Thursday, June 18, 2009
JUA charge state with theft
by Michael Kitch
Laconia — A group of more than 200 health care
providers insured by New Hampshire Medical
Malpractice Joint Underwriting Association (JUA),
including LRGHealthcare — one of the three named
plaintiffs, yesterday brought suit against the JUA and
the state in Belknap County Superior Court to forestall
the transfer of $110-million in JUA funds, which they
claim belong to the policyholders, not to the state
general fund.
The policyholders flung down the gauntlet just as
lawmakers struggled to balance the 2010-2011 state
budget, which now includes the $110-million. In
February, Governor John Lynch proposed using the
funds to help overcome yawning deficits in the state
budget. On the strength of an opinion by the New
Hampshire Attorney General's office, the House of
Representatives included the measure as the first
section of House Bill 2 and the Senate concurred as
Senator Lou D'Allesandro (D-Manchester) called the
money "the easiest $110-million I have ever raised."
The court has scheduled a hearing in the case before
Judge Kathleen McGuire on June 29, the day before
the state budget is due to be adopted. Meanwhile, on
learning of the suit, lawmakers amended HB-2 to
provide that the funds may be transferred from the JUA
to the state not later than July 31, instead of June 30, to
ensure that $65-million of the surplus can be applied
against a projected deficit in the current fiscal year and
the balance used in the next two years.
Representing the policyholders, attorney Kevin
Fitzgerald of Nixon and Peabody of Manchester
opened the pleadings filed yesterday by declaring "this
case can be summed up in a simple commandment:
Thou shall not steal" and referred to the ploy as "a
raid," "theft," and "plunder" throughout the brief. "This
case is all about whose money is it," Fitzgerald said
yesterday. "We're not questioning that the state needs
the money, but we are insisting that they must pursue
lawful means to get it."
The JUA was established in 1975 when private
insurance carriers failed to offer malpractice policies at
reasonable rates, threatening to increase the cost and
reduce the access to health care. The fund is managed
by a board of directors according to rules adopted by
the Insurance Department. About half of the
approximately 900 policy holders are physicians.
LRGHealthcare, which operates Lakes Region General
and Franklin Regional hospitals, is the lone hospital
group insured by the JUA while other policy holders
include more than 20 nursing homes, home health
agencies and individual nurses, physicians' assistants,
podiatrists, chiropractors and optometrists.
Although the state created the JUA, it has never
contributed to funding it.
Instead, the JUA operates much like a mutual
insurance company, paying its losses and meeting its
expenses from the premiums paid by policyholders.
The rules set up by lawmakers provide that if JUA
accumulates a surplus, that is if premiums "exceed the
amount necessary to pay losses and expenses," then the
board shall . . . distribute such excess to those health
care providers covered by the association, in such a
manner as is just and equitable."
The Insurance Department has calculated that by
operating efficiently, investing wisely and managing
claims effectively the JUA holds about $165-million to
meet its obligations, but requires just $55-million,
describing the difference — $110-million — as
"surplus."
The policyholders went to court only after failing to
persuade the governor, legislative leadership, JUA,
Insurance Department and Attorney General to follow
the law. In fact, the suit alleges that when the
policyholders asserted their claim to the surplus and
challenged the legality of transferring it to the state, "the
Insurance Commissioner and Attorney General
responded with thug-like behavior" designed to dissuade
the JUA from fulfilling its duties.
Henry Lipman, senior vice-president and chief
financial officer of LRGH, who was party to these
efforts said that when they were rebuffed, litigation
remained the sole alternative. LRGH pays $1.1-million
in annual premiums, which he estimated may represent
between a fifth and a quarter of the total.