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The Honolulu Advertiser
Posted on: Saturday, March 4, 2006

Judge says state wrongly taxed insurance providers

Advertiser Staff

The state of Hawai'i may owe 10 insurance companies millions of dollars in refunds after losing a court fight in which the insurers claimed they were being taxed improperly.

State officials said yesterday they are mulling whether to appeal the judgment signed by state Circuit Court Judge Karen Ahn on Monday. The judgment largely sided with the insurers, who objected to how the levies were assessed and used.

"We're considering an appeal at the present time," said state Deputy Attorney General James Nagle. "It presents some novel legal questions that have never been addressed before."

The lawsuit stemmed from assessments on insurance companies, beginning in 1999, that paid for the operation of the state Insurance Division. The insurers, in a lawsuit filed by attorney Lisa Munger, contended the assessments were unconstitutional and asked for a refund of some of the money, including payments going into a reserve account that were later transferred to the state's General Fund.

Ahn ordered an accounting of how much is owed the insurers, which include AIG Hawaii Insurance Co. and First Insurance Co. of Hawaii.