Governor Lynch today issued the following statement on his decision to allow Senate Bill 170 to become law without his signature.
"Senate Bill 170 directs that all funds in the New Hampshire Joint Underwriting Authority that are in excess of funds necessary to sustain its operations be deemed to be excess surplus and distributed to all policy holders who have contributed to the current surplus of funds.
"The bill also directs that once the surplus is determined, a reserve of $25 million dollars be set aside in the event of federal tax liability. The legislature may choose, as it has done in this bill, to change the fundamental character of the NHJUA from an essential state entity supporting health care in New Hampshire to an entity that serves the private interests of its participants. Its action in directing that all excess surplus be distributed save for $25 million may, however, undermine the future viability of the NHJUA and its ability to continue to provide medical malpractice insurance at reasonable rates to doctors who need this insurance.
"The Attorney General, the Department of Insurance, and the State's special legal counsel have all advised the legislature for more than a year that a distribution of NHJUA funds to former and current policyholders will likely result in a significant federal tax liability that will far exceed $25 million. By distributing NHJUA surplus funds in the manner directed by this legislation, current and former policyholders will be individually liable to satisfy the federal tax liability that exceeds $25 million dollars.
"In the event that the federal tax liability is not satisfied by policyholders, then the NHJUA itself will be responsible for that liability. This may put at risk the NHJUA's ability to continue its original purpose of providing New Hampshire doctors with needed malpractice insurance to serve the health needs of the State. I believe that it would have been sounder to avoid any issue that could affect the viability of the NHJUA by postponing the distribution of excess surplus until after the federal tax liability issues are resolved. As presented, SB 170 is a simplistic solution to a complex problem that may undermine the role of the NHJUA and impact the continued provision of certain medical services in New Hampshire.
"I expect that the legislature fully understands the consequences of this bill."