By Lauren Zeugner
InkFreeNews

WARSAW — After almost 2 hours of testimony Thursday afternoon, May 8, Judge Christopher Kehler informed attorneys representing the Indiana Attorney General’s Office, the Town of Syracuse and Western Surety he will rule within 90 days regarding the town’s request for summary judgement against the attorney general’s office which was representing the State Board of Accounts.

Before proceeding with the hearing, Kehler acknowledged the case had been consolidated with another where the SBOA was suing current and former town council members as well as current and former employees for allegedly inappropriate Medicare reimbursements. Kehler reported for the record two attorneys representing some of those plaintiffs were in the gallery as well as one on Zoom. Plaintiffs in the original case were also present and Kehler announced he was not intending to hear from witnesses, but from counsel.

Attorneys for both sides are to provide their findings of fact and final arguments in writing to Kehler by June 9.

Bradley Dick of Bose McKinney and Evans, representing the Town of Syracuse, began his argument by explaining over 40 years ago the state abolished the Dillon Rule and implemented Home Rule giving municipal units power to operate as they deem appropriate in accordance with state statues.

IC 5-10-8-2.6(b) provides two methods for a municipality to provide health care to its employees, purchasing a group insurance plan or creating its own insurance plant. The SBOA argues those options prohibit the Town of Syracuse from reimbursing those not on the group insurance plan for their health insurance.

Dick argued the Home Rule statute requires if there is any doubt whether a municipality can do something, the state must rule in favor of the town; that just because statute provides only two ways of providing insurance, the town is not limited to just those two options and there is nothing specific in the statue prohibiting the town from reimbursing for non-group health insurance.

Dick explained Syracuse has a group health insurance plan, but council members do not qualify. To address this, the council passed an ordinance to reimburse council members for their health insurance. Supposedly saving “a significant amount of money,” Dick told the judge.

He reviewed Ordinance 2019-19 explaining the insurance reimbursements “did not happen under cover of darkness. The town is paying for people’s health insurance. That’s what’s going on here,” Dick said.

Dick said it was an undisputed fact between the town and SBOA that the town reimbursed health insurance premiums for individuals not on the town’s group insurance plan. He reviewed state compensation law which since 1969 has said town council members can have a salary and health insurance compensation.

Dick pointed to IC 36-1-3—6 which states “Indiana Code 5-10-8-2.6 provides statutory guidance on the required and specific manner by which a local unit public employer may expend funds for health insurance costs for its employees.” Dick reminded Kehler, if there is any doubt, Syracuse wins. For years, under Home Rule, the town has reimbursed for health insurance until the SBOA decided it couldn’t.

Dick pointed to IC 36-1-35 which states a unit may use power that is not expressly denied. “Under Home Rule, we should be reading between the lines,” he said. He noted IC 36-1-36 which actually relates to planning and zoning laws states municipalities “must do so in a manner provided by (the state). However, there is no requirement or procedure for authorizing reimbursement of health insurance

Reviewing his arguments, Dick reminded the court the Home Rule statute establishes Syracuse may purchase group insurance or establish its own insurance. Under Home Rule, Syracuse has all the power; if there is any doubt, the state must rule in the town’s favor “In my opinion Syracuse is absolutely right. I don’t see how you read all the statues and decide Syracuse can’t do this,” Dick said.

Continuing with his review, Dick pointed out Home Rule lists powers while omitting others. He noted the SBOA “Is fine with the town paying into Health Savings Accounts as long as it works with the town’s ordinance. By their own theory you shouldn’t fund HSA,” Dick told the court.

And lastly Dick stressed the town can exercise power unless the state statute expressly says it cannot. “There’s nothing like that,” he said. “They can’t point to anything. That’s not how Home Rule works.” He pointed out the state says nothing about procedures for reimbursing health insurance

Dick continued by looking at the salary ordinance. In its report the SBOA alleged council members were overpaid. He argued health insurance and a salary are two separate things. Health insurance is “a fringe benefit,” while “salary is a distinct form of compensation.”

Attorney Kevin Koons, representing Western Surety Company argued different communities have different needs and they need to attract qualified people. Home Rule allows communities to do that.

He stressed the town was reimbursing health insurance “out in the open,” only to have the state say it’s illegal. Koons stressed this was a two part contract where a third party came saying it’s illegal. Referring to Home Rule, Koons said if there was any doubt, a ruling has to be made for the town.

Jade Poorman, deputy attorney general, responded saying the SBOA did not attempt to make the matter appear “as some cloak and dagger affair.” She said the matter was investigated as result by a tip from the Indiana State Police.

Poorman went on to explain the SBOA conducts various types of investigations and reports. While the town has stated it has reimbursed insurance for decades and out in the open does not mean the SBOA cannot bring it up now.

Poorman said it is impossible for the SBOA to go through every piece of paper produced by a municipality and referred to an affidavit from an SBOA employee outlining how SBOA conducts audits.

She referred to an email from an SBOA employee to a council member regarding HSA’s. Poorman explained the employee’s affidavit stated he was giving advice with the understanding the HSAs were part of the group insurance plan under the statue. The employee did not state it was appropriate for the town to reimburse health insurance premiums for town council members.

Poorman acknowledged Home Rule grants power to municipalities, but it is not unlimited. Referring to the compensation statue she told the court compensation is all that is paid to an elected official including salary, life and health insurance and pension.

She explained the town has to set compensation within the salary ordinance and that compensation may not be changed for the year it is fixed. She stated the town must abide by the statue and is not doing that in two ways, by exceeding the salary ordinance by paying Medicare premiums. The town’s ordinance has to capture all compensation and does not mention insurance premiums.

Regardless of whether insurance premiums are a fringe benefit, the total of all money paid must be included in the statue. Poorman said it is the SBOA’s contention the town is outside the statue. She stated the Home Rule statue allows a municipality to provide either group insurance or its own self-created insurance. What the SBOA found is the town was paying for privately purchased insurance, supplemental insurance and reimbursement for Social Security payments for Medicare.

She requested the town’s request for summary judgement be denied.

Steve Unger, attorney for the Town of Syracuse, pointed out in reality communities do not put everything in a salary ordinance. “If you look at Kosciusko County Government employees, it does not list the total amount of all benefits, “ he said. “I couldn’t find it on line. That’s the problem here … The implications being made on the Town of Syracuse and municipalities is dangerous.”

Replying to Dick and Unger, Poorman said “The payments to the non-group insurance are beyond the scope of what is normal and somewhere the town needs to reference that the benefit is being provided.”