The NEWS index
Reform Water Board legal costs mount
$32,598 and counting
by Jay O'Brien
The Rio Linda/Elverta Community Water District (RLECWD) now faces three lawsuits thanks to its action to terminate employee and retiree health benefits provided through the Public Employees' Medical and Hospital Care Act (PERS medical) at the end of the year. Even before the now scheduled court dates, RLECWD has received attorney bills for $32,598.63; this does not include the $100 paid to each of the five Directors for attending the special meetings with their new health and benefits legal counsel.
How did this happen?
At the February 14, 2005 RLECWD Board meeting, Directors Mary Harris and Jim Strutton proposed that the Board contract outside legal counsel for health and benefits issues. With reference to the cost of this contract, Harris said "I think six thousand would be an appropriate amount." Strutton said "I would say no more than six thousand, I would say that that should be more than sufficient." The Board approved the proposal, with President Darrell Nelson joining Harris and Strutton voting aye, Director Doug Cater voting no and Director Hal Morris abstaining.
A special meeting was called March 3, 2005. The Board hired attorneys Richard Chiurazzi and Peter Stubbs to provide legal counsel for all matters relating to health and benefits. The Chiurazzi firm charges $195/hour. The contract as approved at that time was limited to a total of $6000 in cost or six months from March 3rd in tenure. The votes were cast three in favor, one opposed, and one abstention, exactly as at the February meeting.
Cater, voting no, said, "It's a waste, a misappropriation of funds, as far as I'm concerned."
A closed session meeting was held with Chiurazzi on March 21, 2005. Two days later, Board President Nelson and Chiurazzi signed a contract for legal services. The contract they signed was markedly different from that approved by the Board on March 3rd. The modified contract was brought to the Board a month after it was signed, for approval at the April 18 Board meeting. Nelson, Harris and Strutton were joined by Director Morris in approving the rewritten contract; Cater voted no, stating that it was not the contract previously reviewed by the Board.
Chiurazzi said in an "attorney/client privileged" document delivered in closed session to the Board, "It is my advise [sic] to terminate insurance coverage with PERS and to retain another medical insurance provider. If this is done correctly, the Board would no longer be responsible for the medical insurance of retiree[s] Tom Ray and Mason Adams." Apparently Chiurazzi did not adequately control the copies of his "privileged" document; as a result, pages of the document were anonymously leaked to The NEWS and later validated by Chiurazzi.
In his "privileged" document, Chiurazzi further suggests that action be taken "...to request a return of premiums paid to the two former employees..." Chiurazzi said to the Board that "it may be possible to eliminate the health insurance payments made on behalf of Jerry Wickum [sic]." Wickham is a former Director and is a Public Employees' Retirement System retiree.
Following the advice in Chiurazzi's document, the Board passed a resolution on July 18th withdrawing from the Public Employees' Medical and Hospital Care Act (PERS medical) effective at the end of 2005. All of the present RLECWD employees, plus retirees Mason Adams, Tom Ray, Mike Phelan and Jerry Wickham are affected by the Board's action.
The Resolution for withdrawal received aye votes from "Reform Board" Directors Harris, Nelson, Strutton and Morris. Director Cater did not attend this meeting, held at 3 PM.
The Board action was taken without having comparative cost and benefits proposals discussed in an open meeting. The employees, ratepayers and constituents were not provided an opportunity to be heard or voice their concerns before the decision was made for them by the elected "Reform Board".
Mike Phelan, who retired as RLECWD General Manager in 2001, has filed a petition in Superior Court asking the Court to force RLECWD to reinstate his health benefits. Phelan, who has been receiving health benefits from PERS medical as agreed by the RLECWD Board of Directors when he retired, will lose those PERS medical benefits on December 31, 2005, thanks to the Board's action.
Two years ago, during a Board meeting on October 23, 2003, Director Harris, attempting to reduce Phelan's benefits, referred to a potential legal claim by Phelan. Harris said, "Let's let that lawsuit happen..." Harris, later at that meeting, said to the Board, "So let's make a loud statement to Mr. Mike Phelan. If he sues us, please encourage him to sue us..." Phelan has sued, giving Harris her wish.
RLECWD employees, claiming the RLECWD Board has denied their rights and benefits, filed suit in Superior Court to have their health benefits, provided through PERS medical, restored. The employees state that they gave up raises in the past so as to maintain their health benefits. The employees' suit asks the court to issue a "writ of mandate", forcing RLECWD to continue the health benefits presently in place.
Retired RLECWD Director Gerald Wickham has filed the third lawsuit. RLECWD Board President Nelson said, after the closed session of the Board November 14, "... on November 7, 2005, the District received a claim from former Director Jerry Wickham...the Board has denied that claim..."
Wickham's court action, as do the suits filed by Phelan and the employees, additionally seeks an award of attorney's fees from RLECWD.
Chiurazzi and Stubbs have billed the District a total of $32,598.63 as we go to press. That's $26,598.63 more than the $6,000 first authorized. And that's before any court appearances and expenses, or paying any attorney fees to Phelan, Wickham or the employees. The "Reform Board" has spoken.