Exhibit 8.1
November 30, 2000
Mr. John A. O'Rourke
President & CEO
Blue Cross Blue Shield of Missouri
1831 Chestnut Street
St. Louis, MO 63103
Mr. John A. O'Rourke
Chairman, President & CEO
RightCHOICE Managed Care, Inc.
1831 Chestnut Street
St. Louis, MO 63103
The Missouri Foundation For Health
c/o Mr. Paul C. Wilson, Chairperson
221 West High Street
Jefferson City, MO 65101
Subject: BCBSMo Settlement Agreement and Plan of Reorganization:
Expected Private Letter Ruling to BCBSMo
Ladies and Gentlemen:
You have requested the opinion of PricewaterhouseCoopers, LLP
("PwC") regarding certain federal income tax issues relating to
the Transfer and Assumption Transaction(1) not addressed in the
private letter ruling expected to be issued by the Internal
Revenue Service (the "IRS") to Blue Cross and Blue Shield of
Missouri ("BCBSMo"), regarding the federal income tax
consequences of certain elements of a series of transactions that
will be consummated pursuant to the Settlement Agreement and Plan
(the "PLR"). That series of transactions include, among others,
the Transfer and Assumption Transaction, the Charter Conversion
Transaction, the Reincorporation Merger Transaction, and the
RIT/New RIT Merger Transaction, which are collectively referred
to herein as the "Reorganization."
Based on the information and representations contained in the
request for rulings dated May 17, 2000, as supplemented August 2,
2000, August 23, 2000, October 13, 2000, October 25, 2000,
October 31, 2000, November 16, 2000 and November 22, 2000
(collectively, the "Ruling Request"), the IRS has verbally
informed us that, when issued, the PLR will hold that the
Reorganization will be treated (for federal income tax purposes)
as if it occurred as follows: (i) Charter Conversion
Transaction, (ii) Reincorporation Merger Transaction, (iii)
RIT/New RIT Merger Transaction, and (iv) Transfer and Assumption
Transaction as if directly between New RIT and its wholly owned
subsidiary, HALIC, as the last step in the Reorganization.
Also based on the Ruling Request, the PLR is expected to hold,
among other things, that (a) the Charter Conversion Transaction
qualifies as a reorganization described in Section 368(a)(1)(E);(2)
and (b) the Transfer and Assumption Transaction qualifies as an
exchange under Section 351 and no gain or loss will be recognized
by New RIT or HALIC. The PLR will not address the federal tax
treatment of the Reincorporation Merger Transaction or the
RIT/New RIT Merger Transaction because, due to IRS ruling policy,
no rulings were requested with respect to those elements of the
Reorganization.
Because the PLR is expected to conclude that the Transfer and
Assumption Transaction is a section 351 exchange occurring
directly between New RIT and HALIC (at a time when HALIC is a
wholly owned subsidiary of New RIT), the PLR is expected to
conclude specifically that the Transfer and Assumption
Transaction will not be taxable to New RIT (citing Section 351(a)
and Rev. Rul. 94-45(3)) and HALIC (citing Section 1032 and,
possibly, Lessinger v. Commissioner(4)), the only parties to that
transaction under the IRS' recharacterization.
Assuming that the IRS rules as requested (a copy of the requested
ruling letter is attached), without any material modifications,
and in light of the recharacterization set forth above, it is our
opinion that the Transfer and Assumption Transaction also will
not result in federal income tax to BCBSMo (which will no longer
be in existence at the time of the Transfer and Assumption
Transaction, as recharacterized, because it will have merged into
New RIT), RIT (which also will no longer be in existence at the
time of the Transfer and Assumption Transaction, as
recharacterized, because it will have merged into New RIT), the
RIT Public Shareholders (who will own stock of New RIT at this
point), or the Foundation (which also will own stock of New RIT
at the point in time of the Transfer and Assumption Transaction,
as recharacterized), as those entities and persons not
specifically the subject of the IRS' conclusions in the PLR are
not involved in the Transfer and Assumption Transaction as,
recharacterized for federal income tax purposes by the IRS .
I.LIMITATIONS
1. In rendering our opinion herein ("the Tax Opinion Letter"), we
have considered applicable provisions of the Code, the
Regulations, pertinent judicial authorities, rulings of the IRS
and such other tax authorities in effect as of the date of this
letter as we considered relevant. It should be noted that such
tax authorities are subject to change at any time and, in some
circumstances, with retroactive affect. A material change in any
of the authorities upon which our opinion is based could
adversely affect our opinions. PwC assumes no obligation to
update or modify the Tax Opinion Letter to reflect any
developments that occur after the date of the Tax Opinion Letter.
2. The opinions set forth above are based on the accuracy and
completeness of (a) the representation letters of BCBSMo and RIT
dated June 14, 2000 and the Foundation dated June 14, 2000, which
have been affirmed as of November 30, 2000, (b) the Ruling
Request, and (3) the information, documents, facts and
assumptions that we have included or referenced in the Tax
Opinion Letter.
3. The opinions set forth in this Tax Opinion Letter are not
binding on the IRS or the courts, and there can be no assurance
that the IRS or a court of competent jurisdiction will not
disagree with such opinions.
4. PwC has assumed (without independent verification) that all
signatures on all documents presented to it are genuine, that all
documents submitted to it as originals are accurate originals
thereof, that all information submitted to it was accurate and
complete, and that all persons executing and delivering originals
or copies of documents examined by it were competent to execute
and deliver such documents.
5. PwC is expressing its opinions only as to the matters
expressly set forth in this Tax Opinion Letter. No opinion
should be inferred as to any other matters. Specifically, no
opinion is offered about the tax treatment of the Payment for
Public Purpose pursuant to which BCBSMo will pay to the
Foundation the amount of $12,780,000 in partial satisfaction of
claims by various parties, the $175,000 payment by New RIT in
partial satisfaction of any obligation of BCBSMo resulting from
the Charter Conversion Transaction, or the $50,000 payment by
BCBSMo to the Foundation for the reimbursement of Foundation
nominating committee expenses. Also, no opinion is expressed as
to the tax consequences of any of the transactions under any
United States state or local tax law, or any non-United States
tax law.
6. Any inaccuracy in, or breach of, any of the aforementioned
statements, representations, and assumptions, could adversely
affect our opinion.
PwC hereby consents to the filing of this Tax Opinion Letter as
an exhibit to the Registration Statement and to the reference to
this Tax Opinion Letter in the Prospectus/Proxy Statement that
forms a part of the Registration Statement.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
DRM/tld
Enclosure
_______________________________
(1) Capitalized terms have the meanings set forth in the Tax
Opinion Letter dated June 14, 2000, unless indicated otherwise.
(2) All Section references are to the Internal Revenue Code of
1986, as amended (the "Code").
(3) 1994-2 C.B. 39.
(4) 872 F.2d 519 (2d Cir. 1989).
