Port Hueneme on verge of losing insurance that covers workplace misconduct claims

Sept. 23--The city of Port Hueneme is in danger of losing insurance that covers it against claims of harassment, wrongful termination, discrimination and other types of workplace misconduct. It would be the first time the insurer has taken the unusual step of stripping a city of a specific form of coverage.

On Sept. 27, city officials plan to travel to Orange County to make their case for why the California Joint Powers Insurance Authority should give Port Hueneme another chance.

The authority provides workers' compensation, property insurance and other types of coverage for Port Hueneme and many other municipalities across the state. Last month, JPIA's executive committee voted to issue a notice of intent to eliminate "employment practices liability protection." That's the insurance that settles claims, like the one that involved former City Manager Cynthia Haas, who alleged harassment by city officials.

Problems with an individual or individuals in the city prompted JPIA Chief Executive Officer Jonathan Shull to recommend the action, which would be retroactive to July 1. It's the first time the authority has recommended taking away just one type of insurance, he said.

"We have had training with executive staff and City Council and as result of that training, there have been some changes in the way members of the city have been dealing with employment practices," he said. "But there have been issues that have been ongoing and continuing."

The authority has been working with the city since May 2016 after identifying several concerns, including "numerous employment practices claims, potential litigation, the sudden departure of the city manager, morale problems, and an unusual amount of resignations," a report stated.

The city and authority agreed to more than a dozen action items, including training and working with employees to avoid behavior that is illegal or harmful. "In more than one instance the authority staff and panel attorneys privately addressed these actions in the strongest of terms, even as the offenders ignored them or bristled in response," according to the staff report prepared for the Aug. 23 meeting.

The report doesn't name anybody specifically, but City Manager Rod Butler theorizes the authority had concerns after Deputy City Manager Carmen Nichols resigned. In a letter given to the city attorney weeks before she left in August, the 22-year city employee said "unwarranted and unsubstantiated allegations continually made against her" by City Council member Jim Hensley helped drive her decision to leave.

Read more: Port Hueneme City Council member stripped of all official duties for second time

Butler also noted ongoing problems with Hensley, who was reprimanded for inappropriate conduct by the council in August and stripped of all his official duties.

JPIA "may be concerned he's not hearing the message and Carmen could file a claim down the road," Butler said.

As of this week, Nichols had not filed a claim against the city. She has six months to do so.

Hensley said he thought he was likely the person cited by the authority but that the real issue was the systemic governing problems that have led to several employees making claims against the city.

At least six claims were filed against the city in 2015, including by the former city treasurer, the former housing director, the wife of a City Council member and a police officer. The following year, JPIA paid Haas $279,000 to settle her claims of sexual harassment and gender discrimination. Currently, the city is actively involved in litigation in at least three cases, Butler said.

Read more: Claims from Port Hueneme staffers reveal treasurer was fired, councilman's wife alleges retaliation

Hensley said the issue comes down to officials wanting him to be quiet and to vote a certain way. He is pushing for transparency, he said, and others don't like it.

"We have significant problems. ... JPIA has been complicit in these problems. They've made deals in the past to pay off people who have left for various reasons with golden parachutes," he said.

Butler said he is hopeful JPIA reconsiders and takes into account the council's action against Hensley. The city has also taken action to fulfill other directives outlined in the Performance Improvement Agreement, Butler said.

"We'll be making the case that we feel like the city is taking concrete steps," he said.

Butler said it was a question of fairness, too. JPIA has the right to exclude the city from insurance, but it gave the city no notice and therefore no time to find alternative coverage, he said.

In case the committee upholds its decision next week, the city is looking at other insurance pools or carriers. Earlier this year, the city hired a consultant, Bickmore, to look at its insurance providers to see if there could be cost savings or a better fit.

The interim deputy city manager is separately putting together a customized supervisory training program for employees geared at ultimately reducing the number of claims filed.

"It's a challenge we'd rather not deal with, but I'm convinced in the big picture we're moving toward getting the organization stabilized," Butler said.

Mobile users, see the CA Joint Powers Insurance Authority staff report here.

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