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New Hampshire Supreme Court rules that LGC must repay millions to communities

The New Hampshire Supreme Court issued a ruling this morning in the legal fight between the former Local Government Center and its state regulator. The court upheld key findings against the LGC by a Bureau of Securities Regulation hearing officer. But it vacated other aspects of that August 2012 decision that would have placed additional regulations on the organization.

Among the findings in today’s 22-page court ruling:

∎ The LGC must repay millions of dollars in excess funds to member communities of its Property-Liability Trust. The court agreed with an earlier ruling that the LGC illegally kept that money.

∎ The LGC improperly transferred $17.1 million from its health insurance trust into its workers’ compensation trust.

∎ The hearing officer did not have the power to require the LGC to purchase reinsurance, or to set a ratio for funds the organization is allowed to retain.

The LGC, which provided insurance to local governments, was dissolved last year. The two risk pools it ran, HealthTrust and Property-Liability Trust, were left to run as independent organizations. They still provide insurance to cities, towns and school districts around the state.

The Bureau of Securities Regulation, part of Secretary of State Bill Gardner’s office, regulates public risk pools. It began investigating the LGC’s business practices in 2009 and accused it of retaining money that should have been refunded to members and illegally subsidizing its workers’ compensation business with revenue from its health insurance business.

The LGC was ordered in 2012 to return money to its members and repay $17.1 million from its Property-Liability Trust to Health Trust.

The LGC appealed that ruling, which came from a Bureau of Securities Regulation hearing officer, to the New Hampshire Supreme Court. They argued that the administrative hearing officer did not have the power to set new standards for the organization.

The New Hampshire Supreme Court heard the case in November. For full coverage, read tomorrow’s Monitor.

(Laura McCrystal can be reached at 369-3312 or or on Twitter @lmccrystal.)

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