EagleTribune.com, North Andover, MA

New Hampshire

January 11, 2014

LGC loses appeal before N.H. Supreme Court

CONCORD — The New Hampshire Supreme Court has upheld an order for the Local Government Center to return $33 million in surplus risk-pool funds to participating cities and towns, and restore $17 million it transferred out of its HealthTrust risk pool.

The court yesterday unanimously upheld most of the findings by the state’s Bureau of Securities Regulation last year that LGC violated state law by accruing huge surpluses, rather than returning some of the excess money to the political subdivisions that buy health and other insurance through LGC.

Pooled risk management programs — such as LGC’s HealthTrust — allow government entities to pool resources to bring down the cost of insurance premiums.

HealthTrust posted a press release on its website saying its board of directors is still reviewing the ruling.

The LGC prevailed on one point: The court ruled that hearing officer Don Mitchell exceeded his authority when he told LGC that net assets in its risk pools should not exceed 15 percent of claims and that it must buy reinsurance to cover unusually high claims. The ruling notes that state law does not require a specific level of reserves or mandate use of a particular formula for calculating reserves.

HealthTrust returned the $33 million to members Sept. 1 — as ordered — but appealed what it claimed was interference with its discretion to manage funds efficiently. The justices said state law does not grant risk pool managers “unfettered discretion” to manage and accrue risk pool funds.

“LGC argued they had absolute discretion and that argument has been completely rejected,” said attorney Andru Volinsky, who argued for the state.

Volinsky said the ruling provides a “roadmap” for risk pool managers to calculate reasonable reserves in the future.

“If good, honest people are following the same roadmap, they should come out to similar conclusions,” Volinsky said.

“When you take too much, you have to give it back, which is what this decision says,” David Lang, president of the Professional Firefighters of New Hampshire.

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