CONCORD — Two former New Hampshire Local Government Center subsidiaries have terminated a secret agreement reached last year that resulted in state regulators seeking to revoke the public insurance administrators’ quasi-government status.
The deal announced Tuesday calls for Property-Liability Trust to reacquire its assets and liabilities from HealthTrust and repay $17.1 million that had been taken from HealthTrust to subsidize a money-losing workers’ compensation program for more than a decade.
“This is very good news for PLT members,” PLT Executive Director Wendy Lee Parker said. “Members reducing their claims, proactive claims handling by PLT staff in combination with our robust educational offerings have made this possible.”
HealthTrust and PLT administer health, property, casualty and workers’ compensation insurance for public employees and member towns, cities and school districts. They were under the corporate umbrella of the LGC until last August, when a reorganization split the entities into separate corporations, though they continue to share a building, as well as human resources, communications and information technology services.
Tuesday’s agreement terminates a secret agreement reached in October and announced following a state Supreme Court decision in January that upheld nearly all of an August 2012 Secretary of State hearing officer’s order that included the $17.1 million repayment. That earlier agreement saw HealthTrust acquire PLT to, according to HealthTrust Executive Director Peter Bragdon, avoid PLT entering bankruptcy. At the time, Bragdon said, HealthTrust and PLT officials believed PLT had net assets of about $13.9 million, meaning it couldn’t make the payment.
Bragdon said actuarial reports done in the wake of the January reorganization have since showed that, primarily because of lower claims, “there was too much money being held back in reserves” and that PLT could make the payment without going insolvent.
“It was in our best interest in January to reach the settlement agreement,” Bragdon said. “If we hadn’t done the settlement agreement, we wouldn’t be having this conversation now because everything would be held up in bankruptcy court, claims wouldn’t be paid and HealthTrust members wouldn’t end up with their $17 million.”
Shortly after that agreement was announced, the Bureau of Securities Regulation filed a motion seeking to revoke HealthTrust’s and PLT’s status as a quasi-government agency and revert the entities into private organizations subject to taxation and regulation by the state Insurance Department.
“From my perspective, this addresses their concerns,” Bragdon said. “By undoing the settlement agreement, it addresses the issue they had identified, in my opinion.”
However, those proceedings, which continue Monday, will not cease following the new agreement, Bureau of Securities Regulation Director Barry Glennon said.
“Although purporting to be good news for taxpayers, this agreement is coming at the 11th hour following four years of litigation, millions of dollars in unnecessary legal expenses and a Supreme Court decision ordering the return of these monies,” Glennon said.
Bragdon said the returned money would be distributed to HealthTrust members within the next several weeks, but not all of the repayment will be in cash. According to Parker, $15,372,896 will be paid in cash; the remaining $1,727,104 will be made up of a transfer of PLT’s ownership in the building the entities share at 25 Triangle Park in Concord to HealthTrust.
According to the original order, PLT had to return “the $17.1 million subsidy.” Throughout the years the workers’ compensation program was being subsidized, all transfers were in cash.
David Lang, president of the Professional Fire Fighters of New Hampshire, who waged a decade-long battle with the LGC that culminated in a state Supreme Court decision that forced LGC and its subsidiaries to comply with state right-to-know laws, said the inclusion of the building’s value in the payment is troubling.
“If the building is part of it, then we didn’t get back all of our $17 million,” he said. “The people are not getting made whole. Once again, it’s a sham.”
Lang on Tuesday called on the state Attorney General’s Office to open an investigation into HealthTrust and PLT.
“Enough is enough,” Lang said. “In order to ensure the integrity of the public’s money, this is not only reasonable, but should be an immediate course of action.”
Bragdon, though, said every move has been done to protect members of the risk pools.
“All actions that have been taken ... have been to maximize the amount HealthTrust could get out of this,” he said.