The president of CareFirst BlueCross BlueShield told the D.C. Council recently that the council had no authority to hold CareFirst accountable to residents of the area ["CareFirst's D.C. Insurer Could Lose Tax Break; Proposal Suggests That Insurer Did Not Give Enough to Earn Nonprofit Benefit," Metro, Oct. 4]. He is wrong about that.

The D.C.-based portion of CareFirst is chartered by Congress. The charter requires the company to operate as a "charitable and benevolent institution" and authorizes it to provide health insurance and to engage in activities that "promote and safeguard the public health." The charter also provides that the company "shall be licensed and regulated by the District of Columbia."

Unfortunately, the company has not operated as a charitable institution for some time. Instead, as a recent report by D.C. Appleseed Center for Law and Justice showed, it is operating as a private, for-profit company and doing little to "promote and safeguard public health." Even though it has net assets of more than $500 million and revenue in excess of $2 billion, the company spent only about $1 million on charitable community health benefits last year.

Because the company's management is not adhering to its charter, the company should be held accountable through the bill pending before the council. The bill should:

* Establish the standards the company must meet as a "charitable and benevolent" institution.

* Define what activities are "charitable and benevolent."

* Give enforcement power to the D.C. attorney general to ensure that the company meets these requirements.

WALTER SMITH

Executive Director

D.C. Appleseed Center for Law and Justice

Washington