HomeMy WebLinkAbout04-07-2008 500 CMWMINUTES
MAPLEWOOD CITY COUNCIL
MANAGER WORKSHOP
5:00 p.m., Monday, April 7, 2008
Council Chambers, City Hall
A. CALL TO ORDER
A meeting of the City Council was held in the City Hall Council Chambers and was called to order
at 5:00 p.m. by Mayor Longrie.
B. ROLL CALL
FBI
Diana Longrie, Mayor Present
Erik Hjelle, Councilmember Present
Kathleen Juenemann, Councilmember Present
John Nephew, Councilmember Present
Will Rossbach, Councilmember Present
APPROVAL OF AGENDA
Acting City Manager, Chuck Ahl requested that the council discuss whether or not the council
wants to hold the April 12, 2008 City Council Goal Setting Meeting due to a scheduling conflict
with one of the councilmembers.
Mayor Longrie said that could be added as item E1. (The recording secretary decided to create E.
UNFINISHED BUSINESS for purposes of discussing the City Council Goal Setting Meeting. This
would require moving E. ADJOURNMENT to item F.)
Councilmember Nephew moved to a
Seconded by Mayor Longrie.
The motion passed.
NEW BUSINESS
rove the aaenda as amended.
Ayes — All
a. Presentation - League of Minnesota Cities Insurance Trust (LMCIT) regarding
concerns with City of Maplewood Liability Insurance Coverage. (No Action
Required)
a. Acting City Manager Chuck Ahl gave a brief introduction before turning the
discussion over to the other representatives.
b. VeNita Schnebele, Area President, Arthur J. Gallagher Risk Management
Services, Inc., 11010 Prairie Lakes Drive, Suite 350, Eden Prairie, addressed the
council. (Agents from Arthur J. Gallagher Risk Management passed information
out to the council and staff regarding this matter).
C. Tony Becker, Sr. Vice President, Arthur J. Gallagher Risk Management Services,
Inc. addressed the council.
April 7, 2008
City Council/Manager Workshop Minutes
E. UNFINISHED BUSINESS
Council Goal Setting Meeting
a. Acting City Manager, Chuck AN stated that due to a scheduling conflict with one of
the councilmembers with the April 12, 2008, City Council Goal Setting Meeting he
recommended that the council discuss whether to cancel and reschedule the
meeting for another date. If the decision was to cancel the meeting then
councilmembers were asked to check their calendars and contact Mr. Ahl by
Friday, April 11, 2008, with alternative dates.
Councilmember Nephew moved to cancel the April 12, 2008, City Council Goal Setting Meeting.
Seconded by Councilmember Juenemann. Ayes — All
The motion passed.
F. ADJOURNMENT
Mayor Longrie adjourned the meeting at 6:15 p.m.
April 7, 2008 2
City Council/Manager Workshop Minutes
Agenda Item D1
AGENDA REPORT
TO: City Council
FROM: Chuck Ahl, Acting City Manager
SUBJECT: Presentation about League of Minnesota Cities Insurance Trust (LMCIT)
regarding concerns with City of Maplewood Liability Insurance Coverage
DATE: April 7, 2008
ADDITIONAL INFORMATION
INTRODUCTION/SUMMARY
Ann Stanton, our Account Manager, from Arthur J. Gallagher Risk Management Services, Inc.,
along with representatives from LMCIT, has requested time to address the City Council regarding
a mid -year review of our liability insurance coverage.
Mr. Mittet provided me with copies of letters from 2007 from Mr. Kantrud and Mr. Bethel
regarding concerns expressed by LMCIT representatives. Copies of those letters are attached.
These letters were not part of the City Manager's files.
A question was asked about the number of cities that are part of LMCIT. LMCIT is limited by
legislation to cities under 50,000, although a city that enters LMCIT under 50,000 may remain
with the group. There are currently 815 cities covered by LMCIT [Minneapolis, St. Paul, Duluth
and Rochester are not], plus the cover 350 Joint Powers organizations.
Ms. Stanton was requested to provide a claims history for the Council's information. She
indicated that she would have information available at the meeting.
Attachments:
1. May 30, 2007 Letter to LMCIT from Alan Kantrud
2. June 8, 2007 Letter to Peter Tritz, Director, from Chuck Bethel
Frederic W. Knaak*
H. Alan Kantrud**
Greg T. Kryzer**
*Also Licensed in
Wisconsin & Colorado
**Qualified neutral under
Rule 114 of the Minnesota
General Rules of Practice
LMCIT
Michael Wozniak
145 University Avenue
Saint Paul, MN 55103-2044
KNAAK & KANTRUD, P.A.
Attorneys at Law .
3500 Willow Lake Blvd., Suite 800
Vadnais Heights, MN 55110
Telephone: (651) 490-9078
Facsimile: (651) 490-1580
RE: City of Maplewood renewal effectivve 07/01/2007:
Dear Michael:
Of Counsel
Donald W. Kohler
Joseph B. Marshall
Thomas M. Dailey, P.A.
Theodore M. "Ted" Thompson
I write in my capacity as general counsel and City attorney for the City of Maplewood. I write
specifically in response to the correspondence copied to me, written by you, on May 14, 2007.
You make it clear that the LMCIT is concerned about future loss and have taken that concern
and translated that into a 10% debit applicable to our next -year renewal. Curiously you then
indicate the debit may be removed, increased, retained or that, [you may] take, "additional
underwriting actions."
The City is aware of the current litigation -landscape, as I have been working with the officials
there to keep them informed. I actually presented several to you for defense.
As I read the list what really stands out is that much of this litigation has concluded at this point.
3 of the 4 employment law cases are -settled andthe',finalone we have great expectations in terms
of our likelihood of success. The "housing project permit denial' (which is better characterized
as a zoning request denial) is scheduled for summary judgment and our chances very good in
terms of outcome. The data practices -request suit is also going well for us and we expect to win
on summary judgment in that case as well.
You indicate a, "current estimated total incurred cost" (exposure?) of over $900,000.00 on all
these claims. Are these case reserves for all claims or simply the remaining ones?
The next few sections cover experience rating and underwriting and it appears that our debit -
increase is based on: the number and types of claims, "apparent disregard or lack of familiarity
with legal requirements" on various matters as well as the climate that appears to exist, in your
estimation.
,
Wozniak Correspondence
30 May 2007
Page 2
Let me first go on record as stating that t have certainly done my best as one of the city's
legal resources to reduce or remove the risk of loss to both the City and LMCIT. This I
have done for Maplewood as well as other cities I represent and I have sought legal
advice from the League consistently Qn all matters for many years, not starting "in recent
weeks" as your correspondence implies.
I cannot change what you have determined in terms of estimated loss on the various
matters involving the City at this point. I would ask that you identify with specificity
how you came up with the number however. Since most of the suits are now settled, it
may be helpful to simply use the analysis time on the remaining claimants. Case reserves
are established on a per -claim case I 'am sure but to manage our City's risk on, in some
cases, a "highly contentious" climate seems to be a bit of a stretch.
Reserves I can appreciate, but implying the. City is not following the law, cannot get
along and doesn't ask for help when it should is just not consistent with the record. I
don't see how the current claims are or can be tied to the LMCIT's concerns.
Please feel free to write or, call to discuss this matter and I look forward to .reviewing the
LMCIT's process to better understand and correspondingly advise the City.
June 8, 2007
Mr. Peter Tritz, Director
League of Minnesota Cities
145 University Avenue West
St. Paul, MN 55103-2044
Dear Mr. Tritz:
Thank you for your phone call today. Pursuant to our discussion today, I am
providing you with this follow-up` lettere regarding the previous correspondence
from Mr. Kantrud and me on behalf of'Maplewood.
The central purpose of this. letter is,to 'clear-up any misunderstanding that may
have been created by the previous letters. You specifically expressed concern
that the City of Maplewood seemed to take a tone in those letters that the City
had no real problems or issues to address with regard to the issues raised in Mr.
Wozniak's letter of May 14, 2007.
Please be advised that the City of Maplewood fully understands and
acknowledges the "LMCIT Concerns" as set forth in Mr. Wozniak's letter of May
14, 2007. The City recognizes that it does have its share of challenges, and I
believe the City is making good progress working towards overcoming these
challenges.
In fact, in recent weeks I have seen continued improvement is several areas. As I
mentioned in my previous letter,, the Mayor, City Manager and members -of the
City Council have all attended recent mediations and worked together with
League attorneys to help settle some.of,fie outstanding litigation. Further, there
has been an increased awareness and conceen with seeking assistance from the
League on a variety of issues For example, in the.�past two.weeks.the City has
been consulting with League attorney, PatBeety over anew set.of..issues that
has arisen with regard to possible termination of a police officer: The .officer in
question was charged with kidnapping, false imprisonment and was found guilty
of assault and misconduct. The- City has committed to continue working with Ms.
Beety throughout this difficult process. Additionally, the City has continued to
work closely with Ms. Beety in preparing discovery responses regarding the
City's data practices issues. Finally, there has also been steady improvement in
relations between the City and its collective bargaining units that has resulted in
two year contract settlements with all but one of seven labor units.
s 1
CITY OF MAPLEWOOD 1830 COUNTY ROAD B EAST MAPLEWOOD, MN 55109
In conclusion, I would like to reiterate my previously expressed commitment to
work with the League to help reduce the risk of future litigation. As I stated in our
conversation today, I would be happy to appear at your board meeting next
Tuesday. I am keeping 10:00 am on that date open, if you decide that you would
like to have me participate. Thank you again for providing me this opportunity to
address any misconceptions that may have arisen from the previous letters.
Very truly yours,
Chuck Bethel
City of Maplewood
Labor Relations Attorney
c: Greg Copeland
City Manager
Bob Mittet
Director of Finance and Administration
H. Alan Kantrud
City of Maplewood
City Attorney
Michael Wozniak, CPCU
Underwriting Manager
LMCIT
LMCIT Board of Directors
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Maplewood Loss Ratio Since 1986 (as of 3/31/07)
Policy Year Premium Net Losses* Dividends Paid
7/1/06-7/1/07
$169,3436 u��''aM x�7� t;'�3���i690�927
$23,569
7/1/05-7/1/06
$174,193'';?f<'r?';'$''$�1U;32
$72,036
7/1/04-7/1/05
$167,847
$2,446
$55,361
7/1/03-7/1/04
$181,372
$11,029
$56,819
7/1/02-7/1/03
$176,9891,ta;a°u
a;4;f77�265�
$57,687
7/1/01-7/1/02
$155,610
$114,198
$50,412
7/1/00-7/1/00
$162,480
$20,437
$33,046
7/1/99-7/1/00
$153,911
$159,814
$47,728-
7/1/98-7/1/99
$170,977
$0
$62,421
7/1/97-7/1/98
$162,067
$23,146
$77,896
7/1/96-7/1/97
$162,886
$32,724
$80,685
7/1/95-7/1/96
$152,871
$12,305
$58,792
7/1/94-7/1/95
$138,882
$1,950
$56,450
7/1/93-7/1/94
$136,231
$6,029
$45,139
7/1/92-7/1/93
$133,621
$4,011
$68,880
7/1/91-7/1/92
$173,212
$173,789
$93,164 -W
7/1/90-7/1/91
$171,774
$0
$53,064
7/1/89-7/1/90
$167,882
$8,040
$56,705
7/1/88-7/1/89
$169,170
$127
$37,898
7/1/87-7/1/88
$168,827
$26,424
$30,104
7/1/86-7/1/87
$199,888
$55,131
$3,450,033
$1,360,119
$1,117,856
Loss Ratio Since 1986 = $1,360,119/$3,450,033 = 39%
Loss Ratio Since 1986 (with premium adjusted by the dividends
returned to the city) = $1,360,119/$2,332,177 = 58%
Note: Shaded fields denote net losses that are estimated based on loss
reserves on open claims.
*Net Losses = total incurred losses - paid and future estimated deductibles retained by the city
LMC
Z -V- ia OR"
Crow promoting =Mflanoa
May 14, 2007
LEldoen
ulik
J. Gallagher Risk Management Services, Inc,
Prairie Lakes Dr.Suite 350
rairie, Mn. 55344-3884
Re: City of Maplewood renewal effective 7/1/07
Dear Mark:
League of Minnesota Cities
Insurance Trust
145 University Avenue West, St Paul, MN 55103.2044
(651) 281-1200 • (800) 925.1122
Fax: (651) 281.1298 • TDD: (651) 281.1290
www.lmne.org
Over the past year, the numbers and cost of litigated claims in the City of Maplewood have been
exceptionally high, and LMCIT is concerned about the risk that this pattern will continue in the
future. As you know, LMCIT is a cooperative self-insurance organization of cities, and the
funds LMCIT uses to pay claims are therefore ultimately the joint property of all LMCIT
members. After carefully reviewing Maplewood's situation, we have concluded it's necessary to
take action at this time to protect the interests of LMCIT's other member cities.
For the City's July 1, 2007 renewal, a 10% debit will be applied to the City's liability premiums.
Depending on experience during the coming year, it is possible that we may be able to remove
that debit for the City's July 1, 2008 renewal. However, it is also possible that it may be
necessary to retain or increase that debit, or to take additional underwriting actions at that time.
LMCIT concerns
Below is the list of claims that give rise to our concerns:
• Termination of the city HR director's employment. This action resulted in three lawsuits.
• Termination of deputy police chief's employment.
• Termination of the community center director's employment.
• Termination of the community center project manager's employment.
• Housing project permit denial.
• Data project challenge.
Defense costs and damages already paid on these claims exceed $150,000. Several of these
cases are still open, and .the current estimated total incurred cost for these claims exceeds
$900,000. The City will be responsible for $200,000 of that cost under its deductible, but the
cost to LMCIT and its member cities is estimated to exceed $700,000. That compares with the
City's liability premium of $110,674 for 2006-2007
AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPLOYER
Experience rating and underwriting actions
As you know, LMCIT's premium for municipal and auto liability includes an experience rating
component. The underlying premise of experience rating is that the city's past loss experience is
a good indicator of the city's future losses. The experience rating formula looks at the city's
liability losses for a three year period, excluding the most recent year.
The liability claims during the past year therefore will not yet affect the City's experience rating
under the formula. The experience rating will therefore increase only modestly for 2007-2008,
from the current .797 to .808. However, when the past year's liability claims roll on to the
formula for the City's 2008 renewal, we estimate that the City's experience rating will then
increase to 1.15 based on the current incurred cost for those claims.
In most cases, the final premium determined by the experience rating system should be a fair
estimate of the premium necessary to cover the member's losses and LMCIT expenses for the
next year. Sometimes though there may be significant changes in the city's operations or risk
characteristics which are not yet reflected in the experience rating. To address those types of
situations, LMCIT will apply a debit or credit to the experience rating modification to more
accurately reflect the change in risk.
Several factors make it clear that the City of Maplewood's risk has increased in a way that is not
reflected by the experience rating: the numbers and types of litigated claims the City has
experienced in the past year; the apparent disregard of or lack of familiarity with legal
requirements relating to employment, land use regulation, and development actions; and the
highly contentious and polarized climate that appears to exist in the City. In other words, the
concern is not simply a matter of the number and cost of the claims; it's also a matter of the
nature of those claims and the conditions and actions from which those claims arose. In order to
properly reflect these increased risks, LMCIT will apply a 10% debit to the City's upcoming
renewal.
I would note that in recent weeks the city's management and staff and the city attorney have
contacted the League's HR and legal staffs for advice on several employment, land use
regulation, and development issues before taking action. We view the city's willingness to seek
advice before acting as a positive sign. Based on that, it's our conclusion that other possible
underwriting actions such as special deductibles, special limits on coverage for particular types
of claims, or specific mandatory loss control measures are not needed at this time. We would
stress though that additional actions of this sort remain a possibility for the future.
Renewal terms for 7/1/07 and 7/1108
With this in mind, LMCIT will renew the City's covenants based on the new rates and exposures
as of 7/1/07. LMCIT will use the .808, experience modification but will also apply a 10% debit to
the City's liability premiums to better reflect our evaluation of the City's risks for the coming
year. When we receive the renewal application we will develop the renewal premium quote on
this basis.
LMCIT will continue to closely monitor the City's claims experience and activities during the
coming year, Depending on the City's experience and developments during the year, future
underwriting actions could be positive, such as reducing or eliminating the debit.
However, LMCIT could also implement additional negative actions if it appears necessary.
These actions could include:
• Increasing the debit
• Increasing deductibles
• Applying special limits or exclusions
• Requiring the city take special actions to reduce risk
It's also important to keep in mind that the City's loss experience this year will affect the city's
experience rating and therefore the liability premiums for the city's July 1, 2008 renewal. The
combined effect of the experience rating formula and any additional underwriting action could
be quite significant.
Let me emphasize though that it is very much our hope that we will be able to eliminate the
premium debit for the city's next renewal. Our goal is to continue working with city
management and staff to reduce losses and improve overall risk management procedures. We
are more than happy to assist the City in any way we can, and we'd encourage the City to
continue to make use of the League's resources.
If the city has any questions or comments, please feel free to contact me. Please submit the
renewal application to LMCIT and we will develop the renewal quote.
ordially yours, J /
Michael Wozniak, PCU
Underwriting Manager
LMCIT
cc Greg Copeland
City Manager
Bob Mittet
City Finance Director
H Alan Kantrud,
Knaak & Kantrud PA
3500 Willow Lake Blvd.
St. Paul, MN.55110-5135
LMCIT Board of Trustees
Agent to deliver
Agent to deliver
LMCIT to mail
XN
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•,'• •. •• ... - • j• :. •:.; ;.;Attorneys:at Lacy" :• ; •.. -• -. .- -;.. -: , .::: - - -
Pieerc�V KiiaaJc 3500 Willow ]rake Bl%d.fSuite 800 ' :Ofiuisel
- Ti 11,1an Kanlxud'* Vacliiai.4Heigitt.14SDS51"� _ " Doi�ald�Voliler .
Grey T. ,KtyiCr*- '. =Telephone:.{1551 ) 490-9078" Joseph B. IViarshai! :
*Also licaised Facsieiiie: {651j 49a-1580.." :. ` Ttuimas )fvi.pailey, PA_ _
sscai sra do Coloradp . -T ozeaV - Tied,%T# n*bn -
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_ 30 ibiay0.07
Michael Woznrak
f. :15"IJiriversi#y.Avenue-
:. aiirt Paiil,.�VIN 5 103=2044.... :
~ RE:-City of Maplewood renewal effective 07/.Oli2007
:Pear
I. wn . "in iiiy, capacity as: general counsel and City,, attorney foi; the pity of I�iaplewood: - i -write
sped callyin iesQonse to;the :ciirrespoiidence.cc�}tied to:me�'written by you;-on May 14; 2007.
- u make:it.clear.that;tite;Id IC T is-concerned about f e lass Afid'Mve-:taken that couc�ern
and :iraiis_ fated: tliat into; .a `10'�o debit : agp4' "able ta•'our;next ,year: renew, : Curibusly you_ - on :
indicate the iiebit -may °lii~='reiiioved; .increased; retaufed° or that;-."Iyou iaiagr. take,. �`additionaL: _
uindvritirig actioii$;27 -
lie`City is aware of the curxen# •litigafiion; landscape; as. I have been working .with the officials.::
thete to!keep:tliem informed.••. I actuall esented several to ibii:for defense.:.
A's I read,the list:what ealty stands ,out:is:that`much-vtius litigation lias`concluded at this point.
.3_of the 4 employment law`s;ases :are settled :and the f nil one-vise have•great:-expectations in:tenms :
=of our likelihood of suec�ess.:. The "h�usirigroject.penmit iieuial°'whicli=is• better:characterized:.. .
as a- vWng. regtiest deiiial)`is:-scliediiled for' eut.aad ot�r cbanccs-v ood iir :
.summary judgm . er :�, .
tenYis •of :outcome The tiafa:practices" request suit is also going. well fortis aiid we expect :to-wm
- . on•summary judSmi np n=tbat case as veli.: .
You indica#e a; "cum6nf e. imated: fiotal inciured .cost".{ suie?) of o"vim: $9(10,000.00 -on alt
these-claims.-Are these case-reserves for all claims or§i ply, the,reanaining ones?
'The-next:few.secfion_s cover.expenence-rating.atid-underwriting and it a Y- CM— -that-our debit
KANTRUD
increas. - Is based on::the number anit types ,of .claim1.s; "appareiit'disregard or lack of familiarity -
m cgal,Xegiiirements" -dn vaciYous tat* Well' well' the 6&iw hat appears tii exist, iri'yout'
estimation:-- - .••- . � - ` •- _ - `. -_ _ -
. • - y .. _ ... - • • .. a ,. — - . _ -
WOuitalC Correspondence. : "
;30 May 2007 :
. " Page 2, ... i
Ut me first ga on'reomd as "smiin -djaf I bane c+eitainly done my best as- one of the city's :
,1*9.r+ewurces to riedui:e or iemove.tlie"risk.of lass to both.the Cityand;LMciT. This I
have lane for Map *s well as odiguatics I ,represent and I havesought leg &
advice fiom rhe:League consistently.on all:niatters for many ye irs;'ni i;staiting ` A recent _
weeps" as,yli+es. ; q " - = .
^ . ,I cam'"change vviat.you have Wined' in terms Qf esfhnated Ions• on various
matters iimlpingthe Cityatcris-point: I would
ask ;dw you identify'lgj4ih specificity
flow you -dame up with the number-liowesrer since mosi'a. t eluits are now•sett 4 it
1naybe heipfg to:simply.use•the analysis t4ni0 i h rtcmairting elaioiiauts: `Case reserves -
are,establrshed on.aper..daiu%cise1 mn sure buttoMarap-oor Cily's task on, in some,.
cases,, a ``UgWyoi�s"elimate" sees to be -a bit of a •stretch. _
Reserves I can°appree�ate,:butimplying *,City:is not following the law,; cannotget
4
Tong and d+oesa't as for help :when it should'is just not consistent ;with the r`ecor(L .
don'x
see how the cuawl claims are -or eanYbe tied. to the ;LiViCs .concerns:: _
f Please:feel iee to write gar call to -discuss this matter and I look foiward to reviewing the
L-MCIs process to better understand and correspondingly advise ttlree City.. = _
an :
"I cod City Attorney ;
- HAK ;
..". .. _ . cc: - Greg Cope�nd " - " . - - - -.. , ... , . , , . ' - .- - ", :. - . . • - .
Chaek Bethel _ i ;
June 1, 2007
Michael Wountak, CPCU
Underwriting ager
LIVICiT
Dear Mr. WozMak
The City of Maplewood is very committed to working with you and the LMCIT to keep its number
and cost of litigated claims down. Towards that end the City has asked that t write this letter in
.response to your leiter of May 14, 2007. The City understands and shares your concerns as
exp in that letter, and therefore would trice to provide you sone additional information to
Help clarify the record of what has happened, and be sure that we are all on the same page gang
forward.
Under the M of your concerns on page one of your letter you refer to four terminations. The City
believes this.m�ts the facts. The only one of the four that can be characterized as a
termination is the termination of -Ms. Le, the former HR Director. This was a termination for
cause, based in part upon a report received from an independent attorney which supported that
termination.
The other "terminations' listed were not terminations of individuals, but eliminations of positionsdue to -a Oly-vide reorganization. While the City hoped that the reorganization could be effected
without excessive cost of litigation, it c erbi* recognized the risks involved, which is why the City
requested, received and followed advice from League attorneys regarding the reorWnizatiion Doth
before and durkV the implementation of the City of Maplewood' reorgarntzatioo.
Your tetter noted that'in recent weeks the city's management and staff and the city attorney have
contacted the League's HR and legal staffs for advice on several employment, land use
regulation and development issues before taking action.' However, the City received and
followed advice on reorgarraft the City from Pat Beady and other League.attaneys and staff
back to the fail of 2008,. beforeactually taking any. actions to r+eotknanize the M. You then go on
to note that you view the CRys-wiillingness to seek advice before ailing as a positive sign.
We agree that having the League's attomeys and staff as a resource is a big asset and the City
Will strive to continue to use that asset to the best of Its ability in the future. As the City efimiriated-
appr+oximateiy 14 positions in that reorganization. and was able to avoid litigation with regard to
most of the Other positions, it is -clear that some of the actions the City to* were sixxessful in
helping avoid litigation with regard to the reorganization. However, it is also clear that even when
the City does.recognize its legal risks, and'does corisultwith the League„and does follow the
League's advice, therae'is unfortunately std no.guarantee that,coslly litigation will ridtsesdit
I note that your letter also stated your concern about the Ohighly contentious and polarized climate
that appears to exist in the City.' Recently 1 attended mediation for the City in -which members of
the City Council successfully worked together with the League attorneys to settle the case. You
iridicated that you saw it as positive sign'that the"City appeared to be improving in its'wiltiiigness
to work with the League. Likewise, Niew the recentwiedalion as aster positive sign the City
CITY OF MAPLEWOOD 1830 FAST COUNTY ROAD 8 MAPIEWOOD, MN 55109
Counal can work together with the League to put this litigation, and their political diflerenaes
behind them, and continue forward in a -manner that will reduce the CiVS risk of future ration.
If you or anyone at the League has any further questions or comments on this matter, please feel
free to contact me. I loots forward to working with you or your representatives to help the City of
Maplewood resolve the current litigation and reduce the risk of future Itigatian.
Very truly yours,
Chuck BeW
City of Maplewood
Labor Relations Attorney
CC. Greg Copeland
City Manager
Bob Mittel
Director of Finance and Administration
R Alan Kantrud
City of Maplewood
City Attorney
LMCIT Board of Trustees
2
June 8, 2007
Chuck Bethel
Labor Relations Attorney
City of Maplewood
1830 East County Road B
Maplewood, MN 55109
Dear Mr. Bethel:
League of Minnesota (hies
InwramThat
145 University Avenue West, St Paul, MN 55103-2044
(651) 2811200 • (800) 925-1122
Fax (651) 2811298 • TDD: (651) 2811290
www_lmne.org
This is a follow-up to the correspondence from Mr. Kantrud dated May 30, 2007, and from
yourself dated June 1 and June 8, all relating to the renewal of coverage for the City of
Maplewood for the coming year.
It is extremely important to understand that LMCIT views Maplewood as a city in which the risk
of future liability claims is significantly greater than in the typical LMCIT member city. As
indicated in our earlier correspondence, that evaluation is based on several factors: the unusual
number of liability claims the city has experienced in the past year; the specific nature of those
claims, and the actions and decisions by city officials which led up to those claims; and the
generally contentious atmosphere in Maplewood both among city officials and among some
members of the public.
Based on the comments in the May 30 and June 1 letters, it appears that city officials may not
fully understand LMCIT's concerns and the reasons for those concerns. Perhaps reviewing one
example — and I would stress that this is just one example — will make it more clear.
A series of liability claims arose from the city's reorganization activities in 2006. Those claims
might very well have been defensible but for some specific actions and comments by city
officials. These include publishing a budget document that explicitly linked the reorganization to
unionization activities; and comments by council members in the press regarding the job
performance of the individuals involved. Those actions and comments unfortunately created
grounds upon which the terminated employees would be able to allege and to argue to a jury that
e reorganization was a pretext to _te_n_=__-ate specific employees for other reasons unrelated to
reorganization.
Because of that, it was necessary to pursue a negotiated settlement of those claims rather than
risk a trial. Two of those claims have been settled, for a total of $93,250 in damages. The third
has not yet settled, though we're hopeful that it may be settled shortly. I believe that you are
aware of the dollar amounts that were discussed for possible settlement of that claim during the
recent mediation session. In addition, the legal costs on these claims will add at least another
$150,000 to $200,000 in costs.
AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPLOYER
In light of this situation, it is both surprising and troubling to read in a communication from the
city that "implying that the city is not following the law, cannot get along, and doesn't ask for
help when it should is just not consistent with the record." As you note, it's certainly possible
that litigation might have resulted from the reorganization in any event. But to put it bluntly, had
city officials sought and followed the advice of legal counsel prior to taking the actions noted
above, it would have been much easier to defend legal challenges arising from the
reorganization; the cost to defend that challenge would have been much less than it is; and we
would in all likelihood not be faced with paying out the very substantial dollar amounts we're
now looking at to resolve the resulting claims.
It is equally surprising and troubling to read that the city's legal counsel "[doesn't] see how the
current claims are or can be tied to the LMCIT's concerns." It is similarly surprising to see the
reorganization characterized as a situation in which the city sought and followed good legal
advice — with no apparent recognition of how the city officials' actions and comments affected
the defensibility of those claims.
In short, the May 30 and June I correspondence create the impression that the Maplewood city
officials do not recognize the problems that their actions have created. If so, that would be a
very serious concern from LMCIT's standpoint.
Your follow-up letter of June 8 is certainly helpful in providing some reassurance on this point.
But in light of the concerns the city's previous correspondence raises, the LMCIT Board will
need to again review this situation before we can offer renewal coverage to the City of
Maplewood. Based on the assurances in your June 8 letter, the staff recommendation will be that
the city be offered a renewal on the terms outlined in Mr. Wozniak's May 14 letter. However, I
will stress that I cannot guarantee that the Board will agree to do so, or that more restrictive
terms and conditions will not be required, or even that any renewal at all will be offered.
Finally, let me reiterate that LMCIT is committed to providing whatever help we can to the city
to address these issues and to reduce the city's risks. But to do so, there also needs to be a
recognition of the issues and a commitment to addressing them on the city's side as well.
Sincerely,
Peter Tritz
LMCIT Administrator
n
Jun, 8. 2007 1:54PM
June S. 2W7
No. 1362 P, 2
.MAPLEWOOD.,1
ANZAfflila Can
Mr: petal• Ti tz, Director
League of Minnesota Cities
145 university Avonue West
SL paul, MN. 51103-2044•
pear Mr. Tritz
Thant you for your phone call today. pursuant to our dlacussion today, I am
provWng you with this foikrw•-crp letter regarding the previous correspondence
from Mr: lfantiW and me on behalf of Maplewood.
The central'purpose of this tette' into clear up any misunderstand that may
have been creaW.by the previous letters. you specifrc IV expressed COMM
that ttie city of Maplewood seemed -to take a tone in those letters that the City
had no real problems or issues to adilress with regard to the issues raised in Mr.
Wozniak's letter of May 14, 260.7.
please be advised that the Ciity"of Maplewood fully understands and
acknowledgba-Me "LMCIT Concems" as set forth In ?Nr. WOXniak's letter of May
14, 2007. The City recognizes that it does have its share of challenges, and 1
believe the.City is making good progress *urging towards overcoming these
challenges.
• In fact, in recent weeks I have seen continued improvement is several areas. As'l
mentioneid In my previous kder, the Majror, City Manager and,members of the
City Eouncil have ail attended recent -mediations and vkrlced Together with
League attomeys to help setfle some of the Outstanding Litigation. Further; there
has been an -increased awareness and mmem with seeking assistance from the
League on a variety -of issues. for example, in the past two weeks the City has
been consulting with League attorney Fat Beety over a new Be of issues that
has arisen with regard -to Possible termination of a police officer. The officer in -
question was charged with kidnapping,.false Imprisonment and was found guilty.
of assault and misconduct The City'has committed to continue working with Ms.
Beety throughout this difficult process. Additionally, the City has continued to
work closely with Ms. Booty in preparing discovery responses regarding the
City's data practices issues. Finally, there has 8190 been steady improvement in
relations between the City and its collective bargaining units that has resulted in
two year -contract settlements with all but one of seven labor units-
. 1 ,
....+...�_.._...., n.,..+ a c.cs MARLEWOOD. MN 55109
f
Jun. 8. 2007 1:50PM No. 1362 P. 3
t
In cam, I would like to reitOrate my pre,riously expressed Oontimtme. t to
work with the League to help induce the lUk of future IitWian. As I stated in our
Omwemation tray, I would be happy bQ appear at your board meeting next
Tuesday. I am keeping 10:00 am on that date open, if you deride OW you would
like W haw me partickQate. Thank you again for providing me this Opportunity to
address any misconceptions that may have arisen from the previous letters.
Very truly yours,
Chuck Bethel
City of Maplewood
Mor Relations Attorney
c Gmg Copeland
city Marlow
Bob -MW
DkecW of Finance and AdminWrAon
H. Alan Kantrud
city Of Maplawom
City Atomey
MOW Vi WT"k, CP'CU
Underwriting Manager
taACIT
LMCtT Board of Directors
K •
1
2
June 14, 2007
Chuck Bethel
Labor Relations Attorney
City of Maplewood
1830 East County Road B
Maplewood, MN 55109
Dear Mr. Bethel;
League of Minnesota hies
la ranwThot
145 UniversiWAvenue West, St Paul, MN 55103-2044
(651) 2811200 • (800) 925-1122
Fax (651) 281-1298 • TDD: (651) 2811290
www.imne.org
This letter is in follow-up to all previous correspondence and provides an update as to the
LMCIT Board's discussion regarding renewal of coverage for the City of Maplewood.
At its meeting earlier this week, the LMCIT Board decided to offer Maplewood a renewal on the
same terms outlined in Mr. Wozniak's May 14 letter. This includes a 10 percent premium debit
applied to the City's renewal rates and strong encouragement that the City continue to seek
advice from LMCIT before taking action on decisions regarding employment practices, land use
matters and development issues. Of course, LMCIT also encourages the City to seek assistance
on other matters as well, and will be happy to provide advice in whatever areas we can.
The LMCIT Board again stressed that future underwriting actions are possible should continued
evaluation of Maplewood's risks indicate ongoing problems. Such additional underwriting
action at renewal or mid-term could include increasing the debit, increasing deductibles,
applying additional limits or coverage exclusions, or requiring additional specific actions by the
City in order to reduce certain risks.
The LMCIT Board views this year's rate renewal as a fair indication of the risks presented in
Maplewood, taking into consideration some positive indications that the City has improved its
understanding of the issues and is taking steps to address them.
Given the rapidly approaching June 30 expiration of the City's existing coverage, I'd encourage
Maplewood to submit renewal materials right away so that rates can be finalized and coverage
continued.
Sincerely,
Ann Gergen
Associate Administrator, LMCIT
Cc: LMCIT Board
AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPLOYER