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August 17. 2012 9:58AM
Local Government Center order to repay cities and towns $50M
CONCORD – The Local Government Center has to refund $50 million to cities and towns according to ruling by a special hearings officer for the Secretary of State's Office.
Hearing officer Donald Mitchell ruled the organization violated state risk poll statutes in using surplus funds from its health insurance program to institute a workers compensation insurance program and for other purposes.
Mitchell wrote the LGC, "improperly accrued and retained unnecessary surplus funds, improperly transferred assets and improperly expended funds for purposes beyond those permitted in the statute, and fail[ed] to return excess funds to political subdivisions which are members."
He also ruled state law covers operations of its risk pools and the organization may not legally operate at the sole discretion of its board of directors in operating the pools and in determining reserve levels as the group's attorneys had argued.
However, Mitchell did dismiss all counts accusing the LGC or violating state securities statutes and also dismissed allegations against Executive Director Maura Carroll and Board Member Peter Curro.
In a statement from the LGC, it said "It will take some time to review the Order in detail, but we are pleased that three out of the five counts against the Local Government Center, all counts regarding the securities claims, were dismissed by the Hearing Officer."
However the LGC took issue with Mitchell's finding that the board could not act with sole discretion in the operation and setting reserves in its risk pools. "After hearing extensive testimony from actuaries and risk pool experts it is hard to understand how he could question the soundness of our Board's actions," the group said in its statement.
Mitchell also ordered the LGC to no longer require member municipalities to join and pay dues to the New Hampshire Municipal Association.
The LGC must pay the fees and costs of the litigation. Additional proceedings may be held if the parties do not agree on reasonable amounts.
The LGC has 30 days to file a request for reconsideration of the decision and following the reconsideration decision the order can be appealed to the state Supreme Court.
Investigators in the Bureau of Securities had said the LGC should refund about $100 million to the cities and towns in surplus funds in its health insurance pool, but the LGC claimed its returns surpluses to its members through lower premiums.
Hearing officer Donald Mitchell ruled the organization violated state risk poll statutes in using surplus funds from its health insurance program to institute a workers compensation insurance program and for other purposes.
Mitchell wrote the LGC, "improperly accrued and retained unnecessary surplus funds, improperly transferred assets and improperly expended funds for purposes beyond those permitted in the statute, and fail[ed] to return excess funds to political subdivisions which are members."
He also ruled state law covers operations of its risk pools and the organization may not legally operate at the sole discretion of its board of directors in operating the pools and in determining reserve levels as the group's attorneys had argued.
However, Mitchell did dismiss all counts accusing the LGC or violating state securities statutes and also dismissed allegations against Executive Director Maura Carroll and Board Member Peter Curro.
In a statement from the LGC, it said "It will take some time to review the Order in detail, but we are pleased that three out of the five counts against the Local Government Center, all counts regarding the securities claims, were dismissed by the Hearing Officer."
However the LGC took issue with Mitchell's finding that the board could not act with sole discretion in the operation and setting reserves in its risk pools. "After hearing extensive testimony from actuaries and risk pool experts it is hard to understand how he could question the soundness of our Board's actions," the group said in its statement.
Mitchell also ordered the LGC to no longer require member municipalities to join and pay dues to the New Hampshire Municipal Association.
The LGC must pay the fees and costs of the litigation. Additional proceedings may be held if the parties do not agree on reasonable amounts.
The LGC has 30 days to file a request for reconsideration of the decision and following the reconsideration decision the order can be appealed to the state Supreme Court.
Investigators in the Bureau of Securities had said the LGC should refund about $100 million to the cities and towns in surplus funds in its health insurance pool, but the LGC claimed its returns surpluses to its members through lower premiums.