City to pay life insurance claim for former mayor
By KIRSTEN ADAMS
Anchorage Daily Planet
Copyright 2010
More than a quarter-century after the late Mayor George Sullivan left office, the Assembly voted Feb. 16 to pay $193,000 to the George M. Sullivan Irrevocable Life Insurance Trust for a policy approved by the Assembly in 1982.
Assemblywoman Harriet Drummond, the only member who opposed the payment, said the payments would be a direct loss for the city since Sullivan only paid about $20,000 in premiums over the years before his death in 2009.
“This whole thing was such a boondoggle I’m surprised the public didn’t say anything about it,” Drummond said. “There’s all this whining about budgets and shortfalls, but nobody even blinked about this.”
After Sullivan left office in 1982, the Assembly requested the Commission on Salaries and Emoluments ask the municipality to provide life insurance coverage to Sullivan. Deputy Municipal Attorney Rhonda Westover said Sullivan then was added to the municipality’s group coverage plan with Aetna insurance company, and paid annual premiums directly to the city, ranging from $1,042 to $555.
According to a Feb. 2 Assembly memorandum, Aetna told the municipality that Sullivan was ineligible for group coverage since he was no longer employed by the city, and he also was ineligible for an individual plan because of his age. Westover said the city decided to continue accepting Sullivan’s payments, though, and pay the claim directly in the event of his passing.
The trustee for the life insurance trust that will collect the $193,000 from the city is Mayor Dan Sullivan.
“The municipality is not in the business of life insurance, this took it right from the taxpayers,” Drummond said.
Kirsten Adams can be reached at
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. Published March 2, 2010
written by Steve Sommerfeld, March 02, 2010
written by Peter Leathard, March 03, 2010
written by Mel Slurrup, March 07, 2010
1) Now, it is possible to have a contract where no signed piece of paper exists, as in this situation. Contracts can be enforceable over a simple handshake where both parties exercised good faith. One of the requirement for determining good faith is the existence of the capability of both parties to perform their duties. Both parties knew that the city did not have the capability to act as an insurance company. Insurance companies are heavily regulated and licensed. Both parties knew this in 1982 (and 2002, and last month) and thus, no contract existed. No payment should be made. It's akin to paying someone $10 to jump to the moon. Both parties know it cannot be done, so no contract exists. Ask any lawyer.
2) There is a big conflict of interest. We have the current Mayor urging the city to make a payment for his own benefit. Ethics, much?
3) Just last week, the Mayor proposed cutting expenditures $150K by reducing the services provided by our firefighters. And let's not forget the $50K that our Mayor requested be spent for another audit of the previous administration. And let's not forget that this Mayor had the city pay him a salary for being the Mayor-elect--he was being paid in the weeks leading up to his swearing-in! That was over $12K, so we've got a total of $212,000 in cuts that were made to things that could be reinstated, but won't be, because the Mayor wants the city to cut him and his family $193,000.
4)Back in 1982, it was not an ordinance that was passed, it was a resolution. Resolutions have no enforcement--ordinances do. And the Emoluments Commission overstepped their authority in creating this non-policy life insurance.
5) The Sullivans should repay the city, minus the premiums paid, and reinstate as much of the firefighters budget as possible.
This payout really stinks and shame on the Assembly (minus Ms. Drummond) for passing it.
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