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A state judge in Manhattan has continued the court order that froze $417 million in proceeds from the initial public offering of WellChoice Inc. State Supreme Court Justice Ira Gammerman kept the temporary restraining order in place, keeping the IPO proceeds in an escrow account. WellChoice’s stock price closed Nov. 26 at $24.68, down 13.4 percent from its opening price and 52-week high of $28.50. But the stock price was up 1.98 percent from Nov. 25th’s close, despite the uncertainty surrounding the court hearing. The lawsuit brought by Consumers Union and a group that includes social service organizations and WellChoice policyholders challenges the constitutionality of a law passed in January by the New York State Legislature. The state statute allowed Blue Cross companies such as WellChoice to convert to for-profit status and give two state funds control of the company’s shares. The plaintiffs are opposed to the state control of what was once charitable assets. The law created the New York State Public Asset Fund, which owned 95 percent of the shares, and the New York State Charitable Asset Foundation, which owned 5 percent. The public asset fund passes on the money from selling the shares to the state’s “tobacco pools,” which will use most of it to pay salaries of health-care workers, as well as health-care research. The charitable fund will use its share of the proceeds to promote health-care coverage for the underinsured. Judge Gammerman said he would keep the TRO in effect until he rendered a final decision. WellChoice, the health insurer formerly known as Empire Blue Cross and Blue Shield, counts 4.6 million PPO and HMO members. Its initial public offering, which began trading Nov. 8 on the New York Stock Exchange, was the last step in the conversion. Copyright �2002 TDD, LLC. All rights reserved.

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