Al: Here is an excerpt from the memo I wrote regarding the increase in health insurance premiums for directors and employees at Sequoia Healthcare District:
It is well-settled that changes in compensation may not be imposed during the current terms of the elected officials who vote on the adjustment. See, e.g. 80 Ops. Cal. Atty. Gen. 119 (1997) (applied to City Council and elected mayor).
However, health care benefits are not considered “compensation” for most purposes. In the case of directors of a healthcare district, “compensation” under Health & Safety Code §32103 means the stipend for attending meetings. Section 32103 imposes limits on the maximum compensation. The Attorney General has taken the position that health care benefits are not subject to this statutory limitation, provided that the benefits are the same as are offered to employees. 66 Ops. Cal. Atty. Gen. 13 (1983). At least in this situation, compensation and benefits are treated differently.
In 80 Ops. Cal. Atty. Gen. 113, the Attorney General considered whether a City Council could reduce the health and welfare benefits of the elected mayor during his term of office. The Attorney General observed that increases or decreases in premiums payable under a health insurance plan that is provided to employees, officers, and the mayor could take effect during the term of office, since these adjustments are not subject to the Council’s discretion and apply to all plan participants. The Attorney General then opined that the City Council could not reduce the benefits of the elected mayor in any manner that was not generally applicable to other plan participants. 80 Ops. Cal. Atty. Gen. at 127.
Of course, there are differences between the situation in this AG opinion and the reimbursement program for employees and directors at SHD. The District does not offer a single healthcare plan which directors and employees can join. On the other hand, reimbursement levels have not kept pace with increasing premiums in many cases, so in order to maintain the level of benefit, some adjustment is necessary (otherwise, directors end up with less benefit than expected during their term). I believe that the increase in maximum reimbursement level to allow directors to maintain the same level of coverage throughout their term is sufficiently close to the principle in this AG opinion to justify allowing it to occur mid-term and so advised the Board, but noted that there was some uncertainty. The Directors eventually determined that, because I could not give an opinion with complete certainty on the point, they would avoid the appearance of impropriety and not apply the policy to current members.
I have not seen Mr. Hickey’s complaint, but he seems to be focused on the issue of whether directors should refund some of the reimbursement payments made to them under the new policy earlier this year, before the revised policy was adopted at the June meeting. The minutes of the June meeting (approved at the August Board meeting) reflect that this issue was not voted on by the directors. There was a discussion but no actual vote. The Executive Director had said that it would be preferable from an administrative standpoint to have the revised policy go into effect at the start of the new fiscal year (July 1, 2013). I would be happy to provide a copy of the approved minutes if you would like to see them.
Let me know if you have any questions regarding the foregoing.
Mark Hudak
Attorney
mhudak@carr-mcclellan.com
CARR McCLELLAN INGERSOLL THOMPSON & HORN
Professional Law Corporation
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Burlingame, California 94010
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