Doctors, State Clash Over Ownership of Funds

Governor Lynch and some state lawmakers might call it “found money.”

It’s a pot of $110 million sitting in a state-run malpractice insurance fund.

In February, when the governor presented his budget, he proposed taking as revenue the excess funds from the Joint Underwriting Association.

The state created the JUA in 1986 to provide malpractice insurance to health care providers who couldn’t get it elsewhere.

Over the years, the program has built up a surplus estimated at about one hundred and forty five million dollars.

Lynch: We recommend using $50 million of that fund’s surplus to help fill the remaining budget gap for fiscal year 2009 so that we can help protect essential health services.

Lynch went on to recommend taking $60 million of the fund’s surplus for budget years 2010 and 11.

And clearly, that money is a critical asset for lawmakers looking to make up an estimated half a billion dollar shortfall in the budget.

But it’s not at all clear that they’ll get those funds without a battle.

A group of close to 500 physicians who are covered by the JUA sees the funds not as “found money” but as “their money”.

Tuttle: "The surplus money in the JUA fund belongs to those who paid it."

That’s Georgia Tuttle, a Lebanon dermatologist and a former member of the JUA board of directors.

Tuttle: "If the legislature through the budgetary process or any other way decides to take that money and use it in any other way, then I would be prepared to file a lawsuit.”

Tuttle says she has contacted a law firm on behalf of physician policyholders.

She refused to name the law firm or to name any other doctors involved.

But Charles Blitzer, president of the New Hampshire Medical Society, says he expects policyholders to sue the JUA imminently.

Their first step, he says, will be to demand that the JUA board agree to pay a dividend to policyholders out of the surplus funds.

Second, he expects the group to ask the courts to freeze the fund so that, in his words, it cannot be “misappropriated.”

Blitzer: "Most of the members, both hospitals, nursing homes, physicians, do not feel that the state has a legal right to this money."

He notes, however, that the New Hampshire Medical Society has no legal standing in a potential case.

But the Society has been lobbying lawmakers in an attempt to support its physician members.

Anticipating a fight, the governor in his budget presentation defended the state’s right to use the money.

Governor: "Under the law, the fund’s insurance premiums must be competitive with the rest of the market. And in fact its premiums are on average ten percent below the market. It cannot return the surplus without risking decimating the private insurance market."

Policy holders disagree.

Dr. Tuttle says the JUA did, in fact, pay dividends in 1999 and 2000, and it had no effect on premium prices or the insurance market.

Tuttle: "The JUA has in the past returned money to the insured, they’ve set a precedent and acted under those rules in the past, and they should continue to follow rules as they were written."

Furthermore, she argues, should the fund run short of money in the future, health care providers will be asked to pay higher premiums.

Senate Finance Committee Chairman Lou D’Allesandro relies on legal analysis from the attorney general’s office.

And he sees no reason to leave this pot of gold out of New Hampshire’s stretched-thin budget.

D'Allesandro: "I think the state stands on very very solid ground in taking the money. Everyone has received what they paid for. They were covered! They were taken care of, so if you wanted to get something for your investment they certainly got that over this period of years and will continue to get it, and the reserves that are left will take care of any future claims."

The budget should go to the full Senate next week.
And at this point, lawmakers continue to count on the JUA funds as “found money.”

For NHPR News, I’m Elaine Grant.