Nevada Benefits Firm Appeals $1 Million-Plus in Fines

August 24, 2006

The Nevada Insurance Division has levied fines and penalties of more than $1 million on a Las Vegas company that provides health benefits to dozens of companies.

Insurance Commissioner Alice Molasky-Arman has ruled that Payroll Solutions Group has been providing health insurance for at least 99 companies without paying the state’s 3.5 percent premium tax.

Payroll Solutions President Howard Winters says Molasky-Arman is wrong. He has filed suit in federal court in Las Vegas to void the fine and penalties and to permit him to carry on his business.

Payroll Solutions acts as the human resources department for companies, paying their employees wages, taking care of unemployment insurance tax, Social Security and providing medical, dental and optical coverage.

Payroll Solutions contends its health benefits are self-funded and are not, by definition, an insurance plan. Although the company says federal law does not allow the state to regulate it, the insurance division says it has an advisory opinion from the federal government saying that the state has jurisdiction.

Deputy Insurance Commissioner Pamela Mackay conducted a hearing in May and issued her findings Aug. 3, imposing a $10,000 fine against Solutions for each client for which it provides a health plan.

Besides recommending that Payroll Solutions pay the 3.5 percent tax on premiums received from its customers dating to March 2004. Mackay also imposed a 10 percent penalty on the tax owed and tacked 1.5 percent monthly interest on the amount owed.

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