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Work to dissolve health insurance trust continuing

Thursday, December 26, 2013 - Updated: 8:26 AM

By HEATHER NELLIS

For the C-S-E

FONDA -- Operations of Montgomery County's Health Insurance Trust with the city of Amsterdam are winding down, but work to continue its dissolution may spill into the new year, officials said.

Outgoing St. Johnsville Supervisor Dominick Stagliano, who serves as the trust's chief financial officer, said the trust's final meeting of the year is scheduled next week.

At the meeting, Stagliano said the division of assets will be announced, and the municipalities will learn how much money will be returned to their coffers from the trust reserve, which was used to pay outstanding claims.

"For all practical purposes, the trust has no business," said Stagliano. "It's basically a shell that is winding down. All health insurance contracts are held by the city or county. The trust has no contracts, and does no business."

The county board of supervisors in February 2012 approved a resolution dissolving the trust.

Stagliano said he does not believe the trust is a legally-created entity, so its dissolution isn't clear cut.

"There's no guideline, so we are comparing it to a municipality," he said.

Stagliano said the dissolution is twofold -- financial and legal.

The trust is the center of a March lawsuit filed by Benefits Marketing.

"The legal part is sitting in court. We're waiting a decision any day now," Stagliano said.

The financial part is also nearing completion, Stagliano said.

The resolution ordering dissolution of the trust hired the firm Toski, Schaefer & Co. to audit the trust's financial activity since its July 2007 creation.

Stagliano said a complete accounting of the trust had to first be created. He said that work is 99.9 percent complete.

"The records are in a condition where they can be audited; they're that detailed," said Stagliano. "They filled up like 16 binders."

"They should be audited, because it's a component of Montgomery County's financial system," Stagliano continued.

The county's audits in recent years have not produced qualified financial opinions because health insurance documentation was lacking, auditors from Toski indicated at an October meeting.

With the documentation nearly complete, it shouldn't be a problem in the future, Stagliano said.

"Once the trust documents are audited, it should clean up the county's books, and the 2013 audit should be a clean audit," he said.

Stagliano said there may be some "minor housekeeping" to tend to after the final meeting. But because his term ends Dec. 31, and the county's new form of government will take effect Jan. 1, he believes the county legislature will have to appoint members to the board.

Further, Stagliano doesn't believe there will be a decision on the aforementioned lawsuit before Jan. 1.

The Montgomery County Health Insurance Trust, its board members, the county and city of Amsterdam were sued on allegations of a breach of contract.

Benefits Marketing of Amsterdam, and its proprietor Pasquale Baia, are seeking at least $1 million in damages, according to the suit.

Benefits Marketing is a third-party administrator, and reportedly contracted with the trust for the administration of health benefits.

The lawsuit says the trust entered into a three-year contract with Benefits Marketing on Jan. 1, 2012, and additionally referenced a contract with Matrix Quality Care.

The suit says the defendants entered into new contracts with Matrix on Jan. 1, and alleged it "had the intentional and unwarranted effect and purpose of excluding [Benefits Marketing] from receiving compensation as a third-party beneficiary for services it performed under the Matrix contract as originally agreed."

Between January and March, the company alleges it's been shorted an excess of $11,000, and will lose almost $78,000 for the remainder of the contract period if the alleged breach continues.

"The defendants should be held liable ... for punitive and exemplary damages arising from their outrageous conduct resulting in defendants' intentional tortious interference of both contracts," says the suit.

The city's and county's contention with health insurance contracts was well documented in 2011, prior to the Board of Supervisors' vote in February 2012 to dissolve the entity.

The municipalities questioned whether the contracts were considered valid because Mayor Ann Thane and then county Chairman Shayne Walters did not sign them.

They were signed by Amsterdam town Supervisor Thomas DiMezza, who formerly served as the trust president.

The aforementioned resolution additionally agreed to only keep the trust's contracts through the end of 2012, so the judge will determine whether the contracts are valid.

Stagliano said because the final decision will likely occur after Jan. 1, he thinks it necessitates new appointments to the trust board.

Amsterdam Corporation Counsel Gerard DeCusatis said he thinks the litigation can be dealt with without continuing the trust board, as long as the county and city agree upon a payment formula should there be any settlement, or any outstanding claims.

"The whole existence of the trust is unusual," he said. "It's not exactly clear how we need to proceed, but if the components agree to fund any liability that might be present, then it could be dissolved."

     

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