Rye insurance expert to be liaison between former LGC subsidiaries, regulator
CONCORD — A Rye insurance expert who twice offered his services to the former New Hampshire Local Government Center as it struggled with looming payments ordered by a state hearing officer in 2012 will be brought in to serve as a “liaison” between LGC’s surviving former subsidiaries and their regulator, the state Bureau of Securities Regulation.
The placement of Michael Coutu, who has managed insurance runoff services for companies like American Express and Xerox, is part of a consent decree agreed to this week by the BSR and those entities, HealthTrust and Property-Liability Trust, that was announced Friday. The agreement came following days of negotiations that began just as a hearing on whether HealthTrust and Property-Liability Trust would keep their quasi-government, tax-free status was set to start on Monday.
“Obviously, the board felt (the agreement) was a way to move things forward and establish trust” with regulators, HealthTrust Executive Director Peter Bragdon said.
Last year, Coutu said he was “dismissed as a misbehaved schoolboy” after two attempts to help Property-Liability Trust meet a $17.1 million payment to return money that had been taken from HealthTrust to subsidize a money-losing workers’ compensation program for more than a decade.
The sticking point then was a clause in the proposals that would have Coutu answerable only to Secretary of State William Gardner for matters pertaining to the order. HealthTrust board members said they felt that granting him broad powers not subject to board approval would be an abdication of their fiduciary responsibility.
Under terms of the new agreement, provided by Bragdon, Coutu would have “reasonable” access “in a nondisruptive manner” to Bragdon, Property-Liability Trust Executive Director Wendy Parker and other executives, as well as access to the entities’ actuaries, pending the approval of HealthTrust and PLT executives.
Many of the other powers granted to Coutu can be exercised by any member of the public, such as access to business records that are public record, board meetings and the ability to ask questions of board members.
Under the one-year term of the agreement, Coutu will be provided office space at the entities’ building at Triangle Park Drive and will be paid a $180,000 salary. The BSR will pay half of it, while HealthTrust will pay 45 percent and PLT 5 percent.
The BSR had asked Secretary of State hearing officer Donald Mitchell to revoke the entities’ tax-free status under a state law, RSA 5-b, which allows communities to form risk pools to manage insurance costs for employees and public property. Had the BSR prevailed, the former LGC entities, HealthTrust and Property-Liability Trust, which administer health, property and liability coverage for member towns, villages and school districts and collectively control about $500 million in taxpayer-funded assets, would have been subject to state taxation and regulation by the state Insurance Department.
The BSR request was in response to a secret agreement reached in October and announced after a state Supreme Court ruling in January that, in part, required Property-Liability Trust to return $17.1 million in subsidiaries provided by HealthTrust over the course of 12 years to keep afloat a money-losing workers’ compensation program. Under that agreement, HealthTrust acquired all of Property-Liability Trust’s assets and liabilities and announced it was managing a “runoff” of PLT’s outstanding obligations.
A deal announced last month would undo the secret agreement and call for Property-Liability Trust to reacquire its assets and liabilities from HealthTrust and repay the $17.1 million. HealthTrust plans to distribute the $17.1 million to its member communities and school districts.
The sides differed on whether the $17.1 million transfer from Property-Liability Trust to HealthTrust should include a $1.7 million interest in the entities’ shared building in Concord and whether PLT effectively shut down when the secret agreement was announced and executed in January.
The consent decree lowers the amount Property-Liability Trust can claim in ownership of the building to $1.2 million and stipulates that a $500,000 cash payment be made by next month.
The decree withdraws the BSR’s motion to revoke the entities’ tax-free status. It also stipulates that Property-Liability Trust can offer no new contract after June 30, 2016, without Mitchell’s approval and stipulates that HealthTrust can operate no property or workers’ compensation coverage unless approved by Mitchell.
Further, HealthTrust and Property-Liability Trust will reimburse the state for the BSR’s legal costs associated with bringing the latest complaint.