Local Government Center Files Motions for Reconsideration and to Stay Order

The Local Governments Center’s (LGC) lawyers have filed a motion challenging the Final Order issued by the hearing officer in the Bureau of Securities Regulation (BSR) case against them. This means more money spent litigating. Delays in municipalities receiving surplus funds - as determined by the hearing officer - returned to them. Delays in the restructuring of the LGC. 

On Sept. 14, the Local Government Center filed Motions for Reconsideration and to Stay the Final Order. The Motion for Reconsideration asks the the hearing officer, Donald Mitchell to reconsider his ruling based on the issues the LGC felt he erred on. Should Mitchell uphold his original ruling then the LGC can appeal to the State’s Supreme Court. The Motion to Stay asks that the issues the Final Order Mitchell determined need to be resolved be put on hold.

The LGC is asking for all of the determinations of the Final Order to be reconsidered. The LGC, based on what I read from their filing, feels they have done nothing wrong. The LGC says in their filing that the way they structured their trusts and risk pool is fine. The way they have set aside reserves is fine. The way they transfer money from one trust to another is fine. The LGC also states that the hearing officer should have recused himself.

While the LGC raises some interesting points in their motions, the bottom line is they screwed up. The question that will now in all likelihood be determined by our State’s Supreme Court is does RSA5-B provide enough guidance and specificity to justify the determinations in the Final Order issued by the hearing officer, Donald Mitchell.

I don’t know if the BSR was overreaching in the outcome they sought against the LGC based on RSA 5-B. I don’t know if the hearing officer was overreaching in the determinations he made against the LGC in his Final Order again based on RSA 5-B. 

Here’s what I’m comfortable stating. The LGC used funds from one trust to support another trust. RSA 5-B is clear in what funds can be used for. Funds can only be used for administration, claims, reserves and purchases of excess insurance. All earning and surplus must be returned to the members of the risk pool.

Based on what I’ve heard and read the LGC’s health trust and liability and property trust  were and are financially healthy and will continue to be financially healthy even if the LGC is forced to enact the determinations of the Final Order. What’s at risk (or was at risk) or appears to be at risk is the LGC’s workers comp trust. Loans or higher rates to stabilize the workers comp trust appear to be allowable. Transferring funds from one trust to the other, not a good idea.

And the part of the Final Order that deals with the restructuring of the LGC, was determined because the LGC registered their trusts as LLCs in Rhode Island, while the RSA clearly states that “...Each program shall: (a) Exist as a legal entity organized under New Hampshire law.”

More delays mean the implementation of the restructuring of the LGC will be put on hold. The restructuring was ordered not only to comply with NH law, but to also to insure that each trust was more concerned with the members in the particular trust then that of the LGC parent company. So it’s more litigation. The lawyers get richer and the members of the LGC get poorer. Unless the LGC’s case against their insurer, who is refusing to pay for litigation costs, is resolved in their favor.

Here are some links:

LGC press release summarizing their Motion for Reconsideration:

http://www.nhlgc.org/attachments/aboutlgc/newsroom/PR2012_Releaseon_MotionforReconsideration.pdf

The Motion for Reconsideration:

 http://www.nhlgc.org/attachments/aboutlgc/newsroom/Regulatory_Legal/LGC_Motion_for_Reconsideration_09.14.12.pdf

 Motion to Stay the Order:

 http://www.nhlgc.org/attachments/aboutlgc/newsroom/Regulatory_Legal/LGC_Motion_to_Stay09.14.12.pdf