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NH urges towns not to plan for insurance refunds

By Lynne Tuohy
Associated Press Writer / June 16, 2010

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CONCORD, N.H.—Municipal officials in New Hampshire are being cautioned not to budget for refunds they could receive from three public employee health insurance pools just because state officials have stepped up oversight of the funds.

State Senate Majority Leader Maggie Hassan, an Exeter Democrat and sponsor of the oversight legislation, said Wednesday that participating cities and towns might see refunds next year if audits show the Local Government Center and two other insurance risk pools have amassed larger-than-needed reserve funds.

"As a municipality, I wouldn't plan my budget around this right now," Hassan said.

Legislation signed by Gov. John Lynch this week clarifies the authority that Secretary of State Bill Gardner has to audit the risk pool firms that cover public employees and political entities. The law also requires input by the state insurance commissioner and an actuary to determine what the permissible levels of cash reserves should be.

Deputy Secretary of State David Scanlan said LGC has forced the state to go to court on several occasions in the past year to compel the production of records. The state began investigating LGC after receiving a complaint last year, Scanlan said. He would not identify the complainant.

Scanlan said the investigation into LGC has been "put on the back burner" while the Bureau of Securities Review wraps up an examination of the Financial Resources Mortgage collapse. "In the next couple of weeks it will start moving again," he said.

He said the question of how much money contributing towns would get back, if any, "is still very much up in the air." Scanlan also said he believes any plan to refund money would first be presented to the legislature for review.

The Professional Firefighters of New Hampshire -- the state union for active and retired firefighters -- has sued LGC. The union claims health care funds have been diverted for non-approved uses and that LGC has co-mingled funds from two separate risk pools it controls.

Municipalities contribute to risk pools such as LGC to obtain health and other forms of insurance at more affordable rates.

In financial statements filed with the Secretary of State's Office in January, LGC stated it had net assets of $92.6 million after operating expenses and liabilities were paid. SchoolCare, a Manchester-based risk pool, reported in April it had $33.9 million in net assets. The New Hampshire Public Risk Management Exchange (PRIMEX) reported net assets of $54.4 million in its May filing.

"It's easy for these firms to begin to grow at their contributors' expense," Hassan said. "They sometimes forget they could grow a little less and return money. I think it's very important this taxpayer money have some oversight by people who are not part of the organization."

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