Topeka ? The Kansas Supreme Court on Wednesday blocked the sale of the state’s largest health insurance company, Blue Cross-Blue Shield of Kansas, to Anthem Insurance Companies, of Indianapolis.

In the unanimous decision, the justices upheld an order issued in February 2002 by then-Insurance Commissioner Kathleen Sebelius, who has since been elected governor.

The Supreme Court decision reverses an earlier decision by a Shawnee County District Court judge that have overturned Sebelius’ ruling. The lower court agreed with the companies that Sebelius did not have the authority to block the sales under state law.

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The matter then went to the state’s highest court. Sandy Praeger, who was elected insurance commissioner, was substituted in the lawsuit.

In a statement released Wednesday, Praeger said, “I am pleased the Kansas Supreme Court has clarified the power of the Commissioner of Insurance regarding insurance company mergers and acquisitions. This decision clearly outlines the Department’s jurisdiction and statutory authority to make decisions in the best interest of Kansas consumers.”

Sebelius also issued a statement praising the high court’s decision, saying she blocked the sale because it would have cost Kansans millions of dollars in increased premiums in the long run.

“This is an important victory for the nearly 750,000 Kansans who rely on Blue Cross and Blue Shield for their health care services and the insurance buying public who need access to affordable, reliable health care,” the governor said. (Read the governor’s full statement.)

Reviewing the lower court’s opinion, the Supreme Court held the insurance commissioner properly interpreted the Kansas Insurance Holding Companies Act. The high court ruled the commissioner’s decision was adequately supported by evidence, as required by statute.

“The Kansas Insurance Holding Companies Act, read in its entirety, contains sufficient guidance from the Legislature to enable the insurance commissioner to exercise her discretion in determining whether a proposed acquisition is unfair and unreasonable to policyholders of the insurer and not in the public interest, or likely to be hazardous or prejudicial to the insurance-buying public,” the court wrote in its opinion.

Sebelius had found that the $131 million reduction of Blue Cross’s surplus during its conversion from a mutual insurance company to a stock company, combined with Anthem’s likely additional surplus reductions and premium rate increases after it acquired Blue Cross, constituted changes to management strategies which were not fair and reasonable to policyholders nor in the public interest.

Sebelius also found the likely increases in premium rates and reductions in surplus would ultimately weaken Blue Cross’s financial standing and place a substantial financial burden on the insurance-buying public.