Tuttle v. New Hampshire Medical Malpractice Joint Underwriting Association No. 2010-CV-00414, 050217 NHSUP, 2015-347

Docket Nº:2015-347
Opinion Judge:Richard B. McNamara, Presiding Justice
Party Name:Georgia A. Tuttle, M.D., LRG Healthcare and Derry Medical Center v. New Hampshire Medical Malpractice Joint Underwriting Association No. 2010-CV-00414; 00294 [1] And In the Matter of the Winding Down of the New Hampshire Medical Malpractice Joint Underwriting Association
Case Date:May 02, 2017
Court:Superior Court of New Hampshire
 
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Georgia A. Tuttle, M.D., LRG Healthcare and Derry Medical Center

v.

New Hampshire Medical Malpractice Joint Underwriting Association No. 2010-CV-00414; 00294 [1]

And

In the Matter of the Winding Down of the New Hampshire Medical Malpractice Joint Underwriting Association

No. 2015-347

Superior Court of New Hampshire, Merrimack

May 2, 2017

UNPUBLISHED OPINION

ORDER

Richard B. McNamara, Presiding Justice

This case involves claims of policyholders of the New Hampshire Medical Malpractice Joint Underwriting Association ("JUA") who seek to recover excess proceeds from the JUA's operation. Pursuant to RSA 404-C: 17, the Receiver of the Association, Insurance Commissioner Roger A. Sevigny, ("Receiver") has filed a pleading he captions "Receiver's Motion for Approval of Interim Distribution, Interpleader and Related Discharge Pursuant to RSA 404-C:17, " reciting that he believes sufficient funds exist to make a distribution of $50 million2 in excess proceeds to policyholders. The Receiver believes that it is necessary to maintain a reserve of $36 million in assets to address remaining costs and obligations of the JUA in receivership including administrative and operational expenses of the JUA, the expenses of the receivership, the tax obligations of the JUA and to provide a reasonable reserve for unknown and unexpected obligations of the JUA.

Georgia A. Tuttle, M.D., LRG Healthcare and Derry Medical Center ("Plaintiffs"), purporting to act as representatives of all other policyholders have filed a Renewed Motion for Preliminary Class Certification, Appointment of Class Counsel, and Approval of Notice. Plaintiffs argue that this action should proceed as a limited fund class action in accordance with the provisions of Fed.R.Civ.P. 23(b)(1)(B). However, Superior Court Rule 16, which governs class actions, contains no analogous provision, and for the reasons stated in this Order, the Court does not believe that it has authority to treat the Plaintiffs' claims against the res as a class action against a limited fund without guidance from the New Hampshire Supreme Court. Accordingly, the Renewed Motion for Preliminary Class Certification, Appointment of Class Counsel and Approval of Notice is DENIED WITHOUT PREJUDICE. Counsel for the Plaintiffs shall prepare an Interlocutory Transfer Without Ruling pursuant to New Hampshire Supreme Court Rule 9 containing at least the question of whether: (1) in the circumstances of this case, the Plaintiffs may bring a class action against the funds held by the Insurance Commissioner accordance with RSA 404-C: 17, pursuant to Superior Court Rule 16 and (2) if such an action may be maintained, what procedures should be utilized by this Court to ensure fair adjudication of the competing claims. Since appellate review is necessary, the Court briefly sets forth the background of this case.

I

A. Tuttle v. New Hampshire Medical Malpractice Joint Underwriting Ass'n, 159 N.H. 627 (2010) ("Tuttle I")

This case arose from litigation between the parties described in Tuttle et al v. New Hampshire Medical Malpractice Joint Underwriting Ass'n, 159 N.H. 627 (2010) ("Tuttle I"). The Joint Underwriter's Association ("JUA") administers a mandatory risk sharing plan authorized by RSA 404-C. The plan provides access to medical professional liability insurance coverage to medical providers in the State of New Hampshire. The JUA is governed by a Board of Directors, which is vested with authority over the operation of the plan, subject to the oversight of the Insurance Commissioner. The JUA owes contractual and regulatory duties to its policyholders. The rights and obligations between the JUA and the policyholders are set forth in the insurance agreement. The Insurance Department rules govern application of the excess surplus from premiums remaining after claims and expenses. N.H. Admin. Rules, Ins. 1703.07(d). Pursuant to these regulations, any excess surplus may be applied to reduce future assessments of the Association or may be distributed to policyholders. Id.

In 2009, the Insurance Commissioner issued an analysis determining that $55, 000, 000 would fulfill the JUA's capital needs. The Legislature then passed Laws 2009, 144:1, which Plaintiffs challenged as unconstitutional. The law required the JUA to transfer a total of $110, 000, 000 to the State's general fund during fiscal years 2009, 2010, and 2011. Plaintiffs sued, the trial court found in favor of Plaintiffs, and on appeal to the Supreme Court, the Court held that the language of the policies and the regulations, taken together, vests the policyholders with contractual rights in the treatment of any surplus for their benefit. Tuttle I, 159 N.H. at 633, 643-44, 650-52.

B. Tuttle, et al v. New Hampshire Medical Malpractice Joint Underwriting Association, No. 2010-CV-294 ("Tuttle II")

In July 2010, Plaintiffs brought a lawsuit to compel disbursement of the excess surplus. Tuttle, et al v. New Hampshire Medical Malpractice Joint Underwriting

Association, No. 2010-CV-294 ("Tuttle II"). In June 2011, the Legislature enacted RSA 404-C:14, II which required the JUA to conduct an evaluation to determine what funds it held that were "excess surplus funds:" 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 . . . shall be interpleaded into the Merrimack County Superior Court, docket no. 217-2010-CV-00414 for the purpose of adjudicating all policyholders' claims to excess surplus funds.

RSA 404-C:14, II. In addition, RSA 404-C:14, VI removes all participation from the Insurance Commissioner: "[t]he approval of the commissioner of insurance shall not be required for any action contemplated under this section." Pursuant to the law, the JUA recognized an obligation to pay $85, 000, 000 to the policyholders and segregated the remaining $25, 000, 000 for payment of possible federal tax obligations.

No funds were interpleaded by the Insurance Commissioner, the other requisites of an interpleader action had not been complied with, and the Court recognized that an adverse legal claim was necessary for it to have authority to act. The case was certified for class treatment only on a contract claim against the JUA. Plaintiffs alleged that all parties had the same-or substantially identical-insurance contracts with the same provisions, which remained unchanged in all material respects during the class period. Thus, the Court found that the proposed class appeared to meet the requirements of numerosity, commonality, typicality, adequacy, and predominance, and the Court preliminarily approved the Class on February 7, 2012 and ordered that notice...

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