- Associated Press - Wednesday, September 17, 2014

SANTA FE, N.M. (AP) - Taxpayers have subsidized insurance costs for the University of New Mexico for cases that the state has paid $48 million for in medical malpractice claims over the treatment of children with leukemia, according to a top official in Gov. Susana Martinez’s administration.

But that subsidy ended in July when the state’s taxpayer-financed insurance program stopped providing liability coverage for UNM hospital for claims stemming from the alleged substandard treatment of children with leukemia from 1979 to 1996.

Instead, UNM has assumed responsibility for future liability claims and legal costs for the child cancer lawsuits. The state will continue to provide insurance for all other coverage.

“In the past, we were not acting like an insurance company, and going forward, we will not have any more of these sweetheart deals for any entity,” A. J. Forte, director of the state’s Risk Management Division, said in an interview last week.

The university’s medical malpractice insurance premiums have been too low, he said, because the state didn’t properly factor in the costs of past settlements, ongoing attorney expenses and potential future liability of child cancer claims.

But Billy Sparks, a spokesman for the UNM Health Sciences Center, said, “There was definitely no sweetheart deal.”

“It’s our understanding that the rates were adjusted to compensate for the claims that were paid, and we were not subsidized,” Sparks said in an interview Wednesday.

He said the university paid the annual insurance premiums calculated by Risk Management.

Sparks said Risk Management proposed in late 2013 that UNM self-insure the child cancer litigation and “after careful consideration, we agreed.”

Forte said the state offered to continue providing insurance coverage for the cancer claims but at an increase of several million dollars in medical malpractice rates.

The state charged about $5.9 million for malpractice insurance for UNM hospital in the last budget year and boosted that to about $8.7 million this year even without coverage for leukemia claims, according to the state agency.

Overall, UNM will pay nearly $23 million to the state this year for all types of insurance, including medical malpractice, general liability, claims for civil rights violations and unemployment compensation.

A government agency’s insurance rates are supposed to be high enough to set aside money to cover anticipated losses. When that didn’t happen with UNM hospital, Forte said, the cost of covering claims was shifted to all other agencies that obtain insurance from the state’s insurance program.

“We believe that every entity should pay their fair share of their claims, and they should not be subsidized by everyone else in our pool,” Forte said. “Agencies are funded by taxpayer dollars. So it makes no sense for the general public to be subsidizing UNMH in this case.”

The state has paid about $146 million in medical malpractice claims involving UNM - $48 million of that for child leukemia cases - while collecting about $80 million in premiums from 1998 through the 2014 fiscal years, Forte said.

“At the end of the day, they’ve been subsidized at a minimum $66 million,” said Forte.

The UNM health system has a $1.7 billion yearly budget and 7 percent of its funding comes from the state, according to Sparks. Most revenue is from patient fees and insurance payments, including government-financed Medicaid and Medicare.

Sparks said UNM has paid the state $169 million from 2005 to 2014 for all insurance coverage, including medical malpractice.


Follow Barry Massey on Twitter at https://twitter.com/bmasseyAP

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