fp Turks and Caicos

The National Insurance Board has asked the Supreme Court to stop it from having to pay $10 million to the interim government, saying a special law requiring the payment is unconstitutional.

The NIB wants the court to halt the payment until the court decides the merits of the case, and to prevent government from taking any action against the board for not paying.

NIB Chairman Ervine Quelch called the $10 million transfer “a rape of the National Insurance Fund,” but that the NIB will pay if ordered by the court.

The dispute centers on reimbursements NIB is supposed to make for health care treatment of insured people for work related injuries, disabilities and deaths. Since 1992, former elected governments never submitted claims, causing the NIB to build up a $20 million surplus in that fund.

Despite the lack of documented requests, the NIB paid government $50,000 a year. When the interim government submitted its first documented request in 2009 for $837,000, the NIB says government agreed that payment would satisfy NIB’s total indebtedness to government dating back to 1992.

In October, His Excellency the Gov. Ric Todd announced during a press conference that NIB would have to give government $10 million to cover unpaid costs back to 1992. The amount was estimated by the NIB’s actuary because government had no proof of actual costs.

Quelch said the governor’s announcement “caught the NIB totally and utterly by surprise.”

Subsequent talks between both sides went nowhere, with government not accepting NIB proposals for some type of loan to help government pay for shortfalls in the National Health Insurance Program. So Todd passed a special temporary law Jan. 25 to force NIB to pay.

At a press conference Feb. 16, Quelch said the board sought legal advice from public law specialists in the U.K. who said the governor’s action was unconstitutional and that NIB would be in breach of its fiduciary duties if it paid.

To protect the board and its members, NIB filed an action Feb. 10 asking the courts to settle the matter. Quelch said that prompted threatening actions by interim government Chief Financial Officer Hugh McGarel- Groves.

“Government has obviously gone absolutely ballistic, and the CFO has started to pretty much engage in some rather threatening correspondences, and the board has accordingly decided that it needed also to apply to the court for interim measures to prohibit any precipitous action against the board,” Quelch said. If the NIB wins its case, government will have $10 million less in its battle to balance the budget by the fiscal year beginning April 1, a requirement for elections to be held later this year.

If the NIB loses, it will have $10 million less in surplus that it could move to other funds, such as for pensions, in case of shortfalls in the future.

The loss will come on top of another potential $17 million loss imposed on NIB by government, which granted amnesty to itself and businesses for penalties on arrears in NIB pension payments for employees.

Government has now paid its arrears, but amnesty will let it escape an estimated $11.8 million in late fees. People and businesses could be relieved of up to $4 million in penalties if they apply by Feb. 29 and bring their NIB contributions current.

Since 1993, the penalty had been 10 percent per month on arrears, which the NIB’s actuary said was too high. An example used by the actuary showed that a company with 15 employees that missed only one month’s NIB contributions of $2,080 would owe an additional $2,496 in penalties after only one year. NIB has changed the penalty to 10 percent for the first month, then 3 percent for each additional month.

Quelch said he agrees that the penalties had been “ridiculously high” but were legal debts that should have been paid by government and businesses.

Government also owes about $3.3 million in rent for government offices in the NJS Francis Building on Grand Turk and about $180,000 for the Hon. Hilly A. Ewing Building on Providenciales.