Pontiac teachers file lawsuit, saying health care premiums were misused to fool state
Pontiac teachers are accusing the school board, business manager and former school superintendent of fraud, deceit and malfeasance for taking money out of their paychecks for health insurance premiums and using it in the general fund for operations.
In fact, Michael Lee, attorney for the Pontiac Education Association, alleged in an Oakland County Circuit lawsuit filed this week that the reason school officials were putting the money into the general fund was to try and deceive Michigan officials as to the status of the state-approved plan to reduce the district’s deficit of $37.7 million.
“They have been taking money out of our checks and they haven’t been paying MESSA (Michigan Education Special Services Association),” said Aimee McKeever, president of the PEA.
As a result, the insurance carrier canceled coverage effective July 31.
The district already owed $7.8 million in back health insurance premiums from the 2011-2012 school year as of Jan. 13. That amount is being levied against property owners on their tax bills under a court order resulting from a settlement between Pontiac schools and MESSA.
As of July 1, the district was in arrears in its payments to MESSA for an additional $3.3 million from this school year, according to a letter accompanying the lawsuit, for a total of more than $11 million.
Lee alleged the defendants acted together to “purposefully, intentionally, fraudulently and maliciously misrepresent to (the PEA members) that in fact the payments were being made to MESSA on their behalf for the purpose of medical insurance coverage.”
The lawsuit names each trustee individually, including Board President Carrol Turpin, Vice President Karen Cain, Secretary Brenda Carter, Treasurer Sherman Williams II and trustees Susan Loveland, Mattie McKinney-Hatchett and S. Barbara Raby.
Also named are Paul Bryant, business manager, who, according to the lawsuit, has sole authority to make payments to vendors; and former Superintendent Brian Dougherty, who was charged with running daily operations from Aug. 27, 2012 until May 17, 2013.
Dougherty said his attorney has advised him not to comment at this time. Interim Superintendent Kelley Williams said she has not seen the lawsuit and the district has no comment.
In fact, Michael Lee, attorney for the Pontiac Education Association, alleged in an Oakland County Circuit lawsuit filed this week that the reason school officials were putting the money into the general fund was to try and deceive Michigan officials as to the status of the state-approved plan to reduce the district’s deficit of $37.7 million.
“They have been taking money out of our checks and they haven’t been paying MESSA (Michigan Education Special Services Association),” said Aimee McKeever, president of the PEA.
As a result, the insurance carrier canceled coverage effective July 31.
The district already owed $7.8 million in back health insurance premiums from the 2011-2012 school year as of Jan. 13. That amount is being levied against property owners on their tax bills under a court order resulting from a settlement between Pontiac schools and MESSA.
As of July 1, the district was in arrears in its payments to MESSA for an additional $3.3 million from this school year, according to a letter accompanying the lawsuit, for a total of more than $11 million.
Lee alleged the defendants acted together to “purposefully, intentionally, fraudulently and maliciously misrepresent to (the PEA members) that in fact the payments were being made to MESSA on their behalf for the purpose of medical insurance coverage.”
The lawsuit names each trustee individually, including Board President Carrol Turpin, Vice President Karen Cain, Secretary Brenda Carter, Treasurer Sherman Williams II and trustees Susan Loveland, Mattie McKinney-Hatchett and S. Barbara Raby.
Also named are Paul Bryant, business manager, who, according to the lawsuit, has sole authority to make payments to vendors; and former Superintendent Brian Dougherty, who was charged with running daily operations from Aug. 27, 2012 until May 17, 2013.
Dougherty said his attorney has advised him not to comment at this time. Interim Superintendent Kelley Williams said she has not seen the lawsuit and the district has no comment.
The union is asking Circuit Judge Shalina Kumar to order the district to cease and desist from this practice.
The PEA is also asking Kumar to order the district to make the payments to the insurance carrier; to pay more than $25,000 for all lost wages and benefits, plus interest; and to pay for any and all other compensation members might have lost as well as attorney fees.
According to attorney Lee, none of the defendants are entitled to government immunity since their actions were either intentional interference, fraud, conversion, misappropriation or grossly negligent for failure to make accurate reports and refusal to properly supervise subordinates who are engaged in “misfeasance, malfeasance and nonfeasance.”
Lee alleges administrators purposely chose to divert those monies on other debts without agreement or consent.
The suit states the board intentionally disregarded their duty to monitor the administrators and willingly used the wrongfully diverted income “for the purpose of deceiving the state of Michigan” on the status of the district’s deficit elimination plan.
“No employer may withhold or otherwise divert an employee’s income without that employee’s written permission,” Lee maintained in the lawsuit.
Under the PEA contract, the district was to pay the premiums in full under the teachers contract until September. That’s when the district began taking more than 20 percent of the premiums out of checks of employees, including teachers, non-union employees and some administrators, including the interim Superintendent Kelley Williams.
The union said neither the district’s nor the employees’ contributions were paid to the insurance carrier.
PEA’s McKeever said: “They are very upset, very panicked because they are so far behind,” and they are worried about not having insurance, she said. The union is working to find another insurance carrier.
State school Superintendent Michael Flanagan cited the district’s failure to pay MESSA employees’ health premiums as one of the reasons for finding the district in probable financial stress and in need of a review by a team approved by Gov. Rick Snyder.
The PEA is also asking Kumar to order the district to make the payments to the insurance carrier; to pay more than $25,000 for all lost wages and benefits, plus interest; and to pay for any and all other compensation members might have lost as well as attorney fees.
According to attorney Lee, none of the defendants are entitled to government immunity since their actions were either intentional interference, fraud, conversion, misappropriation or grossly negligent for failure to make accurate reports and refusal to properly supervise subordinates who are engaged in “misfeasance, malfeasance and nonfeasance.”
Lee alleges administrators purposely chose to divert those monies on other debts without agreement or consent.
The suit states the board intentionally disregarded their duty to monitor the administrators and willingly used the wrongfully diverted income “for the purpose of deceiving the state of Michigan” on the status of the district’s deficit elimination plan.
“No employer may withhold or otherwise divert an employee’s income without that employee’s written permission,” Lee maintained in the lawsuit.
Under the PEA contract, the district was to pay the premiums in full under the teachers contract until September. That’s when the district began taking more than 20 percent of the premiums out of checks of employees, including teachers, non-union employees and some administrators, including the interim Superintendent Kelley Williams.
The union said neither the district’s nor the employees’ contributions were paid to the insurance carrier.
PEA’s McKeever said: “They are very upset, very panicked because they are so far behind,” and they are worried about not having insurance, she said. The union is working to find another insurance carrier.
State school Superintendent Michael Flanagan cited the district’s failure to pay MESSA employees’ health premiums as one of the reasons for finding the district in probable financial stress and in need of a review by a team approved by Gov. Rick Snyder.
The Treasury Department’s Emergency Loan Board agreed and Snyder approved a high-level board with experts in finance to visit the district, review finances and interview employees to determine whether Pontiac schools is in a financial emergency.
If the team finds that to be true, the Pontiac Board of Education will be obligated to choose between several options, including an emergency manager, bankruptcy or a consent agreement.
If the team finds that to be true, the Pontiac Board of Education will be obligated to choose between several options, including an emergency manager, bankruptcy or a consent agreement.
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