Judge: State Supreme Court should decide how to divvy up $86m insurance surplus

May 04--A Superior Court judge is asking the New Hampshire Supreme Court to decide how best to divvy up at least $86 million in surplus to health care providers held by a quasi-public, medical malpractice insurance company that's going out of business.

The New Hampshire Legislature, insurance commissioner and lawyers for these policyholders are all in agreement on the outline for distributing dollars to the roughly 6,000 hospitals, doctors and other medical providers who paid insurance premiums since 1986 to the New Hampshire Medical Malpractice Joint Underwriting Association.

But Merrimack County Judge Richard McNamara said a 2015 law that spelled out the process to take place -- known as an interpleader -- has no precedent.

"In the circumstances of this case, where the need for a remedy is apparent, the procedure to be applied unclear and the amount of money at stake, $86 million, is significant, the court believes that the New Hampshire Supreme Court should determine what procedure should be applied to adjudicate the competing claims of the policyholders in this matter," McNamara wrote.

This JUA was set up in 1976 at a time when health care providers had great difficulty obtaining affordable medical malpractice insurance.

For decades it operated without controversy until at the height of peak earnings and position in the marketplace.

That's when the JUA's surplus was so big, it was irresistible for then-Gov. John Lynch and the Legislature to try and grab in the midst of the last recession.

Lynch proposed, and lawmakers endorsed, using $110 million of it in 2009 to balance the state budget.

The New Hampshire Supreme Court, in a 3-2 decision, blocked the move in January 2010, ruling it violated the contractual rights of these policyholders.

Ultimately the providers got the $110 million in surplus given to them in June 2013.

And in 2015 the Legislature agreed the private insurance market was robust enough to break up this JUA and adopted this law setting up the JUA's liquidation.

Last summer, the state awarded JUA's insurance business to a private company, the Medical Protective Co. (MedPro), which was given $23.8 million of surplus to cover these customers.

The ruling can be viewed below:

McNamara said there's no doubt the policyholders are entitled to this money.

"The real issue here is not a declaration of rights, but a determination of what percentage of the funds should be distributed, what percentage should be retained and to whom the funds should be disbursed," he wrote.

Sevigny and his expert, Special Deputy Commissioner Peter Bengelsdorf, certified the JUA had $86 million in available surplus and in February asked the judge to release $50 million to policyholders leaving $36 million in the fund to deal with tax, operating costs and any unresolved issues.

The ruling surely delays for a significant time the dispensing of this money.

The lead plaintiff in the case, Dr. Georgia Tuttle, a Lebanon dermatologist, said with the passage of too much time they may be unable to find all the surviving policyholders or their next of kin entitled to this money.

"I look forward to that day of the final distribution," Dr. Tuttle said. "The longer this goes on, the harder it will be to find these folks. I consider them the greatest generation. These people worked with no 401K plans, they had to finance their own retirements and with deaths and personal tragedies that have taken place, this money even if it's just a check for under $1,000, it really means a lot to them."

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