Today the New Hampshire Senate passed SB 170 by a vote of 23 to 1. Among other things, the legislation requires the JUA to pay a minimum of $110 million into the court where the policyholder class action against the JUA and its Board of Directors is pending ($25 million is being held in reserve in the event the return of funds results in federal tax obligations). Next week, this bill crosses over to the House for consideration. If it is passed by the House, it proceeds to the Governor for action. Once paid into Court, policyholder class counsel will propose to the Court a plan for the orderly distribution of these funds to policyholders from 1986 to the present. Stay tuned for more developments on the return of premiums to policyholders.
The full text of the legislation as passed follows:
Senate Executive Departments and Administration March 24, 2011 2011-1193s 10/04 Amendment to SB 170 Amend the bill by replacing all after the enacting clause with the following:
1. Statement of Purpose. The general court finds that the New Hampshire Medical Malpractice Joint Underwriting Association (NHMMJUA) is a mutual form of insurance plan funded in the first instance by premiums paid by policyholders. Since 1986, the NHMMJUA has amassed more funds through premium payments than is necessary to sustain operations. Return premiums should be issued to all policyholders who have contributed to the current surplus of funds.
2. New Section; New Hampshire Medical Malpractice Joint Underwriting Association (NHMMJUA). Amend RSA 404-C by inserting after section 13 the following new section: 404-C:14 New Hampshire Medical Malpractice Joint Underwriting Association (NHMMJUA).
I. Notwithstanding any provision of law to the contrary, no officer or agent of the state shall take or transfer, through taxation or otherwise, any funds now held by the NHMMJUA in a manner inconsistent with this section.
II. All funds held as of the effective date of this section by the NHMMJUA in excess of the amount required for the fund to remain actuarially sound, as determined by a qualified actuary, shall constitute excess surplus funds and shall not be less than $110,000,000 in accordance with 2009, 144:1. Such determination shall be completed under the direction of the NHMMJUA board of directors not more than 45 days from the effective date of this section. All such excess surplus funds have resulted from premiums paid under assessable and participating medical malpractice insurance policies, belong to the policyholders who paid these premiums, and shall be returned as directed under this section. Within 60 days from the effective date of this section, all excess surplus funds, except for a reserve of $25,000,000 for the payment of any federal tax liability, shall be interpleaded into the Merrimack County Superior Court, docket no. 217-2010-CV-00414 for the propose of adjudicating all policyholders' claims to excess surplus funds. All distributions made to policyholders shall be subject to a claim from the NHMMJUA to reclaim a pro rata portion of the distribution to satisfy any federal tax liabilities in excess of the $25,000,000 reserved for such claims.
III. Within 30 days of the effective date of this section, the NHMMJUA, the insurance commissioner, or designee, and a representative of NHMMJUA policyholders, designated by the president of the New Hampshire Medical Society, shall jointly approach the United States Internal Revenue Service to obtain a closing agreement, or its equivalent, determining whether the NHMMJUA has any federal tax liability arising from the excess premiums paid and that shall be returned to policyholders.
IV. No later than 30 days after receipt of the closing agreement, or its equivalent, the NHMMJUA shall interplead into the Merrimack County Superior Court docket no. 217-2010-CV-00414 for the purpose of adjudicating all policyholders' claims to these remaining excess surplus funds the remaining amount of the tax reserve after satisfaction of any taxes owed.
V. Funds that cannot be distributed to a policyholder in the court proceedings referenced in this section due to the inability to locate the policyholder after reasonable efforts, shall revert to the NHMMJUA. Undistributed funds that revert to the NHMMJUA as provided in this section shall be used to provide grants in aid to health care providers servicing medically underserved populations to assist in the NHMMJUA coverage.
VI. The approval of the commissioner of insurance shall not be required for any action contemplated under this section.
3. Effective Date. This act shall take effect upon its passage.
Wednesday, March 30, 2011
Friday, March 18, 2011
Governor Lynch's Claims That He Has Been Open and Transparent on the JUA is Not Supported By Fact
Reproduced below is a letter from the Policyholders' counsel to Governor Lynch's lawyer with details of the State's misconduct:
March 18, 2011
Jeffrey A. Myers, Esquire
Legal Counsel
Office of the Governor
State House
107 North Main Street
Concord, NH 03301
RE: Georgia Tuttle, M.D., et al. v. NHMMJUA, et al.
Dear Jeff:
As you know, this firm represents the putative class of policyholders of the JUA in various legal actions involving the JUA, its Board of Directors, and some public officials. For the past 10 months we have been trying to obtain from the State—including the Governor’s office—information required for production under RSA 91-A and Part I, Art. 8, of the New Hampshire Constitution. The State has failed to fulfill its obligations in multiple ways even after the entry of various Superior Court orders. Against this factual context, we read with some interest your recent comments that Governor Lynch believes he has “always approached the JUA matter in an open and transparent way” and that any suggestions to the contrary are “irresponsible and absurd.”
These comments suggest that you and the Governor are unfamiliar with the following facts:
Withholding and Concealment of Documents
• Right to Know Requests dating back to May 5, 2010 remain outstanding;
• The State continues to withhold thousands of documents from production;
• The State claims that certain materials are protected from disclosure under privileges not recognized in New Hampshire (i.e., executive privilege, deliberative process privilege and legislative privilege);
• On October 21, 2010, Petitioners filed a Right to Know lawsuit because of the State’s failure to comply with its obligations;
• On November 30, 2010, the Court ordered the State to produce all responsive materials and a particularized privilege log by dates selected by the State. The State failed to meet their self-selected deadlines or meet the requirements for a privilege log. (Copy of Order attached as Exhibit A);
• On February 4, 2011, the Court again ordered the State to produce a detailed privilege log consistent with the obligations of New Hampshire law and its prior Order. (Copy of Order attached as Exhibit B);
• On February 14, 2011, the State sought leave to continue to conceal information concerning the Governor claiming that the information ordered produced “could be used by Petitioners to try to piece together actions that the Governor’s Office took at certain times.” (Copy of Motion to Clarify attached as Exhibit C);
• On March 1, 2011, the Court rejected the request to conceal this information and again ordered the State to comply with its obligations under RSA 91-A. (Copy of Order attached as Exhibit D);
Suppression of JUA Opposition to Proposed Transfer
• On December 9, 2008, during the JUA Board discussed the proposed transfer of surplus funds to the general fund. The minutes state: “The Department was of the opinion that a distribution would not be in conflict with Regulation 1700—the regulations governing JUA operations—while Mr. Solitro opined that the regulation as well as the terms of JUA insurance policies limited assessments and distributions to JUA insureds exclusively. Provider and Industry representation on the Board expressed opposition to distribution to anyone not otherwise entitled to such by the terms of Regulation or Policy requirements. The Board was unanimous in its opinion that an opinion from JUA counsel would likely be necessary to clarify the issue of eligibility to receive any portion of the JUA surplus deemed to be excess.” (Copy of minutes are attached as Exhibit E);
• On February 10, 2009, Dr. Bagan was summoned to a meeting with Governor Lynch and Michael Delaney. This meeting was two days before the Governor’s budget address at which he suggested the transfer of JUA surplus funds to fill the then existing budget gap. During his deposition on January 13, 2011, Dr. Bagan was instructed by the State, and the outside counsel it retained, not to testify about this meeting with the Governor under a claim of executive privilege. Dr. Bagan was also instructed not to testify about two other meetings with the Governor. (Copy of Dr. Bagan’s Deposition Transcript is attached as Exhibit F, pp. 23-35 );
• Despite the instruction not to answer, it appears that the Governor and Michael Delaney were informed by Dr. Bagan that the JUA Board had retained its own counsel—Michael Aylward of Morrison Mahoney—to review the legality of the proposed transfer. (Copy of February 13, 2011, Delaney e-mail attached as Exhibit G); See Exhibit F, Bagan Depo. at pp. 92:17 – 93:1. When asked if Dr. Bagan told the Governor about his opposition to the transfer, Dr. Bagan was instructed not to answer. See Exhibit F, Bagan Depo. at pp. 32-33;
• Dr. Bagan testified that the JUA’s independent counsel prepared an opinion shared with the State that was in conflict with Attorney General’s opinion concerning the legality of the proposed transfer (the “Conflicting Opinion”). The State waived the attorney/client privilege to selectively disclose the Attorney General’s opinion but concealed the existence of the Conflicting Opinion. At no time has the State informed the Legislature, the Courts or the policyholders about the Conflicting Opinion or the JUA’s opposition to the proposed transfer. See Exhibit F, Bagan Depo. at pp. 92:22 – 93:18, 97:18 – 98:1;
• Soon after receiving the Conflicting Opinion from the JUA’s own counsel, the State instructed the JUA to terminate this lawyer and accept representation by the Attorney General. See Exhibit F, Bagan Depo. at 98:6 – 16. At no time were the Legislature, the Courts, or the policyholders informed of this instruction to fire the JUA’s independent counsel;
• The Conflicting Opinion was not produced in any of the petitioners’ actions despite the fact that the JUA has asserted the advice of counsel as a defense. As troubling, the Conflicting Opinion was not disclosed on any of the privilege logs prepared by the State until petitioners had uncovered the omission of this highly relevant and material information;
The State’s Knowing Actions In Violation of the Conflict of Interest Rules
• On May 29, 2009, we wrote to the Dr. Bagan demanding action to protect policyholder rights. Among other things, that letter stated “we would respectfully suggest that the Board has an obligation to decline the services of the Attorney General with regard to this matter. With due respect to the many talented attorneys who serve this State in that office, the Attorney General has a material professional conflict of interest in providing counsel to the Board concerning its independent contractual and fiduciary obligations given its Opinion to the Governor and Insurance Commissioner on the propriety of taking these surplus funds.” (Copy of letter is attached as Exhibit H). The State failed to acknowledge that at the time of this letter, the JUA Board had already expressed its opposition to the Governor and Michael Delaney, the JUA had already obtained the Conflicting Opinion, and had thereafter been instructed to fire its counsel;
• On June 2, 2009, Roger Sevigny responded to the May 29 letter ostensibly at the request of Dr. Bagan although Dr. Bagan denies that he authorized Mr. Sevigny to do so. See Exhibit F, Bagan Depo. at 231. In this unauthorized response, Mr. Sevigny stated that the JUA was represented by the Attorney General. Mr. Sevigny also failed to disclose that the JUA had retained its own firm, that the firm had prepared the Conflicting Opinion and that the JUA had been instructed to fire that firm;
• On June 2, 2009, we wrote to Glenn Perlow (with copies to Kelly Ayotte, Richard Head, Anne Edwards and Michael Brown) stating “respectfully, we do not believe the rules permit single counsel to represent the Insurance Commissioner or the executive generally on the issue of the propriety of a proposed legislative taking from the JUA/JUA policyholders and concurrently attempt to represent the JUA or individual board members concerning their present contractual, fiduciary and regulatory duties to JUA policyholders. The proposed engagement involve direct adversity and require that counsel materially limit advice and loyalty to one client at the expense of the other. The rules plainly prohibit such professional conduct and apply equally to the Attorney General.” Unbeknownst to the Policyholders at the time of this letter, Dr. Bagan had already informed the Governor of his opposition to the proposed taking and of the JUA’s retention of its own lawyer. (Copy of Letter attached as Exhibit I);
• On June 3, 2009, we wrote to Assistant Attorney General Glenn Perlow (with copies to Kelly Ayotte, Richard Head, Anne Edwards and Michael Brown) once again raising the issue of an irreconcilable conflict of interest under Rule 1.7 of the Professional Rules of Conduct in representing the JUA. (Copy of Letter attached as Exhibit J);
• On June 8, 2009, The State responded to the above saying “The Office of the Attorney General declines your request that we disqualify ourselves from representing the parties against whom you threatened legal action in your May 29, 2009.” The State did not disclose that the JUA board had retained its own counsel who had generated the Conflicting Opinion, and that the State had instructed that the JUA fire this attorney. (Copy of Letter attached as Exhibit K);
• On June 18, 2009, the Policyholders moved to disqualify the Attorney General from simultaneously representing the State (proposed taker of the JUA funds) and the JUA (from whom the funds would be taken);
• On June 23, 2009, during oral argument on the Motion to Disqualify, the State made material misstatements to the Court in response to the Court’s direct inquiry about the JUA’s separately retained counsel:
“THE COURT: The board is aware of the suit and all?
MS. EDWARDS: Yes.
THE COURT: I guess if they want to take an independent position, they have counsel in other matters.
MS. EDWARDS: Well, Your Honor, the counsel that they have in other matters is not counsel that provides legal advice to them on how they function. It’s their claims dispute counsel. They hire that counsel as part of their role through the Department of Insurance to deal with claims that are made against the JUA fund.
So it is not like a private law firm that they have on retainer to answer questions for them. The questions with respect to their functioning and their law and their rules are requests that come to the Attorney General’s Office to be answered.
THE COURT: Okay.”
(Transcript attached as Exhibit L);
• On June 25, 2009, notwithstanding the State’s misrepresentation, the Court disqualified the Attorney General from representing the JUA. (Order attached as Exhibit M.) As part of the Order, the Court made specific findings of fact. Copies of the adopted findings are attached as Exhibit N. Contrary to repeated representations by the State to the contrary, neither this order nor the Findings of Fact were among the specific matters appealed to the Supreme Court (Copy of the notice of appeal is attached as Exhibit O);
• On April 28, 2010, the State once again purported to resume concurrent representation of both Commissioner Sevigny and the JUA Board in direct contravention of the unappealed June 25, 2009, Order and incorporated findings of fact. (Copy of Letter attached as Exhibit P);
State’s Improper Instructions and “Threats” to the JUA
• As referenced above, the State improperly instructed the JUA Board to terminate Morrison Mahoney after providing the Conflicting Opinion over the Governor’s recommendation;
• On September 1, 2009, the Insurance Commissioner again improperly prevented the JUA Board from retaining Devine Millimet and Deloitte & Touche to advise it concerning its obligations to policyholders. (Copy of Letter attached as Exhibit Q);
• On February 23, 2010, the Commissioner Sevigny wrote a letter to Dr. Bagan and other JUA Board members indicating that indemnification could be jeopardized if the JUA Board did not suspend certain actions in compliance with obligations to policyholders. (Copy of Letter attached as Exhibit R); Dr. Bagan has testified that he considered this to be a “an implied threat.” See Exhibit F, Bagan Depo. at 204.
This history may be described in many ways but “open and transparent” is not among them. Ironically, only a few weeks before you offered that description in your public remarks the Attorney General had expressly opposed the production sought from your office stating to the Court that if such disclosure were to occur it would permit the public to “piece together actions taken by the Governor’s office at various times.” Exhibit C. These actions describe deliberate choices to block public disclosure of the Governor’s actions, not transparency. The Governor, through attorneys acting in his name, is exhausting all efforts to prevent disclosure to the citizens of New Hampshire of the true facts—their constitutional and statutory entitlement-- as to how the rights of policyholders were, and continue to be, violated through a systematic abuse of power by public officials. Your deflection of these serious allegations as “absurd and irresponsible” deserves to be, and in time will be, compared to the detail of what has actually occurred when the authentic openness and transparency guaranteed by New Hampshire law is secured.
In providing this detailed information, we allow for the possibility that Governor Lynch and you are unaware of the full extent of the State’s activities. We believe a reasonable review of these details compels the conclusion that the State should correct its course and comply with its disclosure obligations. If the Governor is as committed to transparency as you say, he will be equally troubled by the actions taken in the name of the State and immediately release the requested information. What he does, not what he says, will reveal the Governor’s true commitment to the public’s right to know. As the proverb goes, the sermons are best lived, not preached.
If you require further information on these issues, please let me know.
Very truly yours,
W. Scott O’Connell
Attachments
cc: Kevin M. Fitzgerald, Esquire
Gordon J. MacDonald, Esquire
March 18, 2011
Jeffrey A. Myers, Esquire
Legal Counsel
Office of the Governor
State House
107 North Main Street
Concord, NH 03301
RE: Georgia Tuttle, M.D., et al. v. NHMMJUA, et al.
Dear Jeff:
As you know, this firm represents the putative class of policyholders of the JUA in various legal actions involving the JUA, its Board of Directors, and some public officials. For the past 10 months we have been trying to obtain from the State—including the Governor’s office—information required for production under RSA 91-A and Part I, Art. 8, of the New Hampshire Constitution. The State has failed to fulfill its obligations in multiple ways even after the entry of various Superior Court orders. Against this factual context, we read with some interest your recent comments that Governor Lynch believes he has “always approached the JUA matter in an open and transparent way” and that any suggestions to the contrary are “irresponsible and absurd.”
These comments suggest that you and the Governor are unfamiliar with the following facts:
Withholding and Concealment of Documents
• Right to Know Requests dating back to May 5, 2010 remain outstanding;
• The State continues to withhold thousands of documents from production;
• The State claims that certain materials are protected from disclosure under privileges not recognized in New Hampshire (i.e., executive privilege, deliberative process privilege and legislative privilege);
• On October 21, 2010, Petitioners filed a Right to Know lawsuit because of the State’s failure to comply with its obligations;
• On November 30, 2010, the Court ordered the State to produce all responsive materials and a particularized privilege log by dates selected by the State. The State failed to meet their self-selected deadlines or meet the requirements for a privilege log. (Copy of Order attached as Exhibit A);
• On February 4, 2011, the Court again ordered the State to produce a detailed privilege log consistent with the obligations of New Hampshire law and its prior Order. (Copy of Order attached as Exhibit B);
• On February 14, 2011, the State sought leave to continue to conceal information concerning the Governor claiming that the information ordered produced “could be used by Petitioners to try to piece together actions that the Governor’s Office took at certain times.” (Copy of Motion to Clarify attached as Exhibit C);
• On March 1, 2011, the Court rejected the request to conceal this information and again ordered the State to comply with its obligations under RSA 91-A. (Copy of Order attached as Exhibit D);
Suppression of JUA Opposition to Proposed Transfer
• On December 9, 2008, during the JUA Board discussed the proposed transfer of surplus funds to the general fund. The minutes state: “The Department was of the opinion that a distribution would not be in conflict with Regulation 1700—the regulations governing JUA operations—while Mr. Solitro opined that the regulation as well as the terms of JUA insurance policies limited assessments and distributions to JUA insureds exclusively. Provider and Industry representation on the Board expressed opposition to distribution to anyone not otherwise entitled to such by the terms of Regulation or Policy requirements. The Board was unanimous in its opinion that an opinion from JUA counsel would likely be necessary to clarify the issue of eligibility to receive any portion of the JUA surplus deemed to be excess.” (Copy of minutes are attached as Exhibit E);
• On February 10, 2009, Dr. Bagan was summoned to a meeting with Governor Lynch and Michael Delaney. This meeting was two days before the Governor’s budget address at which he suggested the transfer of JUA surplus funds to fill the then existing budget gap. During his deposition on January 13, 2011, Dr. Bagan was instructed by the State, and the outside counsel it retained, not to testify about this meeting with the Governor under a claim of executive privilege. Dr. Bagan was also instructed not to testify about two other meetings with the Governor. (Copy of Dr. Bagan’s Deposition Transcript is attached as Exhibit F, pp. 23-35 );
• Despite the instruction not to answer, it appears that the Governor and Michael Delaney were informed by Dr. Bagan that the JUA Board had retained its own counsel—Michael Aylward of Morrison Mahoney—to review the legality of the proposed transfer. (Copy of February 13, 2011, Delaney e-mail attached as Exhibit G); See Exhibit F, Bagan Depo. at pp. 92:17 – 93:1. When asked if Dr. Bagan told the Governor about his opposition to the transfer, Dr. Bagan was instructed not to answer. See Exhibit F, Bagan Depo. at pp. 32-33;
• Dr. Bagan testified that the JUA’s independent counsel prepared an opinion shared with the State that was in conflict with Attorney General’s opinion concerning the legality of the proposed transfer (the “Conflicting Opinion”). The State waived the attorney/client privilege to selectively disclose the Attorney General’s opinion but concealed the existence of the Conflicting Opinion. At no time has the State informed the Legislature, the Courts or the policyholders about the Conflicting Opinion or the JUA’s opposition to the proposed transfer. See Exhibit F, Bagan Depo. at pp. 92:22 – 93:18, 97:18 – 98:1;
• Soon after receiving the Conflicting Opinion from the JUA’s own counsel, the State instructed the JUA to terminate this lawyer and accept representation by the Attorney General. See Exhibit F, Bagan Depo. at 98:6 – 16. At no time were the Legislature, the Courts, or the policyholders informed of this instruction to fire the JUA’s independent counsel;
• The Conflicting Opinion was not produced in any of the petitioners’ actions despite the fact that the JUA has asserted the advice of counsel as a defense. As troubling, the Conflicting Opinion was not disclosed on any of the privilege logs prepared by the State until petitioners had uncovered the omission of this highly relevant and material information;
The State’s Knowing Actions In Violation of the Conflict of Interest Rules
• On May 29, 2009, we wrote to the Dr. Bagan demanding action to protect policyholder rights. Among other things, that letter stated “we would respectfully suggest that the Board has an obligation to decline the services of the Attorney General with regard to this matter. With due respect to the many talented attorneys who serve this State in that office, the Attorney General has a material professional conflict of interest in providing counsel to the Board concerning its independent contractual and fiduciary obligations given its Opinion to the Governor and Insurance Commissioner on the propriety of taking these surplus funds.” (Copy of letter is attached as Exhibit H). The State failed to acknowledge that at the time of this letter, the JUA Board had already expressed its opposition to the Governor and Michael Delaney, the JUA had already obtained the Conflicting Opinion, and had thereafter been instructed to fire its counsel;
• On June 2, 2009, Roger Sevigny responded to the May 29 letter ostensibly at the request of Dr. Bagan although Dr. Bagan denies that he authorized Mr. Sevigny to do so. See Exhibit F, Bagan Depo. at 231. In this unauthorized response, Mr. Sevigny stated that the JUA was represented by the Attorney General. Mr. Sevigny also failed to disclose that the JUA had retained its own firm, that the firm had prepared the Conflicting Opinion and that the JUA had been instructed to fire that firm;
• On June 2, 2009, we wrote to Glenn Perlow (with copies to Kelly Ayotte, Richard Head, Anne Edwards and Michael Brown) stating “respectfully, we do not believe the rules permit single counsel to represent the Insurance Commissioner or the executive generally on the issue of the propriety of a proposed legislative taking from the JUA/JUA policyholders and concurrently attempt to represent the JUA or individual board members concerning their present contractual, fiduciary and regulatory duties to JUA policyholders. The proposed engagement involve direct adversity and require that counsel materially limit advice and loyalty to one client at the expense of the other. The rules plainly prohibit such professional conduct and apply equally to the Attorney General.” Unbeknownst to the Policyholders at the time of this letter, Dr. Bagan had already informed the Governor of his opposition to the proposed taking and of the JUA’s retention of its own lawyer. (Copy of Letter attached as Exhibit I);
• On June 3, 2009, we wrote to Assistant Attorney General Glenn Perlow (with copies to Kelly Ayotte, Richard Head, Anne Edwards and Michael Brown) once again raising the issue of an irreconcilable conflict of interest under Rule 1.7 of the Professional Rules of Conduct in representing the JUA. (Copy of Letter attached as Exhibit J);
• On June 8, 2009, The State responded to the above saying “The Office of the Attorney General declines your request that we disqualify ourselves from representing the parties against whom you threatened legal action in your May 29, 2009.” The State did not disclose that the JUA board had retained its own counsel who had generated the Conflicting Opinion, and that the State had instructed that the JUA fire this attorney. (Copy of Letter attached as Exhibit K);
• On June 18, 2009, the Policyholders moved to disqualify the Attorney General from simultaneously representing the State (proposed taker of the JUA funds) and the JUA (from whom the funds would be taken);
• On June 23, 2009, during oral argument on the Motion to Disqualify, the State made material misstatements to the Court in response to the Court’s direct inquiry about the JUA’s separately retained counsel:
“THE COURT: The board is aware of the suit and all?
MS. EDWARDS: Yes.
THE COURT: I guess if they want to take an independent position, they have counsel in other matters.
MS. EDWARDS: Well, Your Honor, the counsel that they have in other matters is not counsel that provides legal advice to them on how they function. It’s their claims dispute counsel. They hire that counsel as part of their role through the Department of Insurance to deal with claims that are made against the JUA fund.
So it is not like a private law firm that they have on retainer to answer questions for them. The questions with respect to their functioning and their law and their rules are requests that come to the Attorney General’s Office to be answered.
THE COURT: Okay.”
(Transcript attached as Exhibit L);
• On June 25, 2009, notwithstanding the State’s misrepresentation, the Court disqualified the Attorney General from representing the JUA. (Order attached as Exhibit M.) As part of the Order, the Court made specific findings of fact. Copies of the adopted findings are attached as Exhibit N. Contrary to repeated representations by the State to the contrary, neither this order nor the Findings of Fact were among the specific matters appealed to the Supreme Court (Copy of the notice of appeal is attached as Exhibit O);
• On April 28, 2010, the State once again purported to resume concurrent representation of both Commissioner Sevigny and the JUA Board in direct contravention of the unappealed June 25, 2009, Order and incorporated findings of fact. (Copy of Letter attached as Exhibit P);
State’s Improper Instructions and “Threats” to the JUA
• As referenced above, the State improperly instructed the JUA Board to terminate Morrison Mahoney after providing the Conflicting Opinion over the Governor’s recommendation;
• On September 1, 2009, the Insurance Commissioner again improperly prevented the JUA Board from retaining Devine Millimet and Deloitte & Touche to advise it concerning its obligations to policyholders. (Copy of Letter attached as Exhibit Q);
• On February 23, 2010, the Commissioner Sevigny wrote a letter to Dr. Bagan and other JUA Board members indicating that indemnification could be jeopardized if the JUA Board did not suspend certain actions in compliance with obligations to policyholders. (Copy of Letter attached as Exhibit R); Dr. Bagan has testified that he considered this to be a “an implied threat.” See Exhibit F, Bagan Depo. at 204.
This history may be described in many ways but “open and transparent” is not among them. Ironically, only a few weeks before you offered that description in your public remarks the Attorney General had expressly opposed the production sought from your office stating to the Court that if such disclosure were to occur it would permit the public to “piece together actions taken by the Governor’s office at various times.” Exhibit C. These actions describe deliberate choices to block public disclosure of the Governor’s actions, not transparency. The Governor, through attorneys acting in his name, is exhausting all efforts to prevent disclosure to the citizens of New Hampshire of the true facts—their constitutional and statutory entitlement-- as to how the rights of policyholders were, and continue to be, violated through a systematic abuse of power by public officials. Your deflection of these serious allegations as “absurd and irresponsible” deserves to be, and in time will be, compared to the detail of what has actually occurred when the authentic openness and transparency guaranteed by New Hampshire law is secured.
In providing this detailed information, we allow for the possibility that Governor Lynch and you are unaware of the full extent of the State’s activities. We believe a reasonable review of these details compels the conclusion that the State should correct its course and comply with its disclosure obligations. If the Governor is as committed to transparency as you say, he will be equally troubled by the actions taken in the name of the State and immediately release the requested information. What he does, not what he says, will reveal the Governor’s true commitment to the public’s right to know. As the proverb goes, the sermons are best lived, not preached.
If you require further information on these issues, please let me know.
Very truly yours,
W. Scott O’Connell
Attachments
cc: Kevin M. Fitzgerald, Esquire
Gordon J. MacDonald, Esquire
Sunday, March 13, 2011
Union Leader Story Concerning the Firing of the JUA Board Attorney
Suit raps Lynch, AG in bid to divert $110m
Alleges court was misled:
Lawyer says effort to use JUA reserves for the budget an “abuse of power.”
.
By NANCY WEST
New Hampshire Sunday News
A lawsuit against the state claims Gov. John Lynch and Attorney General Michael Delaney deliberately misled the court, lawmakers and the public as they tried unsuccessfully to divert $110 million in reserves from a medical malpractice insurance plan to the state’s general fund.
Lynch and Delaney strongly denied the allegations. But ongoing litigation makes it clear Lynch’s two-year battle to take excess reserves from the New Hampshire Medical Malpractice Joint Underwriting Association to help balance the state budget is not over.
JUA policyholders allege Lynch and Delaney misled by suppressing a legal opinion obtained by the JUA board of directors early on — and continue to keep it secret — that disagreed with the state’s position that it was legal to seize JUA excess reserves.
Kevin Fitzgerald, one of the Nixon Peabody lawyers representing Dr. Georgia Tuttle and about 300 other JUA policyholders in two related lawsuits, believes the state behaved unethically and possibly illegally in trying to confiscate JUA funds.
“What has shocked me the most is the systemic abuse of power and public trust by government officials that in my view is unprecedented in New Hampshire history,” Fitzgerald said.
Jeff Meyers, Lynch’s legal counsel, said the governor wouldn’t comment personally because of the pending lawsuits. “Those allegations are irresponsible and absurd,” Meyers said. “They are really coming from people who are financially motivated to obtain JUA funds for themselves.”
Delaney said there was no attempt to deceive anyone. His office took a position that the JUA is a state entity. And despite a superior court decision stating otherwise, it continues to take that position today, Delaney said.
The contrary legal opinion — obtained by the JUA board of directors, who were also concerned at the outset that Lynch’s plan was possibly illegal — was kept confidential because it was protected as attorney/ client communication, Delaney said.
While hiding the contrary legal opinion, Lynch and Delaney publicly touted a legal opinion by Senior Assistant Attorney General Glenn Perlow saying the state had a right to the JUA money, according to a right-to-know lawsuit JUA policyholders filed against the state last October. The suit in Merrimack Superior Court names Lynch, Delaney and Insurance Commissioner Roger Sevigny.
“Indeed, neither the Legislature, the public nor the court in the ‘Tuttle’ litigation were told of its existence,” Fitzgerald wrote in a recent court filing.
Fitzgerald said he was shocked to learn in January that there had been a contrary legal opinion all along. Fitzgerald was taking sworn testimony Jan. 13 in a deposition from Dr. Merwyn Bagan, of the JUA board of directors, during which Bagan revealed its existence.
That opinion, which remains confidential, was written by the JUA’s Boston attorney, Michael Aylward, Bagan testifed. He was cautioned by his lawyer that day against revealing further details of its content.
“(Aylward) had an opinion that was contrary in some respects to the opinion rendered by the Attorney General’s Office,” Bagan testified.
The deposition was taken in preparation for a trial slated for August in the second lawsuit in which Dr. Tuttle and other JUA policyholders claim the board of directors failed its duty to protect the reserve funds. That suit was filed last May.
They want the board to disburse any excess reserves to them as policyholders who have paid the insurance premiums. But Delaney said if the JUA is not a state entity, much of those reserves could be claimed by the IRS because it would lose its tax-exempt status.
The breach-of-duty lawsuit alleges the JUA board failed to do what was reasonable to protect the JUA’s fund and the contractual interests of the policyholders. “Instead they abandoned their duty and capitulated to the demands of the governor and insurance department,” Fitzgerald said.
“They were willing to allow the property of policyholders to be stolen and didn’t raise their hands in any effective way to prevent it,” Fitzgerald said.
Attorney Daniel Mullen, who represents the JUA board, did not return calls seeking comment.
The state Supreme Court ultimately backed a lower court ruling and said it was unconstitutional for the state to take JUA reserves. A second attempt to seize the reserves by legislatively changing Insurance Department rules also failed.
But Delaney said the Supreme Court left open the question of whether the JUA is a state or private entity.
The JUA was formed by the Insurance Department in 1975 to insure health care providers who were having trouble at the time finding affordable malpractice insurance. It insures about 900 doctors, hospitals, nursing homes and other allied providers.
Bagan testified in January that after the board sent Aylward’s legal opinion to the state, it was told to fire Aylward and accept legal representation by the Attorney General’s Office.
Delaney said Bagan was correct. The board was told the Attorney General’s Office would be its only counsel. Delaney said later in the proceedings Aylward spent more than a year representing the JUA.
The JUA board did not cooperate with the state, Bagan said in the deposition, adding it was simply following the orders of the governor. “We were told what to do,” Bagan said. Bagan also testifed about a letter Insurance Commissioner Sevigny sent to the board saying he had concerns board members might not be indemnified by the state if they didn’t do what Sevigny expected.
“It was an implied threat,” said Bagan.
Sevigny declined to comment.
State Sen. Sylvia Larsen, D-Concord, who backed Lynch’s plan to seize the $110 million when she was Senate president, said Lynch and Delaney wouldn’t try to mislead anyone. Larsen said she never heard about a contrary legal opinion during the legislative and court hearings, but said she respects that it was confidential under the attorney/client privilege.
“You can have an issue with six different opinions from six different lawyers. That’s not surprising,” Larsen said.
Superior Court Judge Kathleen McGuire ruled the JUA was a quasi-private entity and the state was therefore not entitled to its reserves.
“I think a negotiated settlement is needed and let’s move on,” Larsen said, adding she has great faith in the integrity of Delaney and Lynch. “You can have an honest difference of opinion,” Larsen said.
Senate President Peter Bragdon, R-Milford, said he only learned earlier last week of the JUA board’s opinion questioning the legality of Lynch’s plan.
“These are some troubling allegations,” Bragdon said. “Our concern has always been that this was an attempt by the state to take the private property of the doctors and medical practitioners,” said Bragdon.
The fund is supposed to pay dividends to its policyholders, he said. “The state hasn’t taken their money, but it has not released it, either,” Bragdon said. Fitzgerald said he plans to take sworn testimony from Lynch and Delaney in the breach-of-duty lawsuit.
Fitzgerald argued in court records that Lynch, Delaney and Sevigny have refused to turn over public records, calling it “a knowing violation of (the rightto- know law).”
“They weren’t candid and complete and transparent. People were misled into believing it was completely legal,” Fitzgerald said.
But Meyers, Lynch’s attorney, said the court would ultimately decide which documents the state should make public.
“The governor has always approached the JUA matter in an open and transparent way. There have been many public legislative and court hearings,” Meyers said.
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