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Calif. Blue Cross Faces Premium Tax Suit

By Staff Writer

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NU Online News Service, Nov. 24, 2004, 4:28 p.m. EST

A California activist group wants to force WellPoint Health Networks Inc., Thousand Oaks, Calif., to pay the state $500 million in additional premium taxes.[@@]

The group, the Foundation for Taxpayer and Consumer Rights, Santa Monica, Calif., says WellPoint’s Blue Cross of California unit has avoided paying preferred provider organization coverage premium taxes by describing the PPO operation as a health maintenance organization operation.

California treats PPOs as insurance companies and requires them to pay premium taxes.

The state treats HMOs as corporations and lets them pay a lower corporate tax rate.

The taxpayer foundation has made its case by filing a suit in a state court in Los Angeles.

WellPoint has argued that it has paid all required taxes and passed state tax audits.