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High-risk insurance pool refuses to turn over audits

Copyright © 2018 Albuquerque Journal

SANTA FE – New Mexico’s high-risk insurance pool, which has come under scrutiny in recent weeks for the political ties of its administrators, has refused to turn over its annual financial audits to the state Auditor’s Office for approval, arguing it does not meet the definition of a state agency.

A letter sent June 4 by a contract attorney representing the insurance pool rejected the state auditor’s request for its audits and described the pool as a “nonprofit entity made up of private business members.” But she later said the pool was working to publicly post the audits on its website.

State Auditor Wayne Johnson, whose office provided the letter to the Journal in response to a records request, has not formally responded.

But he said this week that he disagrees with the insurance pool’s position.

“I will strongly resist attempts by any governmentally established board to avoid review of their annual financial audits and independent oversight by the state Auditor’s Office,” said Johnson, a Republican who was appointed to the post last year by Gov. Susana Martinez. “As we know, sunshine is the best disinfectant, and there is no reason to establish a precedent which would allow such an entity to operate in the dark.”

The high-risk insurance pool assists New Mexico residents who do not have insurance or have been quoted at higher rates than the pool’s rate. Its enrollment has dropped significantly since enactment of the Affordable Care Act.

About 2,400 people are enrolled in the pool, down from roughly 10,000 at the time Obamacare was enacted. Many of those enrolled are kidney dialysis patients who are disabled, while others are immigrants who are in the country illegally and cannot qualify for federally subsidized health insurance.

Delta Consulting, a health care consulting company that Democratic gubernatorial nominee Michelle Lujan Grisham co-founded in 2008, has repeatedly landed contracts to help run the high-risk insurance pool.

Lujan Grisham divested herself from Delta Consulting last year after announcing her run for governor and has said she played no role in the company’s day-to-day operations since being elected to Congress in 2012.

But the firm is still owned by her campaign treasurer, state Rep. Deborah Armstrong, D-Albuquerque, and Lujan Grisham faced criticism from her two Democratic rivals in the run-up to last week’s primary election.

She won the three-way race decisively, however, receiving roughly 66.4 percent of the more than 175,000 votes cast in the race, according to unofficial returns.

The back-and-forth between the state Auditor’s Office and the high-risk insurance pool started during the tenure of former Auditor Tim Keller – who stepped down last year after being elected Albuquerque’s mayor – and has continued under Johnson, according to documents obtained by the Journal.

But it appears it wasn’t until earlier this year that the state Auditor’s Office determined the pool met the definition of a state agency, a determination that would allow its financial affairs to be audited and examined annually by the state auditor.

The State Audit Act defines a state agency, in part, as any entity specifically provided for by law.

New Mexico’s high-risk insurance pool is indeed enshrined in state law, though the law describes the pool as a nonprofit and says its board is a governmental entity for purposes of the state’s Tort Claims Act.

Per state statute, the board’s chairman is the state superintendent of insurance, who is currently John Franchini. The board also has six members appointed by the superintendent and four appointed by the pool, who are typically health insurance company executives.

Meanwhile, the high-risk insurance pool’s outside attorney, Laura Sanchez-Rivét of Albuquerque, said she did not believe the pool’s past audits have been shared with the state Auditor’s Office.

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