ANTHEM FILES SUIT AGAINST GARAMENDI.

Byline: Staff and Wire Reports

WellPoint Health Networks Inc.'s suitor Anthem Inc. filed a lawsuit Tuesday in Los Angeles against the California insurance commissioner, who is blocking the companies' $16.4 billion merger.

The suit seeks to push aside Insurance Commissioner John Garamendi's disapproval of Anthem's control of BC Life & Health Insurance Company, a WellPoint subsidiary.

The suit also requests that the court declare Indianapolis-based Anthem's application for control of BC Life as legally sound.

BC Life would represent approximately 4 percent of the combined revenues of the merged companies.

``The commissioner is required to follow California law in making his decision and he failed to do that,'' David R. Frick, Anthem's chief legal officer, said in a statement.

``Filing this lawsuit is something we did not want to do,'' said Larry C. Glasscock, Anthem's chairman, president and chief executive officer. ``However, we genuinely feel we have met all the legal requirements necessary for approval of the merger.''

There was no immediate response from the Department of Insurance.

The companies had argued that the deal would benefit the 28 million Californians insured by Anthem and Thousand Oaks-based WellPoint, parent of Blue Cross of California.

The insurance commissioner rejected the deal on July 23. Garamendi, who has oversight authority over about 4 percent of the deal, had said he could not ``in good conscience'' support the merger, charging that it would pull $400 million a year out of California for three years - in the form of dividends sent to Indiana-based Anthem instead of remaining in the state - and an unlimited amount afterward to help Anthem finance the takeover. He also criticized a $76 million payout to WellPoint's chief executive, Leonard Schaeffer, who would lose his job.

Garamendi said that amount could provide a year's worth of insurance coverage for 47,000 children in a state where 6 million people lack health insurance.

Garamendi's decision was the last major hurdle in the process. The state's Department of Managed Health Care had approved the deal, along with the federal government and nearly a dozen other states and territories affected by it.