Ruling sets state back $110 million

Lauren Dorgan reports in the Concord Monitor on the decision in the JUA case, and Governor Lynch's reaction to it:

Belknap County Superior Court Judge Kathleen McGuire found for a group of doctors and hospitals insured by the fund that claimed the money rightfully belongs to them. She found that the state budget plan to seize the money violates state and federal constitutional prohibitions against taking private property and against impairing a contract. McGuire's 27-page ruling dissected the state's claims to an ownership stake in the Joint Underwriting Association and concluded the planned seizure is "unconstitutional and shall not be enforced."

Lynch promptly vowed to appeal the decision to the state Supreme Court. In a statement, Lynch, a Democrat, restated his belief that the money rightfully belongs to the state.

"The Joint Underwriting Authority was established - and given tax-free status as a state entity - in order to provide a service, not a windfall, to doctors. The state established the Joint Underwriting Association to ensure doctors could get access to malpractice insurance and that service has been provided," Lynch said in a statement. "These surplus funds belong to the citizens of New Hampshire, who created the Joint Underwriting Association and gave it tax-exempt status." (more)

The Governor's logic is that the JUA's tax-exempt status makes its a state agency. If true, this would have wide-ranging implications for other tax-exempt organizations that are currently considered private entities. And any windfall going to doctors comes from money they paid. The State of New Hampshire has not provided a single dollar to the JUA in the 35 years its been in operation.

Since both parties to the case already stipulated the facts prior to trial, there is little room for appeal beyond showing some legal error on McGuire's part. That would seem to require the State coming up with some new cases specific to New Hampshire that dramatically alter the way the Court examined both the Takings and Commerce Clauses of the state constitution.

Both I and Charlie Arlinghaus have been warning budget writers for months that their attempt to transfer money from the JUA to the General Fund was illegal, unconstitutional, and unlikely to succeed. We doubt very much that the State would prevail on appeal.