Dec. 11 2008 12:00 AM

Lansing steps in to help Blue Cross in Cox suit

Lansing City Attorney Brig Smith filed a motion in Ingham County Circuit Court Thursday asking that a lawsuit brought against Blue Cross Blue Shield of Michigan by state Attorney General Mike Cox be dismissed.

Blue Cross subsidiary, Accident Fund, is in the midst of redeveloping the Ottawa Street power station in downtown Lansing and company officials have said that Cox's suit could jeopardize the project.

Lansing Mayor Virg Bernero had ordered Smith to intervene on behalf of the city.

Bernero has said that Cox is "playing political roulette with Lansing's future." Accident Fund would invest $182 million into renovating the power station and build several other structures nearby.

"What we're asking the court to do is dismiss the case and send the final bite of the apple back to the person who should have the apple in the first place: the insurance commissioner," Smith said in an interview Thursday.

Cox's suit alleges that in November 2007 Blue Cross illegally transferred $125 million to the Accident Fund to purchase CompWest, a California workers' compensation company, among other allegations. Cox has said that Michigan consumers shouldn't “have to pay higher health care premiums so Blue Cross can go on a spending spree and grab up for-profit insurance companies.”

Two of Cox's three charges against Blue Cross have already been sent back to state Insurance Commissioner Ken Ross. Smith's motion is before Judge Paula Manderfield.

John Sellek, a Cox spokesman, declined to comment on Smith's filing, saying that the attorney general has not yet reviewed it.