Mt. Diablo Health Care District seeks to cash out Concord mayor's lifetime health benefits

Concord Mayor Ron Leone stands to cash out a lifetime health care benefit for possibly hundreds of thousands of taxpayers' dollars, courtesy of a perk he earned during his 16-year stint as a part-time elected director of a small hospital district.

The soon-to-be-downsized Mt. Diablo Health Care District is seeking to settle up its legal obligation to provide coverage to Leone -- who also is covered under Concord's medical plan -- and current board member Grace Ellis, 85, the only two people eligible for the lucrative benefit awarded years ago.

There is nothing illegal about the payoff, but the public has grown increasingly dissatisfied with the idea of elected officials -- particularly part-timers -- earning free lifetime benefits while city and county services are slashed and voters are asked to pay more taxes to keep those services intact.

Leone says he will accept a cash payout as long as a third party manages the funds and all remaining dollars after his death revert to taxpayers.

"I"m not looking for a check," said 61-year-old Leone, who served on the health care board from 1991-2006 and was elected to the Concord City Council in 2010. "What I am looking for is the benefit guaranteed to me in exchange for my service on the health care district."

But the path to resolution is a twisted one fraught with political implications for the Concord mayor.

Leone became eligible for the free lifetime medical and dental insurance

for himself, his wife and two children in 2003.

Faced with skyrocketing premiums for the CalPERS plan that approached $2,000 a month apiece, the district in late 2011 asked Leone and Ellis to accept cheaper alternatives.

Ellis enrolled in Medicare and a supplemental plan, which cut the district's costs by more than half.

Leone agreed to sign up for Concord's health plan as long as the district covered his out-of-pocket costs, which he estimated at $580 a month.

The mayor and the district, as it turned out, defined "cost" very differently:

For a period of time that Leone had received free benefits from the health care district, he also had collected from Concord an equivalent health insurance cash payment of $571 a month. It's a perk offered to all workers and employees who opt out of the city's health plan.

When Leone agreed to switch from the district to the city's plan last November, he asked the district for $550 a month based on his loss of the city's payment. The district paid him at this rate from January through May.

But when the district found out Leone's premium cost him only $104 a month, it cut the councilman's cash payments accordingly. The district's push to pay off its liability comes in anticipation of local regulators' vote this summer to disband the district's five-member elected board and shift to the Concord City Council its few duties and small pot of tax revenues.

"I'm going to do the best I can to resolve the issue as quickly as possible," said Health Care District Chairman Jeff Kasper. "Once we agree on a dollar amount, the district could write Ron a check and he can purchase an annuity or do whatever he wants to do. And we will do the same for Grace."

If Leone and Ellis agree -- and they could refuse -- the dollar amount will depend on the outcome of the negotiations.

The district's May analysis puts the combined value of the pair's benefits at $218,304 although a prior study set the figure at $713,660. The decline was attributed to the pair's voluntary shift in late 2011 to cheaper plans.

The district has been under fire over the free lifetime health benefit for years.

Four Contra Costa civil grand juries and a Contra Costa regulatory agency have cited the expense as an unreasonable use of public money and a reason to shut down the district, which hasn't run a hospital since 1996.

The district spent $455,144 between 2000-2011 on medical and dental premiums for Ellis and Leone, according to an independent consultant. During the same period, the consultant found the district spent the bulk of its $240,000-a-year in property tax receipts on administrative, legal and election costs.

State lawmakers in 1994 banned the provision of health benefits to elected special district board members unless they met specific criteria, including having served at least 12 years. Most of the district's liability is for the much-younger Leone. The district has asked its consultant to provide updated individual estimates, Kasper said.

A lump sum payout is a reasonable option, agreed pension and benefits expert Gary Craft of Lafayette, who recently conducted an analysis of public employee retirement costs for the Contra Costa Council.

Leone and Ellis would likely invest the money or purchase an annuity, and use the proceeds to buy coverage, Craft said. The district would no longer fund or manage their plan.

The move carries some risk, Craft said.

"You don't know what the future will bring," Craft said. "Health care costs could escalate and the payout might not be enough. On the other hand, the district could shut down and they could lose the benefit. But in theory, (Leone and Ellis) will be made whole and the district will have satisfied its legal obligation."

Contact Lisa Vorderbrueggen at 925-945-4773, lvorderbrueggen@bayareanewsgroup.com, www.ibabuzz.com/politics or at Twitter.com/lvorderbrueggen.

Source: http://www.insidebayarea.com/news/ci_20965260/mt-diablo-health-care-district-seeks-cash-out?source=rss

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