HEALTH PLAN TO RECONSIDER WELLPOINT; BIDDER CHOICE PROMPTS CRIES OF UNFAIR DEALING.

Byline: Ben Sullivan Daily News Staff Writer

Officials at a Colorado health plan said Wednesday they will reconsider a takeover offer by WellPoint Health Networks, two days after agreeing to sell to a different bidder.

Neil Westergaard, a spokesman for the nonprofit Rocky Mountain Hospital and Medical Systems, said Wednesday his firm would send a letter to WellPoint executives asking for more details on the company's offer to pay between $200 million and $240 million for the plan. Rocky Mountain markets its products under the Blue Cross-Blue Shield of Colorado and Nevada name.

The 500,000-member plan on Monday announced it signed a definitive agreement to be bought by Anthem Inc. for approximately $165 million. That prompted a cry of foul from WellPoint, which fired off letters to Rocky Mountain's investment bankers and to the Colorado Attorney General's Office noting that it had offered more for the plan. The attorney general, in turn, has asked Rocky Mountain to explain itself.

WellPoint spokesman John Cygul said his company was genuinely startled to learn of the Anthem agreement. ``We'd just like to see an open auction process,'' Cygul said.

For its part, Rocky Mountain insists the process by which it selected Anthem was fair and open. Going in Anthem's favor, Westergaard said, was that the company had agreed to provide an immediate cash infusion to boost Rocky Mountain's reserves, which had fallen low after several quarters of losses. Without such cash, Rocky Mountain risked losing its Blue Cross-Blue Shield accreditation, he said, and WellPoint was less willing to immediately pour money into the plan.

``There was an urgency and our need to get capital now, and that played into'' the decision, Westergaard said.

Also, WellPoint's initial bid was not necessarily better than what Anthem offered, he said. As in California, a nonprofit Colorado health plan that converts to for-profit status must create a charitable foundation to offset the the tax-exempt status it previously enjoyed. WellPoint offered to earmark $140 million of its bid to the foundation, while Anthem offered ``at least $140 million,'' suggesting that more could be offered, Westergaard said.

Because Rocky Mountain has signed a definitive agreement with Anthem, any other acquirer will also have to cover a $6 million break-up fee written into the agreement. A new firm would also be required to pay Anthem 50 percent of the difference between Anthem's bid and the new offer. Those factors, and Rocky Mountain's apparent satisfaction with Anthem, may make a potential deal too expensive and problematic for WellPoint, some analysts say.

WellPoint earlier this month agreed to buy another Colorado business, QualMed Plans for Health, from Woodland Hills-based Foundation Health Systems. And a Rocky Mountain deal would fit nicely into those plans, said Bill McKeever, an analyst at investment bank Paine Webber.

Still, in the big scheme of things, Colorado figures into the company's future far less than states like California, Georgia and Texas, he said.

``I wouldn't say this is a big deal,'' McKeever said.