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    New Mexico Political Report
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    A lawsuit filed against Presbyterian for alleged fraud related to reimbursements from Medicaid and tax reimbursements.

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    AG complaint Presbyterian

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    A lawsuit filed against Presbyterian for alleged fraud related to reimbursements from Medicaid and tax reimbursements.

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    635 views43 pages

    AG Complaint Presbyterian

    Uploaded by

    New Mexico Political Report
    A lawsuit filed against Presbyterian for alleged fraud related to reimbursements from Medicaid and tax reimbursements.

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 43
    ENDORSE ‘STATE OF NEW MEXICO First Judicisi diss’ CAMBS, COUNTY OF SANTA FE z FIRST JUDICIAL DISTRICT COURT Jeu 11 2007 Sing Fe Aaron STATE OF NEW MEXICO es re. MONICA GALLOWAY, SHAWNA MAESTAS, and JOLENE GONZALES, OB>y See ta Fo, Ra 37504 2050 Plaintiff and Qui Tam Plaintits, ve No. D-101-ev-2016-01596 PRESBYTERIAN HEALTH PLAN, INC., PRESBYTERIAN NETWORK, INC, and PRESBYTERIAN INSURANCE CO, INC., Defendants. LAINT IN INTERVENT! COMES NOW Plaintif the State of New Mexico (*PlantfP), nd hereby files this Complaint in Intervention against Presbyterian Health Plan, Inc. (“PHP”), Presbyterian "Network, Ine. ("PNIM), and Presbyterian Insurance Company, ne. (*PIC"), alleging as follows: wn ON 1. This ase involves Defendants obligation under New Mexico law to py taxes to the Stat of New Merco, Office ofthe Supeintendent of Insurance (“OSI") on cetin insurance emis it collects in New Mexico, 2. In pariculr, the ease Focuses on Defendants systemic and deliberate underpayment of such tx obligations between 2001 and 2015, Presbyterian repeatedly and ‘systematically sited is duty to pay tns-of millions of dollars in taxes to the State Presbyterian excouted its scheme through the filing of premium tax returns signed knowingly by company executives that plainly contravened the insurers dat o pay. By outnely filing these false claims, Presbyterian filled it offers, eaping benefits upon is management and shareholders at the expense ofthe public fs and othe detriment of New Mexico taxpayers 3. Asset forth in greater det below, PHP execute its Scheme through invocation ‘of myriad impermissible tax deductions, primarily claimed for payments recived from the State “Medicaid program, in which PHP panicipated as an insurer. PHP brazenly claimed these deductions despite receiving reimbursement fom the Sat for the very taxes it endeavored to underpay ‘4. Not content o benefit fom the baseless deductions i sought in ling its annul Fetus 36 OSI was in the throes of waning to en independent agency in early 2013, PHP ‘doubled down, filing additional false claims in the form of amended versions of returns forthe years 2003-2011, seeking millions of dollars ination pen ax eres and new deductions on top ofthe millions already claimed. Because PHP had already succeded in eliminating its ability fr some years through its previous deductions, it sought to roll over the ew eet to avoid ture ox Hail, ceting yet more fils clams submited tothe State HEP then sought to avoid accountability for its misdeeds by pursing an omnibus consderation- fie setement with OSI, seeking to bind the agency to Presbyterians serial false claims. 5, Allo nd as set fort heten, PHP hes engaged ina 15+ yer fraudulent enterprise to avoid responsibility for tens of million of dallas ta which New Mexico taxpayers sxe ented PARTIES 6 Plan the State of New Mexico is a sovereign state ofthe United States and ‘rings this ation under New Mexico statutes andthe common lew. 7. Shawna Maesas, Monica Galloway ad Jolene Gonzales orginally filed this ston and are the qui tar plaintiffs (he Qui Tams Plants” or the “Relators wth respet to ‘his ation as defined by the Fraud Against Taxpayers Act (or “FATA, NMSA 1978, Section 44-9(A). Because the Attomey General hs intervened inthis matter on behalf of the Sate, this action is now brought by and subject to prosecution by the Attomey General as st forth at Section 44-9-(A), The Relators retain al rghs appurtenant hereto under FATA, Sections 44- 91 through 49-14 8. Defendant PHP isa for-profit domestic corporation with ts principal place of business and registered agent in Albuquerque. Atl imes material to this Complain, PHP transacted busines es a health insurance provider inthe Stat of New Mexico. 9. Defendant PIC is for-profit domestic insurance corporation with its principal place of business and reystered agent in Albuquerque. At al times material o this Complaint, PIC transacted business in the Stat of New Mexico. 10, Defendant PNt is for-profit domestic corporation with ts principal place of business and registered agent in Albuquerque. PNI owns the common stock of PHP and PIC. At all times material to this Complaint, PNItanscted busines in the State of New Mexico JURISDICTION & VENUE 11. This Cours jurisdiction is founded upon Article VI, Seton 13 of the New Mexico Constitution 12, This Court has persona jurisdiction over Defendants because they are New ‘Mexico corporations and do business in New Mexico. 15, Venue is proper in Santa Fe County, New Mexico, under NMSA 1978, Section 383-1, because Painiffand Qui Tam Plaintiffs reside in Santa Fe County and the causes of| ction sot forth herein arse in Santa Fe County. oBLicats PAY PREMIUM TAXES IN NEW ME, 14, Under Section $946.2 ofthe New Mexico Insurance Code, Chapter S9A, NMSA, 1978, each insurer authorized to transact business in New Mexico is obligated to pay a premium, "ax of 3.003% ofthe gross premiums and membership and policy fes received or writen by it ‘Premium Tax”). Prior to the 2003 tavcalendar year, the Premium Tax rate was a at 3% Effetve July 1, 2004 insurers are also obligated to pay an additional 1% surcharge to the State ‘ofthe gross premiums and membership and poly fees received or written by it (“Premium Tax Surcharge" or “Surcharge”, See § $9A-6-2C). 15. Insurers subject to Premium Tax ibility are obligated to make quatriy ‘timate payments of Premium Tax based on specified statutory rtera and file an annus] retum, See 59A-62(D). All taxes fora given calendar yer are due on April 5 ofthe next year 16, PHP is subject to the obligation and duty to adhere to New Mexico's Premium ‘Tex and Surcharge provisions 17. Under the Insurance Code, Section $9A-6-5(B), inthe event hat an insure pays Premium Tax in any given year that exceed he insurer's Premium Tax lability that insurer ‘may only request a refund or cet within thre years ofthe purported or. Inthe event an insurer eects to receive a eet, such eet may only be applied to Premium Tax retumn fled within thre years ofthe erroneous or excess payment 18, Only two deductions from payment of Premium Tax obligation are currently permitted under New Mexico law, The two deductions from the tx are expressly enumerated in Section $94-6-2E) and are limited to (1) premiums abut to insurance or contacts purchased by the tate ore politcal subdivision forthe State's or political subivision’s active oF retired employees and (2) premiums recived bya health msinrenance organization from the federal secretary of heath and human services pursuant oa cenract under the provisions of 42 USC. Section 1395 mm), which pertain o certain contrat arising under the federal Medicare program 19, The current language clarifying the scope of Premium Tax exemptions was sdoptd bythe Lepslatre during the 2003 legislative session in Senate Bill 331 CSB 331 fective retroactively to January 1, 2003. Prieto Hanuary 1, 203, as set forth in Senate Bll 557 which was enacted during the 1993 legislative season, the exemption governing “premiums attributable o insurance contracts purchased by the state or poltical subdivision” dd nt include the language “or the state's active a retired employees.” 20. Also during the 2003 legislative session, prior tothe adoption of SB 31, the Legislature enacted House Bill 420 (“HB 420", which increased the ate for Premium Tax assessments by tree-thousandths ofa percent fom flat 3% tothe curent 3.003% rate. HB 420 was not enacted to revise the Insurance Code athe, its purpose was to adop the Voter Action Act (he “VAA"), whichis now codified at NMSA. 1978 Sections I-19A-I to-17. To in considering and promulgating HB 420, the Legislature did not contemplate changes tothe deductions language in Section $946.2, which was the subjectof SB 331. The increase to the Premium Tax was included inthe legislation because the Legislature ated to offset Premium ‘Tax monisit diverted from the general fund in HB 420 to fund new earmarks established under the VAA. 21, Inthe 2008 session, when the Legislature enacted ational changes tothe Premium Tax provisions in Section 96:2 in Senate Bil 52, tf intct the exemptions language it adopted in SB 331 daring the 2003 session, agin clarifying intent to only exempe State and local government purchases of healt are for “ative or etied employees” 22. Thus, bythe pin language of Section 594-6-2(E) al ether gros premiums ard ‘membership and policy fees re subject to the dy to pay Premium Tax. 23, Asam authorized insurer in New Mexico, PHP sand remains ~ obligated to remit Premium Tax payments tothe State as required under the Insurance Code 24, Asse forthin this Complaint, PHP systematically and flsely claimed deductions and credits agsins its Premium Tax and Surcharge obligations not pemitted under Section $9A- 62, PHP sditonally falsely claimed deductions and eet outside the tree year limitations imposed under the law. In both instances, PHP's actions were contrary to Section 94-62, ‘whic lacked a reasonable ass frit conduc HP'S PARTICI MEDICAID 25, Included among te premium revenue subject tothe Premium Tax levy are any 4nd al premium payments made to insurers pursuant to participation inthe State's Medicaid program, which provides heath coverage to certain eligible New Mexico resents 26, The Medicaid program i a product of federal law, bts jintl funded by a combination of State and federal monies; the relative share of Site versus federal funds is dependent upon certain criteria developed bythe federal government, suc as pe capita income ina given ste. 27, New Mexico, the majority of Mota funding is derived from the federal government 28, State Medicaid programs, including New Mexico's are administered by the Stat subject fo federal regulations and oversight by the federal Centers for Medicare and Medicaid Services. 29. _ In New Mexico the State government agency responsible for administering the “Medicaid program isthe Human Services Department (“HSD") See NMSA 1978, §27-2-126. 30. HSD contracts wih private health eae providers and insurers to provide health coverage to eligible New Menicans. 31, Incaeulating payments made to Medicaid insurers like PHP, HSD adds adkitonal evenve to offset insurer's Premium Tax and Surcharge obligations. This, insurers are effectively compensate, dolar for dolla, foe the obligaionto remit Prem Tax and Surcharge payments othe State, Insurers participating in Media nee’ not tap nto premium and other revenues satisfy Premium Tax and Surcharge obligations 32. During the relevant period, PHP contacted annuily with HSD to provide Medicaid managed care coverage and benefited fom the additonal 3 o 4.003% it received {depending upon the applicable taxes in any given calendar yea 10 offet Premium Tax and Surcharge tx aby 33. For example, under the Medicaid "managed cae” contract between HSD and “Presbyterian Sala in place for July 2001 to June 2003, the State was obligated to compensate Defendants tothe extent thatthe ‘performance ofthe] [agreement is subject to txation In tum, the agreement provided thatthe entractor was “responsible fr reporting and remitng all applicable taxes tothe appropriate taxing agency.” PUP'S FIRST ROUND MEDICAID DEDUCTIONS 34, Through he fling of fle elsims with the Stat, PHP has systematically and knowingly sought baseless exemptions forthe premitms it received through the State's Mecicaid program, contrary to the Premium Tax and Surcharge laws described supa 38, Forthe 2001 calendar year, PHP filed an annual premium tx retum with OSL tod on or about April 12, 2002 (the“2001 Return’). Among other deductions claimed, PHP {mpoperty claimed $331 412,202 for Medicaid premiums. This deduction caused PHP's Premium Tax obligation for 2001 tobe reduced by approximately $9,947,366. As aresltof these false claims, the State incurred a commensurate loss in revere to which it was entitled understate law. By claiming this unlawful dedueton through the 2001 Return, Defendants acted with actual knowledge ofthe ilsty ofthe information contained therein with deliberate ignorance of the trator fst ofthe information, or in reckless disregard forthe tt or falsity ofthe information contained therein. To wit, the 2001 Rum included a signed statement fom PHP Presiden David R, Serse, MD and Secretary Dale Maxwel falsely attesting on behalf of PHP's Board of Ditetrs that “they have examine the contents ofthe return) and thatthe best oftheir knowiede, and belie [the contents ofthe ret) are trv and correct..." 36, Forthe 2002 calendar year, PP filed an annual premium tx retum with OSt ‘ated on or about April 10,2003 (the “2002 Return”). Among other deductions claimed, PHP impropesy claimed $385,198,859 for Medicaid premiums. This deduction caused PHP's Premium Tax obligation fr 200210 be reduced by approximately $11,555.96. Asa rest of these false claims the State incurred a commensurate losin revenve to which it was ented unde stat aw. By claiming this unlawfl deduction through the 2002 Retum, Defendants acted ith actual knowledge ofthe falsity of the information contained therein, with deliberate ‘gnorance ofthe tut or fsity ofthe information, rin eles distegard forthe truth o alsity ‘ofthe information consined therein. To wit the 2002 Retum included a signed statement fom PHP President David R,Serase, MD and Secretary Dale Mace falsely attesting on behalf of PHP's Board of Directors that “hey have examined the contents [ofthe retum]; an that tothe bes oftheir knowledge, and belief [the contents ofthe retum] ae true and comes. 437. Forthe 2008 calendar year, PHP filed an annual premium tax retum on o about ‘April 14,2008 he“2003 Return”), Among other deductions claimed, PHP impropely claimed ‘4,886,829 for "Medicaid Gross IHS Revenue The Sate believes that the reference to “IHS” ‘means the federal Indian Health Service all subsequent references to that acronym herein refer tothe Indian Health Service, This deduction caused PHPYs Premium Tax obligation fo 2003 to be reduced by approximately $145,751. As. result of thes false claims the State incured a commensurate loss in revenue to which it was entitled under State law. By claiming this nla fl deduction through the 2003 Return, Defendants acted with actual knowledge of the {ast ofthe information contained therein, with deliberate ignorance ofthe truth o als of the information or in eles disregard fo the ruth a falsity ofthe infomation contained therein. ‘To wi the 2003 Retum included a signed statement from PHD President David R, erase, MD and Secretary Dale Maxwell falsely testing on behalf of PHP's Board of Directors that “they have examined the contents ofthe return); and that tothe Best oftheir knowledge, and belie? (the contents ofthe return) are tre and comet...” 38, PHP falsely through former company official John Brckbil in May of 2011, contended 1 OSI that IHS Medicaid revenues are sujet to he exemption at Section 59A-6- 2(E)(1) for “premiums.purchased bythe sae or apolitical subdivision forthe state's or Political subdivisions employees.” To the contrary, such premiums ate pad to provide insurance to indigent populations, not employees ofthe State or apolitical subdivision, This false assertion, knowingly made, constitutes a false claim in addition to the false atestatons ‘made in PHP's retums wherein it claimed specific “IHS Medicaid” or other “IHS” exemptions 39. Forthe 2004 calendar year, PHP filed an annual premium tx return on Apyil 14, 2006 the2004 Return"). Among other Premium Tax deductions claimed, PHP falsely claimed $451,280 for “Medicaid Gross IHS Revenue,” and an ational deduction of $85,08,839 for “Medicaid Dual Eligible Phamacy.” The sum total ofthese two improper ‘deductions equals $9,640,119. These deduction caused PHP's Premium Tax obligation for 2008 to be reduced by approximately $289,493. Asa result ofthese false claims, the State ineuned a ‘commensurate loss in revenue to which it was entitled unde State lv. 40, 2004 also marked the fist year where the 1% Surcharge (described in paragraph 14) went into effet, beginning July 1, 2004. PHP impropeny deducted portions of “Medicaid (Gross INS Revenue” fom the premiums amount subject othe Surcharge levy. In patcuay, PHP claimed approximately $2,082,773 of such revenues fom the premiums it reported as subject othe Surcharge levy. This deduction caused PHP's Surcharge obligation for 2004 to be reduced by appronimately $20,628. Asa result ofthese false claims, the State incumed commensurate loss in revenue to which it was entitled under State av: 41, _Intota, these improper Medicaid deductions claimed in the 2004 Retum caused PHP's Premium Tax and Surcharge obligations to the Stat for 2004 tobe reduced by approximately $310,121, By clauming these unlawul deductions through the 2004 Retr, Defendants acted with actual knowledge ofthe flsity ofthe information contained therein, with elberate ignorance of the truth or falsity ofthe information, orn reckless disregard forthe ‘ruth or falsity ofthe information contained therein, To wit, the 2004 Return included a signed 10 Statement, ted April 15,2005, from PHP "CFO" Dale Maxell testing falsely on behalf of PHP's Board of Directors that “he [] examined the contents [ofthe ret]; and that othe best of his] knowledge, an belie [the contents ofthe retura are tre and comet." The 2004 Return included only the atesttion and signature of Maxwell, and ef bank a signature line on ‘the Retur forthe ier’ “Secretary/Treasure.” 42. Forthe 2008 calendar year, PHP filed an anual premium tax retum on or aout April 18,2006 (he "2008 Return"), Among othe deductions improperly claimed, PHP claimed 2.041.277 for "Medicaid Gross IHS Revenue” and $12,280 "Medicaid Dual Eligible Pharmacy.” The sum toa of these improper Medicaid deductions equals approximately 82,053,557. These deduetions caused PHP's Premium Tax obligation for 2005 tobe reduced by approximately 561,668, nd PHP's Surcharge obligation fr 2005 tobe reduced by approximately $20,536, for a total of $82,204, As a result ofthese false claims, the State inured commensurate oss in revenue to which twas ented under State Ia, By claiming unlawful deductions trough the 2005 Retum, Defendants ated with actual knowledge ofthe falsity of te infomation contained therei, with deliberate ignorance ofthe trth or falsity ofthe information, orn eles disregard forthe thor fit ofthe infomation contained heen, “Towit, the 2005 Return include a signed sttement from PHP President David R. Sease, MD they have ‘examined the contents [ofthe return}; and tha tothe best oftheir knowledge, and belie [the and Secretary Lisa Farell falsely attesting on behalf of PHP's Board of Directors that contents of the return] are true and correct..." 43, Forthe 2006 calendar year, PHP filed an annual premium tx rtum in Apri of| 2007 (the “2006 Return"), Among other deductions claimed, PHP improperly cleimed $2,623,504 for “Medicaid Gross THS Revenue.” This deduction caused PHP's Premium Tax obligation for 2006 to be reduced by approximately $78,784, nd PHP's Surcharge obligation for 2006 to be reduced by approximately $26,235, for tot oF $105,119. As a result ofthis false claim, the tate incured a commensurate Toss in revenue to which it was ented under tate tas. By claiming this unlawful deduction through the 2006 Retrs, Defendants acted with actual knowledge of the flsity ofthe information contained therein, with deliberate ignorance ofthe {nth o fas of the information, or in reckless disregard forthe rath o est ofthe information conned therein. To wit, the 2006 Return included a signed statement from PHP ‘President David R Serase, MD and Secretary Lisa Farell falsely attesting on behalf o PHP's Board of Directors that “they have examined the contents ofthe eur] and thi to thebestof ther knowlege, and bli [the contents ofthe return] ae true and core." 444. Forthe 2007 calendar year, PHP filed an annual premium tax retumn wth OSL dated April 15,2008 the “2007 Return”). Among other deductions claimed, PHP improperly ‘lime $2,771,852 for “Medicaid Gross 1HS Revenue” This deduction caused PHP's Premium ‘ax obligation for 2007 tobe reduced by approximately $83,239, and PHP's Surcharge obligation for 2007 to be reduced by approximately $27,719, fora total of 110,958, Asa result ofthis false claim, te State incurred commensurate os in reve to which twas entitled ‘under Stat law, By claiming this unlawful deduction trough the 2007 Return, Defendants acted with acta knowledge ofthe falsity ofthe information contsined therein, wth deliberate ignorance ofthe rth o falsity ofthe information, orn reckless disregard forthe rath or falsity ‘ofthe information contained therein. To wit the 2007 Retr ncuded a signe statement fom PHP Presiden Dennis Alan Batey, MD and Secretary Lisa Farell falsely attesting on behalf of PHP's Board of Directors that “they have examined the contents fof the eur); and that to he best oftheir knowledge, and belief [the contents ofthe return) ae true and core 45. Forthe 2008 calendar year, PHP file sn annual premium tax retum with OSL dated April 6, 2009 (he “2008 Return”). Among other deductions clsimed, PHP impropely claimed proximately $3,732,336 for “Gross IHS Revenue” This deduction caused PHP's Premium Tax obligation fr 2008 tobe reduced by approximately 112,082, and PHP's Surcharge obligation for 2008 o be redvced by approximately $37,325, for ttl 149,405, ‘As a result of his false eli, the State inured a commensurate loss in revenue to which it was

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