CONCORD — Several towns left out of a state order compelling the New Hampshire Local Government Center to return more than $33 million to member communities of its health insurance risk pool are suing LGC in a second attempt to get a share of the money.
Last year, a hearing officer for the state Bureau of Securities Regulation issued the order, saying LGC had improperly kept too much money in surpluses. LGC announced in June that it was issuing checks on Aug. 27 to meet a Sept. 1 deadline the hearing officer imposed. Communities receiving checks were, according to the order, members as of 2010.
Fourteen towns, led by Durham, Northfield, Peterborough and Salem, all of which had taken their insurance business elsewhere prior to 2010, filed an intervening motion with the state Supreme Court, arguing that the funds should have been proportionate to what communities paid for insurance coverage through LGC programs over the years they were members.
The Supreme Court denied their motion and said the communities should bring their case to Superior Court, which they did on Monday.
The suit names as defendants LGC, its subsidiaries and Secretary of State William Gardner, whose office oversees the Bureau of Securities Regulation.
"The order got the basic facts right, but came up with an unfair remedy that is not allowed under New Hampshire law," said Concord attorney Chuck Douglas, who is representing the towns. "Instead of returning money to each town based on its contribution, the BSR chose an arbitrary date and used it to determine which towns would get refunds."
"By ordering the money returned to current members, it created windfalls for some, but inadequate recompense for others," said Durham Town Manager Todd Selig. "That is, some members will receive an arbitrarily larger share than their contribution, and some an arbitrarily smaller share."
"I respect the right of the communities to do what they believe is correct. The LGC is under an order as part of an Administrative Hearing process with the BSR and we are following the order," said LGC interim Executive Director George Bald.
LGC has yet to announce how it will meet the rest of the order, in which the agency must repay about $3.1 million to members of its property and liability risk pool and return $17.1 million that the hearing officer determined was improperly taken from members of the health insurance pool and used to subsidize the workers' compensation program.
LGC officials have said they will likely use a similar formula — members received a share proportionate to what they contributed to the risk pool in 2010 — for returning the $3.1 million, which is also due Sept. 1.
However, the workers' compensation program has no cash reserves and LGC officials are struggling with how they will make that payment. The $17.1 million payment is due Dec. 1.