Three women whose lawsuit helped New Mexico collect $18.5 million in unpaid taxes from the state’s largest health insurance provider are fighting for what they say is their share of additional money collected through a subsequent administrative proceeding.
Former Office of the Superintendent of Insurance employees Monica Galloway, Shawna Maestas and Jolene Gonzales testified last week that they filed their lawsuit — which accused Presbyterian Health of cooking its books to avoid tax liability, among other things — in 2016 after they reported their findings to their boss, then-Superintendent of Insurance John Franchini, and he refused to take action.
Under the Fraud Against Taxpayers Act, citizens who suspect government fraud can file their own lawsuit, but the Attorney General’s Office gets a chance to prosecute the allegations first if it wishes.
Attorney General Hector Balderas’ office took over prosecution of the complaint shortly after it was filed and reached a settlement with Presbyterian in which the insurer agreed to pay the state $18.5 million related to tax credits the company had improperly claimed in 2003 and 2004.
For their efforts, the women were part of the settlement and collected 20 percent of that money, about $3.7 million.
The state Office of Superintendent of Insurance has since recovered about $15.5 million more from the company through an administrative proceeding.
The women’s attorney argued in a bench trial that concluded Monday that they are entitled to 20 percent of that money too, but the state won’t give them the money they’re asking for — an additional $3 million.
“Relater’s share seems to be touchy subject,” the women’s attorney, Kate Ferlic, said during her opening statement last week on the first day of the trial. “Once the government gets the money in hand, it does seem to fight relaters over what is guaranteed to them. These women fought hard and suffered great losses including the loss of their jobs. ... The state stood on the shoulders of these women and is now making them fight for their relater’s share.”
The Office of the Superintendent of Insurance has taken the position that the 20 percent the relaters negotiated during the first settlement applies only to the first collection and the women were mistaken if they assumed otherwise.
“There was no meeting of the minds,” Office of the Superintendent of Insurance attorney Todd Baran said in court last week. “There were a lot of sophisticated lawyers in the room. ... They thought they were bargaining for 20 percent of everything, but the attorney general is going to say, ‘That was never expressed by us.’ ”
Baran said he doesn’t know where the relaters got the impression they were entitled to anything beyond 20 percent of the original settlement, but he said, “It wasn’t from the state.”
Baran also argued during the bench trial that the second batch of money the state collected from Presbyterian — which was related to incorrectly applied tax credits — was recovered as a result of the findings made by an outside firm the agency brought in to review Presbyterian’s records after the initial lawsuit, not problems identified by the women.
“There is no overlap between what they alleged in their Fraud Against Taxpayers Act case and the Office of [the] Superintendent of Insurance recovery,” Baran said.
Galloway testified during the bench trial that she identified some of the same issues that resulted in the second collection in her original work.
As an auditor, Galloway said the things she saw in Presbyterian’s books — incorrectly applied or twice-applied tax credits and retroactively amended tax returns — made her suspect fraud.
But Presbyterian never faced criminal charges in connection to the allegations the women made in their lawsuit.
“Presbyterian failed to pay insurance premium taxes, and while our investigation recovered $18.5 million owed to the State, we did not find evidence of criminal conduct,” a spokesman for the Attorney General’s Office said in an email. “However, the Attorney General remains concerned that the State invest adequate resources into oversight of the healthcare industry.”
Presbyterian Health Plan President Brandon Fryar responded to a list of questions from The New Mexican with a statement that read in part: “The settlement reached in 2017 represented a compromise relating to the interpretation of new, complex laws introduced in 2003 and 2004 regarding payment of taxes on Medicaid premiums. Presbyterian believes it was important to resolve the disputed claims quickly for the good of our state and in support of our purpose to serve New Mexicans. The lawsuit did not reveal any acts or information indicating intent by Presbyterian to commit fraud or file false claims. In fact, all fraud claims in the lawsuit were dismissed prior to any settlement payment by Presbyterian.”
Oral arguments in the bench trial ended Monday and state District Judge Francis J. Mathew directed attorneys on both sides to submit written closing arguments within 10 days. He’s expected to issue a written ruling at a later date.