California Strips Blue Shield Of Tax-Exempt Status
SACRAMENTO (CBSLA.com/AP) — State officials have stripped Blue Shield of California of its tax-exempt status, an exemption the nonprofit health insurer has held since its founding in 1939.
The California Franchise Tax Board quietly made the revocation last August, the Los Angeles Times reported Wednesday.
The decision could put Blue Shield on the hook for tens of millions of dollars in state taxes each year. The insurer has paid federal taxes for years.
A spokeswoman for the tax agency declined to comment on the reasons the exemption was stripped. The highly unusual action comes after a lengthy state audit.
The newspaper says the move comes as the state's third-largest health insurer faces fresh criticism over its rate hikes, executive pay and financial reserves.
California regulators investigated Blue Shield last June amid allegations it misled consumers about which doctors they covered under federal health care reform packages.
San Francisco-based Blue Shield is protesting the decision.
In a written statement, Blue Shield said in part: "We believe we meet the requirements for a state income tax exemption and have challenged the California Franchise Tax Board's finding to revoke our tax exempt status."
The health plan provider further stated: "Regardless of whether we prevail in our tax dispute, we will continue to fulfill our not-for-profit mission."
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