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LGC members off the hook for $17.1m repayment order

New Hampshire Union Leader

March 02. 2013 10:54PM

CONCORD - Municipalities and school districts that participate in workers' compensation insurance provided by an arm of the New Hampshire Local Government Center will not be forced to collectively repay $17.1 million the program has been ordered to repay to towns and cities participating in a separate risk pool, according to a letter sent to members.

In August, the Secretary of State's Office ordered the Property and Liability Trust, an offshoot of LGC, to repay the money to towns and cities in the LGC's health insurance pool, which is known as HealthTrust. The LGC has appealed that order to the state Supreme Court.

Since its inception in 2000, the workers' compensation program has annually operated at a loss and had been subsidized by the health insurance pool, as well as contributions from Property and Liability Trust, which is the parent organization of the workers' compensation program.

The repayment is due Dec. 1. The organization's HealthTrust and Property and Liability Trust programs have also been ordered to repay a combined $36 million, but have sufficient cash reserves to make those payments. The workers' compensation program has no cash reserves.

A story in Tuesday's New Hampshire Union Leader cited state law and LGC member agreements that indicate that members of the workers' compensation program could be forced to raise the funds to repay the sum.

Dennis Pavlicek, the Newbury town administrator who serves as chairman of the Property and Liability Trust Board, said in a letter to members of the workers' compensation program that LGC will not charge the members.

"We continue to look at different options for repayment. This situation is a priority for us," Pavlicek wrote. "Also, we stand firm that any repayment is the responsibility of the Property-Liability Trust (PLT) and not the members themselves. We truly value your membership, and we are doing all we can to resolve these issues."

Pavlicek said Saturday that he hadn't received any calls from workers' compensation members and that the letter was sent "to address any concerns any of them may have had."

LGC officials have said the order could mean the collapse of the workers' compensation program, which covers about 25,000 employees. There were 220 communities, organizations and school districts enrolled in the workers' compensation program as of Feb. 27, according to a list provided by Wendy Parker, deputy director for risk pool operations.

Parker has cited another state law which says, in part, that participation in a risk pool, such as the workers' compensation program, "shall not subject any such political subdivision to any liability to any third party for the acts or omissions of the pooled risk management program."

"We haven't come up with any definitive solution yet," Pavlicek said. "We're still discussing it at the board level."

No matter what happens to the program, existing claims would be covered through a secure guaranty of about $11.4 million that is under the control of the Department of Labor. Parker said the guaranty, a security deposit held at Merrimack County Savings Bank, is backed by a claims reserve the workers' compensation program holds of $11.4 million in investment securities.

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