Jul. 9—Curry and Roosevelt counties and the city of Portales are among 24 counties and six cities that have sued the New Mexico General Services Department (GSD) and its cabinet secretary to challenge invoices to cover deficits in the state’s employee health insurance fund.
The counties filed suit on June 30 through New Mexico Counties (NMC), an advocacy group all belong to. The cities filed suit on Wednesday on their own and through the New Mexico Self-Insurer’s Fund.
Both suits were filed with the Seventh Judicial District Court, which covers Socorro, Catron, Sierra and Torrance counties.
The city of Portales was billed $285,000 bill from GSD for its apparent share of the deficit. Roosevelt County received an invoice for $209,000 and Curry County was billed $266,978 by GSD for shares of the insurance fund’s shortfall.
General Services insists the assessments are proper.
Rod Crawley, acting General Services public information officer, stated in an email sent Wednesday that General Services is “executing the requirements as stated in HB2 (the General Appropriations Act),” and said the assessments to county and municipal governments “are required pursuant to HB2.”
Crawley sent an excerpt from HB2 that calls for one-time fees totaling $10.2 million for health insurance premiums and $299,100 for life insurance premiums to cover projected shortfalls to be paid by local entities.
Crawley also attached a May 5 letter from Robert Doucette Jr., secretary of the General Services Department, to county and municipal governments which states, “The COVID pandemic along with soaring medical inflation has caused huge deficits in the Employee Health Benefits Fund … that will need to be paid by the pool participants to assist in fund solvency.”
Further, Crowley stated, “No alternative sources of funding are available” to cover the deficits.
The counties’ complaint, filed June 30 by Santa Fe attorney Grace Phillips for NMC against GSD Secretary Robert Doucette Jr., challenges parts of the General Appropriations Act that seem to authorize GSD to assess counties and cities to make up for insurance fund deficits.
The counties’ complaint alleges these parts of the act violate the New Mexico Constitution because:
— They are not appropriations.
— They are vague, because nothing in the language would cause the counties to think they would be charged millions of dollars in a one-time assessment, and not specifying amounts of “shortfalls” in the state insurance fund..
— .They attempt to modify contractual relations between counties and their employees, and modify pay for county employees.
— They violate the state constitution’s prohibition on county debt contained in the Constitution and would require violation of the Bateman Act, which prohibits counties from incurring debt beyond income in any given year.
In addition, the complaint states that Doucette failed to make public any regulations in his “plan” to implement the “employer-only” assessments, making the plan “void as a matter of law.”
The counties’ complaint asks the court to declare the parts of the appropriations act unconstitutional on the grounds listed in the complaint, declare that those parts of the legislation are unlawful “because neither counties nor the General Services Department followed the statutory requirements for implementing Doucette’s plan, which the counties assert is a regulation.
The counties also asked the court to declare those parts of the appropriations act unlawful under the Batement Act, and order Doucette to return any funds paid to GSD either under the appropriations act or through the invoices sent to the counties. Section 6 of the GAA or the invoices described above.
The cities in their complaint seek a jury trial in addition to a court injunction to avoid being required to pay all at once for shortages in the insurance fund.
The cities’ complaint was filed against the GSD, the state Health Care Authority Department and Doucette.
The cities say the invoices from GSD are violations of the state Group Benefits Act, which requires a Group Benefits Committee to advise the Risk Management Division of GSD’s director on guidelines establishing rates and methods used to rate participating state agencies and local public bodies.
In order to increase premiums, the cities’ complaint states, the division director must establish by regulation or letter “the types, extent, nature and description of coverages, eligibility rules, deductibles and rates.” None of these were determined before the invoices were sent out, the cities’ complaint states.
The cities’ complaint also alleges the same parts of the appropriations act as mentioned in the counties’ suit violate the New Mexico Constitution because the appropriations act cannot assess fees, and because of constitutional prohibitions against any debt by municipalities, except by local ordinance.
In addition, the cities’ complaint states the GSD invoicing to cover its shortages was a breach of contract, because the cities “have fulfilled all of their obligations and promises to GSD, including making all required payments and otherwise following GSD’s administrative aspects of the plan.”
The cities’ complaint was signed by Justine Fox-Young and Ryan J. Villa for the state Self-Insurer’s Fund, as well as by Stephen Doerr, the attorney for Portales and attorneys for Moriarty, Estancia, Socorro, Las Cruces, and Raton.