Public Regulation Commission Suspends New Mexico’s Superintendent

State Insurance Superintendent Eric Serna was suspended by the Public Regulation Commission on the recommendation of the attorney general, who is investigating his office.

Attorney General Patricia Madrid said an “inadequate controls environment” has persisted for some time within the division.

She cited contracts issued at Serna’s direction that she said involved “questionable procurement processes” and “questionable payment levels” to Insurance Division vendors.

Leaving Serna on the job while the investigation is under way would further damage public confidence in that office, Madrid said in a letter to the PRC.

Serna was put on leave temporarily, with pay, according to Commissioner David King. King said the commission would formalize the suspension when it meets tomorrow.

“I haven’t done anything improper,” Serna said in an interview. He said when he’s given the opportunity, he will “address any issue of concern.”

The PRC had asked the attorney general last month to look into a 2005 agreement between the insurance division and Century Bank that commissioners said resulted in illegal overpayments to the bank.

Madrid also cited the findings of an October 2005 audit by the Legislative Finance Committee, saying the audit and the Century Bank materials “present disturbing similarities.”

The legislative audit — which noted the division had a “relatively high level of autonomy” within the PRC — said the division’s practice of selecting contractors to examine insurance companies could give the appearance of favoritism.

An Albuquerque company, chosen without a formal bidding process, had been paid more than $10 million for such work since 2003, according to the 2005 audit.

The audit also said the contractor’s compensation exceeded the guidelines in state law.

Serna said the division is taking care of the deficiencies pointed out in the audit.

Serna came under fire recently for his dual roles as insurance superintendent and president of the board of Con Alma Health Foundation, a nonprofit organization he founded to give grants to health providers. Serna said he has resigned from the board.

Century Bank had contributed more than $124,000 to Con Alma starting in 2003, the same year Century was awarded the contract. Some PRC members said they were troubled by an appearance of impropriety.

Serna has said there was nothing inappropriate about the contributions.

Serna also said he was unaware that the contract revision he approved in 2005 with Century Bank included fees that exceeded those allowed by division regulations. He said it was “just a mistake.”

Century Bank, owned in part by Santa Fe businessman Gerald Peters, is the repository for about $400 million paid to the division by insurance companies to guarantee they can pay insurance claims.

Century Bank agreed to refund the overpayments — which commissioners said could total as much as $200,000 _ to about 1,600 insurance companies in the form of credits against future fees.

The PRC also approved an adjustment to the 2005 contract revision to lower the bank’s fees to the level allowed by law.

Serna, who has been in the job five years, was hired by the PRC and could be fired for “cause,” under state law.

“In my opinion, (my) record of accomplishment far outweighs the current situation,” Serna said.