N.M. Benches Regulator In Contract Probe

New Mexico Insurance Superintendent Eric Serna was put on administrative leave late last week at the recommendation of the state attorney general, who is investigating his office, officials said.

Deputy Superintendent Tom Rushton will take over the duties on an interim basis, said a spokeswoman for Daniel Mayfield, chief of staff of the New Mexico Public Regulation Commission. The PRC put Mr. Cerna on administrative leave at the request of New Mexico Attorney General Patricia Madrid.

In a letter to the PRC, Ms. Madrid said it has become clear "that there is an inadequate controls environment within the Insurance Division that has persisted for some time."

The attorney general cited "questionable payment levels to Insurance Division vendors" and contracts resulting from "questionable procurement processes."

"In both matters, contracts were issued without any legal review," Ms. Madrid wrote. "Public confidence in the Insurance Division will be further damaged if Superintendent Cerna remains in charge at the Insurance Division."

The PRC had asked the attorney general's office to look into an agreement between the state Insurance Division and Santa Fe-based Century Bank, which controlled a custodial bank account.

In a report issued last fall, the New Mexico Legislative Finance Committee criticized the division for high contract examiner compensation.

"The PRC has no formal written policies that cover the use of contract examiners, and in this environment one contract firm has performed 87 percent of all recent examinations," the report said.

The principal on that predominantly used contract firm is also on the division's "Solvency Team" that sets insurance company priorities for call examinations. The report said this could give the appearance that the contractor is given favorable treatment.

Those findings included compensation that exceeded statutory guidelines, according to the audit.