Sacramento Bee

The Foundation for Consumer and Taxpayer Rights has lost the first round in its legal fight to force the state to collect $500 million in alleged unpaid taxes from Blue Cross of California, the insurance company said Monday.

Los Angeles Superior Court Judge Jane L. Johnson dismissed the consumer advocacy group’s suit against the state Board of Equalization. The suit accused the state of failing to collect taxes on gross premium revenues from Blue Cross. The levy is assessed on health plans regulated by the state Department of Insurance.

Blue Cross answers to a different regulator, the California Department of Managed Health, which does not require taxes on premiums, the judge ruled.

“This the first round. We are not done yet,” said Jamie Court of the taxpayers group. Within the next few weeks, Court said, his group will make its next move. He can go to a state court of appeal, ask state tax regulators to reconsider rules that exempt Blue Cross from premium taxes or both.

Blue Cross, the state’s largest health plan, said in a statement that it had “paid appropriate tax” and that the case “had no merit.”

A spokesman for state Controller Steve Westly said the Board of Equalization had received the ruling. Westly was not available for comment late Monday.
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The Bee’s Lisa Rapaport can be reached at (916) 321-1005 or [email protected]