LGC should give back what’s owed

Last modified: 8/22/2013 10:34:23 AM
More than $53 million in New Hampshire taxpayer money — not to mention employee contributions to health insurance plans offered by municipalities — is at stake in the Local Government Center’s appeal of a N.H. Department of State order, calling for the LGC to return surplus health insurance and property liability funds to towns and school districts. The LGC is appealing the order to the N.H. Supreme Court, arguing it should only have to return about half of that. And the case gets more complicated.

The LGC previously said it planned to return surpluses just to its current members, but a new executive director seems to be open to negotiations. More than a dozen towns that have left the organization’s insurance risk pools, including Bennington, Greenfield, Lyndeborough, Peterborough and Temple, are asking the Supreme Court to hear their position along with the LGC’s appeal; they say they are entitled to surpluses generated when they were members.

The LGC offers risk pools that provide both health insurance and property/liability coverage. In August 2012, Donald Mitchell of the N.H. Department of State ordered the LGC to return more than $50 million to members, saying the organization had built up unnecessarily large surpluses. The LGC had been holding 24 percent of claims in surplus, according to an August ruling on the surplus issue. Mitchell ruled that until the matter is studied further, the LGC may only maintain up to 15 percent of claims in surplus. Last spring, the state reached agreements with Primex and School Care, the two other large risk-pool organizations in the state, in which the risk pool management firms agreed to return smaller amounts.

In their petition related to the LGC surplus dated Jan. 14, the towns point out that the state “found wrongdoing in the management of the Local Government Center’s risk pools” between 2003 through 2010. According to an affidavit from Town Administrator Pam Brenner, which is attached to the petition, Peterborough was a member of the Health Care Trust between Jan. 1, 2003, and June 30, 2012, and a member of the Property Liability Trust between Dec. 27, 1986, and June 30, 2012. According to Brenner’s calculations, Peterborough is owed $85,000 in medical surplus funds. She also wrote that between 2003 and 2012 Peterborough employees contributed about 20 percent of the health care premium costs, and that the town would return their share of any surplus refunds it receives from the LGC on a prorated basis.

If money is indeed owed to former members, we would hope the LGC would be eager to settle with them. The nonprofit’s stated mission “is to strengthen the quality of its member governments and the ability of their officials and employees to serve the public.”

In an interview last week with Ledger-Transcript staff, LGC’s Interim Executive Director George Bald noted that the August 2012 ruling specifies that members of the LGC’s Health Trust risk pool after June 14, 2010, are eligible for restitution. He also said he’s hoping the matter can be resolved without further litigation. We think this is the right approach, and we’re hopeful it will yield fruit for our local towns. But to be fair the LGC may need to look back further than 2010.


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