side note: This is a phenomena of the times. With state budgets across the country grossly in the red, several governors have taken (or tried to take) surplus money from state-regulated funds set-up with physician dollars to compensate victims of gross medical negligence. The doctors claim the money belongs to them, not the state. New Hampshire and its physicians have been battling it out in the courts for quite some time. This is the most recent news item.
A coalition of New Hampshire health care providers is accusing officials of circumventing a state Supreme Court ruling that the state could not tap a $110 million surplus from the New Hampshire Medical Professional Liability Joint Underwriting Association to help balance its budget.
The Supreme court affirmed the July 2009 decision by Belknap County Superior Court Judge Kathleen McGuire that found the transfer to be unconstitutional. Gov. John Lynch’s administration petition the court for reconsideration, but the request was denied (BestWire, Feb. 12, 2010).
The providers, the same plaintiffs in the litigation, said state officials are still trying to claim the funds. In a letter to Lynch, they cited remarks from the governor’s spokesman that the state still had a right to the funds and legislative testimony in which Insurance Commissioner Roger Sevigny claimed a potential tax liability from the fund to the state. The letter was followed by a petition for mandamus, a filing in which they asked the Supreme Court to enforce its decision.
“It’s amazing finger-in-the-eye behavior,” said Scott O’Connell, an attorney representing the providers, all JUA policyholders.
After the petition was filed, the insurance commissioner proposed rule changes that would allow for the appropriation of 23 years of excess surplus funds for the state, O’Connell said. “These attempted legislative gymnastics are, in our view, equally flawed to the first attempted raid on these funds. The moral of this story, I guess, is that if you don’t like the rule of law as established by a court, you try to change the law,” he said.
The state is considering its legal options, but has not touched the funds in dispute, said Glenn Perlow, an assistant attorney general and spokesman for the office. “The money is where it was,” he said.
The state has maintained that the JUA is part of state government, Perlow said.
State attorneys have argued that JUA policyholders do not have a constitutional right to surplus funds. They previously noted the JUA distributed surplus funds to policyholders just twice in more than two decades.
New Hampshire created the JUA, which is overseen by the insurance department, in the 1970s to offer coverage to a then-troubled market. Sevigny and other state officials have defended the money shift, saying the surplus is “profit” the JUA earned through good management and the advantage of its tax-exempt status. The amount at issue is nearly 12 times the amount paid by policyholders in 2008, Sevigny said (BestWire, July 7, 2009).
The top five writers of medical professional liability insurance in New Hampshire in 2009 were ProMutual Group, with a 31.7% market share; Medical Mutual Insurance Company of Maine, with 21.2%; American International Group, with 11.7%; CNA Insurance Cos., with 6.8%; and Ace INA Group, with 5.4%, according to BestLink, which provides online access to A.M. Best’s Global Insurance & Banking Database.
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