“The Office of the State Auditor is conducting an ongoing audit to get to the bottom of questions about the amount of premium taxes owed by numerous health insurance companies.”
State Auditor Tim Keller on Friday asked the New Mexico Superintendent of Insurance to stop approving any extraordinary dividends the state’s health insurance companies pay to share holders pending the outcome of an audit to determine whether the insurers underpaid their state premium taxes.
That audit is expected to be completed in September.
“Despite current concerns about money that may be owed to the State of New Mexico, companies, including Presbyterian and Lovelace, have had approved dividends of more than $100 million,” Keller’s office said in a news release. “The Office of the State Auditor (OSA) is conducting an ongoing audit to get to the bottom of questions about the amount of premium taxes owed by numerous health insurance companies.”
A spokeswoman for the Office of the Superintendent of Insurance said the office hadn’t yet seen Keller’s request and couldn’t comment on it.
Earlier this week, state Attorney General Hector Balderas’ office sued Presbyterian Health Plan saying it failed to pay “tens of millions” of dollars in premium taxes over a 15-year period. The lawsuit said the failure to pay those taxes was deliberate.
Presbyterian said it was blindsided by the lawsuit and that it had paid its taxes.
“At this time insurance companies doing business in New Mexico must ensure they are settled up and solvent before sending dividends out of state or shielding it from the state,” Keller said. “Despite the fact that health insurance companies may owe millions in under-collected premium taxes, the state has been allowing them to drain millions of dollars that may be needed for settlements. It’s prudent to put the brakes on this until we get to the bottom of what taxpayers are owed.”
Keller’s news release also said:
“Like other businesses, insurance companies pay dividends to their stockholders such as individual investors and parent holding companies. Dividends paid by New Mexico insurance companies are scrutinized by the Office of the Superintendent of Insurance so the state can make sure companies will still have the financial capacity to pay claims to New Mexicans.”
Keller’s office also offered this timeline of events regarding the audits:
— 2014: Legislature appropriated funds for an audit of OSI’s premium tax collections practices (Phase I audit).
— October 2015: Presbyterian requested to pay $78 million in dividends despite an estimated premium tax liability of $60 million due at the time. OSI approved the request.
— 2016: Phase I audit found $193 million in possible premium tax underpayments by insurance companies based on sample testing alone. Auditor Keller initiated a Phase II audit to resolve the specific potential tax liability of health insurance companies.
— May 2017: Presbyterian requested to pay $46 million in dividends. OSI approved the request.
— June 2017: Auditor Keller instructs Superintendent of Insurance to disapprove any further requests for extraordinary dividends until questions regarding premium tax collections are resolved in the ongoing audit.
— July 2017: New Mexico Attorney General files suit against the state’s largest carrier for possible fraud.
Latest posts by Dennis Domrzalski (see all)
- New Mexico Health Connection To Spin Off Into For-Profit Biz - September 27, 2017
- NMAG Demands That Analee Maestas Resign From APS Board - September 25, 2017
- Time Running Out For ART Funding - September 25, 2017