SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
October 14, 1999
Date of Report (Date of earliest event reported): (October 8, 1999)
RIGHTCHOICE MANAGED CARE, INC.
(Exact Name of Registrant as Specified in Its Charter)
MISSOURI
(State or Other Jurisdiction of Incorporation)
1-13248 43-1674052
(Commission File Number) (I.R.S. Employer Identification No.)
1831 Chestnut Street, St. Louis, Missouri 63103-2275
(Address of principal executive offices) (Zip Code)
314-923-4444
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Items 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
On October 8, 1999, the Special Master appointed by
the Circuit Court of Cole County, Missouri, recommended that
the March 1999 modified settlement agreement of litigation
(described in the Registrant's prior SEC filings) be
disapproved. The March 1999 settlement agreement is intended
to resolve outstanding litigation and regulatory issues,
create Missouri's largest health care foundation, the
Missouri Foundation for Health, and result in RightCHOICE's
reorganization as a fully for-profit Blue Cross and Blue
Shield licensee. The settlement agreement was reached by
Blue Cross and Blue Shield of Missouri, the Registrant,
the Missouri Attorney General, the Missouri Department
of Insurance and 100 consumer organizations
representing more than one million Missourians and was filed
with the Circuit Court on March 15, 1999.
On September 9, 1999, the Missouri Supreme Court
ordered that the Circuit Court of Cole County, Missouri,
rule on the settlement on or before November 9, 1999.
The underlying litigation giving rise to the Settlement
Agreement (described in the Registrant's prior SEC filings)
remains pending in the Supreme Court of Missouri.
The Registrant's Press Release, dated October 11, 1999,
is attached as Exhibit 99(a) hereto and is incorporated
herein by reference.
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements
Pro Forma Financial Statements and Exhibits.
(a) - (b) Not applicable.
(c) Exhibits Required by Item 601 of Regulation S-K:
99(a) Press Release of Registrant dated October 11, 1999.
Item 8. Change in Fiscal Year.
Not applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: October 14, 1999
RIGHTCHOICE MANAGED CARE, INC.
By /s/ Sandra A. Van Trease
Sandra A. Van Trease
Chief Financial Officer,
Senior Executive Vice
President and Chief Operating Officer
EXHIBIT INDEX
Exhibit No. Description
99(a) Press Release of Registrant dated October 11, 1999
Exhibit 99(a)
CONTACT: Deb Wiethop, (314) 923-4767
COURT ADVISOR FAILS TO RECOMMEND APPROVAL OF BLUE CROSS SETTLEMENT
PARTIES HAVE 30 DAYS TO RESPOND; SUPREME COURT SAYS JUDGE MUST RULE BY NOV. 9
ST. LOUIS, October 11, 1999 - Blue Cross and Blue Shield of
Missouri, parent company of RightCHOICE Managed Care, Inc. (NYSE:
RIT), today announced that the Special Master appointed by the
Circuit Court of Cole County, Missouri, has recommended that the
March 1999 modified settlement agreement be disapproved. The
March 1999 settlement agreement is intended to resolve
outstanding litigation and regulatory issues, create Missouri's
largest health care foundation, the Missouri Foundation for
Health, and result in RightCHOICE's reorganization as a fully for-
profit Blue Cross and Blue Shield licensee.
Special Master Robert G. Russell, a Sedalia, Mo. trial
lawyer, criticized the modified settlement agreement because it
does not give the Missouri Foundation for Health the right to
force the sale of RightCHOICE.
"The independence of the Missouri Foundation for Health and
RightCHOICE is a critical provision that protects the Blue Cross
and Blue Shield trademarks and provides the foundation with the
opportunity to achieve up to $70 million in savings through a tax-
free transaction," said John A. O'Rourke, president of Blue Cross
and Blue Shield of Missouri, and chairman, president and chief
executive officer of RightCHOICE.
"Judge Brown still must rule on the modified settlement
agreement. We hope he will fully appreciate the value of what was
agreed to last March by our boards, the Missouri Attorney
General, the Missouri Department of Insurance and consumer groups
representing over 1 million Missourians, because it is fair,
reasonable and in the public interest. It's the right thing to do
for our members, our shareholders and our community."
The modified settlement agreement is intended to maximize
value of RightCHOICE stock. Once the settlement is consummated,
such value may be attained through the orderly divestiture of
RightCHOICE stock by the Missouri Foundation for Health or
through the action of the board to sell RightCHOICE stock in a
single transaction, with the counsel and approval of the
foundation.
"We have a fiduciary responsibility to maximize value for all
our shareholders, and the Special Master's insistence that the
foundation control the sale of RightCHOICE undermines the value
that the settlement is designed to provide," O'Rourke stated.
The Missouri Supreme Court ordered Judge Brown to rule on the
modified settlement agreement by Nov 9. The litigation remains on
appeal to the Supreme Court. Evidence supporting the value of the
modified settlement agreement was presented by the parties and
representatives of the consumer groups. However, that evidence
was not accurately reflected in the Special Master's report,
which contained inconsistencies and disclosures selected to
support his conclusions. The parties have 30 days within which to
file objections to the Special Master's report.
- -more-
Add one/Report from Special Master
The March 1999 settlement agreement calls for Blue Cross and
Blue Shield of Missouri to reorganize and be merged with
RightCHOICE Managed Care and for the creation of the state's
largest health care foundation. The foundation would receive an
additional $12.78 million in cash from Blue Cross and Blue Shield
of Missouri, which currently has sufficient cash and investments
to provide for the payment. Following the transactions, the
foundation would become the owner of approximately 80 percent of
the stock of the new RightCHOICE. As a result of the
reorganization, RightCHOICE or its subsidiaries would absorb the
remaining assets and related liabilities of Blue Cross and Blue
Shield of Missouri, and would continue as a strong, viable
provider of health care benefits to members, using the highly
recognized and valued Blue Cross and Blue Shield names and
trademarks. The company is the largest provider of health care
benefits in Missouri and has approximately 1,800 employees. The
transaction is not expected to dilute RightCHOICE earnings or
shareholder's equity.
Safe Harbor Statement
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Estimates and other statements set
forth herein that are not historical facts are forward-looking
statements that involve risks and uncertainties. These risks and
uncertainties include, but are not limited to: an adverse ruling
on the litigation including the possibility that court approval
of the modified settlement agreement, referenced above, would not
be obtained, or if obtained, could include terms or conditions
that are not acceptable to the parties; the possibility that all
remaining contingencies and conditions to the parties'
obligations to effect the proposed settlement transaction would
not be met or otherwise satisfied; governmental and regulatory
action or legislation; pending litigation; actions by the Blue
Cross and Blue Shield Association relating to the license to use
the Blue Cross and Blue Shield names, trademarks and service
marks; and other risks detailed in the company's Securities and
Exchange Commission filings.
Blue Cross and Blue Shield of Missouri and its for-profit
subsidiary, RightCHOICE Managed Care, Inc., are the largest
providers of health care benefits in Missouri. The company's web
site addresses are www.ritusa.com and www.abcbs.com.
