Paid not to work

Wages paid so attorney can get extra benefits

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COEUR d'ALENE - A third party - the county's insurer - is paying the wages for a Kootenai County deputy prosecutor until he's eligible for lifetime benefits through the state's retirement plan, PERSI.

Kenneth D. Stone hasn't worked a day for the county since county commissioners created a new position for him and re-hired him as a county employee in December. As part of a settlement agreement, the Idaho Counties Risk Management Plan paid the county an upfront lump sum of more than $30,000 as reimbursement for his wages.

Stone also received $315,000 from ICRMP to settle a federal suit he filed against the county after he was fired in March 2011 following a sexual harassment investigation. Court records show Stone, who was hired by then-Prosecutor Bill Douglas in 2006, had been the subject of several complaints of sexual harassment dating to 2007.

His wrongful termination suit alleged Prosecutor Barry McHugh mishandled the investigation and Stone's firing and appeal.

Some details of the "confidential settlement" were disclosed in a mutually crafted press release after a settlement agreement was signed by McHugh, Commissioner Todd Tondee, Stone and Stone's wife, attorney Saviraj Grewal, last December. Neither the county nor ICRMP's attorney, Peter Erbland, would release the settlement amount, saying they had agreed not to.

Public records requests filed by The Press revealed ICRMP had paid both the $315,000 settlement and written two checks to the county - one for Stone's wages and the other for his Idaho State Bar dues.

Until this week, the county would not confirm reports that Stone wasn't working or say whether he was on paid leave. Repeated attempts by The Press to reach Stone at the prosecutor's office have been unsuccessful. He is not listed in any employee directories and his contact information in the 1st District Court directory is for his wife's law firm.

"I think he's on administrative leave," Commissioner Dan Green said Wednesday, though Tondee said he wasn't sure if administrative leave was the correct term.

"He's an employee and that is based upon the agreement we have," Tondee said. "Technically, no he's not on leave, but technically, yes."

Tondee said he "would think it's not uncommon" for a third-party, like ICRMP, to be paying the wages of a public employee.

"I don't recall if it's happened in the county," he said. "We have paid settlement claims that have been reimbursed by our insurance company. Whether it's wages or an outright check makes no difference."

However, in Stone's case, it does make a difference. If the county keeps Stone on the payroll until he's vested in PERSI, he qualifies for lifetime benefits.

"It is common for PERSI retirement to be part of a property settlement in a divorce," PERSI spokesman Kelly Cross said Thursday. "Other than divorce, I do not know if there have been other types of settlements where the parties addressed PERSI benefits."

Although Stone's PERSI eligibility was a condition of the settlement agreement, it's unclear if PERSI was a party to the agreement.

"I don't know if PERSI was consulted," said Scott Nass, an attorney whose firm represented ICRMP. He declined to discuss additional details, saying those who signed off on the settlement agreed no more information would be shared with the public than what was in the December press release.

Tondee, however, said PERSI was not consulted.

"It's a county employee," he said. "It's a county decision. If we're making this kind of settlement, we wouldn't contact PERSI and say, 'We are going to do this, is this OK?' It's an employee matter."

Cross said it is up to the employer to determine if a person is PERSI eligible.

According to PERSI rules, an employee is defined as "any person who normally works 20 hours or more per week for an employer ... and who receives salary for services rendered for such employer."

PERSI rules say a person is "not an employee" if they are "provided sheltered employment or made-work by a public employer in an employment or industries program maintained for the benefit of such person."

The phrase "made-work" has been in the PERSI statute since 1963, Cross said. He said it's not defined, though, and he isn't aware of any cases interpreting that phrase.

"PERSI's general understanding of that phrase is that it may be used to describe work made to provide employment," Cross said. "Since it's not defined in PERSI statute and since there is no case law interpreting it, PERSI cannot say for sure if that is how a court would interpret it."

Asked if the new position the county created for Stone, with a salary reimbursed by ICRMP, is "made-work," Tondee said, "That's covered under the settlement."

Green said, as a commissioner, he's not familiar with ICRMP having paid or reimbursed the county for employee wages in the past.

"I would like to think before ICRMP enters into a recommendation for settlement they have done their due diligence being consistent with statute," he said.

The Stone settlement is one of several paid to county employees in recent months. Former community development director Scott Clark was paid $30,000 and human resources employee Christina Anderson received $12,000.

The county wouldn't release details of either payment, classifying both as personnel matters and part of a "release and settlement agreement."

In a similar case in southern Idaho, The Post Register newspaper and a substitute school teacher successfully sued the Blackfoot School District in 2012 to obtain a copy of a separation agreement the school board made with the superintendent that included a $220,000 payout.

As part of the deal the school board struck with former superintendent Scott Crane, they also agreed to a "nondisclosure agreement" to hide the payout and then put the document in Crane's personnel file to shield it from public view, according to the Associated Press.

Sixth District Judge David Nye ordered the records be released and ruled that adding a nondisclosure clause didn't make a public record subject to the personnel records exemption under Idaho's Public Records Law.

Nye wrote in his ruling that "everything about this case smacks of a public agency trying to hide its decision-making from the public."

Kootenai County commissioners on Wednesday posted notice of a special meeting scheduled for 4 p.m. today. According to the agenda, the commissioners will meet in executive session with legal counsel to "discuss the legal ramifications of and legal options for pending litigation, or controversies not yet being litigated but imminently likely to be litigated" involving Stone.

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