Health insurance benefits provided to Township Council members could have cost Montclair taxpayers hundreds of thousands of dollars since the township switched to the state-run plan in 2017, based on a review by Montclair Local of the insurance plan’s coverage rates.

The township gave council members various options for health insurance, including high-end family coverage with annual premiums that in 2021 could have been more than $32,000, according to figures provided online by the New Jersey Division of Pensions and Benefits, which oversees the State Health Benefits Program. 

With Montclair contributing 97% of those payments, the price tag for the township would have been more than $31,000 for that one policy, although it is unknown if anyone took that option. 

Under a single-person plan, the township’s share of the annual premium could have run from just over $5,700 to roughly $11,000 in 2021. Given that council members receive an annual $10,000 stipend, that would have resulted in up to a 110% increase in compensation.

Questions about whether Montclair’s elected officials were entitled to the benefits emerged last October in a lawsuit brought by the township’s chief financial officer, Padmaja Rao, against Township Manager Timothy Stafford and Montclair. The suit describes repeated attempts by her as well as an outside auditor to bring council members – whose posts are regarded as part time – into compliance with a requirement that to participate in the state plan it is necessary to officially log 35 hours a week.

Time after time, according to her suit, her efforts were rebuffed by Stafford and dismissed by the council’s Finance Committee.

Without citing anyone by name, the suit says that four of the seven current council members were participating in the plan well into 2022 and that two members had received annual $5,000 waiver payments from the township to opt out of the plan. The suit says that all three members of the Finance Committee were among those who received the benefits or accepted the waiver payments. The committee is made up of Mayor Sean Spiller, Deputy Mayor Bill Hurlock and Fourth Ward Councilor David Cummings.

In repeated public remarks, Councilor-at-Large Bob Russo has said he is the single member of the council who has not used the state-run plan or accepted waiver payments since the township switched from a private insurance carrier in 2017. 

Russo repeated that assertion to Montclair Local this week.

No one ever offered me town health benefits and I would not have taken any knowing that it was a part-time, almost volunteer position!” he said in a text message.

At 75, he has been on Medicare for 10 years, he said.

Only Councilor-at-Large Peter Yacobellis, who was elected in 2020, and Hurlock, who has served on the council since 2012, have publicly acknowledged enrolling in the plan, indicating that the township had presented them with the option as a routine fringe benefit of the position. They said they stepped away from it after learning they were not entitled to the benefit.

Like most employees starting a job somewhere,” Yacobellis said in December, “when I was elected in 2020, Human Resources put a packet in front of me and asked me to select my benefits by filling out various forms. I never thought to ask if I qualified for the benefits or stipends in lieu of benefits or not. They were presented to me in a pro forma manner.” 

Yacobellis has said that he switched to a private plan beginning Jan. 1. And Hurlock told Baristanet last October that after learning he was not entitled to the state benefit, he switched off the plan as of Sept. 30.

In early December last year, the CFO’s suit may have led to a new pivot point when a subpoena issued by the New Jersey Attorney General’s Office compelled the township to hand over any existing pay records, time sheets and attendance logs for each member of the council. Though the subpoena did not state a reason for demanding the records, it came six weeks after Rao’s lawsuit was filed.

Then, at the council’s last session, on March 27, it advanced an ordinance that in many circumstances would indemnify and guarantee paid legal defense for a broad range of Montclair employees, including council members. 

The ordinance gives the township attorney the authority to decide whether to have Montclair’s legal department represent the employee, hire outside counsel or reimburse the employee’s own lawyer. The ordinance would cover “any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit or proceeding.”

The legislation seemed to appear out of nowhere. It was not on the agenda shared with the public in advance and was introduced shortly before 11 p.m., more than three and a half hours into the March 27 meeting, after the gallery in the Municipal Building chamber had nearly emptied.

A letter obtained by Montclair Local from a confidential source and sent around 3 p.m. that day from the assistant township attorney, Gina DeVito, to Angelese Bermúdez Nieves, the municipal clerk, and Alexis D'Ambrosia, executive assistant to the township manager, suggests that Hurlock had pushed for its late addition to the session.

“Per Deputy Mayor’s request (and his second’s request) the attached ordinance is to be introduced tonight,” DeVito wrote.

Hurlock, who was chairing the meeting in place of the absent Spiller, introduced the measure at the session, and it was seconded by Yacobellis. 

Quickly, it bared some of the infighting and distrust that has become one of this council’s defining characteristics, with Russo drawing a connection between the ordinance, the allegations contained in the CFO’s lawsuit and the subpoena hovering over the council. 

“But what is the genesis of this?” Russo asked.

“So why are we doing this?” he added.

In responding, DeVito said that a review by the legal department showed that several other municipalities had an indemnification clause in their codes.

“So this was something that we noted,” DeVito said. “This was a deficiency. We wanted to fill that gap. And that was the genesis for this proposed ordinance.”

Russo persisted.

“I don't want things to be obfuscated, and I don't want to also throw my colleagues under the bus, so to speak,” he said. “But the reason this has been generated is because it was a question raised by the town's CFO, which caused the major conflict to occur with the manager over whether council members should receive health care benefits from the township under the state plan. Let's be honest.”

The council’s vote for the ordinance was 5-0 in favor, with Russo abstaining. 

Ahead of the April 12 council meeting, Russo said he would vote against it when it comes up for a scheduled second and final vote.

Yacobellis said this week: “I’m committed to hearing out more opinions on this before voting to enact it. My understanding is that this is perfectly common across municipalities and was a flaw in our code. I want to make sure this council and future councils are protected, as I don’t think anyone should be at risk of personal financial loss for conducting official business.

Asked if the ordinance would apply to legal fees that may arise due to the attorney general’s subpoena, Yacobellis said in a text, “I hope so.”

“The township can’t defend me as an individual council member and the township itself at the same time and that’s a problem,” he wrote. “I’m not going to be out of pocket personally for something the township screwed up.”

Meanwhile, it is uncertain what repercussions council members may end up facing, including the prospect of having to pay back years in premiums and opt-out payments that were footed by Montclair under the State Health Benefits Program. 

Responding to a query by email, Daniel Prochilo, a spokesman for the attorney general, said that “the Attorney General’s Office generally does not confirm or deny the existence of any investigation unless and until charges or a complaint have been filed.”

The state plan includes generous provisions for employees, with municipalities paying the lion’s share of the premiums on a sliding scale. For an employee with a salary of $110,000 and higher, Montclair pays 65% of the premium costs.

But the township’s share of the premiums soars for employees making $20,000 or less. For a single person in this category, the township pays 95.5% of the annual premiums. It pays 96.5% for a participant and a partner or child and 97% under a family plan.

Because council members receive only a $10,000 stipend, Montclair has
classified them in the low-income grouping. Given the 35-hour-a-week work requirement, it is not certain if any other employees in Montclair, part time or full time, are in this category and could receive such a generous contribution by the township.

Of the six years since Montclair switched to the state plan, Montclair Local was able to review premium rates for the years 2018, 2020 and 2021.

In 2018, the total annual premium for the most comprehensive coverage for a single person earning less than $20,000 ran to roughly $8,400, with Montclair paying all but $400 of that. By 2021, the township was contributing nearly $11,000 for the same coverage.

Rates have ascended likewise for all plan options. In 2018, the best coverage for a parent and child cost the township a little over $15,000. Under identical coverage in 2021, Montclair’s contribution was nearly $20,000.

Plans including coverage for a spouse or partner saw the township contribute as much as $16,100 in 2018, a figure that rose to more than $22,000 in 2021.

And under the most comprehensive coverage for families, the annual premium rose from nearly $24,000 in 2018 to more than $32,000 by 2021. Montclair’s contribution for a single one of these policies in 2021 was $31,112.

Over the three years reviewed by Montclair Local, the cost to the township for this policy would have been about $85,000.

While it is uncertain which plans, including the high-end options, any council members may have chosen, a long-serving member of the council choosing the annual opt-out payment might have accepted a total of $30,000 from the township.

Of the seven council members, the longest-serving is Russo, who was first elected in 1992 and was mayor from 2000 to 2004. Second Ward Councilor Robin Schlager has been on the council for a total of 17 years, including since 2012, the same year Spiller was elected to the council.

Yacobellis, Cummings and Third Ward Councilor Lori Price Abrams joined the council in July 2020.

Following the subpoena, Yacobellis said that the law department had informed council members that the state health insurance “likely shouldn’t have been offered.”

He said that he and other members had consulted with the township’s external labor lawyer. He said he was advised last Sept. 28 that council members should not be receiving benefits through the public state plan. 

“In that guidance, counsel also advised that we should come off of that plan ‘as soon as practicable,’" Yacobellis said.

Rao’s lawsuit says she strongly expressed her concerns to Finance Committee members at least as far back as August 2021. Of the members of the committee, Spiller and Hurlock did not respond to messages seeking reaction. Cummings declined to comment. In addition, Schlager declined to comment, and Price Abrams did not reply to a message.

The narrative laid out in Rao’s gender discrimination and whistleblower lawsuit reads like a prolonged suspense tale, with the CFO warning Stafford and other officials over several years that they were in dangerous territory by not moving council members off the state-run plan. Rao’s suit says that rather than spurring Stafford to remedy the situation, he instead turned on her with recriminations and reprisals.

Following the lawsuit, Stafford was placed on administrative leave. He is now under suspension and has received official notice from the council that he may be removed from his post.

Rao’s suit says that as soon as the township switched to the state plan in January 2017, she alerted officials, including Stafford, to a 2010 law stipulating that only employees “whose hours of work are fixed at 35 or more per week” were entitled to the new coverage. She sought to have council members provide written certifications that they met this requirement, only to have Stafford tell her that their verbal assurances would suffice, her suit contends.

In April 2021, the suit says, nearly a year after the current council was installed, Rao was joined in her efforts by an outside auditor who questioned whether the elected officials were eligible to receive the health benefits. That summer, the suit says, despite resistance – particularly from Spiller, Hurlock and Cummings on the Finance Committee – six of the council members signed written certifications that they had worked the requisite hours.

By last summer, Rao’s struggle only increased, the suit says, with two council members signing an updated certification, only to have one of them rescind it. The suit depicts a discouraging meeting with the Finance Committee when Rao says she again voiced her concerns. “The Finance Committee members would not address the issue,” the lawsuit says. “Rao’s request to address the issue was met with silence and stony looks.”

Rao’s concerns about the health insurance plan and mistreatment by Stafford seemed to converge last Sept. 13, her suit says, when she instructed the Human Resources Department to move council members receiving township-paid benefits to COBRA and to stop the opt-out waiver payments, with both actions effective Oct. 1.

Stafford, Rao says in her suit, countermanded her directive within hours. Thirteen days later she was told she could no longer attend Finance Committee meetings, which had been a normal function of her role as CFO.

In at least one other New Jersey community, health Insurance benefits taken by officials under the state plan has come under scrutiny by the attorney general.

Two weeks ago, a grand jury handed up a 12-count indictment against the current and former mayors of Wildwood and the current city commissioner, including on charges that they wrongfully claimed state health benefits.

In that case, the alleged crimes include the theft and tampering of public records and the falsifying of public records. No one, including the attorney general, has suggested that Montclair officials have committed any of these acts.

A statement from the Attorney General’s Office says that Wildwood and the State Health Benefits Program paid nearly $900,000 in premiums and claims to two of the men.