Salem One of Four Towns Filing Motion to Intervene on LGC Appeal

A group of four towns including Salem filed a motion today to intervene on the appeal of the Local Government Center, Inc. (LGC) v. N.H. Bureau of Securities Regulation (BSR) case currently before the N.H. Supreme Court.

Joining Salem in the motion were Durham, Northfield and Peterborough. The towns filed on behalf of a coalition of 14 municipalities – Auburn, Bennington, Canaan, Durham, Greenfield, Henniker, Lyndeborough, Meredith, Northfield, Peterborough, Plainfield, Raymond, Salem and Temple.

The BSR found wrongdoing in the management of the Local Government Center’s risk pools. On Aug. 16, 2012, the BSR ordered $53.4 million held by the LGC to be returned to current members of the pools.

But today's motion to intervene was brought about after the four towns recognized that their share of the refunds would be disproportionate due to what they referred to in a release as the "hearing officer’s failure to fashion a remedy that will allow refunds in proportion to members’ contributions."

Salem Town Manager Keith Hickey said on Thursday that the four communities were not members of the LGC on the dates you needed to be to be eligible for the surplus. The LGC proposed to issue refunds to those who were members of its Health and Property Liability Trusts as of Aug. 16, 2012.

According to the release, that proposal came after no agreement was presented to the hearing officer within 30 days as required.

The following details were also provided in the release:

Durham, Peterborough, Salem and many other political subdivisions would have been able to recoup a refund had its operative date been June 14, 2010 – the date set by the Order if the BSR and LGC reached an agreement.

Northfield and many other political subdivisions who left the LGC prior to June 14, 2010 would have been able to recoup a refund had the remedy required a re-calculation of surplus on an annual basis, with the surplus distributed annually, based on annual membership rolls and the premiums paid by members and former members each year.

The NH Supreme Court has equity jurisdiction to fashion a refund remedy that is in proportion to each member’s contributions to that standing amount of earnings and surplus.

Durham, Northfield, Peterborough, and Salem and scores of other political subdivisions across NH contributed to the creation of the illegal LGC surplus, but per the terms of the Order and the position taken by the LGC, they are not eligible to participate in the distribution of surplus because they terminated their Trust membership prior to 8/16/12. 

The release called the motion an "unfortunate turn of events," where taxpayer funds are now being diverted to litigate the very organization responsible for representing the interests of communities statewide.

At the Salem Board of Selectmen meeting Dec. 11, the board unanimously voted to join a complaint against the LGC for "discriminatory business practices."

Hickey resigned from the LGC board on Dec. 14 and said he has not had contact with them since.

He cited too many conflicts between his position in Salem and his position with the LGC.

Hickey said that unless there's a conflict that he's not aware of that will occur, he will continue to represent Salem in its legal battle against the LGC.

"If there's a conflict and it has to be somebody else (representing), we would look to replace me with sombody else from Salem" Hickey said, saying that it could be the Human Resources Director, a Selectman or another individual.

As for when the situation will be resolved, Hickey doesn't know yet.

"I'm not sure to be very candid with you," he said. "I want to say that the LGC has a deadline of the third or fourth quarter to refund all of the excess surplus."

Durham Town Administrator Todd Selig also issued a statement:

“The return of tens of millions of dollars by the LGC to its members of the Health Trust and Property-Liability Trust programs is mandated by the hearing officer’s order to be in proportion to each member’s contributions.  Durham, Northfield, Peterborough, Salem and other political subdivisions contributed to the surplus with taxpayer funds.  Those funds should therefore be returned.  It is an issue of basic fairness and equity – no more, no less.