Former New Mexico Insurance Superintendent Claims Wrongful Termination

February 23, 2001

Former New Mexico Insurance Superintendent Don Letherer is suing several current and former state regulatory officials for wrongful termination according to a Business Insurance report.

Letherer charges that the officials fired him late last month in part because his office uncovered evidence that the officials had misappropriated public funds. Letherer was officially fired for negligence, inefficiency and misconduct. He filed suit Wednesday in the U.S. District Court in Albuquerque seeking unspecified damages.

The suit reportedly names Bill Pope, chairman of New Mexico’s Public Regulation Commission; commissioners Jerome D. Block and Tony Schaefer; and Jack Hiatt, the PRC’s former chief of staff.

Two other PRC who objected to the disciplinary action were not named.

Letherer charges, according to Business Insurance’s story, that the defendants inappropriately covered past PRC budget shortfalls with $500,000 appropriated by the Legislature intended to establish a special unit to carry out the objectives of a 1998 health care patient protection act.

Letherer contends, according to the Business Insurance report, that the unit was supposed to be in operation by July 1999, but the defendants “purposely withheld paperwork and delayed establishment” of the unit so they could use the funds. Letherer charges that the delay in establishing the unit created the appearance that the unit did not needed the entire appropriation. That led the state’s Legislature to underfund the unit for the next fiscal year, which substantially contributed to the insurance division’s budget deficit.

According to the Business Insurance report, the lawsuit explains that the defendants blamed the budget deficit on Letherer. The lawsuit goes on to say that the insurance division’s budget deficit was increased further when the PRC transferred 12 employees to the insurance division’s payroll in an effort to cut the PRC budget deficit.

Business Insurance reports that Letherer also charges that for 18 months, beginning in early 1998, the defendants misappropriated $150,000 from the Insurance Fraud Fund to cover a PRC budget shortfall. Letherer alleged that the defendants used $50,000 of those funds to remodel their offices.

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