SALEM — Salem is among 10 New Hampshire communities fighting in court to block the state-ordered refund of $36 million to towns and cities for insurance costs.
The communities say they are entitled to a share of the rebate pool from the Local Government Center. That’s money the state Bureau of Securities Regulation ordered LGC to repay for health or property liability insurance.
Salem and the other communities filed the lawsuit Monday in Strafford County Superior Court.
“The order got the basic facts right, but came up with an unfair remedy that is not allowed under New Hampshire law,” attorney Chuck Douglas said in announcing the lawsuit on behalf of the communities.
The LGC has appealed the ruling to the state Supreme Court, but the court has refused to stay disbursement pending appeal.
Disbursement is slated for next month.
Town Administrator Keith Hickey, in an affidavit filed with the court in support of the lawsuit, estimated Salem should be getting about $150,000.
“We’re just looking to get Salem’s fair share,” Selectmen’s Chairman Everett McBride said yesterday.
Affidavits from several of the other towns showed the communities are looking for more than $400,000 combined.
Salem is the only town from the local area participating in the lawsuit.
The town pulled out of the LGC program for cheaper insurance coverage through another provider before the refunds became an issue.
The state bureau’s ruling applied to participating communities after Salem’s withdrawal.
The attorney representing the 10 towns maintains that’s just wrong.
“It is completely unfair to the towns that paid excess insurance premiums, but were not members of the LGC on the date selected in the order,” Douglas said.
The towns that brought the lawsuit want the court either to award damages or require another look at the issue before refunds are given.
“Absent action by this court, the LGC will make the improper distribution, including payment of excess and underserved funds to some municipalities and other participants in the program,” the lawsuit said.
The communities maintain that could undermine their efforts to get a fair payment.
“Once that happens, LGC may have fully met its obligations under the order and the legally deserving plaintiffs may be unable to efficiently obtain funds they are legally entitled to,” the lawsuit says.
Local towns and school districts that, unlike the town of Salem, stuck with LGC, are awaiting refunds next month.
The towns of Derry, Londonderry, Windham, Pelham, Plaistow, Kingston, Hampstead, Atkinson, Danville and Newton are in line to share a combined $1 million in refunds.
School districts in Salem, Derry, Londonderry, Timberlane and SAU 28 — which included both Pelham and Windham at the time — would get a combined $3 million.
“By ordering the money returned only to current members, it created windfalls for some, but inadequate recompense for others,” the lawsuit said.