June 21, 2004

Molina Healthcare of Michigan and McLaren Health Plan to purchase The Wellness Plan

Office of Financial and Insurance Services (OFIS) Commissioner Linda A. Watters—in her capacity as court-appointed rehabilitator—announced today that she has filed a petition with the Ingham County Circuit Court seeking approval for the sale of the right to serve The Wellness Plan (TWP) membership to Molina Healthcare of Michigan and McLaren Health Plan.

“As rehabilitator, my focus has been on ensuring continuity of care to plan members and securing reimbursement for the provider community. I am pleased to be able to recommend that the court approve Molina Healthcare of Michigan as the buyer for the right to serve the approximately 87,000 TWP members in Wayne, Oakland, Macomb, Oceana, and Muskegon counties.” Watters said. “ I am also pleased to recommend McLaren Health Plan as the buyer for the right to serve the approximately 12,000 TWP members in Genesee and Lapeer counties. Both Molina and McLaren are Michigan-based health care providers with extensive experience in the marketplace.”

In her May 12, 2004, letter inviting Michigan health plans to submit bids, the rehabilitator indicated that qualifying offers must demonstrate: (1) The financial (cash) resources are readily available to consummate the transaction. (2) The potential buyers will continue to meet all financial requirements after the completion of the transaction. (3) The likelihood the potential buyers will receive a new Medicaid contract effective October 1, 2004. (4) The potential buyers’ provider networks are adequate to acquire more members. (5) To ensure continuity of care to TWP members, the extent to which the potential buyers’ provider networks overlap with TWP provider network. (6) The likelihood the potential buyers will obtain the necessary regulatory approvals (i.e. OFIS and the Michigan Department of Community Health) for the transfer of members. (7) The extent of any contingencies regarding the completion of the transaction. (8) The extent the purchase price is subject to any potential adjustments in subsequent periods.

“I evaluated all the offers that were made for each county and accepted the best offers,” Watters said.

The Wellness Plan petition has been filed with Ingham County Circuit Court Judge William E. Collette. The Commissioner, as court ordered rehabilitator in charge of The Wellness Plan, has overseen all post-rehabilitation payments to providers for health care services. The petition and notice will be sent to the creditors of The Wellness Plan later this week.

A copy of the petition for The Wellness Plan may be found on the OFIS web site at www.michigan.gov/ofis. More information about Molina Healthcare of Michigan may be found at its web site at www.molinahealthcare.com/michigan; and more information about McLaren Health Plan may be found at its web site at www.mclarenhealthplan.org.

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