Daily Sun News
|
|
|
|
|
Sunnyside Councilmen (L-R) Mike Farmer, Tom Gehlen and Don Vlieger mull information regarding two insurance carriers at Monday's special session.
The Sunnyside City Council last night held a special session to make a decision in adopting a resolution for its insurance carrier.
The discussion was at times volatile, with council members bringing up first the right to call the special session and later whether or not the city's attorney had any stake in the decision.
Councilman Don Vlieger was the first to call into question whether or not the special session was appropriately called by Mayor Jim Restucci.
Last Monday, Aug. 23, the council voted 3-2 to approve Washington Cities Insurance Authority (WCIA) as the city's insurance carrier. At least four yes votes were needed to make it official, however.
Sunnyside has for several years been provided insurance by Cities Insurance Association of Washington (CIAW). Previously, WCIA provided the coverage.
Last night Vlieger questioned Restucci's authority to call for the special session.
"You didn't have a right to call this meeting," he charged, speaking directly to Restucci.
Vlieger said the council's rules state only members who prevailed during the 3-2 vote on Aug. 23, which he said were himself or Farmer, can bring forth a meeting to reconsider a vote.
"The prevailing side (Aug. 23) is the side against the resolution," he said.
City Attorney Scott Beyer reviewed the council's policy and read the rule differently, but Vlieger was not appeased.
City Clerk Deborah Estrada jumped into the fray and read a clause in the rules that allow for suspension of a rule.
Seeing Vlieger was not going to be appeased, and acknowledging the fact that council had to make a decision because it would be without insurance coverage as of midnight tonight (Tuesday), Councilwoman Theresa Hancock made a motion to suspend the rule Vlieger was referring to.
Councilman Pablo Garcia seconded the motion and more discussion took place prior to a vote.
"This has to do with our rules of procedure," Restucci said in response to Vlieger's charge that council could not suspend by-laws.
Councilman Nick Paulakis stepped in and said council should be talking about which insurance carrier should be retained, not whether or not the council was following procedure.
Vlieger responded, "I feel it is a big issue. I will not vote to suspend the rules."
The rules were suspended by a 5-2 vote, with Farmer and Vlieger being the two councilmen in dissent.
The meeting moved forward with Hancock making the first motion to reconsider the Aug. 23 vote and Garcia giving the second.
The reconsideration was up for comment and Canfield and Associates' Phil Richie was provided the opportunity to speak to council about CIAW.
"I understand there is some division, but there needs to be affirmative action because we will not allow CIAW membership by default," he said.
Richie said Sunnyside has been a member of CIAW for nine to 10 years and he was not aware of conflict between the city and the insurance carrier. His firm is the broker for CIAW and he said the insurance carrier has paid several claims for Sunnyside over the years.
"We offer pre-litigation assistance at no cost," said Richie.
He said the attorneys contracted by CIAW assist both city attorneys and staff members.
Addressing the issue of CIAW having been served a notice to cease and desist, Richie said the company has been determined to have plenty of liquidity to pay claims.
Vlieger asked him if the city of Sunnyside has taken advantage of pre-litigation assistance in the past 18 months.
Richie answered, stating some pre-litigation was requested, but CIAW was asked to stop that service.
"I think it is fair to say the relationship between our office and (Sunnyside) staff hasn't been as good as I would like. If WCIA is a better fit, then that is the direction Sunnyside needs to go," he responded.
Vlieger later asked Richie about the membership status. At the Aug. 23 city council meeting council was informed Sunnyside would have to become a full member of CIAW if they chose to renew membership.
Richie confirmed that membership would have to be moved from associate membership to full membership at the cost of $1 in order to keep CIAW as the insurance carrier.
He said the company must build a reserve and offer existing members a buy-in. That buy-in would be according to liability "...and I am not going to guess the cost."
Hancock, too, had questions for the broker. She wanted to establish the nature of the relationship between CIAW and the city, stating the insurance carrier was asked to help city hall "heal" after the termination of former city manager Eric Swansen and the resignation of the finance director and city attorney in 2009.
"But, it turned into an investigation," she said.
Richie said there have been trust issues "...but I want to move forward and believe the relationship is not what it should be."
He said he was not invited to the Aug. 23 council meeting and learned of it by reading documentation on Finance Director Byron Olson's desk.
Olson spoke to the issue, stating he notified local insurance agent Jeff Barrom, who is the local contact for Canfield and Associates. "That is how it has been done in the past," he told council.
Barrom entered the discussion, stating he provided Canfield and Associates notice more than a year ago that the city may not renew its insurance with CIAW.
"I was notified by (Byron) Olson that the recommendation (to council) would be Washington Cities Insurance Associates, and because Olson's job is to make recommendations, I told him I would support the decision," he told council.
Barrom apologized to council, stating, "If I was supposed to invite Canfield to the Aug. 23 meeting, I failed."
Olson told council the city did invite quotes from both CIAW and WCIA. There was a $6,000 difference between the two firms.
Restucci, backing up Olson, said staff is tasked to make recommendations.
Vlieger, getting upset at the line of discussion, said, "It's not staff's job to give recommendations. They aren't voted in...our job is to have all the facts."
Hancock jumped into the discussion and told Vlieger he was not fully aware of all the facts. She brought up a "string of communications" between former council member Bruce Ricks and Alan Key, a Canfield and Associates employee.
"Farmer and Vlieger were carbon copied on those communications," she said, stating the communications took place prior to the council members being on the council. The communications, she said, were inappropriate discussions of city matters.
Because Vlieger, said Hancock, was charging interim City Manager Jim Bridges with wrongdoing in the relationship with Canfield and Associates, Hancock said, "It's not fair for you to lay this at the feet of Jim Bridges."
Bridges spoke up, adding, "I was not sitting as city manager at that time."
Restucci intervened, calling the meeting back to order, and Vlieger immediately took another line of attack, stating, "That's why staff should stay out of council affairs."
Restucci once again stopped the line of discussion, moving on to Richie's presence at the special session. He questioned Richie regarding CIAW's lack of a presentation for council prior to last night.
He said, "I am concerned if you were advised Sunnyside may not remain a member of the (insurance) pool...you could have made a presentation, but didn't.
"I found the cease and desist order and talked to the office of finance management to find out if it was a big deal."
Restucci explained his concern about the cease and desist order arose after Farmer and Vlieger seemingly made it seem as if it was not a matter of importance.
Richie responded, saying, "I think it was a huge deal."
He said the office of financial management had not issued such an order in 20 years. He said CIAW, however, was given short notice on the matter.
The order states, "According to information provided by the independent expert in late December (2009), the CIAW's third party administrator was not able to provide any insurance policies supporting the insurance receivable recorded in the annual financial statements on August 31, 2008, the pool's fiscal year end. This $7 million receivable included an insurance receivable of approximately $6,044,849. According to information provided by the independent consultant, the actual amount of the insurance receivable was overstated by $4,774,849 and required a write off in that amount."
Richie said the company has about $10 million in its budget, which may be approximately $1 million less because of membership loss.
"We did everything we could to reduce the $986,000 problem," he said.
Richie continued, stating full members are responsible for the $986,000, but the city of Sunnyside would not be held responsible if it chose to renew its membership.
Further discussion ensued as to the training offered by CIAW and whether or not the city took advantage of training opportunities.
Richie said the police department was the most proactive department within the city that took advantage of training.
Hancock revisited the email situation, stating she felt Key, the Canfield and Associates employee, was acting in an inappropriate manner, discussing city matters with an individual who was not seated on city council. "Those emails were making their way to city employees, further fracturing (the relationships)," she said.
"If Key was neutral, he should not have responded to the emails," Hancock continued.
That was at issue for Restucci, too, who after the special session told the Daily Sun News he would have liked to have heard an apology from Richie. He said he would like to know the broker would be willing to take measures to ensure the insurance carrier was not putting itself or the city in a liability situation.
Farmer, during the special session, asked about the relationship between WCIA and Menke Jackson Beyer Ehlis and Harper, LLP. He had information that the law firm that serves as the city's legal counsel is a provider for the insurance carrier.
The city's attorney spoke to the matter, stating WCIA and other insurance carriers assign his law firm cases. However, the firm is not counsel for WCIA.
"We work for cities," said Beyer, stating his firm is occasionally assigned to a city case or case involving city staff members.
He said his firm has not taken a stance on which insurance carrier the city should choose as its provider. "We support the decision of the city," he said.
WCIA Executive Director Lewis Leigh also had an opportunity to speak to the council, stating his firm is growing its membership with members who have chosen to leave CIAW.
He spoke briefly addressing WCIA's stance on meeting the needs of the membership, including claims based coverage and occurrence based coverage.
Leigh said Sammamish left CIAW and Sunnyside would be one of the few large cities left in the insurance company's membership, picking up the slack for smaller cities.
When asked about training, Leigh said his company believes it must be mandatory for the purpose of ensuring a stronger client.
Using this past year's training as an example, he said, "We want everyone to go through employment practice training because everyone deals with employment riffs."
After further discussion with Leigh, the council voted to approve a resolution, adopting WCIA as Sunnyside's insurance carrier.
The vote was split 4-3, with Hancock, Restucci, Garcia and Tom Gehlen in favor. Vlieger, Farmer and Paulakis were against the resolution.
