New Mexico Launches Bid To Collect Underpaid Insurance Taxes

SANTA FE — An effort to collect nearly $65 million in New Mexico premium taxes owed by insurance companies was launched Wednesday with classified reports sent to nine companies, a top official with the Office of the Superintendent of Insurance told lawmakers.

However, it could take months for the underpaid tax claims to be resolved, and there’s no guarantee all $65 million will ultimately be collected, Deputy Insurance Superintendent Robert Doucette told members of the Legislative Finance Committee.

That’s because insurance companies will have the option of requesting an administrative hearing if they dispute the tax claim and filing a court appeal if they don’t agree with the hearing’s outcome.

But Doucette said during a Wednesday hearing at the state Capitol he’s optimistic that a “high percentage” of the unpaid taxes will be collected, adding, “Most companies don’t want to fight with the department of insurance.”

A special audit released this week by State Auditor Tim Keller looked at premium tax filings from 30 companies, primarily health insurers, from 2003 to 2016, and found that 17 of them owe money to the state.

More than a third of the money in question — nearly $29 million — is owed by New Mexico’s largest health insurer, Presbyterian Health Plan, according to the audit, which was ordered after disagreement over previous estimates.

Lawmakers had plenty of questions Wednesday about how those dollars will be collected, as the state faces a tight budget situation in the upcoming 30-day legislative session. Only $25 million in “new” money is expected to be available next year.

“We need the money,” Rep. Larry Larrañaga, R-Albuquerque, said bluntly at one point during the hearing.

The reports mailed Wednesday to nine insurance companies marked the first phase of the collection effort, Doucette said. More reports will be sent out next week, with a final batch scheduled for Nov. 8.

Once the reports are sent, the insurance companies will have 20 days to decide how to respond — whether to pay the dollar amount specified in the audit or challenge the claim. The OSI said the reports sent to insurance companies will not be made public, but any final settlements or orders will be publicly disclosed.