CONCORD — An expert in the insurance and finance fields who made a career of helping failing insurance companies was twice brought to the New Hampshire Local Government Center to help its struggling Property-Liability Trust make good on looming payments that threaten to send the public property insurance administrator into financial insolvency.
Each time, members of various LGC boards of directors sent Michael A. Coutu, who had the backing of the Secretary of State’s Office and a plan to get the struggling public insurance administrator out of trouble, packing, he said.
“I was dismissed as a misbehaved schoolboy who had been summoned to the principal’s office for misdeeds,” Coutu said. “Yet I held in my hands the key that would get PLT out of financial distress.”
His viewpoint is not shared by board members who said they were not willing to abdicate their responsibilities as board members to someone who would, according to proposed agreements, answer to the Secretary of State’s Office rather than the boards.
“If the boards were to turn everything over to a hand-picked person of the Secretary of State, the boards would be derelict in their duty,” said HealthTrust board member and Laconia City Manager Scott Myers.
“I don’t think it was right or in the powers of the Secretary of State to put someone in charge,” said Peter J. Curro, chairman of the HealthTrust Board.
HealthTrust and Property-Liability Trust are former LGC subsidiaries that became not-for-profit corporations on Sept. 1 following a corporate reorganization. They respectively administer health insurance and property and liability coverage for member towns, cities and other political subdivisions in New Hampshire and control nearly $500 million in taxpayer-funded assets and liabilities.
The latest dismissal, Coutu said, happened Aug. 22 in a closed-door meeting of the board of HealthTrust. Coutu said he and Executive Director Peter Bragdon had hammered out a contract for his services the previous weekend after Bragdon inquired as to whether the plan, which had previously fallen through after a lengthy Aug. 5 meeting, could be rekindled.
LGC’s state regulator, Bureau of Securities Regulation Director Barry Glennon, and Secretary of State William Gardner agreed to the terms, which said Coutu would guide LGC through an order by state hearing officer Donald Mitchell that compels PLT to return $17.1 million that was deemed to be improperly taken from HealthTrust members to subsidize a money-losing workers’ compensation program.
But after that short Aug. 22 meeting, Coutu said, the HealthTrust board told him that his services were not required. A planned meeting of the Property-Liability Trust board to hear Coutu’s proposal was abruptly cancelled.
Less than a month later, Property-Liability Trust, which does not have the surplus cash on hand to make the $17.1 million payment, hired Boston bankruptcy attorney Peter N. Baylor, though Bragdon has said PLT is not pursuing bankruptcy.
Coutu said his career included working with distressed insurance carriers owned by companies like Xerox and American Express. According to his resume, he also served as chairman of The RiverStone Group of Manchester, which is managing $9 billion worth of insurance voluntary runoffs — the largest such portfolio in U.S. history. He retired three years ago and now lives in Rye.
He also successfully negotiated agreements between the BSR and the two other public risk pools in the state, Primex and Schoolcare, that saw those entities similarly return excess surpluses to their members.
“I’ve been involved in a lot of complicated stuff,” he said.
When the Secretary of State’s Office and the BSR began investigating LGC’s risk pool operations in 2011, Coutu sent some emails to the BSR that ultimately saw him serve as an expert witness for the BSR during hearings last year that resulted in the order, which also compelled HealthTrust to return $33.2 million, and PLT to return $3.1 million, to members from surpluses that were deemed too high.
LGC has appealed the order to the state Supreme Court.
He said Gardner tried to convince LGC board members earlier this year that he should be brought in. Gardner’s effort “produced no dividends,” Coutu said.
“I think Bill Gardner went out of his way to find a solution that is in the best interest of all the parties involved,” Coutu said.
Then the meeting of Aug. 5 happened after then-interim Executive Director George Bald attempted to have Coutu guide PLT through the remaining parts of the order, including the $17.1 million payment.
At the Aug. 5 meeting, Coutu, Glennon, Bald and several board members of LGC entities spent about 10 hours negotiating the terms of an agreement to have Coutu help PLT with implementing the order.
But who said “no” to whom following that meeting remains a disagreement that has widened the mistrust between the insurance administrators and the BSR.
“Unfortunately, I think (the relationship is) still strained,” Myers said.
According to Coutu, it was LGC that balked. He said board members refused a stipulation that Coutu be brought in, answerable to Gardner, to implement the order. According to that failed agreement, Coutu said, for any matters not directly related to the order, he would be answerable to the boards of the risk pools. He said the HealthTrust Board similarly refused the stipulation on Aug. 22.
“They sort of brushed me aside then,” Coutu said of Aug. 5. “They just as vigorously brushed me aside (Aug. 22).”
Curro disagreed, saying the board believed a deal had been worked out, but that Gardner would not agree to it.
“The Secretary of State nixed the deal,” he said. “He thought (Glennon and Coutu) had given up too much. We never even got the chance to vote on the agreement.”
Coutu said he was, in attempting to give the board some control and in coming up with a solution for PLT to make the payments, trying to find an equitable solution. He said he believed that, beyond the components of the order, he could have lent his expertise to help LGC deliver high quality insurance products to its members in a more cost-effective way and said LGC and other public risk pool administrators provide a “much-needed and valued” service.
“They shot down the Mike Coutu piece,” Coutu said. “Why? Why is LGC so adamant about not letting me through those doors?”
Myers said the problem is not Coutu, but Gardner’s insistence that Coutu be given broad powers over any of HealthTrust’s and PLT’s operations, including those related to the order, that supersede the board’s authority.
“The board is not going to give up day-to-day operations to someone the Secretary of State has hand picked. This goes against the fundamental fiduciary responsibility or role of a board member,” Myers said.
On Aug. 22, the board refused to discuss Coutu’s involvement unless it could see, in writing, what Coutu had proposed in the draft. Glennon declined to release it, a move that Myers called “disappointing.”