision to participate in the Plan. 

Employee Stock Purchase Plan  

You
may enroll in the Employee Stock Purchase Plan if you are employed on the day preceding the first day of the offering period. Enrollment is twice a year—in December, reflecting the
January to June offering period, and in June, reflecting the July to December offering period. At the end of each offering period, your contributions are used to purchase WellPoint Common Stock at a
rate discounted from the market price at the time of purchase. 

Shares
are purchased at 85% of the lower of the Company stock price on the first day of the offering period or on the last day of the offering period. 

You
may choose to keep or sell your shares and are responsible for brokerage fees, capital gains, and any other costs associated with the sale. 

You
should refer to the Summary Plan Description/ Prospectus for a complete description of the Plan before making a decision to participate. 

37

 

Mid-Year Changes  

Generally,
you will not be able to change your FlexPoint elections until the next Open Enrollment period. However, IRS rules and the plans allow you to
change your elections during the year if you have a qualified mid-year change. 

Qualified Mid-Year Changes  

Examples
of qualified mid-year changes for which you can change some of your benefits during the year include: 

	•
	Marriage,
change in domestic partner status, divorce, legal separation, or annulment

	•
	Birth
or adoption of a child, or a change in a child custody arrangement

	•
	Death
of your spouse/domestic partner or dependent

	•
	A
change in your spouse's/domestic partner's/dependent's employment status

	•
	A
significant change in your spouse's/domestic partner's/dependent's employer's health care coverage, not including Open Enrollment

	•
	A
change in a dependent's eligibility status because of marriage, age, or loss of dependent status for federal tax purposes

	•
	A
change in the cost of your dependent daycare

	•
	Unpaid
leaves of absence 

The
coverage change must be consistent with the qualifying event. 

If
a qualified mid-year change occurs, it is your responsibility to contact the Associate Service Center within 31 days of the qualifying event. After you report the event to the Associate Service
Center, you will receive an Enrollment Worksheet for your use in making changes to your benefits. Failure to act promptly could result in not having coverage for which you or your dependents would
otherwise be eligible. 

Continuing
coverage for a dependent who is no longer eligible (i.e. divorce, termination of domestic partnership, a dependent child reaching the maximum age, etc.), is a violation of Company policy
and subject to disciplinary action up to and including termination of employment. WellPoint pays for a portion of coverage for these individuals. You may be liable for premiums and all expenditures
including, but not limited to, claims costs and any fees necessary to be reimbursed for any paid claims, as well as legal fees. 

If
you move to an area where an HMO, Dental Net, or a PPO is not available, you must change your option to one that is available in your new location. However, no other benefit changes will be
allowed. 

The
chart on the following pages shows the changes you can make during the year. For allowable domestic partner changes, refer to the Domestic Partner Guide. 

38

   Qualified Mid-Year Changes  

	Event*
 
	 	Election Changes You Can Make

Within 31 Days of the Event
 
	 	Coverage/Change

Effective Date
 
	 	Documentation Required
 

	You get married	 	•	 	Enroll yourself, spouse, and your spouse's dependent children in Medical, Dental, and/or Vision (may not change existing plans)	 	Date of the event	 	Copy of marriage certificate
	 	 	•	 	Cancel Medical, Dental, and/or Vision for yourself and dependent children if you are electing coverage under your new spouse's plan	 	 	 	 
	 	 	•	 	Add Spouse Life	 	 	 	 
	 	 	•	 	Enroll in/increase Health Care Spending Account	 	 	 	 
	 	 	•	 	Enroll in/cancel/change amount of contribution to Dependent Day Care Spending Account	 	 	 	 
	

	You get divorced, legally separated, or have your marriage annulled	 	•	 	Enroll yourself and dependent children in Medical, Dental, and/or Vision if you and your dependent children lose coverage under your former spouse's plan(s)	 	Date of the event	 	Copy of court documents
	 	 	•	 	Required to cancel spouse in Medical, Dental, and Vision (COBRA coverage will be available for your spouse)	 	 	 	 
	 	 	•	 	Required to cancel Spouse Life and Child Life for stepchildren	 	 	 	 
	 	 	•	 	Enroll in/change contribution to Health Care Spending Account	 	 	 	 
	 	 	•	 	Enroll in/cancel/change amount of contribution to Dependent Day Care Spending Account	 	 	 	 
	

	You gain a dependent	 	•	 	Enroll yourself, spouse, and dependent	 	Date of the event	 	Copy of birth certificate
	child through birth,	 	 	 	children in Medical, Dental, and/or Vision	 	 	 	from hospital, copy of
	adoption or placement	 	•	 	Add new dependent child to existing Child	 	 	 	adoption papers, or copy
	for adoption, or gain	 	 	 	Life coverage or enroll an only child	 	 	 	of court documents for
	legal guardianship	 	•	 	Enroll in/increase Health Care Spending Accounts	 	 	 	legal guardianship
	 	 	•	 	Enroll in/increase Dependent Day Care Spending Account	 	 	 	 
	

	Your and/or your	 	•	 	Required to cancel dependent child in	 	End of the month	 	Copy of court documents
	spouse's dependent child	 	 	 	Medical, Dental, Vision, and Child Life	 	 	 	for legal custody
	becomes ineligible (i.e.	 	 	 	(may be eligible for COBRA)	 	 	 	None required for marriage,
	marriage, over maximum	 	•	 	Cancel (if ineligible dependent is	 	 	 	over maximum age, etc.
	age, becomes a WellPoint associate, etc.) or you lose legal custody of a child	 	 	 	only person covered) or decrease Dependent Day Care Spending Account	 	 	 	 
	

	Your spouse dies	 	•	 	Required to cancel spouse in Medical, Dental, Vision, and Spouse Life	 	Date of death	 	Copy of death certificate
	 	 	•	 	Enroll yourself and dependent children in Medical, Dental, Vision, and Health Care Spending Account if you and your dependent children lose coverage under your deceased spouse's plan(s)	 	 	 	 
	 	 	•	 	Change amount of Health Care Spending Account	 	 	 	 
	 	 	•	 	Enroll in/change amount of Dependent Day Care Spending Account	 	 	 	 
	

	Your dependent child dies	 	•	 	Required to cancel dependent child in Medical, Dental, Vision, and Child Life	 	Date of death	 	Copy of death certificate
	 	 	•	 	Decrease Health Care Spending Account	 	 	 	 
	 	 	•	 	Decrease Dependent Day Care Spending Account	 	 	 	 

	*
	For allowable domestic partner changes, refer to the Domestic Partner Guide. 

39

 

	Event*
 
	 	Election Changes You Can Make

Within 31 Days of the Event
 
	 	Coverage/Change

Effective Date
 
	 	Documentation Required
 

	Your spouse begins	 	•	 	Cancel yourself, spouse, and/or dependent	 	Date of the event	 	Documentation from spouse's
	employment or increases	 	 	 	children in Medical, Dental,	 	 	 	employer (i.e. benefits
	his/her work hours and	 	 	 	and/or Vision	 	 	 	enrollment form,
	gains Medical, Dental,	 	•	 	Change contribution to Health Care Spending	 	 	 	employment offer letter, etc.)
	and/or Vision coverage	 	 	 	Account	 	 	 	 
	through his/her employer	 	•	 	Enroll in/increase Dependent Day Care Spending Account	 	 	 	 
	

	Your spouse ends	 	•	 	Enroll yourself, spouse, and/or dependent	 	Date of the event	 	Documentation from spouse's
	employment or loses	 	 	 	children in Medical, Dental,	 	 	 	employer (i.e. COBRA
	eligibility for benefits and	 	 	 	and/or Vision	 	 	 	notice, HIPAA notice, etc.)
	you/your spouse/your	 	•	 	Enroll in/change contribution to Health Care	 	 	 	 
	dependent children lose	 	 	 	Spending Account	 	 	 	 
	Medical, Dental, and/or Vision coverage through his/her employer	 	•	 	Cancel/decrease Dependent Day Care Spending Account	 	 	 	 
	

	Your and/or your spouse's	 	•	 	Enroll dependent in Medical, Dental, and/or	 	Date of the event	 	Documentation from
	dependent ends employment	 	 	 	Vision	 	 	 	dependent's employer
	or loses eligibility for benefits through his/her employer	 	•	 	Change contribution to Health Care Spending Account	 	 	 	(i.e. COBRA notice, HIPAA notice, etc.) and proof of full-time student status
	

	Your spouse or dependent child begins full-time employment at WellPoint	 	•	 	Required to cancel Spouse/Child Life	 	Date spouse or dependent child qualifies for benefits	 	None—Provide name and Social Security Number of spouse/dependent child
	

	Your and/or your spouse's	 	•	 	Cancel Medical, Dental, Vision, and Child	 	Date of the event	 	Documentation from
	dependent's dependent	 	 	 	Life for dependent child	 	 	 	employer (i.e. benefits
	child begins employment	 	•	 	Change contribution to Health Care Spending	 	 	 	form, employment offer
	enrollment or increases work hours and gains	 	 	 	Account	 	 	 	letter, etc.)
	coverage through his/her employer	 	 	 	 	 	 	 	 
	

	You move outside HMO or PPO Service Area	 	•	 	Required to elect new Medical plan in new location	 	Date of the event	 	Address change
	

	You move outside Dental Net Service Area	 	•	 	Enroll in new Dental plan	 	Date of the event	 	Address change
	

	Your job status changes from	 	•	 	Enroll in Medical, Dental, Vision, Employee	 	First of the month	 	None—Human Resources
	part-time to full-time	 	 	 	Life, AD&D, Spouse Life, Child Life,	 	following job	 	action
	 	 	 	 	STD, and LTD	 	status change	 	 
	 	 	•	 	Enroll in/increase Health Care Spending Account	 	 	 	 
	 	 	•	 	Enroll in/increase Dependent Day Care Spending Account	 	 	 	 
	

	Your job status changes from	 	•	 	Enroll yourself, spouse, and dependent	 	First of the month	 	None—Human Resources
	part-time (under 20	 	 	 	children in Medical	 	following job	 	action
	hours/week) to part-time at	 	•	 	Enroll in Health Care Spending Account	 	status change	 	 
	least 20 hours/week	 	•	 	Enroll in Dependent Day Care Spending Account	 	 	 	 
	

	Your job status changes from	 	•	 	Change Medical plan	 	First of the month	 	None—Human Resources
	full-time to part-time (at least	 	•	 	Required to cancel Dental, Vision, STD, LTD,	 	following job	 	action
	20 hours/week)	 	 	 	Employee Life, AD&D, Spouse Life, and	 	status change	 	 
	 	 	 	 	Child Life (COBRA may be available)	 	 	 	 
	 	 	•	 	Enroll in/cancel/change contribution to Health Care Spending Account	 	 	 	 
	 	 	•	 	Cancel/decrease Dependent Day Care Spending Account	 	 	 	 
	

	Your job status changes from full-time to part-time (less than 20 hours/week)	 	•	 	Required to cancel Medical, Dental, Vision, STD, LTD, Employee Life, Spouse Life, Child Life, Health Care and Dependent Day Care Spending Account (COBRA may change be available)	 	First of the month following job status	 	None—Human Resources action

Important Note: The allowable changes are permitted only if they are consistent with and on account of your
change in status as determined under IRS regulations.

	*
	For allowable domestic partner changes, refer to the Domestic 40 Partner Guide 

40

   Continuing Health Care Coverage ("COBRA")  

This
is a summary of your rights and obligations under the COBRA continuation coverage provisions. Both you and your spouse, if any, should take the time to read this notice
carefully. Domestic partners and children of domestic partners are not eligible for COBRA continuation. 

COBRA
requires that most Officers of WellPoint and its related companies and their families receive the opportunity for a temporary extension of health care coverage, called "continuation coverage,"
at group rates in certain instances where coverage under the WellPoint Companies' Group Health Plans ("Health Plans") would end. For this purpose, the term "Health Plans" includes the WellPoint
Companies' medical, dental, vision, employee assistance, and health care flexible spending account plans, and the term "qualified beneficiary" is used below to refer to individuals who are eligible to
receive COBRA continuation coverage. 

Qualifying Events For Officers  

If
you are an Officer of the WellPoint Companies covered by a Health Plan, you have the right to choose COBRA continuation coverage if you lose your Health Plan coverage because of the following: 

	•
	A
reduction in your hours or employment, or

	•
	The
termination of your employment (for reasons other than gross misconduct on your part). 

Qualifying Events for Spouse and Dependent Children  

If
you are the spouse or a dependent child of an Officer covered by a Health Plan, you have the right to choose continuation coverage for yourself if you lose coverage for any of the following
reasons: 

	•
	The
death of your spouse

	•
	A
termination of your spouse's employment (for reasons other than gross misconduct) or reduction in your spouse's hours of employment

	•
	Divorce
or legal separation from your spouse

	•
	Your
spouse becomes entitled to Medicare

	•
	You
reach the maximum age allowed to be considered a dependent child

	•
	You
are no longer considered a dependent child. 

There
is no COBRA continuation coverage for domestic partners or their children. 

Deadline for Election  

When
the Plan Administrator is notified that one of these qualifying events has happened, the Administrator will, in turn, notify you that you have the right to choose continuation coverage. Under
COBRA, you have 60 days from the date you receive the notice or 60 days from the date that you would lose coverage because of one of the qualifying events described above (if later) to inform the Plan
Administrator that you want continuation coverage. If you do not choose continuation coverage, your group Health Plan coverage will end. 

Type of Coverage  

If
you choose continuation coverage, the WellPoint Companies are required to give you coverage which, as of the time coverage is being provided, is identical to the coverage provided under the Health
Plan to similarly situated Officers or family members. 

Length of Coverage  

COBRA
requires that you be afforded the opportunity to maintain continuation coverage for 36 months unless you lost Health Plan coverage because of a termination of employment or reduction in hours.
In that case, the required continuation coverage period is 18 months. 

The
18-month period may be extended to 29 months if a qualified beneficiary is determined by the Social Security Administration to be disabled (for Social 

41

 

Security
disability purposes) at any time during the first 60 days of COBRA coverage. This 11-month extension is available to all individuals who are qualified beneficiaries due to a termination or
reduction in hours of employment. To benefit from this extension, a qualified beneficiary must notify the Plan Administrator of that determination within 60 days and before the end of the original
18-month period. The affected individual must also notify the Plan Administrator within 30 days of any final determination that the individual is no longer disabled. 

The
18- or 29-month period may be extended if other qualifying events (for example, divorce, death, or entitlement to Medicare) occur during the period. In no event will coverage last beyond 36 months
from the date of the qualifying event that originally made you eligible to elect COBRA continuation coverage. 

A
child who is born to or placed for adoption with the covered Officer during a period of COBRA coverage will be eligible to become a qualified beneficiary if the Plan Administrator is notified within
31 days of the birth or placement for adoption. 

Early Termination of Coverage  

COBRA
provides that your continuation coverage may be shortened for any of the following five reasons: 

	•
	The
WellPoint Companies no longer provide group health coverage to any of their associates;

	•
	The
premium for continuation coverage is not paid on time;

	•
	The
qualified beneficiary becomes covered under another group health plan that does not contain any exclusion or limitation for any pre-existing condition
that affects the qualified beneficiary;

	•
	The
qualified beneficiary becomes entitled to Medicare;

	•
	The
qualified beneficiary has already received 18 months of coverage due to disability, and there has been a final determination that the qualified
beneficiary is no longer disabled. 

The
Plan Administrator reserves the right to terminate your COBRA coverage retroactively if you are determined to be ineligible for COBRA. 

Cost of Coverage  

You
do not have to show that you are insurable to choose continuation coverage. However, the law provides for payment by the qualified beneficiary of 100% of the premium for continuation coverage
plus an administrative fee. The cost of continuation will be 102% of the premiums. However, if you are eligible to extend continuation of coverage for an additional 11 months due to disability, the
cost of continuation for any additional months will be 150% of the premiums. There is a grace period of 30 days for the regularly scheduled premium. 

Cancellation for Non-Payment  

	•
	Premiums
are due on the last day of the calendar month preceding coverage.

	•
	Coverage
will be cancelled if payment is not received within 30 days of the due date.

	•
	It
is the participant's responsibility to make sure premiums are received by the due date, allowing sufficient mail time.

	•
	Once
coverage is cancelled for non-payment, it will not be reinstated. 

Additional Information  

If
you have any questions about COBRA, please contact the Associate Service Center. 

42

 

Important Information  

Actively At Work  

If
you are not actively at work on a full-time basis on the day your coverage or an increase in your benefits would otherwise begin, then your coverage or an increase in benefits will not begin until
the date you return to active work on a full-time basis. 

If
you elect a medical plan offered by WellPoint, coverage will become effective under the Plan even if you are hospitalized or on medical leave on the effective date. 

The Health Insurance Portability and Accountability Act of 1996 (HIPAA)  

Pre-existing
conditions exclusions have been eliminated from the WellPoint Preferred and Group Medical Plans (for pre-existing conditions on LTD/STD, please see page 30). Special enrollment provisions
for associates declining medical coverage have been adopted. 

Special Enrollment Rights  

If
you are declining enrollment for yourself or your dependents because of other health insurance coverage, you may be able to enroll yourself or your dependents in the future in a medical plan
offered by WellPoint, provided that you request enrollment within 30 days after your other coverage ends. 

In
addition, if you have a new dependent or other person eligible under our plans as a result of marriage, domestic partnership, birth, adoption, or placement for adoption, you may be able to enroll
yourself and other eligible persons, provided that you request enrollment within 31 days after the marriage, birth, adoption, or placement for adoption. 

Newborn's and Mother's Protection Act  

The
minimum stay for mothers and newborn children is 48 hours following a normal delivery and 96 hours following a cesarean section. Providers are not required to obtain authorization from the Plans
or the insurance issuer for prescribing a length of stay within the above periods. 

Women's Health and Cancer Rights Act of 1998  

The
Women's Health and Cancer Rights Act of 1998 was enacted on October 21, 1998 and requires that all health plans cover post-mastectomy breast surgery if they provide medical and surgical coverage
for mastectomies. If you and/or your eligible dependents receive these benefits under a WellPoint-sponsored medical plan, the plan must cover: 

	•
	Reconstruction
of the breast on which the mastectomy was performed;

	•
	Surgery
and reconstruction of the other breast to produce a symmetrical appearance;

	•
	Prostheses;
and

	•
	Treatment
for physical complications of all stages of mastectomy, including lymphedemas. 

Benefits
required under the Women's Health and Cancer Rights Act will be provided in consultation between the patient and attending physician. These benefits are subject to the same health plan
deductibles, copayments, and coinsurance that apply to any other benefit under the specific plan and cannot be denied or reduced on the grounds that they are cosmetic in nature or that they otherwise
do not meet the plan's definition of "medically necessary." 

If
you are enrolled in an HMO offered by WellPoint, please be aware that several states have enacted similar laws requiring coverage for treatment related to mastectomies. If the similar law of the
state in
which your HMO is located is more generous than the federal law, your benefits will be paid in accordance with your state's law. 

43

   Important Telephone Numbers  

	Associate Service Center	 	(877) 342-5272
	

	Medical	 	 
	

	 	 	WellPoint Preferred PPO	 	(800) 234-0111
	

	 	 	WellPoint Group	 	(800) 234-0111
	

	 	 	BCBSGA PPO	 	(800) 441-2273
	

	HMOs	 	 
	

	 	 	CA:	 	Blue Cross HMO	 	(800) 234-0111
	

	 	 	CT:	 	BlueCare Health Plan	 	(800) 922-1742 in CT;

(800) 426-8531 elsewhere
	

	 	 	GA:	 	Blue Choice Healthcare	 	(800) 441-2273
	

	 	 	IL:	 	UNICARE HMO (Illinois)	 	(800) 234-0111
	

	 	 	MA:	 	HMO Blue	 	(800) 588-5509
	

	 	 	MI:	 	Blue Care Network of S.E. Michigan	 	(800) 662-6667
	

	 	 	TX:	 	HMO Blue Cross (Dallas/Ft. Worth)	 	(888) 558-2393
	

	 	 	 	 	HMO Blue Texas (Houston)	 	(888) 882-2390
	

	 	 	VA:	 	HealthKeepers of Virginia	 	(800) 421-1880
	

	Dental	 	 
	

	 	 	Dental Net	 	(800) 627-0004
	

	 	 	WellPoint Standard Dental	 	(800) 627-0004
	

	 	 	WellPoint Enhanced Dental	 	(800) 627-0004
	

	 	 	BCBSGA Dental	 	(800) 441-2273
	

	Vision	 	 
	

	 	 	VSP	 	(800) 622-7444
	

	 	 	LensCrafters (BCBSGA associates)	 	(800) 377-6436
	

	UniAccount (Flexible Spending Accounts)	 	(888) 209-7976
	

	MedCall (ID # 1005)	 	(888) 629-4000
	

	BlueChoice On Call (BCBSGA associates)	 	(888) 724-BLUE (2583)
	

	Group Universal Life Insurance	 	(925) 979-3255
	

	Comprehensive Nonqualified Retirement Plan	 	(805) 557-5801
	

	Employee Assistance and Work/Life Program	 	(888) 777-6665
	

	Vanguard's Voice Network	 	(800) 523-1188
	

	Employee Stock Purchase Plan	 	 
	

	 	 	AST—Stock Plan Administrator	 	(888) 980-6456
	

	 	 	National Discount Brokers	 	(888) 302-7764
	

44

 

Important Addresses for Claims  

Medical—PPO  

WellPoint
Health Networks Inc.

P.O. Box 4109

Woodland Hills, California 91365

Attn: Associate Claims Unit 

Dental  

WellPoint
Health Networks Inc.

P.O. Box 9066

Oxnard, California 93031-9066

Attn: Associate Claims Unit 

Vision  

Vision
Service

Plan P.O. Box 997100

Sacramento, California 95899-7100 

BCBSGA Associates  

Medical and Dental

Blue Cross and Blue Shield of Georgia

P.O. Box 9907

Columbus, GA 31908-6007 

Vision

BCBSGA Vision

P.O. Box 9907

Columbus, GA 31908-6007 

Pharmacy Drugs  

WellPoint
Pharmacy

P.O. Box 4165

Woodland Hills, California 91365-4165 

Spending Accounts  

UniAccount

P.O. Box 4381

Woodland Hills, California 91365-4381 

45

QuickLinks

How to Use This Guide

Table of Contents

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