The New Hampshire Supreme Court rebuffed the state's claim to the $110-million surplus in the Joint Underwriting Association's medical malpractice fund in a 3-2 split decision last week. The state now must work to find alternative ways to balance its budget without those funds, which may negatively affect budgets for New Hampshire towns and cities, several state officials said.
Gov. John Lynch, D-N.H., in his proposed budget plan last year, submitted a claim on the surplus in the JUA's coffers to balance state budgets. The proposed budget plan prompted representatives of the JUA to file a lawsuit against the state, The Dartmouth previously reported. The Belknap County Superior Court ruled against New Hampshire in July when the JUA filed a suit against the state in order to maintain its $110-million surplus, spurring the recent appeal.
The state of New Hampshire launched JUA's medical malpractice fund in 1975 to ensure that health care providers in the state could access affordable malpractice insurance. The accumulated surplus in the medical malpractice fund is derived from premiums, investments, efficiency and effective claims management, BusinessWeek reported.
The state Supreme Court decided on Thursday that the legislation authorizing the transfer of the $110 million from the JUA's medical malpractice fund to the state violated the state constitution. According to BusinessWeek, the court defended the policyholders' claim that they had a "constitutionally protected contractual right" to the fund, and that the state could not alter its law to enforce retroactive changes to the contracts between the JUA and the fund's policyholders.
The policyholders, who include doctors and health care providers, argued that the surplus in the JUA's medical malpractice fund belonged to them and should either be returned to them in the form of dividends or used to lower future insurance premiums, BusinessWeek reported.
The state had previously counted on using $65 million of the $110 million to help balance the budget in the previous fiscal year and using the remaining $45 million toward spending in the next fiscal year, BusinessWeek reported. The $110 million is approximately 1 percent of the state's current two-year budget.
"The Supreme Court's decision is very disappointing," Lynch said in a statement released on Thursday. "But even without the JUA funds, we will continue to responsibly manage the state budget and ensure that it is balanced."
Echoing Lynch's sentiments, state Senate President Sylvia Larsen, D-Concord, told The Nashua Telegraph that she was unhappy about the state Supreme Court's decision.
"[The Court disregarded] the decisions of other states that legally tapped similar surplus funds," she said.
Larsen said that even without the $110 million, the state would still responsibly balance the state budget.
State Senator Matthew Houde '91, D-Plainfield, said in an interview with The Dartmouth that he was disappointed with the Supreme Court's decision and that he was concerned about the budget deficit that the state is facing. The state can either continue to look for additional sources of revenue or make budget cuts in the appropriate places, Houde said.
"The hard part about making budget cuts in these difficult economic times is that we also see an increased demand for state social services," he said.
Houde said that policymakers will have to make difficult decisions about whether or not to adopt costly measures to meet the needs of the people.
The state Supreme Court's ruling may also affect local towns and cities across New Hampshire, according to reports.
Betsy McClain, director of administrative services and Hanover deputy town clerk, said that Hanover has been "bracing itself for additional downshifting from the state as [state administrators] work to shore up their operating budget shortfall."
McClain also said that Thursday's ruling on the JUA case may be a reason for local governments in New Hampshire to call for more conservative budgets and higher taxes in the near future.
The state has not yet officially released its plans to find alternative ways to fix the budget deficit, McClain said. Hanover's Board of Selectmen will adopt a proposed budget plan next month that will be taken to the town meeting to be voted on in May.
