Presbyterian settles case with state for $18.5M
N.M.’s largest health insurance provider denies claims it failed to pay the proper amount of premium taxes
New Mexico’s largest health care provider has agreed to pay the state $18.5 million to settle claims that it failed to pay the proper amount of insurance premium taxes over a twoyear period.
The payment closes a case brought by Attorney General Hector Balderas in July, when his office alleged widespread fraud by the nonprofit Presbyterian Health Plan, which is obligated to pay a 3 percent tax on insurance premiums sold in New Mexico instead of a gross receipts or sales tax.
But the case ends with Presbyterian admitting no wrongdoing and Balderas dropping the widespread-fraud charges, originally pressed in cooperation with employees at the Office of the Superintendent of Insurance under a law to protect taxpayers against fraud. The four employees claimed Presbyterian deliberately misled regulators about how much it was reporting in tax payments.
The settlement documents claim the agreement is “without any admission by any party as to the strengths or weaknesses of any claim or defenses and without any fact or liability … the Parties desire to settle any and all disputes.”
But in their public comments Monday, both sides were less conciliatory.
Dale Maxwell, the chief executive of the nonprofit Presbyterian Healthcare Services and its subsidiary health plan, said there was no evidence it purposely
withheld taxes or filed false documents to support underpayments. The company has more than 10,0000 employees in the state, 1,000 hospital beds and a reported revenue of $1.6 billion in 2016.
“Presbyterian did not commit fraud, we did not file false claims in any manner,” Maxwell said Monday. “There is no indication that Presbyterian acted wrongfully or did anything outside the law.”
At an Albuquerque news conference, Balderas said the settlement exceeds the original amount of uncollected taxes identified in its litigation, $14.6 million. Of the total amount paid by Presbyterian to the state, $3.7 million will go to the state employees at OSI who originally filed the Fraud Against Taxpayers’ complaint and Santa Fe law firm Egolf+Ferlic+Harwood, which brought the case.
“Presbyterian should not be bragging today,” Balderas said. “The amount of money they are paying New Mexico taxpayers clearly shows they did not properly pay their taxes in the first place.”
He said the settlement happened quickly because it saved taxpayers’ money and allows funds to be returned to the state for public services, including Medicaid.
“The state regulators and these health care companies should have paid these taxes years ago, even decades ago,” he said.
Presbyterian spokeswoman Melanie Mozes said the amount paid is a recognition that the company owed the taxes and wanted to avoid costly litigation. She added the recent audit found Presbyterian Health Plan owed $15.3 million from for 2003 and 2004, when there “were complex, and in some cases contradicting, changes in the state’s premium tax laws.”
The additional $3.5 million, “reflects a compromise of disputed claims to avoid time-consuming and expensive litigation,” she said.
The dispute over insurance premium taxes goes back more than a decade and has been the source of public hearings before the Legislative Finance Committee, which helped fund several audits of the tax collections going back to 2003.
The final audit results by the Atlanta-based Examination Resources was released last week. It documented not just the Presbyterian amounts from 2003-04 but a total of $65 million of uncollected money from 17 insurers that sell products in New Mexico, from health insurance to home, property and casualty companies. Other firms owing money include Molina, Blue Cross, Lovelace, United Healthcare, State Farm, Allstate, MetLife Progressive, John Hancock and Allianz Life.
Of that amount, however, Presbyterian owed $29 million as of last week, 44 percent of the uncollected total.
Maxwell said the company was still examining the audit results and will work with the superintendent of insurance to answer questions about its remaining liability. The Balderas complaint focuses on a dispute over whether Medicaid insurance was obligated to pay the premium tax.
The remaining $14 million from Presbyterian stems from a complicated formula of credits that an insurer can claim for payments to a high-risk insurance pool for the state’s sickest patients. The Office of the Superintendent of Insurance has been trying to resolve that with Presbyterian and other carriers since 2015.
“We will be working closely in a quick and transparent manner to resolve that issue with the OSI,” said Maxwell.
Balderas and state Auditor Tim Keller have been critical of Insurance Superintendent John Franchini’s office for what they termed as its lax oversight of insurers. They are both calling for better auditing of the insurance premium tax with lawmakers backing an effort to move the tax collections to the Taxation and Revenue Department.
Balderas said there are inherent conflicts with the insurance office collecting taxes from the industry it regulates.
“The remaining health care companies need to quickly write checks,” Balderas said. “I’m losing my patience. The fact that no other payments have been made except that forced by the attorney general is a black eye for New Mexico.”
Presbyterian said the amount paid is a recognition that the company owed the taxes and wanted to avoid costly litigation.