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HomeMy WebLinkAboutCIV 1992-07-14 Minutes MINUTES FOR T8E MEETINC~ OF THE CIVIL SSRVICE COtlRISSION JULY 14, 1992 at 7:00 p.m. IN THE NORTH RICHLAiiD HILL5 COUitCIL CSAMBERS 7301 N.E. LOOP 820 l. CALL TO ORDER Chairman Jeff Newsom called the meeting to order at 7:05 p.m. 2. ROLL CALL Members Present: Jeff Newsom, Chairman Sally Hackfeld, Commissioner George Pederson, Commissioner Dennis York, Commissioner Others Present: Ron McKinney, Personnel Director Linda Cast, Personnel Technician Vicky Craven, Employee Benefits Clerk 3. APPROVAL OF MINUTES Commissianer Pederson made the motion FOR MAY 26, 1992 to approve the minutes of the meeting held May 26, 1992, seconded by Commissioner Hackfeld. Chairman Newsom, Commissioner Hackfeld, and Commissioner Pederson voted for, Commissioner York abstained. Motion carried. 4. APPROVAL OF MINUTES Commissioner Hackfeld made the motion to FOR JUNE 18, 1992 approve the minutes of the meeting held June 18, 1992, seconded by Chairman Newsom. Chairman Newsom and Commissioner Hackfeld voted for, Commissioners Pederson and York abstained. Motion carried. 5. APPEAL HEARING 92-04 The witnesses were sworn in. Appellant Kenneth Vise was represented by his attorney, Paul Enlow. Rex McEntire represented the City. The rule was ir~voked by Mr. Enlow, and the witnesses left the room. Opening statements were made by Mr. McEntire and Mr. Enlow. Mr. McEntire called Ms. Dee Roberts as his first witness for the City. Ms. Roberts identified herself as the employee of Transport Life Insurance Company who was custodian of the claims f ile on Kenneth Vise' s claims for the car wreck of April 13, 1992. She is Transport Life's subrogation manager. Through Ms. Roberts, Mr. McEntire introduced the entire subrogation file, correspondence file and medical bills file o£ Kenneth Vise in connection with the automobile collision of Mrs. Vise. The board received these items in evidence and allowed substitution of a copy thereof. She testified that by her final calculation the Plan had paid medical claims on Mrs. Vise in the amount of $41,271.22, which were related to the accident in question. She testified that the Plan had paid an additional $7, 503. 56 for a G.I. bleeding problem and she couldn't say whether or not these charges were claimed by Mrs. Vise to have been related to the collision. She testified that Transport Life was merely an agent of the City and worked far a set contract fee. She testified that after November, 1990, that Mr. Vise nor his lawyer ever answered any correspondence or phone calls until the Spring of 1992. She testified that she had knowledge of ERISA involvement in group plans and that this plan was not covered by ERISA. Mr. EnTow questioned Ms. Roberts about her knowledge of inedicine. She stated that she was not a doctor or a nurse and only had training in medical matters on the job with Transport Life. She testified that she was not licensed by any agency. She testified that she did check all the bills which the Vise's sent in, and their doctors and hospitals sent in. Mr. Enlow asked her about her knowledge of ERISA and she testified that she knew that in their view the City plan was not covered by ERISA. Mr. Enlow questioned her about some of the correspondence. She said that the file ref lected that an employee with Transport had written that the plan was covered by ERISA. Mr. Enlow asked who we should believe, the other employee or Mr. Roberts. Ms. Roberts replied that she (Ms. Roberts) should be believed because the other lady was in error. Ms. Roberts 2 told Mr. Enlow that she was not totally sure exactly how much had been paid that should be attributed to the collision. On redirect by Mr. McEntire Ms. Robert said that the reason she didn't know exactly how much should be attributed to the collision was because Mr. Vise would not cooperate and would not answer correspondence. She testified that she could not get full information without some cooperation from Mr. Vise. She testified that Section 4 of the Act excluded City and other government plans from ERI5A. Mr. McEntire called Mr. Rodger Line as a witness for the City. Mr. Line testified that he was City Manager and was also a member of the Risk Management Committee which did the in-house management ot the Employee Welfare Benefit Fund. He testified that after hearing of the details of the investigation in this case that he directed Mr. C.A. 5anford to sign tk~e letter of May 7, 1992 to Mr. Vise suspending his coverage under ~he Welfare Group Plan. He testified that Chief Gertz did not want to fire Mr. Vise, and that he (Mr. Line) agreed to take the road of lesser punishment. He verified that he had executed and filed the two statements, dated May 22, 1992 and May 8, 1992, with the Commission. He stated that he would do the same thing again if he were faced with the same problem. Mr. Enlow asked Mr. Line whether or not he had any medical training. He replied that he had not, but that he could tell it was "too hot" in the room. (He then adjusted the air conditioning setting.) Mr. Line admitted that he did not know exactly how much Mr. Vise owed the Plan because Mr. Vise would not answer correspondence and cooperate. Mr. Enlow asked Mr. Line about Rule 10-o dealing with debt. Mr. Line said he didn't know exactly what the amount of the debt was. Mr. Enlow suggested to Mr. Line that it was impossible to have a"just and due" debt owed to the City if he didn't know 3 how much it was. Mr. Line said that was true and it was difficult. On redirect by Mr. McEntire, Mr. Line pointed out all of the reasons given in the written statements filed with the Commission. He testified that he fully expected Mr. Vise to come and discuss the problem with the Risk Management people, but it didn't look like Mr. Vise was ever going to do it. Mr. McEntire called Ron McKinney, Personnel Director and Risk Manager, as his next witness. Mr. McKinney verified the employees' health protection plan is an Employees' Welfare Plan, not an insurance policy. It is not supported by premiums, and there is no profit mative. Transport Life Insurance is the administrator of the plan, and for this they are paid a contractual administration ~ee. The plan's three sources of revenue are the City's contribution to each employee's account; employee's contribution for dependents; and subrogated income from prior claims paid. Mr. McKinney stated that the City's contribution is the largest source of revenue. During 1990, the City's contribution was $3,000 per employee per year. The employee's contribution for dependents was $90.00 per month, which was never intended to meet the actual cost of dependant's coverage under the plan (the balance of the cost to pay for dependents' care came from the City's $250.00 per month contribution to the plan). If the employees were to have participated in a group insurance policy from a"for profit" company, the cost for the coverage provided to employees and dependents in 1990 would have been in excess of $362.00 per month for a plan which would not have provided many of the benefits provided by our plan. Mr. McKinney explained that over the eight year period that he has been Risk Manager, he has computed figures paid by other cities and reviewed proposals by insurers on an annual or semi-annual basis. Mr. McKinney further related 4 that if the employees were to have paid a premium to a private insurance carrier in 1990 which equalled the cost of dependents' actual medical expenses claimed and paid, the employee would have paid $333.00 per month for dependents' coverage alone. Mr. McKinney explained that at the time of hire, the Employee Health Benefit Plan booklet is issued to each employee. A copy of booklet updates is provided to each employee during the year of update. Mr. McKinney stated that when a person makes a claim where a third party liability possibility exists, the employee executes an agreement to reimburse the plan before benefits are paid. This is the form which Mr. Vise signed in this case. Mr. McKinney, upon being questioned by Mr. Enlow, stated the debt the City was clai~c?ing Mr. Vise owed amounted to something more than $40,000. He did not have an exact figure. Mr. Enlow questioned what would happen if the medical expenses had been related to a pre-existing condition that Mrs. Vise had prior to the accident, to which Mr. McKinney replied that the City would not have a right to subrogate. Mr. McKinney was questioned by both Mr. Enlow and Mr. McEntire about whether money received by Mr. Vise was subject to subrogation. Commissioner Hackfeld asked about the specific and aggregate stop loss amounts, and Mr. McKinney stated that the specific stop loss was $100,000, and the aggregate was $1,750,000. Kenneth Vise was called by Mr. McEntire under ths adverse witness rule. When questioned about the unanswered correspondence, Mr. Vise said his attorney never told him about receiving the letters since October, 1990. He remembered receiving the letter in March, , 5 1992, but did not remember receiving letters in December, 1991, and January, 1992. He has since seen the letter of April 2, 1992, but was never told about it by his attorney until recently. He identified his signature on the form agreeing to repay the employee benefit plan which he remembered signing in April, 1990. He identified his signature on a release for $50,000 dated November 19, 1990, which had already been received in evidence along with certif ied copies of 153rd District Court Records. He said that he and his wife got the $50,000 settlement, but he could not remember how much they got out of the $50,000. He could not remember how much attorney's fee he paid out of the $50,000. He then recalled that he and his wife got a net of a little less than $20,000. The money was disbursed by his attorney, who also paid some other expenses but he was not sure how much they were. He thought he had four or five thausand dollars in medical bills that had to be paid. The Commission interrupted to ask why he would have additional medical bills. He said that his wife had used her limit on mental and psychological services and she had to have more of this treatment. He then recalled that he and his wife got a little more than $19,000 out of the $50,000. He was questioned about the attorney's letter threatening to sue the Welfare Fund, the City, the City Manager and Ron McRinney. He said he didn't know it was being written, but that he now adopted it and thought it was alright for his attorney to write it. He was asked to sign authorization for the City to get information on his family's claims in connection with the car wreck of April 13, 1990. He deferred to his attorney, and Mr. Enlow would not allow him to sign the authorization. Mr. Enlow then questioned Mr. Vise and asked him to read the entire letter aloud which was written by Mr. Enlow to Mr. 6 McKinney. He did so. Mr. Vise testified that he got the agreement to repay the money in the mail in April, 1990. He took it to his attorney for review before he signed it and sent it to the City offices. He testified that Mr. McKinney told him that the group plan could not pay his wife's medical bil.ls until he signed the subrogation agreement. The Commission asked when he hired his attorney. He didn't remember exactly, but it was in April, 1990. He only hired the attorney because the doctors wouldn't treat his wife unless he got a lawyer. The Commission asked him to explain that because he said that he signed the agreement so that the bills could be paid by the City. He explained that the doctors have a 20~ "up-front" charge, even if he had medical insurance, and if he got a lawyer they would waive it. He was asked if the doctor who told him this was Dr. Enlow. He said no, he thought it was Dr. Smith. Mr. Enlow told the Commission that he was in the case before Dr. Enlow was involved. He stated he knew Mr. Vise through a little league program. The Commission asked Mr. Vise several questions about how he felt about pa~ring back the City what he had agreed to pay. Mr. Mike McEntire called Rex McEntire as the next witness for the City. Rex McEntire confirmed that he was attorney for the City and a member of the Risk Management Committee. He conducted an investigation for the Risk Management Committee. He found certain public records in the 153rd Relief Court case which were introduced in evidence. He said the records indicated that the Vises got at least $50,000 in payment of the claims in question. He testified that the papers in the case were silent about the settlement amounts in addition to the $50,000, but that it appeared that additional sums were paid because costs were adjudged against the defendants. He testified that his investigation was at a dead end because he had no authorization signed by the Vises. He said that he was 7 involved in the recommendation to suspend coverage. He said other options were available, including suspension of the employee, but that all concerned opted to take the lesser punishment approach. He testified that Mr. Gertz, the Fire Chief, was in on one meeting and was instructed to try to get Mr. Vise to communicate and cooperate with the Risk Management people. He advised that Mr. Gertz called him and said that Vise was not caming in. He was going to get in touch with his attorney. He further testified that he knew that the Plan was not covered by ERISA and was exempt under 4-B of the Ac~. He testified that there was no insurance company involved here and the plan was not supported by premium to any insurance company. He said that he felt there was good cause for the suspension status in Mr. Line's statement to the Commission. He stated that it was not unusual for an employee benefit plan to call for subrogation. On cross-examination by Mr. Enlow, Mr. McEntire stated that he did not knaw the exact amount of the plan's claims for subrogation, but that it was obviously substantial. Mr. Enlow questioned Mr. McEntire about the law on subrogation. Mr. McEntire said that he obviously disagreed with Mr. Enlow's interpretation of the law. Mr. Enlow asked how he could get Mr. Vise's coverage reinstated. Mr. McEntire said that Mr. Vise would have to cooperate with the plan. (A discussion was then held involving both attorneys and the Chairman of the Commission.) After the discussion, Mr. Enlow asked Mr. McEntire if he would recommend some type of reinstatement if he would change his stance and have Vise execute the four releases. Mr. McEntire said that he would recommend reinstatement to the Committee if Mr. Vise would execute the releases and fully cooperate with the Commission. Chairman I~Tewsom asked how long this would take. Mr. McEntire stated that it depended on Mr. Vise's cooperation. He thought that he could 8 complete his investigation very quickly if he could get the necessary authorization and releases. He estimated a week or two. The Chairman asked when the coverage could be reinstated. Mr. McEntire said that was up to the City Manager, but that he would recommend that it be reinstated as soon as Mr. Vise presented him the necessary signed documents. Mr. Enlow asked what was going to happen after the City completed its investigation. Mr. McEntire stated that the City would then be in a position to offer a compromise or settlement of some kind. If it couldn't be compromised, we would be right back where we are tonight. Chairman Newsom asked how long it would take to get the settlement after the investigation. Mr. McEntire said he didn't know, but the Risk Management Committee should be able to state its settlement position very shortly after receiving the necessary documents from Mr. Vise. Chairman Newsom asked for a proper report by August 14th. Mr. McEntire said that he hoped they could have it all worked out before then. Chairman Newsom then instructed Mr. McEntire to give the Commission progress reports sooner if possible. Chairman Newsom asked the Commissianers if this was a satisfactory place to leave the problem. None disagreed. Motion was made by Commissioner Pederson to table the matter until a call by the Chairman. Seconded by Commissioner Hackfeld. Motion carried unanimously. 6. ADJOURNMENT Meeting adjourned at 11:05 p.m. Ch r a ,7eff Newsom Ass' t nt Civil Service Secretary Linda Cast 9