In recent months, the New Hampshire attorney general and top State House Republicans have questioned the management of a landmark settlement fund for victims abused at the state's former youth detention center.
They’ve cited those concerns as one reason to vastly shrink the fund’s size — and the amount of money available to victims — even as the number of abuse claims continues to swell.
But those concerns are not supported in a new state analysis of the settlement fund commissioned by Senate President Sharon Carson.
The analysis, released late Monday, concludes that the fund’s administrator — former state Supreme Court Justice John Broderick — is following the rules set by Attorney General John Formella and lawmakers.
“During our review of the Settlement Fund, co-managed by the (Youth Development Center Claims Administration) Administrator and the Attorney General, we found the claims process was well-documented and appeared to operate in compliance with laws and policies,” reads the 18-page report from the state Office of the Legislative Budget Assistant.
In particular, the report addressed frustration from Formella and some lawmakers that Broderick was paying victims' lawyers their fees up front. Broderick’s critics said he should have considered paying lawyers in staggered payments, which would preserve more money to settle with victims now.
But in its report, the Office of the Legislative Budget Assistant echoed Broderick’s conclusion that the law does not clearly allow him to do so.
Lawmakers created the $100 million settlement fund three years ago after nearly 500 former YDC residents sued the state, alleging they’d been sexually and physically abused there as children. At the time, Formella was among the fund’s biggest champions. He said the state would save money by settling lawsuits and that the fund was “the right thing” to do.
The report raised no concerns about how the settlements are being managed and tracked. It said Broderick’s detailed quarterly settlement reports have been accurate and both his office and the Attorney General's Office are verifying and tracking claims of abuse.
The report comes as state lawmakers are debating the future of the landmark settlement fund as part of the state budget process. Carson did not return messages seeking comment on the report.
Here are three takeaways from this week’s analysis of the fund, its management, and Broderick's latest report to lawmakers.
The process for paying victims’ attorneys remains a sore spot
Formella told Broderick in a March letter that he would not support additional money for the fund this year because Broderick had not sufficiently spread out payments to victims and their attorneys over time. Others have alleged that Broderick approved attorney fees that exceeded the 33.3% of the victim’s settlement — the percentage specified in law.
“Our position is that any shortfall you anticipate this fiscal year would not have occurred but for your ongoing decisions to award attorneys fees upfront when issuing awards in installments and to award disproportionately large first-year installments to claimants,” Formella wrote. “Any shortfall you anticipate this fiscal year could be easily avoided by simply issuing future awards in prudent installments.”
In a reply letter, Broderick said he’d asked Formella for legal guidance on whether state law allowed him to issue periodic — rather than upfront — payments to lawyers. He told Formella he’d move to periodic payments if he directed him to. He said Formella never responded.
The report confirmed Broderick’s interpretation of the law, saying it “does not clearly provide” him that authority. It noted, however, that Broderick has persuaded 18 law firms representing nearly 875 clients to voluntarily accept periodic payments.
AG has also settled claims with victims
The Attorney General's Office had an equal opportunity to negotiate periodic payments with lawyers.
NHPR’s review of the 320 cases settled as of May 15 shows that Formella’s office has finalized the terms of more settlements than Broderick and his office have.
Formella’s office settled 156 cases, determining how much money victims and lawyers received and whether those payments were made over time or all at once.
Broderick has decided 146 cases for victims who opted to go through a hearing process instead. That included negotiating payments for victims and lawyers.
The remaining 18 cases were resolved this year through a hybrid process where Formella’s office determined what to pay victims and asked Broderick’s office to decide how to pay them and their lawyers.
The report shows that in most cases, the attorney and their client received lump sum payments. The report does not say which cases were resolved with periodic payments or how many of those were decided by the Attorney General’s Office or by Broderick.
The Attorney General's Office did not respond when asked if it had included periodic payments in any of its settlements. Jennifer Foley, a lawyer who advises Broderick on his management of the settlement fund, said Monday their office has not tracked that as part of its quarterly reports.
The numbers suggest it has largely been Broderick who has moved to periodic payments.
Since June, when lawmakers clarified in law that victims could receive payments over time, Formella’s office has settled 17 claims versus the 99 Broderick decided.
Most payments are falling far below legal caps
Formella worked with lawmakers last year to increase the cap on settlements from $1.5 million to $2.5 million in extreme cases. Broderick and Formella’s office are paying most victims far less, according to the report.
Of the 300 cases resolved as of the end of March, 31 people were paid more than $1.5 million. Nearly 100 received less than $250,000. The average award paid so far has been $543,000. That’s far less than what some victims could collect if they had sued the state.
The Attorney General’s Office has agreed to settle one lawsuit for $10 million. And last year, a jury awarded another victim $38 million in a case that’s being appealed.
