Lawsuit over illegal alien insurance scheme survives legal hurdle

A lawsuit seeking to expose the inner workings of a government-backed health coverage scheme that would provide insurance to illegal aliens and other uninsurable individuals will move forward, after a New Mexico judge denied a motion to dismiss the case on Tuesday. The ruling by Second Judicial District Judge Daniel Ramczyk allows plaintiffs to proceed with their claims that the New Mexico Medical Insurance Pool (NMMIP) violated both the Open Meetings Act (OMA) and the Inspection of Public Records Act (IPRA).

The lawsuit, brought by businessman Duke Rodriguez—a former Cabinet secretary and potential Republican gubernatorial candidate—and Kristina Caffrey, chief legal officer at Ultra Health, targets what they call a deliberate attempt to conceal the operations of the NMMIP from public scrutiny. The pool was created by the Legislature in 1987 to provide health insurance to high-risk individuals with severe or costly medical conditions. Yet questions persist as to whether it is a public agency subject to transparency laws or merely a private nonprofit operating with public funds behind closed doors.

In defense of the NMMIP, attorney Carlos Padilla claimed it is a “nonprofit organization wholly independent of state government,” arguing that while the pool may voluntarily comply with some transparency practices, it is not legally required to do so. However, plaintiffs argue that this position is intentionally contradictory. The pool accepted a $1.75 million no-bid contract from the state’s Health Care Authority in February under the guise of a “governmental services agreement”—a contract form typically reserved for transactions between state agencies. This contract was explicitly intended to launch a coverage expansion that would extend state-subsidized health insurance to illegal aliens and other high-risk groups.

Attorney Jacob Candelaria, representing Rodriguez and Caffrey, called the state’s subsequent cancellation of the contract a “classic attempt at a movida,” according to the Santa Fe New Mexican. After granting the agreement without public input or a competitive bidding process, the state suddenly reversed course, citing the fact that NMMIP is “not a governmental or quasi-governmental agency.” Candelaria didn’t hold back, saying bluntly, “They got their hands caught in the cookie jar.”

At the center of the NMMIP is its acting executive director, former state Rep. Deborah Armstrong, a far-left Albuquerque Democrat and close political ally of Gov. Michelle Lujan Grisham. Armstrong is also the owner of a private firm that manages all of the pool’s contractors under a lucrative executive services contract. In a prior interview, Armstrong downplayed the controversy, claiming that the Health Care Authority simply misunderstood the nature of the pool’s structure, which she described as “legislatively created, nonprofit, and without hardly anything that would tie us directly to the government.”

But this isn’t the first time the New Mexico Medical Insurance Pool has drawn scrutiny. In fact, its past is marked by numerous red flags. From 2014 to 2017, Armstrong’s firm, Delta Consulting Group, was paid over $2 million in taxpayer money to administer the program, even as enrollment plummeted from 8,500 to just 2,400 participants. The premiums charged by the pool were routinely higher than those on the private market, yet often covered only a fraction of the actual claims. In 2013 alone, premiums covered less than 20% of the total cost of claims, leaving taxpayers and insurance ratepayers to foot the rest of the bill. Meanwhile, budget analysts repeatedly warned that the pool had outlived its usefulness after the implementation of the Affordable Care Act, which made high-risk pools largely obsolete by providing more comprehensive and affordable coverage options.

Yet the program persisted—fueled by political connections and backroom deals. Rather than wind down the pool, Armstrong and Lujan Grisham advocated to keep it alive, despite its financial inefficiencies and questionable benefits for New Mexico residents. With millions in public funds flowing into a politically connected nonprofit that refuses to be transparent, critics argue the NMMIP has become less about helping vulnerable patients and more about enriching a select few insiders.

The current lawsuit aims to force long-overdue accountability. Rodriguez and Caffrey argue that any entity created by the Legislature and receiving public funds should be subject to the same openness and transparency as any other state agency, especially when those funds are being used to provide benefits to individuals living in the country illegally. As the case moves forward, it will test not only the integrity of New Mexico’s sunshine laws but also the public’s willingness to tolerate politically protected entities operating in the shadows with taxpayer dollars.