This mornings article from the Eagle Tribune on last nights Board of Selectmen meeting.
By Doug Ireland 08/09/2011 12:13 AM
SALEM — A controversy involving the Local Government Center prompted selectmen last night to consider severing ties with the municipal insurance provider.
Selectman Stephen Campbell also accused Town Manager Keith Hickey of having a conflict of interest because he serves on the organization’s board of directors.
Hickey presented selectmen with a report from the state Bureau of Securities Regulation, which announced last week that the nonprofit group had violated state law in its management of health insurance for municipal employees and retirees.
Campbell told his colleagues and Hickey that the town, insured through the LGC, needs to consider other options in wake of the panel’s findings.
“We should be looking for alternatives,” he said. “I really think we need to look to get out of it.”
But Hickey said the town has already shifted its property liability insurance coverage from LGC to another company because it is cheaper. The town will also seek bids this fall for less expensive health and dental insurance, he said.
Chairwoman Elizabeth Roth told Hickey that considering other insurance options is a wise move.
“It’s much appreciated we are moving away from LGC (and from being) dependent on them for health insurance,” she said.
The state bureau is seeking a hearing to determine if punitive action should be taken against the LGC. Only two towns, Portsmouth and North Hampton, have formally requested reimbursement, according to The Associated Press. It provides health insurance to 80,000 people.
The bureau accuses the LGC of several violations, including not returning a surplus of more than $100 million to the communities its serves.
Campbell said the organization has failed in its representation of municipal workers and retirees, including his parents.
“That touches real close to home,” he said.
The bureau said the LGC used an illegal setup to run the insurance pools and broke the law by changing its nonprofit corporate structure to merge with limited liability companies.
The LGC is also accused of transferring some of its surplus to subsidize one insurance pool at the expense of two others, and spending millions of dollars on unauthorized items, the report said.
But the fact Hickey is a director for the organization prompted Campbell to voice his concern.
He said he didn’t like Hickey attending LGC meetings at the town’s expense.
“I have a slight concern there is a conflict of interest,” Campbell said.
But Chairwoman Elizabeth Roth came to Hickey’s defense, saying a key reason he was hired as town manager was because of his experience as a LGC director. The group’s board consists of municipal leaders from across the state.
Selectmen agreed to hire Hickey shortly before Campbell joined the board in March.
“We felt at the time it was a good business decision,” Roth said. “Mr. Hickey is performing as he was hired to perform.”
Selectman Michael Lyons also spoke in favor hiring Hickey for his LGC experience.
Campbell said he reviewed the town manager’s contract and his LGC role wasn’t mentioned.
“I didn’t see where that specific thing was pulled out,” he said.
When questioned by a reporter after the meeting, Hickey said he is just doing his job.
“I don’t see any conflict of interest whatsoever.”
