Tuesday, June 30, 2009

Superior Court judge delays hearing

on $100M ‘surplus’ case to July 20
by Michael Kitch

LACONIA — A hearing in the suit brought by policyholders of the New Hampshire Medical
Malpractice Joint Underwriting Association (JUA) challenging the state’s claim to a surplus of
$110-million in the fund scheduled for Wednesday in Belknap County Superior Court has been
cancelled.

Instead, Justice Kathleen McGuire has asked attorneys for the policy holders and the state to file
pleadings with the court no later than Friday, July 10 and responses a week later in preparation for
a hearing on the merits of the case on Monday, July 20.

A week before the Legislature adopted the 2010-2011 state budget, which included the $110-
million, over 200 policyholders, including LRGHealthcare, brought suit, claiming that the rules
governing the JUA and the terms of their insurance contracts required its board of directors to
distribute a surplus to the policyholders.

In their pleadings, the policyholders called the state’s action “theft” and “plunder.”

Last week, McGuire granted the policyholders’ motion to disqualify the New Hampshire
Attorney General’s Office from representing the JUA in the litigation. The policyholder’s argued
that because the obligations of the directors of the JUA were at odds with the state’s claim to the
money, for the attorney general to represent both would be a conflict of interest. McGuire agreed,
ruling that contrary to the state’s contention, the JUA is not a part of state government but an
independent entity, with a autonomous board of directors with fiduciary and contractual
obligations to its policyholders.

Associate Attorney General Anne Edwards said yesterday that McGuire set the hearing
schedule in a conference call with all parties to the suit on Monday morning. She said that the
JUA has retained independent counsel, who indicated the directors would not take a position in
the litigation.

House Bill 2, the companion bill to the state budget, prescribes that the JUA will transfer funds
to the state treasurer not later than July 31. The policyholders have asked the court to attach the
funds and last week McGuire ordered the state not to move the money until she ultimately ruled
on their motion.