SYRACUSE — The revelation of a well-kept secret launched a special investigation by the State Board of Accounts into how the town of Syracuse was paying insurance premiums.
After conducting a lengthy audit, the SBOA determined current and former town council members, along with several former town employees, owe the town approximately $503,529.94. The SBOA provided a copy of its report to InkFreeNews Thursday.
While two town council members and one former town employee have reimbursed the town, the Syracuse Town Council is disputing the results of the audit and has engaged Bose, McKinney and Evans, an Indianapolis law firm, to represent it. The SBOA has forwarded its report to the Office of the Indiana State Attorney General and to the Kosciusko County Prosecutor’s Office.
Secret Revealed
According to the SBOA’s report, its agents were notified by the Indiana State Police the town of Syracuse was paying for insurance premiums for a town councilman and his ex-spouse. That councilman is Paul Stoelting and his wife, Martha. According to a statement Stoelting provided the SBOA, he and Martha filed for divorce in 2007 in another county. They did not tell anyone, “including our children, family or friends, since there was no physical changes in our relationship and we fully intended to remarry.”
Stoelting state, “… My wife and I intended to remarry, however, there was no urgency since we continued living together while coping (with) our children(’s) issues and celebrating their successes. Prior to and after the dissolution we dealt with the mental illness of our middle child. In 2018, we lost our oldest child after a 3-4 year illness requiring our constant care.”
In Stoelting’s statement, he noted he and Martha intended to get married in 2019, but their intended date, Sept. 1, was unavailable. Due to the statewide COVID-19 shutdown, the Stoeltings did not remarry until Sept. 1, 2022.
“The SBOA report shows my wife began receiving health benefits from the town in 2019. As stated above, we expected to marry for many years, however, that became impossible on many levels. We certainly did not intend to violate any town policies or ordinances, although I am regretful that I was so adamant to marry on the Sept. 1 original wedding date and determined to avoid publicity, as we could have marred in Kosciusko County at any time years before,” he said.
SBOA Report Finds
According to the SBOA’s report, Stoelting was charged with reimbursing the town $27,293.06. He has paid back $19,943.66.
Further inquires and a review of records indicted the town was paying premiums for insurance obtained by individuals who were not eligible for participation in the town’s group insurance. The premiums included reimbursements and/or payments of privately obtained insurance, supplemental Medicare insurance as well as reimbursement for amounts deducted by the federal government from an individual’s social security payments for Medicare insurance.
The SBOA reviewed records from Jan. 1, 2015, through Dec. 31, 2023, noting records prior to Jan. 1, 2015, were not available.
The report notes a local unit public employer may expend public funds for the health insurance costs for its employees as set forth in IC 5-10-8-2.6(b). However, according to the report, “The payment or reimbursement of Medicare insurance premiums and supplemental insurance premiums is outside the ‘specific manner’ that is required by IC 5-10-8-2.6 which is limited to ‘purchasing polices of group insurance’ or ‘establishing self-insurance programs.’”
However the Syracuse Town Council passed an ordinance on Oct. 21, 2008, which granted the town authority to expend public money on health insurance for certain individuals in a manner inconsistent with the required and specific manner set forth in IC 5-10-8-2.6(b).
This ordinance was then amended on Dec. 16, 2017, repealing Section 4 of Ordinance 08-11 with a new section for Ordinance 2014-17 stating: “All full-time employees of the town and town council members shall be provided health insurance at a cost of $1 per year. Full-time employees are eligible for health insurance following a 60-day probationary period after their hire date. The town will provide a high deductible health plan in conjunction with a health savings account. Annually, the town may select to fund any portion of the HSA up to the maximum contribution allowed by federal regulations. A spouse of an employee will not be eligible for health insurance through the town’s plan if the spouse is eligible for health insurance at his or her place of employment.”
On Nov. 19, 2019, the council again changed Section 4 of Ordinance 08-11, removing the last line regarding a spouse of an employee’s eligibility for health insurance through the town’s plan and replaced it with: “In addition spouses of full-time employees and spouses of the town council members shall be eligible for health insurance coverage through the towns’s plan unless he/she is eligible for health insurance coverages through his or her place of employment at a cost of $1 per year. Health insurance shall include, but not be limited to, the payment of reimbursement of Medicare insurance premiums and supplemental insurance premiums incurred by an employee or town council embers on and after the date of amended ordinance No. 2024-17.”
According to the SBOA report, the following people owe the town:
Current Town Council members:
Cynthia Kaiser - $11,15.79 – paid back
Cynthia and Brent Kaiser - jointly and severally - $10,835.70 – paid back
William Musser - $46,259.32
William and Margaret Musser - jointly and severally - $48,431.93
Larry Siegel - $159,072.20
Larry and Matthew Siegel - jointly and severally - $8,271
Larry and Sharon Siegel - jointly and severally - $16,839.50
Paul Stoelting - $40,787.61
Paul and Martha Stoelting – jointly and severally — $27,293.06- paid back $19,943.66 with $7,349.40 remaining.
Former Town Council Members
Thomas Hoover (spouse deceased)— $36,103.92
Larry Martindale (deceased), Mary Martindale, spouse — $19,186.90
Former Clerk-Treasurers
Julie Kline (spouse deceased) —$11,886.18
Paula Kehr-Wicker and Robert Wicker— jointly and severally — $9,946.50
Former and Current Employees
Henry DeJulia - former town manager – $9,927
Henry and Esther DeJulia - jointly and severally - $14,897.98
Kathleen Goodyear (spouse deceased) former police matron — $41,518.11
Kenneth Plikerd, street laborer - $14,028.80
Don and Kathleen Robinson - water department foreman- jointly and severally – $16,969.10 - paid back.
The Town Council Responds
In its response to the SBOA, the town noted, “Not only has the SBOA audited the town and never raised this form of compensation as an issue, the SBOA has made specific representations to town officials that such form of compensation is permissible. In April 2023, a town council member, Mr. Larry Siegel, contacted the SBOA regarding the town’s practice of reimbursing employees and council members for insurance premiums. Mr. Siegel spoke with an SBOA representative and then sent the SBOA representative a copy of the town’s more recent ordinance, Ordinance 2019-19, that authorizes the town’s price of compensating employees and council members by reimbursing them for their insurance premiums. The SBOA responded to Mr. Siegel’s inquiry, advised Mr. Siegel on how the town council should administer the ordinance and never mentioned or rated any concern that the town’s form of compensation was contrary to law. The SBOA representative memorialized this conversation in an email, a copy of which is attached to this letter …”
The email the council’s letter referred to is from Mitch Wilson, government technical assistance and compliance director, talking about how the town funds HSAs. It says nothing regarding reimbursing council members or town employees for insurance premiums. Additionally, at the bottom of the letter, it states: “The foregoing should not be construed as a legal opinion, but rather as the position the State Board of Accounts may take during an audit. Please consult an attorney on all legal matters.”
The letter from the council further states Nathan Scherer, council president, and Virginia Cazier, clerk-treasurer, “contacted the SBOA auditor, assigned to the town for the audit in question, at the end of 2023 and asked whether the town should continue its practice of reimbursing employees and council members for insurance premiums. The SBOA auditor specifically said the town should continue its practice of reimbursing town employees and council members. It now seems exceedingly unfair and inappropriate for the SBOA to require both current and former employees to reimburse the town for a form of compensation the SBOA has implicitly and explicitly recognized as permissible.”
Bose McKinney And Evans Weigh In
Bose, McKinney and Evans, the law firm representing the town, stated, “It is our opinion that Section 2.6 (of IC 5-10-8-2.6) does not prohibit a municipality from providing compensation to employees and officials in the form of reimbursements for health care benefits that are outside of a town group health plan, provided that such alternative forms of compensation are approved by ordinance of the legislative body. We believe that to hold otherwise could also have far reaching and unintended consequences with respect to how local governments have compensated employees and officials in Indiana for decades.”