Michael Myers, MD, a California-based physician, has brought a petition for a writ of mandamus against California's tax board seeking to have it collect eight years of insurance taxes from Kaiser Foundation Health Plan.
All insurers doing business in California are subject to a tax on gross premiums. Dr. Myers claims that although Kaiser is an insurer and should be required to pay a gross premium tax on the $38 billion in annual premiums it collects to provide health coverage, it has avoided the tax by calling itself a nonprofit.
"Kaiser has received 'charitable' status exemptions from state and federal income taxes. However, instead of providing premium discounts to its members/subscribers or decreasing its income-generating coinsurance, fees and deductible charges imposed on its members, Kaiser…continues to accumulate and hoard unreasonable excess tangible net equity amounts," Dr. Myers' complaint states.
In California, only insurers are required to pay the gross premium tax. Kaiser calls itself a healthcare service plan and HMO, and not an insurer, according to the complaint.
However, citing to legal precedent, Dr. Myers claims "whether a company is an 'insurer' for purposes of the gross premium tax is determined by what the company does, not what it calls itself or which government entity regulates it." He says it is "well settled that healthcare service plans like Kaiser are engaged in the 'business of insurance.'"
Bringing the petition on behalf of himself and other California citizens, Dr. Myers is requesting the tax board collect past-due gross premium taxes, plus interest and penalties, owed by Kaiser to the state of California.
Kaiser couldn't immediately be reached for comment regarding the pending petition.
More articles on healthcare industry lawsuits:
504 hospitals hit with whistle-blower lawsuit alleging false claims violations
Whistle-blower physician: 'We have got to get hospitals out of the business of hiring doctors'
Nevada agrees to pay $400k to settle patient dumping allegations