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Former LGC entities agree to tentative arrangement including more state oversight

The two public risk pools that used to make up the Local Government Center have come to a tentative agreement with the state that would subject them to more state oversight.

HealthTrust and Property-Liability Trust released the terms of the agreement yesterday, but hearing officer Don Mitchell has not yet agreed to it. The agreement marks a new stage in the years-long battle between the state and the risk pools. The two risk pools used to form the Local Government Center, which provided health, workers’ compensation and other insurance to municipalities and school districts. Last year, the Bureau of Securities Regulation found that the LGC improperly withheld $33 million from its member communities and used $17 million from its health insurance plans to prop up workers’ compensation plans.

In January, the state Supreme Court upheld those findings, including an order that the two risk pools must operate as separate entities. But the legal problems didn’t stop there, as the two pools entered into a debt-recovery agreement that, in effect, put them back under one roof.

This week’s agreement, if accepted by the hearing officer, could finally put the legal issues to rest. Representatives from both Property-Liability Trust and HealthTrust said they are ready to rebuild trust with the state and return their focus to their members. The agreement, however, gives the state considerable authority to monitor both entities’ actions and the power to stop Property-Liability Trust from entering into new contracts. Since the agreement is not final, the Bureau of Securities Regulation is not commenting on it at this time.

Under the agreement, Property-Liability Trust must pay an additional $519,000 that it still owes HealthTrust within 30 days of the agreement being signed. It also says Property-Liability Trust must fulfill all of its contracts with members through June 2016. But the trust cannot issue any new policies, extend or renew any contracts without approval by the Bureau of Securities Regulation. For approval, it would have to show it has the financial viability to support those policies. If it can’t prove that, the state could ask it to run off its obligations, effectively shutting it down, according to a copy of the agreement.

HealthTrust, for its part, is barred under the agreement from offering any plans that cover workers’ compensation, liability coverage or unemployment compensation insurance unless given permission by the state.

The agreement also gives a liaison for the Bureau of Securities Regulation on-site access to both HealthTrust and Property-Liability Trust for the next year. That liaison will have access to business, financial and nonprivileged documents. That liaison, as well as chief operating officers for both trusts and someone from the bureau, will meet monthly, under the terms of the agreement.

Executives from both HealthTrust and Property-Liability Trust said the agreement, if signed, will have little impact on the services they provide to members. But the agreement, particularly the oversight given to the bureau and the creation of a liaison, will serve to rebuild trust between the risk pools and the state.

“I think it’d actually be a good chance to build some bridges,” HealthTrust Executive Director Peter Bragdon said regarding the liaison. Despite a lengthy legal battle, he noted that more than 90 percent of HealthTrust members elected to renew their policies this year.

Wendy Parker, executive director of Property-Liability Trust, said she looks forward to building a positive relationship with the state going forward. For members, the BSR’s oversight over new policies will be “added security,” she said.

“The most important thing is our members know now that their coverage is secure,” she said.

(Kathleen Ronayne can be reached at 369-3309 or kronayne@cmonitor.com or on Twitter @kronayne.)

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