Bragdon, as new director of LGC, engages in war of words with Gardner over settlement talks [The Telegraph, Nashua, N.H.]

Sept. 29--CONCORD -- State Sen. Peter Bragdon, R-Milford, executive director of HealthTrust, and Secretary of State Bill Gardner have accused opposing camps of sabotaging a settlement to the August 2012 ruling that the former Local Government Center improperly spent more than $50 million.

In an exchange of letters, the former Senate president and the state's top election official said the other side was untruthful about why a national insurance/finance expert won't be brought in to try to resolve this long-running feud.

"The HealthTrust board asked me to express its great disappointment that the settlement discussions ended in this manner, especially following a 10-hour marathon session on Aug. 5 that seemed to yield an agreement by both sides," Bragdon wrote Gardner on Sept. 12. "As we all know, it would be in the best interest of all involved if this case could be settled."

Gardner fired back to Bragdon in a Sept. 20 letter that what Bragdon alleged about an Aug. 5 agreement was untrue.

"I could not approve of something I had never seen," Gardner wrote.

Bragdon said that on Aug. 5, an administrator with the state Bureau of Securities Regulation, members of the HealthTrust board and former LGC executive George Bald endorsed a role for insurance expert Michael Coutu to resolve disputes between that state agency and LGC.

"George Bald, the board, (BSR Director) Barry Glennon all left that meeting with an agreement," Bragdon said during an interview.

"My conjecture is Bill said, I don't want to see the agreement because it doesn't give the BSR through Mr. Coutu enough control. He says he never saw it; he just nixed it."

But Gardner said he met with Glennon the day after the Aug. 5 meeting and that there was no compromise because the HealthTrust board wouldn't give Coutu any authority to make decisions.

"Barry came in to see me the morning after, and he was very discouraged that the talks had essentially gone nowhere," Gardner said.

Glennon affirmed Gardner's account that the stumbling block was that board members affiliated with all parts of the former LGC empire refused to give Coutu the power to implement any settlement.

"Everyone on both sides knew going in to that August 5 meeting any type of arrangement we made would include Mike Coutu going in there to implement the order," Glennon said.

"This was something we required, and through two meetings it was clear they were never going to accept it."

A week after the Aug. 5 session, the HealthTrust and Property-Liability Trust boards voted to hire Bragdon and replace Bald as CEO of both trusts.

The Property-Liability board announced that longtime LGC risk pool finance executive Wendy Lee Parker would take over from Bragdon and run the PLT operation after Sept. 30.

The first weekend after starting his new $180,000-a-year job, Bragdon met privately with Coutu, and a memorandum of understanding was crafted that Gardner and Glennon signed.

The proposed deal would have HealthTrust agree to drop its court appeal and accept Coutu as a temporary receiver.

Bragdon confirmed the HealthTrust board voted on Aug. 22 against endorsing any role with Coutu and Bragdon hadn't signed the memorandum of understanding.

The board majority had wanted and didn't receive a written resolution about the terms of any settlement from the BSR, Bragdon said.

Gardner said the HealthTrust board refused to even look at the document he signed.

While a future deal can never be ruled out, Bragdon said he and the board have turned their attention to striking down the hearing officer's decision on appeal with the state Supreme Court.

"I believe at this point things are moving forward with the appeal," Bragdon said.

The immediate financial crisis is how the Property-Liability Trust will come up with $17 million in payments owed to HealthTrust by a Dec. 1 deadline.

The hearing officer judged that HealthTrust's past side payments made to the Property-Liability Trust to support a worker's compensation risk pool provided to member cities and towns were illegal.

Bragdon denied the PLT board is considering seeking bankruptcy protection to avoid having to make the payments. A pair of Boston law firms have been hired to help administrators and the boards work out "debt restructuring and financial management" solutions for PLT, Bragdon said.

"We have a number of options before us and continue to have conversations with our attorneys and advisers," Bragdon said.

David Lang, president of the Professional Association of Fire Fighters, said he's concerned about the impact of that next move.

"The $17 million that is owed to HealthTrust is money owed to the taxpayers, active and retired employees," Lang said. "I am concerned there may be a restructuring plan in the works that doesn't make those three groups whole."

Glennon said he believes the HealthTrust and PLT boards will endorse forgiving or changing the terms of the $17 million repayment from PLT to the HealthTrust at some point. Any such move would be illegal because HealthTrust has appealed the hearing officer's decision in the courts, he said.

"Any talk of settlement or somehow altering the terms of the hearing officer's order on the $17 million has to start with HealthTrust dropping the appeal," Glennon said. "The appeal cements the hearing officer's ruling until the court makes a decision on it. Legally, the trust boards can't do anything that deviates from it."

Coutu is a semiretired executive who worked with distressed insurance companies owned by Xerox and American Express and had chaired a Manchester-based holding company that at one time managed a historic $9 billion of insurance runoff investments.

Gardner wanted Coutu to become a "temporary, voluntary receiver" who would go into HealthTrust and PLT and execute a financial workout.

"I wanted someone I knew was an expert on this and could trust him to make decisions in the best interests of the state and the communities that contribute to these risk pool trusts," Gardner said. "That's why I wanted him."

Gardner said he believes Coutu's history in this matter may have become an obstacle.

Andru Volinsky, outside counsel to the BSR, enlisted Coutu to become an expert witness during the state agency's case over LGC's actions that was presented to hearing officer John Mitchell. Ironically, prior to working for the state, Coutu said he had approached the parent LGC's board and offered to advise it about how to deal with the BSR findings about the risk pools, but the LGC turned him down.

During the meetings on Aug. 5 and 22, Coutu said the same individuals turned aside his ideas for settling the case.

"I was dismissed as a misbehaved schoolboy who had been summoned to the principal's office for misdeeds," Coutu told The New Hampshire Union Leader last week. "Yet I held in my hands the key that would get PLT out of financial distress."

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Kevin Landrigan can reached at 321-7040 or klandrigan@nashua telegraph.com. Also, follow Landrigan on Twitter (@Klandrigan).

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