Copyright © 2017 Albuquerque Journal
SANTA FE – Three state employees who filed a whistleblower lawsuit against New Mexico’s largest health insurer over taxes – alleging more than $40 million in underpayments – claim their supervisors at a state regulatory office threatened them and tried to keep them quiet after they first raised concerns in 2015.
Top officials at the Office of the Superintendent of Insurance defended the agency’s handling of the case Tuesday but said they could not directly respond to the whistleblowers’ claims because of personnel issues.
The allegations were included in an amended August 2016 lawsuit filed under the state’s Fraud Against Taxpayers Act that had been sealed by court order until Attorney General Hector Balderas intervened in the case last week, effectively taking over prosecuting duties.
The lawsuit claims Presbyterian Healthcare Services falsified tax deductions and credits on Medicaid premiums and avoided paying tens of millions of dollars in taxes on health insurance premiums from over a decade ago.
Insurance company executives have strongly denied the allegations, saying Presbyterian worked openly with state regulators in determining its tax liability.
They have also said that after they decided they had overpaid taxes in 2003 and 2004, they worked with the Office of the Superintendent of Insurance on how to file the amended tax returns in 2013.
The three workers in the Office of the Superintendent of Insurance – all of whom still work for the agency – are Monica Galloway, an accountant and auditor; Shawna Maestas, chief of the agency’s Financial Audit Bureau; and Jolene Gonzales, the office’s chief administrative officer, according to the lawsuit.
Their attorney, Kate Ferlic, is a partner in a Santa Fe law firm with Brian Egolf, a Santa Fe Democrat who is speaker of the state House.
“The plaintiffs are very brave women who have put their jobs on the line to expose the allegations in the complaint,” Ferlic told the Journal this week. “They are everyday heroes whose bravery will benefit every person in New Mexico.”
The women claim in the lawsuit that they reported questionable tax deductions and credits to their supervisors multiple times, starting in 2015.
In response, they were allegedly excluded from meetings about the matter, accused of extortion and threatened with criminal prosecution.
“Plaintiffs were directed not to pursue any further investigation or action against Presbyterian and not to talk to anyone about their findings of fraud, including law enforcement agencies,” the complaint says.
The three whistleblowers also claim OSI supervisors confiscated the original Presbyterian tax filings.
A spokesman for the agency said Tuesday that the tax filings remain in the possession of OSI, and have been shared with auditors. All three whistleblowers have also cooperated with auditors, OSI spokeswoman Heather Widler added.
The whistleblower allegations come at a turbulent time for the Office of the Superintendent of Insurance, which became a stand-alone state agency in 2013 after voters approved a constitutional amendment a year earlier.
Insurance Superintendent John Franchini came under fire last year from state Auditor Tim Keller and legislators for his initial response disputing a report that found New Mexico failed to collect at least $193 million in premium taxes from insurance providers. An independent audit on the subject was subsequently launched and is expected to be completed this fall.
In addition, a separate audit of the Office of the Superintendent of Insurance released earlier this year – and requested by Franchini – found 31 problem areas, most of them related to financial operations and controls.
Meanwhile, the Attorney General’s Office is apparently not focusing on the retribution allegations against top OSI brass as part of its lawsuit against Presbyterian.
“The review is ongoing, and this case was limited to Presbyterian’s conduct with respect to Medicaid deductions and credits,” AG’s Office general counsel Ken Stalter said in a statement.
The Attorney General’s Office has said it is also investigating other insurers besides Presbyterian but has declined to discuss ongoing investigations.