The Maryland legislature is considering a two-year study on how nonprofit hospitals use offshore subsidiaries as supplemental insurance against future lawsuits, a practice one whistleblower says already costs the state $30 million in tax income from billions of offshored dollars.
“How much longer are we going to be suckers as taxpayers and the state of Maryland around these taxes?” whistleblower Jason Schupp told The Baltimore Sun. “In other industries, the Cayman Islands are used as an undisclosed piggybank where nobody can see what’s in it or what it’s being used for. They could be paying for trips to the islands for board members and their families.”
Schupp, a retired attorney, spent the last five years looking into offshore subsidiary insurance companies in the health care industry. Under Maryland’s whistleblower law, he provided the state evidence that at least 10 nonprofit hospitals established offshore for-profit subsidiaries, housing billions in hospital proceeds.
“My investigation has revealed that Maryland’s nonprofit hospitals have spirited down to the Islands at least $1.8 billion, which they stash in their for-profit captive insurance subsidiaries,” he testified to the Maryland Senate on Wednesday. “This is money outside of the reach of Maryland’s corporate income tax.”
The Maryland Senate Ways and Means Committee heard testimony on Wednesday on a bill calling for a two-year study on these practices and a tax moratorium. Legally, these subsidiaries, called...
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