DURHAM - Twelve New Hampshire municipalities have filed a complaint with the Bureau of Securities Regulation regarding how the Local Government Center plans to refund more than $52 million in surplus funds it illegally accrued over several years.
In a letter sent to BSR Director Barry Glennon, the towns argue that the LGC's proposed refund through issuance of future insurance premium "holidays" to current members will not include all municipalities and school districts that contributed to the creation of surplus funds.
All of the towns listed in the complaint have since taken at least some of their insurance business elsewhere. Peterborough moved from LGC's HealthTrust program to Schoolcare as of June 30, as did one of Durham's four unions and its non-union employees.
Durham Town Administrator Todd Selig said the LGC is trying to have its cake and eat it too.
"They broke the law ... and they don't want to return the surplus to communities who contributed to it, and that's problematic," Selig said.
The other towns named in the complaint include Auburn, Bennington, Canaan, Greenfield, Henniker, Lyndeborough, Northfield, Plainfield, Raymond and Temple.
Peterborough Town Administrator Pam Brenner said the LGC proposal discriminates against at least 20 other New Hampshire municipalities and school districts.
"This is patently unfair to local taxpayers from these communities whose annual insurance premiums to the LGC were utilized to amass significant illegal reserves by the organization, one of the largest risk pools in the nation," Brenner and Selig said in a news release issued Monday.
In August 2012, BSR hearing officer Donald Mitchell agreed with the state that LGC had amassed money by overcharging cities, towns and school districts for health insurance and not returning enough surplus to member communities. LGC was ordered to return more than $52 million to communities, including $33.2 million from HealthTrust, $17.1 million from the property-liability pool siphoned from HealthTrust and $3.1 million from property-liability for communities that joined after June 14, 2010.
Brenner said she does not know specifically how much the town of Peterborough overpaid to the LGC. The complaint indicates an audit needs to be done and pro-rated amounts need to be determined.
"Whether it is a great deal of money or a little bit, we feel strongly that Peterborough, Durham and other communities mentioned need to be refunded," Brenner said. "Just because we are not in the trust anymore doesn't mean we shouldn't be getting our pro-rated amount."
Selig and Brenner said it is "common sense" that since the LGC had an obligation to perform an audit and actuarial analysis of the insurance programs, and then refund any surplus funds on an annual basis, the refund of funds should be calculated on an annual basis and credited to the members of these insurance programs on an annual basis.
Selig said the municipalities are hopeful that the BSR will take up and review the matter.
"Ultimately we believe they will agree with our position," Selig said.
Glennon said the Bureau of Securities Regulation is reviewing the letter, which he received Monday afternoon.
"We have yet to determine whether we will be proceeding with this matter as a separate complaint, but certainly we need to review it further before taking any action," Glennon said.