A new proposal has emerged to settle much (but far from all) of the legal and political controversy over New Hampshire’s unique medical malpractice insurance fund. Primarily, it would settle the matter of who has a right to the extra money in the fund.
Sen. Sharon Carson (R-Londonderry) has proposed a new way to settle the JUA controversy.
Senate Bill 170 first forbids the state from claiming any surplus funds from the Joint Underwriting Association — either through legislation or taxation. It also orders that any “excess surplus” funds be distributed to policyholders. That excess measures at least $110 million, according to the bill. And that $110 million is at the core of the two-year controversy.
A House committee will hold a public hearing on SB 170 Tuesday.
the backstory
The JUA (officially known as the New Hampshire Medical Malpractice Joint Underwriting Association) is an otherwise unknown structure. Founded in 1981 by the N.H. Legislature, it was designed to help doctors, hospitals and other medical providers find affordable medical malpractice insurance through a state-administered not-for-profit agency.
Over the years, plenty of money has built up at the JUA from premium payments made by policyholders. The fund goes beyond a prudent reserve, some say, to the point of having “excess” surplus funds.
The JUA became a political flashpoint in 2009, when Gov. John Lynch and Democratic budget writers tried to transfer $110 million in surplus JUA money into the state’s general fund to help balance the budget for 2010 and 2011.
As we noted in an earlier post on SB 170, JUA shareholders were joined by Republicans in fighting the transfer, saying lawmakers had no right to the money. The Lynch administration countered that the people had a right to benefit from the surplus JUA funds because the state had established the entity in the first place.
Eventually, the JUA won a lawsuit that reached the N.H. Supreme Court. In its ruling, the Court said the tax-exempt JUA is a private agency, even though the IRS allows it to function within state government.
the new story
Senate Bill 170, sponsored by Sen. Sharon Carson (R-Londonderry), codifies the court’s ruling and goes a step further by prohibiting any possible taxation on the funds. It also orders that the current excess be distributed among shareholders, effectively emptying the cookie jar.
In a full Senate vote, even Democratic members who had formerly supported the Lynch administration’s stance on JUA supported SB 170 as it passed by a 23-1 vote. Sen. Lou D’Allesandro (D-Manchester) was the sole objector.
If SB 170 passes, that won’t mean that the JUA controversy itself is anywhere near over. Check out this Foster’s article on continued legal fallout.
Q&A
Is it about time for SB 170? Or does it go too far in prohibiting any possible taxation on the JUA’s surplus funds? And is it for the Legislature or the courts to order that excess money be distributed to shareholders?
Let us know your thoughts using the comments box below. (Comments Policy)
>> Tuesday, April 19, 10 a.m., House Executive Departments and Administration Committee public hearings on SB 170 and other legislation. An executive session is scheduled at 1:15 p.m . (Legislative Office Building, Room 306).
This Daily Dispatch was written by Michael McCord, with contributions from Hilary Niles.