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Sequoia Healthcare District alters health insurance subsidies for Directors and employees

Original post made by Jack Hickey on Apr 8, 2013

There is something suspicious about the Sequoia Healthcare District's flip flop on policy regarding health insurance benefits.

At their April 3, 2013 board meeting Web Link
the majority approved agenda item 5c:

A subcommittee of the Board consisting of Directors Kane and Faro and Mr. Michelson, conducted additional research regarding the premium amount allowed for health care and dental insurance for directors and staff. The subcommittee's recommendations are as follows:
1. Medical and dental premiums are to remain at a maximum of $1,500 per month as approved in December 2012; however, effective July 1, 2013 participating directors and staff will be required to pay 10% of the premium expense with the District paying 90%. In the instance of CalPers Health premiums paid monthly by the District, directors and staff will reimburse the District 10% of their individual premium cost.
2. Effective July 1, 2013 the inlieu benefit offered to employees who opt out of the District's benefit plan shall be reduced from $400 to $200 per month. (Employee Policy 5.05)
3. Effective July 1, 2013 Employee Policy 5.10 providing reimbursement of $40 per month for gym membership shall be eliminated.
4. Effective July 1, 2013, the District shall offer employees a paid term life insurance policy valued at $50,000 at no cost to the employee. Employees cannot increase the value of this policy by paying an additional premium. This benefit will cease upon termination of employment from the District.
Upon approval of the above recommendations, Board Policy 15.2 and Employee Policy 5.05 will be amended accordingly; Employee Policy 5.10 will be eliminated; Term Life Insurance
Benefit will become Employee Policy 5.11.

Effectively, this reduced the subsidy for Directors from the recently (January 2013)raised cap of $1500/month to $1350/month, with the exception of yours truly. I had chosen coverage with Kaiser with premiums <$800/month. The new policy now would require me to reimburse the District 10% of my premium.
Ironically, this reduction in benefit was determined by District counsel Hudak to only apply to newly elected directors. At my request, Mr. Hudak provided me with an Attorney General's Opinion supporting that determination. He has yet to provide similar support for a determination that the December_increase_was immediately applicable to current directors.

History:
When I first was elected to the Sequoia Healthcare District Board of Directors, some Directors were costing the district more than $2,000/month for their health insurance.
Several years later, the District changed its policy and put a $1200/month cap on the subsidy.

At our December meeting, that cap was raised to $1500/month. I challenged the applicability of that increase for current Directors.
District counsel, Mark Hudak, was tasked to research the issue.

________MINUTES FROM DECEMBER MEETING
5.e. Consider Increasing Premium Amount Allowed for Health Care
Insurance for Directors and Staff
Director Kane reported she surveyed several special districts and in an environment of increasing healthcare premiums, to add dental and vision coverage she suggests raising the amount reimbursed to directors and staff to $1,500 a month.
Motion: To approve an increase in amount reimbursed to directors and staff to $1,500 a month effective January 1, 2013. By: Director Kane
Seconded by: Director Faro
Director Hickey asked that the maker of the motion amend it to no reimbursement for healthcare premiums for directors and that they receive a stipend for meeting attendance.
The suggested amendment was not accepted by the maker of the motion.
Vote: 3-1-1 with Director Shefren abstaining and Director Hickey opposed.
Motion Passed
Additional research will be conducted by a subcommittee of the Board and item shall be placed on the February 6, 2013 meeting agenda for re-evaluation. Mr. Hudak will research to determine if increase is applicable to current directors.

The increased cap of $1500 was applied to Directors effective January 1, 2013.

No item reporting on the research conducted by the subcommittee was placed on the agenda for the February meeting Web Link, nor do the minutes show any determination by Mr. Hudak as to the applicability of the increased cap on board health insurance subsidy.



Comments (8)

Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Apr 9, 2013 at 12:37 pm

No documentation supporting the opinion of District counsel Hudak suggesting that current Directors did not have to wait for their next election to take advantage of the increased subsidy. That opinion was discussed at board meetings but not recorded in the minutes. Audio of those meetings may be reviewed at the District office upon request. The Board has repeatedly refused to place those recordings on the District website as I have requested.

I am awaiting a response from Mr. Hudak regarding citations supporting his opinion, which I question.


Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Apr 10, 2013 at 4:29 pm

I have just received a Mememorandum from Mark Hudak to Lee Michelson dated 6 December. This memo was NOT included in the meeting information posted on the District's website. I have requested that it be uploaded to that website. I will post a link when it is available.

I totally disagree with the opinion of District Counsel. Sitting Directors must not benefit from increased compensation upon which they have voted. Mr. Hudak suggests that it is not "compensation".


The facts suggest otherwise.


Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Apr 13, 2013 at 9:10 am

Here is an LTE published in yesterdays Daily Post:

"Editor, your article, "Health District awards $1.3 million in grants" has an error which prompts my response.
It states "Board members themselves are reimbursed for up to $1200 a month for both medical and dental insurance." A history of board member compensation follows.
After my election to the Sequoia Healthcare District Board in 2002, I discovered that some Directors were costing the District >$2000/month for health insurance. I proposed that a stipend for meeting attendance (6 regularly scheduled meetings/year) would be more appropriate compensation. My proposal was rejected. Several years later, under public pressure, the Board put a cap of $1200/month on the Directors health insurance subsidy. For several years the majority of Directors, whose premiums far exceeded that cap, had to make up the difference out-of-pocket.
Emboldened by her re-election in Nov. 2012, Katie Kane placed an agenda item on the Dec. 2012 board meeting which resulted in an increase of the cap to $1500/month. I questioned the legality of such increased compensation accruing to sitting board members. The following day a memorandum was issued by District counsel, Mark Hudak, which states "I researched the issue of whether an increase in the amount reimbursable for health care premiums can take effect during each board member's current term. The answer is not entirely clear, but I think it can be done."
The District put the new cap into effect beginning January 2013.
At it's April 2013 meeting, the board did a flip-flop on the cap by imposing a 10% reduction. This reduced the maximum subsidy for directors with high-end policies to $1350/month. Yours truly, who has chosen the less expensive (<$800/month) Kaiser coverage will be required to pony up 10%.
Fortunately, and confusingly, counsel has deemed that the reduction can not be imposed on sitting Directors. Go figure!"
_____Directors Katie Kane and Kim Griffin could cost the District $28,800 over the next 4 years if the increased cap of $1500 for which they voted is allowed.


Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Apr 13, 2013 at 9:44 am

Here are links to Mark Hudak's Dec. 6, 2012 memo Web Link and the Attorney General Opinion cited Web Link


Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Jun 6, 2013 at 9:37 am

FLASH!
At yesterday's Board meeting, Directors of the Sequoia Healthcare District voted to make the Director's health insurance subsidy increase of $300/month (raised to $1500 from $1200), which began on January 1,2013, effective only after Director's next election, or for newly appointed Directors.

A repayment arrangement for those Directors who erroneously received those benefits for January through June ($1800) was left to be determined.




Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Jun 13, 2013 at 4:31 pm

I sent the following e-mail to San Mateo County District Attorney, Steve Wagstaffe. I invite readers to review the meeting audios.

I will be obtaining the December and February meeting audios shortly.

From the audios, it looks like 3 Directors will "keep" the $1,800 they each erroneously received in subsidies from January thru June 2013 unless someone, in addition to Jack Hickey, objects.

E-MAIL TO WAGSTAFFE
Steve, regarding the "misappropriation of public funds", the audio for the last three meetings can be found at:

6-5-13.MP3 13-Jun-2013 15:22 133M (starting at 1:00:24)
4-17-13.MP3 13-Jun-2013 15:18 114M
4-3-13.MP3 13-Jun-2013 15:15 84M (starting at 00:46:45)

Fortunately, the District now uses a digital recorder. Unfortunately, they were still using an analog tape recorder for the December meeting, for which I do not have a copy.

My original e-mail follows:

Mr. Wagstaffe, I am an Elected Director of the Sequoia Healthcare District. I ask for your assistance to seek a remedy to an action of my Board which I consider to be a misappropriation of public funds.

At our December, 2012 meeting, the Board approved a $300/month increase in Board Health Insurance subsidy (from $1200/month to $1500/month). I questioned the applicability of this increased benefit to sitting Directors. Subsequently, Mark Hudak, District counsel issued a memo Web Link which contained the following caveat "The answer is not entirely clear, but I think it can be done."
Directors began receiving the increased benefit in January.

Seeking a remedy to this situation, I sent the following e-mail to Board President Jerry Shefren:
On Tue, Apr 23, 2013 at 11:38 AM, <JackHick@comcast.net> wrote:

Jerry, be aware that I consider the reimbursement of Director's healthcare insurance premiums, being made in 2013 pursuant to the boards action at its December meeting, to be a misappropriation of public funds. See:
Web Link

I ask you to review the action of the District and seek a remedy.

Jack Hickey, Elected Director

Below are his responses to my repeated requests:
(Most recent response first)

From: Jerry Shefren
Sent: Friday, May 17, 2013 6:59 PM
To: JackHick@comcast.net
Subject: Re: Increased benefits for sitting Directors

Jack,
Out of town till Monday
I have not forgotten
Jerry

Sent from my iPhone

On May 16, 2013, at 4:02 PM, "JackHick@comcast.net" <JackHick@comcast.net> wrote:


Jerry, it has been 11 days since your last response. "Next week" is almost over. What action are you taking to remedy this situation?

Jack

From: Jerry Shefren
Sent: Sunday, May 05, 2013 5:52 PM
To: JackHick@comcast.net
Subject: Re: Increased benefits for sitting Directors

I have asked for some additional information and will be getting back to you next week.

Jerry



On Sun, May 5, 2013 at 1:07 PM, <JackHick@comcast.net> wrote:

Jerry, what action are you taking to remedy this situation?

Jack

From: Jerry Shefren
Sent: Thursday, April 25, 2013 5:06 PM
To: JackHick@comcast.net
Subject: Re: Increased benefits for sitting Directors

Jack,

I am reviewing this again and will get back to you about it as soon as I can review the material and make a decision.



On Wed, Apr 24, 2013 at 11:08 AM, <JackHick@comcast.net> wrote:

Gerry, there are two actions in question:

1. The increase in insurance premium subsidy from $1200 to $1500 which was approved by a majority vote of the Board at the December 5, 2012 meeting:
Can sitting Board Members benefit from an increase in compensation for an action of the Board in which they voted?

Mr. Hudak's December 6, 2012 memo Web Link suggests that '...health care benefits are not considered "compensation" for most purposes.' He then concludes with "However, the issue could be viewed differently because we do not offer a plan for employees and directors alike."

The history of directors health insurance benefits shows that a cap of $1200/month was placed on reimbursement when it became apparent that some directors were being reimbursed for premiums much higher than that. Those subsidies exceeded $2,000/month. It was an issue of "overcompensation" for members of a Board which has only 6 regularly scheduled meetings per year.



California Government Code Section 36516.5
36516.5. A change in compensation does not apply to a councilman during his term of office; however, the prohibition herein expressed
shall not prevent the adjustment of the compensation of all members of a council serving staggered terms whenever one or more members of such council becomes eligible for a salary increase by virtue of his beginning a new term of office.

2. The April decrease in benefits effected by a vote to require directors to pay 10% of the insurance premium:
Can an action of the board reduce compensation of sitting Board Members?

The AG Opinion provided by Mark, Web Link clearly supports a prohibition on reduction of benefits.

It is my opinion that, if pursued, a Writ of Mandate would issue to remedy the situation by delaying the increased subsidy for board member health insurance until the next elected directors are seated.

You can make such action unnecessary.

Jack

From: Jerry Shefren
Sent: Wednesday, April 24, 2013 9:32 AM
To: JackHick@comcast.net
Subject: Re: Increased benefits for sitting Directors

When I asked him at the last meeting he voiced confidence to the Board that our action was legal.

Jerry



On Tue, Apr 23, 2013 at 4:25 PM, <JackHick@comcast.net> wrote:

Mark said, "The answer is not entirely clear, but I think it can be done." Are you comfortable with that?

Jack

From: Jerry Shefren
Sent: Tuesday, April 23, 2013 4:15 PM
To: JackHick@comcast.net
Subject: Re: Increased benefits for sitting Directors

Thanks for keeping me informed of your thoughts on this matter Jack. As you know this has already been reviewed by our legal counsel.

Jerry


Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Jun 13, 2013 at 4:38 pm

Sorry, here are the links to meeting audio:
Web Link
Web Link
Web Link


Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on Dec 6, 2013 at 11:58 am

Updated analysis:
A Sequoia Healthcare District action on 12/5/12 raised the cap on monthly Health Insurance premium reimbursement for Directors and employees from $1,200 to $1,500. The question of applicability to "sitting Directors was raised. In a 12/6/2012 memo to CEO Lee Michelson, not shared with all Directors, District Counsel opined that "The answer is not entirely clear, but I think it can be done." It is reasonable to conclude that the memo was shared with Board President Griffin and a subcommittee composed of Michelson, Faro and Kane tasked with researching the issue and placing an item on the 2/6/13 meeting agenda for re-evaluation.
Three Directors, Kane, Griffin and Faro, the only ones voting for the increase, benefited to the tune of $1,800 each for the first 6 months of 2013. It is notable that only one employee, Pamela Kurtzman, benefitted ($66.72/month) from the increased cap of $1,500/month in the first 6 months of 2013. All other employees and Directors received no added benefit in that period.
At their April Board meeting, Directors added a 10% co-pay to premiums effective July 1, 2013! Now, Pamela Kurtzman, who previously had 100% of her premium paid by the District, is paying $125.70/month for her insurance. And, Janeene Johnson, who previously had 100% of her premium paid by the District, is paying $66.67/month.
Fortunately for Directors, the 10% co-pay was deemed by District Counsel NOT to apply to "sitting" Directors. Fortunately for taxpayers, concerns were raised which resulted in Board action at their June meeting to restore the $1,200 cap on "sitting" Directors effective July, 1, 2013. Unfortunately, the $1,800 benefit enjoyed by Directors Kane, Griffin and Faro remains a "gift" which they have not yet chosen to return. See:
Web Link


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