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.
