The nearly four-hour August 2, 2020, City Council meeting was marked by confusion and hysterical, baseless allegations against a fellow Council member and a long-time city employee made by Mayor Kim, Public Safety Commissioner Montagnino, and Finance Commissioner Sanghvi. The meeting exposed the fact that these three elected officials do not understand the terms of the insurance policy that protects the city from lawsuits and that they have been unwilling to perform the due diligence necessary to learn about it. Their comments at this meeting also showed that they are embarrassingly ignorant of the city’s process for authorizing the payments of the city’s bills and of their responsibilities for monitoring the payments of these bills. These officials conjured up conspiracies where there were none at the expense of Marilyn Rivers, the city’s Director of Risk and Safety, who has served this city honorably for almost twenty years.
The kerfuffle arose over the payment of a deductible to the city’s insurance company for the settlement of a lawsuit brought against the city in 2020. Mayor Kim, Commissioner Montagnino, and Commissioner Sanghvi are apparently ignorant of the city’s agreement with Travelers Insurance Company that covers lawsuits brought against the city. The insurer has billed the city for a $25,000.00 deductible in the recently settled case. Instead of acknowledging the need to pay the charge, the three launched into an ugly attack at the August 2, 2022, meeting, making unsubstantiated allegations that there was some kind of conspiracy to secretly get the city to pay $25,000.00 toward the settlement, claiming untruthfully at times that they didn’t even know the case had been settled. The toxic discussion was rampant with dark references to unnamed persons attempting some sort of coverup. Despite Accounts Commissioner Moran’s urgent assertions that the bill was legitimate and needed to be paid, the three refused to acknowledge the city’s contractual obligation.
Adding to the madness, Mayor Kim got his colleagues at the table to authorize him to write to the insurer, the attorney who litigated the case on behalf of the city, and to the judge in the case, Justice Mae D’Agostino, “…asking them for a detailed explanation of how this deductible arose, why we were not informed [we had to] to pay $25,000.00.”
I am happy to answer Mayor Kim’s questions:
Mayor Kim, the attorney in the case advised you that there had been a $100,000.00 settlement. It was reasonably assumed that you would be aware that in the event of a settlement, your agreement with the insurer required the city to pay a deductible of up to $25,000.00.
If you were surprised to be told that there was a deductible, it was incumbent on you to either review the agreement yourself or to have the City Attorney do so.
It is hard to understand how you would engage in a public controversy over the matter before educating yourself on the contents of the city’s agreement with the insurer.
Here is the video of Mayor Kim asking for approval for the letter he wants to write and denying that a deductible is part of the city’s contract with Travelers. Accounts Commissioner Moran tries unsuccessfully to set him straight. Kim also inadvertently acknowledges that he was actually advised of the settlement in an email he received from the lawyer who litigated the case.
The letter Kim sent did not adhere to the resolution the Council adopted but instead asked the judge to “…reinstate this case and set a time for a conference with the parties.” This failure by the Mayor to properly carry out a resolution passed by the Council would normally be considered a serious breach, but very little this Mayor and Council do these days seems normal anymore.
Jeopardizing the City’s Insurance
During the Council meeting, Mayor Kim not only repeatedly complained about paying the deductible owed to the insurance company, he also attacked the settlement reached in the case. He claimed the city should not have to pay anything. In a piece of demagoguery, Kim indignantly appealed to the public, telling them the settlement was costing “you” $25,000.00.
Aside from being baseless, this was a gratuitous and reckless public attack on the city’s insurer. It is reasonable to assume that Travelers will be most unhappy that the city is unwilling to abide by their contract and pay them. It is reasonable to assume they will not be happy being accused in the Capital District media of failing to protect the city.
This is a total mess and completely unnecessary. It remains to be seen how Travelers will react to the Mayor’s accusations. Several attorneys who practice law involving insurance companies told me that they believe this could lead to Travelers dropping the city’s coverage in the future.
So what is the story behind this settlement that is causing so much consternation at the Council table?
In March of 2020, Tim Wales, who had worked in the Public Works Department as the city’s engineer, sued the city, claiming he had been wrongfully terminated. Mr. Wales had been fired for alleged abusive behavior. Wales claimed that he had been terminated because he had supported Dillon Moran’s 2019 campaign for Commissioner of Public Works against then Commissioner of Public Works, the late Skip Scirocco.
Mr. Wales lost his lawsuit before the U.S. District Court, Northern Division of New York, along with his appeal to the Appellate Division’s Third Judicial Department. He then sued again in federal court. Regrettably, before this suit could go to trial, the two key witnesses (Skip Scirocco and Jen Merriman) died. Without these witnesses, the attorneys representing the city decided to settle the case for $100,000.00.
This settlement triggered the city’s obligation to pay its insurer, Travelers, a $25,000.00 deductible.
In June, I wrote about Mayor Kim’s false claim that the insurer was required to seek city approval for any settlement. The city’s contract with its insurer, Travelers, is quite clear. The agreement with the insurance company the city has contracted with cedes all authority over handling suits (including frivolous ones) to the insurer. For this authority, the insurer agrees to accept all legal costs in defending the city and to pay any settlement reached by the parties or any award from a trial. As the insurer is burdened with the high costs of attorney fees and paying the bulk of any settlement or judgment, they understandably require having exclusive control over any litigation. This approach is standard for the insurance industry.
In fact, the city’s attempt to interfere in the settlement demonstrates why the insurer requires sole control over the litigation.
As documented in the video clip below, Kim cited the fact that the city had prevailed in the original suit and in the appeal of the suit (Kim inaccurately referred to the latter as arbitration) as evidence that the settlement was unnecessary, ignoring, as stated earlier, that the two key witnesses against Wales are now deceased. I will leave the readers to consider how Mayor Kim thinks he is qualified to weigh in on this case.
The contract between Travelers and the city requires the insurer to pay the full cost of settlements and judgments. In turn, the city must expeditiously pay its deductible to the insurer.
The contract between Travelers Insurance and the city reads:
“If we [Travelers] settle a claim or “suit” for damages, or pay a judgement for damages awarded in a “suit,” that are subject to a deductible, we may pay any part or all of the deductible amount. You [the city] will promptly reimburse us for such part of the deductible amount as we have paid.”Insurance Contract Signed By City
“If you do not reimburse us [Travelers] for a deductible amount and we are awarded the deductible amount we sought, or any part of that amount in any legal proceeding against you, you agree to pay us the amount of the award and the following:
a. Our deductible recovery expenses; and
b. Interest, from the date of the notice of payment to you on the deductible awarded to us.”Insurance Contract Signed By City
The Consent Agenda
At the August 2 meeting, much was made of the fact that the authorization for payment of the deductible was included in the city’s “consent agenda.” This was a sure sign for Kim, Montagnino, and Sanghvi that some nefarious plot was underway to sneak the insurance deductible payment through without their knowledge.
So what is the consent agenda?
Saginaw Valley State University has published a very helpful white paper explaining consent agendas. This is an excerpt from the paper.
The consent agenda is a tool used to streamline meeting procedures by collecting routine, non-controversial items into a group whereby all are passed with a single motion and vote. This method has grown in popularity in recent years and there are many variations on the theme to meet specific needs.SVSU
The city has adopted no formal rules of its own as to what items should go on a consent agenda. Instead, the city relies on the vaguely defined definition in Roberts Rules of Order.
The city packages the vast bulk of its outstanding bills each month into its consent agenda, allowing the Council to authorize payments in one resolution. The August consent agenda ran some eighty-two pages listing all the bills to be paid. If the Council had to approve each payment separately, it would take a great deal of unnecessary time. As discussed in the white paper linked above, efficiency is the driving force.
To be included on the consent agenda, the invoices to be paid must reference the line item in the city budget from which the funds for the bill will be drawn. In addition, every bill must have adhered to the city’s procurement requirements.
There is extensive evidence that the city has routinely included the payment of insurance deductibles on the consent agenda. A cursory search showed that the payment of insurance deductibles was authorized through the consent agenda at Council meetings on October 1, 2015, December 4, 2017, and July 7, 2020.
They have been included in the consent agenda because, up until the August 2 meeting, previous administrations have seen nothing controversial regarding the city’s obligation to pay these deductibles.
1. The city had properly executed contracts with the insurer for the service (litigation liabilities).
2. The insurer had fulfilled its duty to represent the city in litigation.
3. The insurer had documented the total cost of the settlements to the city and appropriately invoiced the city for their share (the deductible).
With a saner Council, paying the deductible would not be controversial. The city has a signed agreement that requires it to pay the deductible. End of story. Previous Councils understood that their contract with Travelers required payment, so there was no point in making it a special, separate agenda item. There was nothing really to discuss. The city had to pay the bill.
Montagnino Is Wrong About the Consent Agenda
The consent agenda is not just for minor expenses, as Montagnino and Kim claim in these video excerpts from the Council meeting. It is not just for “mops and buckets.” As noted earlier in this post, it is for all expenses that have been properly funded by the Council and have met the procurement requirements.
At one point in the video, Commissioner Sanghvi asks why she had to put an item for $20 on her department’s agenda rather than include it in the consent agenda. Her question demonstrated her basic misunderstanding of the consent agenda. The purchase of the item she referenced had violated the city’s procurement policies and so could not be included in the consent agenda. The Council was required to act on it separately.
Having been in office for seven months, the fact that neither Montagnino nor Sanghvi nor Kim (who previously served two terms on the Council) understand how the items that go on the consent agenda are selected, is quite a sad and troubling admission.
Similarly, Montagnino’s assertion that only minor items are supposed to go on the consent agenda is demonstrably false.
Consider that the city’s payroll of over one million dollars is on the consent agenda. A payment request for $702,165.28 to Amsure for insurance is on that consent agenda.
Or consider these two pages from the warrants for the consent agenda.
This highlighted service contract is not a minor expense at $15,771.00. It is for a service that was properly contracted for and apparently delivered similar to the legal insurance deductible.
This payment of $489,517.94 was apparently for a capital project that had been properly contracted for by the Council and carried out consistent with the agreement. Again, basically the same as the insurance deductible.
No one would characterize these expenses as minor purchases.
Montagnino’s self-righteous rant is so clearly false that it is rather stunning and embarrassing. I guess he thought that no one else would actually look at the documents he was talking about.
The Consent Agenda and Due Diligence: Montagnino Complains about What, in Fact, He Is Responsible for Doing
In a bizarre twist to this story, Commissioner Montagnino bitterly and unashamedly complained that because of an alleged conspiracy to use the consent agenda to hide an allegedly inappropriate bill, he would now be burdened by having to scrutinize all the items in the consent agenda in the future. In effect, he admitted he had been failing in his fiduciary responsibility for the previous seven months. (see video).
Commissioner Montagnino appears unaware that he or his Deputy is supposed to review the consent agenda before it comes before the Council for a vote and not just blindly approve it.
The fact that the consent agenda combines most of the city’s outstanding bills does not relieve the City Council members from reviewing the items on the consent agenda. After all, Council members must go on record with their vote approving the payment of the bills. I spoke to past members of the Council and their deputies regarding these obligations. In each case, I was told that either the elected official or the commissioner’s deputy always reviewed the consent agenda before it came up for a vote. “It goes with the job.,” one told me.
Montagnino Goes Operatic
Notwithstanding Montagnino’s boast about how, using his skills as an attorney, like Sherlock, he had discovered the settlement at issue, there is a trail of emails that show he was advised about the settlement weeks before his alleged sleuthing. On May 20, 2022, Mayor Kim sent out an email that included a thread of exchanges that the case was to be settled for $100,000.00. As documented earlier in this post, Kim acknowledged receiving an email from attorney John Aspland advising him of the settlement.
Additionally, in May, Marilyn Rivers had advised City Attorney Anthony Izzo of the impending settlement suggesting he contact John Aspland.
In that context, Montagnino’s claims indicate that he either did not bother to read his emails or he cynically made his accusations knowing they were unfounded.
It is also worth noting that the City Attorney could have stepped in during this controversy and admitted that he knew about the settlement.
The City Council Goes on a Witch Hunt: Montagnino as the Grand Inquisitor
Having convinced themselves falsely that a grand conspiracy was afoot to cheat the city out of $25,000, Kim, Montagnino, and Sanghvi turned to the question of who was responsible for this supposedly nefarious act that the three “uncovered.” Montagnino leads the charge:
So Who Put the Deductible Payment in the Consent Agenda?
This is a particularly grim example of the disingenuous nature of this witch hunt. Everyone at that table knew that Marilyn Rivers, as Director of the office of Risk and Safety, had put it on the agenda. There was no secret.
This video clip exposes that everybody at the Council table knew this.
A Cruel and Gratuitous Attack on a City Employee
Marilyn Rivers was hired as the first Director of the Office of Risk and Safety Management on April 4, 2003.
During her nineteen years of service, Ms. Rivers established a national reputation as one of the leading voices on municipal risk and safety issues. She has been selected numerous times as a featured speaker at conferences here in New York and nationally and has received numerous awards in recognition of her expertise.
Many of the programs she has initiated here in Saratoga Springs have been adopted by other municipalities in New York as “best practice.”
In speaking to former Mayor Meg Kelly, and former Commissioners Michele Madigan, and Chris Mathiesen, all were unanimous in their praise for her, and all agreed that over her tenure, the city has saved millions of dollars due to her work. Ms. Rivers deserves some of the credit for the high credit ratings the city has received.
As the Risk and Safety Management Director, Ms. Rivers oversaw the Travelers contract. The contract required that Travelers be paid expeditiously upon settlement, and she processed this deductible payment for the Wales settlement as she had processed others over the years.
The public attacks on Ms. Rivers, who is due to retire next April, have been cruel and unconscionable. I have heard from a number of sources that Ms. Rivers has been devastated by the false allegations made against her. On August 9, 2022, I learned that Ms. Rivers went out on medical leave. Kim, Sanghvi, and Montagnino seem oblivious or indifferent to the harm they have done to Ms. Rivers and to the effect their behavior has had on the morale of the city’s employees.
This Was All Unnecessary
The hysteria generated by Kim, Sanghvi, and Montagnino is unmerited. There had been previous discussions on this litigation in June, so everyone knew about it. The insurance carrier was authorized by a signed contract to have full authority over the litigation. The city was legally obligated to pay a deductible should the case be resolved by a cash settlement with the claimant. Travelers paid the $100,000.00 settlement and sent the bill for the $25,000.00 deductible that the city is required to pay expeditiously. End of story.
The idea that Marilyn Rivers or anyone else tried to hide anything is both unfounded and grossly unfair. Kim, Montagnino, and Sanghvi owe Ms. Rivers an apology.