The lawsuit alleged that between 2001 and 2015, Presbyterian routinely filed false claims for premium tax deductions and credits, thereby defrauding the people of New Mexico.
Presbyterian Health plan and two of its sister companies “systematically” and “brazenly” cheated the state of New Mexico out of tens of millions of dollars in premium taxes over a 14-year period, state Attorney General Hector Balderas’ office alleged Tuesday in a lawsuit against the health plan.
The lawsuit alleged that between 2001 and 2015, Presbyterian routinely filed false claims for premium tax deductions and credits, thereby defrauding the people of New Mexico and evading its legal duty to pay these taxes.
Named as defendants in the complaint are Presbyterian Heath Plan, Inc., Presbyterian Network, Inc., and Presbyterian Insurance Co., Inc.
But Presbyterian said it “vehemently” rejected the allegations and that in 2016 it paid $52.6 million in premium taxes to the state and $20.1 million in other assessments that help fund state-sponsored insurance programs.
Here’s what Balderas’ office said in a news release announcing the lawsuit:
“Under New Mexico law, every insurer doing business in New Mexico is required to pay a premium tax and surcharge. According to the Office of the Attorney General’s complaint, Presbyterian falsified its Medicaid deductions and credits, thereby evading tens of millions of dollars in premium taxes and surcharges.
“The complaint includes counts for violation of the Fraud Against Taxpayers Act, violation of the New Mexico Insurance Code, unjust enrichment, fraud, and negligent misrepresentation. In addition to seeking millions of dollars in unpaid taxes, the complaint seeks civil penalties and punitive damages. The Office of the Attorney General, as chief prosecutor in the State of New Mexico, is taking control of a lawsuit previously filed by whistleblowers in the Office of the Superintendent of Insurance.”
Presbyterian issued this statement about the lawsuit:
“We vehemently reject the allegations made today and we look forward to a positive resolution to this matter.We are genuinely alarmed and surprised by the timing and nature of these allegations. The premium taxes paid by Presbyterian Health Plan have been audited multiple times by independent firms and state agencies. We have consistently and fully participated in the review of our financial records, including the audit currently underway by the Office of the Superintendent of Insurance.
“As an organization, we are committed to paying all taxes due to the state, which includes premium tax, gross receipts tax, property tax, and unemployment. In 2016 alone, Presbyterian Health Plan paid more than $52.6 million in premium taxes to the state and $20.1 million in assessments that help fund state-sponsored insurance programs.”
“New Mexicans deserve a healthcare system they can trust,” Balderas said. “When insurance providers break the rules, they must face consequences. My office is working with the State Auditor to make sure that Presbyterian—and any other companies that engaged in similar fraudulent conduct—are held responsible for the serious injuries imposed on New Mexican taxpayers.”
Here’s what the lawsuit alleged about Presbyterian’s behavior:
“Presbyterian repeatedly and systematically skirted its duty to pay tens of millions of dollars in taxes to the state … PHP executed its scheme through invocation of myriad impermissible tax deductions, primarily claimed for payments received from the state Medicaid program, in which PHP participated as an insurer. PHP brazenly claimed these deductions despite receiving reimbursement from the state for the very taxes it endeavored to underpay.”
PHP is a for-profit company that is an insurer in the state’s Medicaid, or Centennial Care, program.
In 2016, PHP reported a profit of $31.8 million, and of $29.8 million the year before.
As of the first quarter of this year, PHP had a profit of $8.7 million, according to its financial statement filed with the New Mexico Office of the Superintendent of Insurance.
As of this March, PHP had 331,000 paying members, 229,000 of which were Medicaid recipients.
Here’s how much of the firm’s insurance comes from Medicaid, which is the joint federal and state health care program for low income people:
In 2016, PHP collected $1.8 billion in premiums. Of that, $1.2 billion came from the Medicaid program
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