Blue Shield of California stripped of state tax-exempt status

The California Franchise Tax Board has revoked Blue Shield of California's state tax-exempt status, something the state's third-largest health insurer had enjoyed since it was founded in 1939, according to a Los Angeles Times report.

The CFTB revoked the insurer's state tax-exempt status in August 2014. However, news of the state's move only recently surfaced.

The revocation came after Blue Shield of California was subjected to a state audit that examined the insurer's taxpayer subsidy and the justification for it, according to the report.

On Tuesday, the insurer told the Los Angeles Times it is protesting the decision. "Blue Shield as a company and management team firmly believes it is fulfilling its not-for-profit mission and commitment to the community," a Blue Shield of California spokesman told the Los Angeles Times.

Michael Johnson, who resigned as Blue Shield of California's public policy director last week after 12 years with the insurer, has publicly come out against the company, claiming it has been "shortchanging the public," by operating like a for-profit company and not holding up its responsibility to residents of California, according to the report.

Mr. Johnson is launching a public campaign calling for Blue Shield of California executives to convert the company into a for-profit insurer and to return billions of dollars to the public.

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