Legislature(2021 - 2022)SENATE FINANCE 532
04/04/2022 01:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Review of Judgments and Claims: | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
April 4, 2022
1:38 p.m.
1:38:18 PM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 1:38 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Donny Olson [via teleconference]
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman
ALSO PRESENT
Megan Wallace, Director, Legislative Legal Services, Alaska
State Legislature.
PRESENT VIA TELECONFERENCE
Cori Mills, Deputy Attorney General, Department of Law.
SUMMARY
REVIEW OF JUDGMENTS AND CLAIMS:
DEPARTMENT OF LAW
DIVISION OF LEGISLATIVE LEGAL
Co-Chair Stedman relayed that the committee would consider
a review of judgments and claims and would consider a
presentation by the Department of Law as well as hear
testimony from the Legislative Legal Division. He thought
the committee would hear about at least ten issues of
concern.
^Review of Judgments and Claims:
Department of Law
Division of Legislative Legal
1:39:40 PM
CORI MILLS, DEPUTY ATTORNEY GENERAL, DEPARTMENT OF LAW (via
teleconference), relayed that she would be providing a
background and overview of the state's judgements and
settlements. She would discuss the background of the
Department of Law and common elements of the judgments and
settlements. She referenced a spreadsheet document entitled
"Judgments and Settlements of Significant Interest" (copy
on file). She would briefly cover the listed items.
Ms. Mills wanted to offer context for the judgments and
settlements, and she provided that the Department of Law
handled thousands of cases at any given time that involved
numerous claims against different state agencies or
officials. Every year the supplemental budget had a section
that included judgements and settlements, which signified
settlements of court cases or prelitigation settlements as
well as attorney fees from judgements and settlements
reached in cases. She noted that amount listed in the
supplemental appropriation was a fraction of the thousands
of cases the department handled in any given year and
represented cases without an existing fund source.
Ms. Mills detailed that the civil division had 1,352 active
cases ranging in administrative litigation in the superior
court, federal court, or the supreme court. She continued
that some of the cases were affirmative cases, where the
state was the plaintiff seeking damages or recovery. She
cited that the Department of Law had recouped around $2
million in fraudulent Medicaid payments, $52 million in
taxes, royalties and attorney fees in natural resource
cases; and another $5.3 million in consumer protection
cases.
1:43:46 PM
Ms. Mills continued her remarks and discussed cases where
the state and one of its agencies or officers were named as
a defendant in a case where damages, recovery fees, or
attorney fees were sought against the state. She explained
that in many of the cases where the state was a defendant,
there was an existing funding source to pay for the
judgement or settlement, the largest of which were the
state's tort lawsuits. She mentioned risk management, which
had funds to pay for cases.
Ms. Mills identified that there were certain cases without
a fund source, and the total amount for the judgements,
settlements and attorney fees were put into the
supplemental budget for payment in a timely manner without
too much interest. She detailed that the amounts in the
supplemental varied greatly from year to year depending
upon the kind of case. She thought there was a three-year
time horizon requested by the committee. She cited that in
FY 20, the total for the supplemental budget was around $7
million, with the following year being $1.8 million, and
the current amount was closer to $1.1 million.
Ms. Mills continued that many of the payments were court-
ordered payments from judgements issued by a court.
Additionally, some payments were settlements that may not
have been court ordered but were a contract that the state
had entered; any amount was subject to appropriation. She
explained that most cases settled in advance and did not go
to trial, which saved the state money and did not clog up
the courts while allowing parties to move on more quickly.
She emphasized that paying the settlements showed
negotiation in good faith and ensured future success in
settling matters out of court with other parties.
1:47:39 PM
Ms. Mills discussed attorney's fees and noted that Alaska
had unique attorney's fees laws compared to other states.
Alaska allowed for parties that won a lawsuit to get at
least a portion of its attorney's fees, which was often 20
percent. She continued that there were some rules that
could expand or contract the amount of attorney fees. She
referenced AS 09.60.010, which allowed for full reasonable
attorney fees for constitutional claims, with some
exception. The state often could not get attorney fees
because there was usually some constitutional claim.
1:49:58 PM
Ms. Mills addressed the question of what items that could
be coming in the near future. She was not sure of any cases
that would be added in the current budget cycle but wanted
to address items that could be on the horizon. She
referenced a Department of Transportation and Public
Facilities (DOT) claim regarding a contractor in the
Ketchikan area. She continued that DOT had terminated with
a Juneau contractor for default. She anticipated that there
would be additional damage proceedings in May because the
administrative law judge had already determined that the
contractor was wrongfully terminated. She mentioned a
number of cases currently before the Alaska Supreme Court,
which could possibly result in required payment of
attorney's fees.
Ms. Mills referenced a case involving forward funding, in
which the administration and the legislature were at odds.
She mentioned a case involving an effective date clause, in
which the administration and legislature were also at odds.
She mentioned a case involving the Higher Education Fund.
She mentioned a case involving unions, and a case about
contamination and Flint Hills Resources Alaska. The state
had won at the lower court in the Flint Hills case, but the
decision had been appealed.
Ms. Mills relayed that she would begin to discuss specific
cases listed on the spreadsheet. She referenced Item 1 on
the spreadsheet, the Recall Dunleavy v. State of Alaska
case, and relayed that the judgement amount was for
attorney's fees and not damages. The case involved a recall
petition filed with the Division of Elections, which denied
the petition on statutory grounds. The superior court
upheld the recall petition save for one item, and the
supreme court upheld the superior court decision. The
prevailing party sought attorney's fees, which was listed
in the judgements and settlements accounts. She detailed
that the current amount was for the supreme court, and the
superior court fees were in the previous year's budget.
1:54:43 PM
Co-Chair Stedman asked for help interpreting the numerics
of the cases Ms. Mills was describing.
Ms. Mills specified that the amount for the first case was
$197,631, which accounted for the judgement amount plus
interest. She noted that the chart also showed department
attorney costs, which were listed in column 12 and showed
$146,687 as the cost to defend the state in the action.
Senator von Imhof referenced Item 1, and thought the total
cost was shown to be $344,000.
Ms. Mills answered "yes," and clarified that the cost in
column 16 represented the amount that needed to be
appropriated, and the total cost in column 17 was the
judgement/settlement cost plus the cost to the department,
which was paid from the operating budget.
Co-Chair Stedman asked about what "J and S" signified.
Ms. Mills clarified that J and S represented judgements and
settlements, which was the part of the supplemental budget
being discussed.
Co-Chair Stedman thought it was easier for the public to
understand testimony when testifiers abstained from using
acronyms.
Senator von Imhof looked at column 16, which showed the
amount the legislature would be considering appropriating
for the cost of the case.
Ms. Mills answered in the affirmative.
Senator von Imhof asked if there were criteria by which the
state covered the costs for a state employee, such as in
the executive branch, versus a case where the state would
not cover the costs.
Ms. Mills answered "yes." She relayed that she would
address the standards when she spoke to Item 5 through Item
7, which had to do with lawsuits in which the governor was
named.
1:58:40 PM
Senator Wielechowski asked how many court cases there had
been over the definition or certification of recalls in the
state.
Ms. Mills stated that from a statewide perspective, the
current case was only the second case for the supreme
court. She thought the superior court had heard a handful
of cases that dealt with recall.
Co-Chair Stedman asked if there had been two recall-related
cases before the supreme court.
Ms. Mills answered affirmatively and noted that only one of
the two cases had dealt with a state employee.
Ms. Mills addressed Item 2, the Vote Yes for Alaska's Fair
Share v. Meyer case, which dealt with the Division of
Elections. She explained that for purposes of ballot
initiatives, the lieutenant governor would prepare a
summary that went on the ballot as a description of the
initiative. The sponsor for the ballot initiative relating
to oil and gas taxes in 2020 had sued the lieutenant
governor for the statement, and one sentence that had to do
with the Public Records Act. Part of the ballot initiative
had to do with the confidentiality of documents or making
certain documents not confidential, and there had been a
sentence in the summary about the Public Records Act
applying. The court had found that the sentence should be
stuck, but also allowed the lieutenant governor to
institute at least a partial new sentence into the summary.
The case went to the superior court and then the supreme
court. The payments had to do with attorney's fees owed.
Ms. Mills continued to address Item 2. She looked at column
12, which showed the department's cost to be $71,428. She
cited that column 16 showed the amount sought to be paid in
the supplemental budget was $78,117. She thought the amount
was for attorney's fees at the superior court level. She
mentioned additional attorney's fees for the appellate and
superior courts.
2:02:37 PM
Senator Wielechowski had read a September 18, 2020,
Anchorage Daily News headline that claimed that there were
more lawsuits filed against election officials during the
first two years of Governor Dunleavy's term than were filed
in all four years of the term of the previous governor. He
asked if the information was accurate.
Ms. Mills was not familiar with how many cases there had
been. She mentioned the Stand for Salmon initiative. She
relayed that she would not be surprised, based on the fact
that the last election was held during a pandemic. She
thought there were at least five cases that were a direct
result of the pandemic, and requests to change election
rules. She knew there had been an uptick in elections
litigation.
Senator Wielechowski understood that the sponsor of Vote
Yes had contacted the Division of Elections to resolve
concerns with the language, and the division had refused to
work with the sponsor.
Ms. Mills believed there were discussions and asserted that
ultimately there was a decision by the lieutenant governor
with no requirement for the sponsor to be involved.
Senator Wielechowski thought the matter would be shown as a
pattern going forward. He asked if it would be simpler to
address concerns by working with the sponsor instead of
costing the state $149,000.
Ms. Mills thought the matter was related to policy choices
that had to be made and thought the state must ensure the
summary was accurate. The court had held that one sentence
needed to be struck, but the rest of the summary was fine.
Senator Wielechowski cited that the superior court judge
had ruled that the lieutenant governor "tried to put his
finger on the scales" of the election with the way he wrote
the description. He asked if that was what the judge had
said.
Ms. Mills believed that Senator Wielechowski had read
wording from the Superior Court decision but was not sure
it translated to how the supreme court categorized the
language.
2:06:20 PM
Senator Wielechowski asked if the department or executive
branch were willing to change policies and work with
sponsors of initiatives in order to avoid costly litigation
that required time, energy, and money.
Ms. Mills thought the decision was one for every
administration to make. She was not familiar with what had
happened in the past but did not know there was a policy in
place and thought each new lieutenant governor and the
division determined how it would deal with the issue.
Senator von Imhof thought when there was a ballot
initiative or referendum there needed to be a certain
number of signatures. She described initiative sponsors
efforts in getting signatures, including language to
provide information to potential signers. She considered
that if there was a change in the writing after collecting
signatures, a sponsor would have to get new signatures. She
thought that the change might have been a factor in the
lawsuit.
Co-Chair Stedman was not sure whether Senator von Imhof's
comments were accurate.
Ms. Mills believed the certification decision for the
petition had happened pretty close to having two months for
the sponsors of the initiative to gather signatures. She
could not recall when the discussions happened versus when
the booklets were printed, but all of it had to happen in
an expedited fashion.
Senator Wielechowski thought the issues had to do with the
way the summary was written on the ballot and did not have
anything to do with the collecting of signatures.
Ms. Mills affirmed that the ultimate court case had been
regarding the ballot summary and the same summary usually
appeared on the petition. There was a petition summary that
was required as well, and there had been slight changes
between the summaries. Both of the summaries had initially
been challenged, but ultimately the challenge came down to
the ballot summary.
2:10:08 PM
Ms. Mills addressed Item 3, The Alaska Landmine LLC et al.
v. Dunleavy et al. She noted that the document made note of
the fiscal year on the side. The Alaska Landmine case
involved a blogger that brought a complaint in the superior
court that he was left out of press conferences, and it had
violated his constitutional rights. The case had been
settled fairly quickly, and Mr. Landfield had been allowed
back into press conferences. The settlement covered Mr.
Landfield's attorney's fees that had been spent to date on
the case. She directed attention to column 12, which showed
that the department's internal cost had been $54,000, while
Mr. Landfield's attorney's fees and the amount in the
settlement had been $65,789.
Co-Chair Stedman asked if the total cost to the state was
$120,099.
Ms. Mills answered in the affirmative.
Senator Wielechowski thought Ms. Mills had indicated the
case was resolved quickly and cited that according to the
court decision, Mr. Landfield enjoyed implicit press
credentialing and access to the current governor's press
conferences beginning January 23, 2019. The defendants then
implicitly revoked Mr. Landfield's press credentials in
October 2019 absent any explanation. The defendant
initially indicated that the removal was an oversight,
however the revocation was never remedied or rescinded. He
recounted that Mr. Landfield had sent multiple emails for a
year asking to for the oversight to be remedied, and his
attorneys had sent letters.
Senator Wielechowski opined that the case appeared to have
been an avoidable situation and thought the court had
issued a harshly worded decision, which stated that the
government's position was that plaintiffs were not entitled
due process, because the government had not provided due
process. The court went on to say that it was untenable to
assume that a cornerstone of our nation's bill of rights
could be so impotent that it could be extinguished by
simple apathy or indifference.
Senator Wielechowski was curious as to why the
administration had not simply resolved the case early on
when there were emails being exchanged, and when attorneys
were beginning to be involved. He questioned why the
administration had not solved the issue when case law was
so clear.
2:14:18 PM
Ms. Mills suggested that not all agreed that the case law
was extremely clear and cited that there were cases on both
sides of the issue. She clarified that her comments about
the timing involved the period after the department had
become involved. She noted that the administration had had
a "no blogger" policy at press conferences and had
determined it was willing to change the policy and settle
the case.
Senator Wielechowski wanted to clarify that only after the
plaintiff initiated the current litigation did the
defendants articulate that it followed an unwritten "no
blogger" policy.
Ms. Mills answered in the negative and thought there had
been disagreements over whether Mr. Landfield had been
informed of the policy. She asserted that the policy was
followed by the communications office.
Senator Wielechowski cited that he had read directly from
the judge's decision. He wondered why the administration
did not appeal the case if the judge got it wrong.
Ms. Mills thought it was important to recall the procedural
stance of where the case was. She recalled that there was a
preliminary injunction in which facts were not argued. She
thought that if the administration was willing to change
its policy, it was preferrable to spending more on
continuing with the case.
2:17:04 PM
Ms. Mills addressed Item 4, pertaining to the the Keren
Lowell/ACLU demand letter. The item involved pre-
litigation. She did not think litigation had been filed in
the case, but there was a demand letter that had been
served on the state alleging wrongful termination. She
relayed that the matter pertained to an employee of the
Alaska State Council on the Arts, who's position had been
eliminated along with the entire council under the budget.
When the council received money again after a change in the
budget, the council was reinstated, and Ms. Lowell applied
and was denied re-hire. She cited the department's cost of
$27,300, and Ms. Lowell received $85,000 through the
settlement.
Senator Wielechowski asked for the reason Ms. Lowell was
not rehired to the council.
Ms. Mills thought the point would be debated by both sides
and could not cite the full facts of the case.
Senator Wielechowski stated that according to his documents
and those reported in the press, the executive director of
the council said that Ms. Lowell was irreplaceable. There
was a veto that eliminated the arts council, and all the
employees were laid off. When the council was restored, it
reached out to remaining staff for re-hire. He thought Ms.
Lowell was specifically rejected by the governor's office
because of statements made on social media about the
governor.
Ms. Mills thought Senator Wielechowski was accurately
representing what was alleged by Ms. Lowell.
2:20:52 PM
Ms. Mills addressed Item 5, Parker v. Dunleavy, et al. She
commented that she would take a moment to discuss the
background of a group of cases. She noted that Items 5, 7,
and 8 were in the same category and she would address the
cases together before going back to address Item 6. The
cases all pertained to the resignations of a range of
employees (seemingly all partially exempt or exempt) that
were requested at the beginning of the administration. The
employees included Ms. Parker, an Office of Public Advocacy
attorney and two individuals who both worked for the Alaska
Psychiatric Institute (API).
Ms. Mills continued that Ms. Parker had been terminated for
the same reasons as the two employees from API and that she
did not turn in a resignation letter, or she thought the
issue in the case may have been the wording of her
resignation letter. She noted that outside counsel had
represented the state in all the resignation cases. The
outside counsel fees shown in column 12 were $213,859, and
the total including the settlement was $339,407 for the
Parker case.
2:25:13 PM
Ms. Mills continued to address Item 5, Item 7, and Item 8.
She detailed that the two individuals from API had not
turned in resignation letters. She discussed settlement
amounts for the plaintiffs. She noted that in cases that
had a state official named, in all of the cases it was not
just the governor or chief of staff, but the state was
named as well. There had been Section 1983 civil rights
claims brought as well as good faith and fair dealing
claims brought against the state. She discussed settlement
of the Parker case. She discussed the cases with the API
employers and explained that the motion for summary
judgement was about whether the positions of the API
doctors had been in the position of policy makers. She
referenced the Pickering Test.
Ms. Mills continued that the summary judgement motion in
the API case determined that the positions were not policy-
maker positions. The second inquiry considered whether
qualified immunity applied. The court had determined that
qualified immunity did not apply to the positions. Shortly
after the decision was issued, the state appealed the
qualified immunity issue. The parties settled the case
before damages and the good faith and fair dealing claim.
2:28:59 PM
Ms. Mills relayed that the questions that had arisen from
the cases pertained to indemnification. She referenced a
memo by former Attorney General Bruce Botelho, which had
established long-standing departmental policy. She cited
language from the memo that stated that in the event that a
state employee was sued for damages in a civil action
arising out of their employment with the state, the state
will provide representation and indemnity for compensatory
damages if the event or conduct for which the employee was
being sued occurred in doing their job and their actions
did not constitute willful misconduct, or gross negligence
or recklessness.
Ms. Mills cited that the standard was used often and had
been used with cases against commissioners, nurses, and
correctional officers. The standard outlined in the memo
was applied at the decision of the attorney general, along
with the decision of whether an employee should be
indemnified and represented by the state.
Ms. Mills pointed out that in cases in which the state was
named, there had been a misconception that the state was
not named in the lawsuit. There had been potential
liability for the state in the cases. She had heard another
common misconception that if the amount was not paid, the
governor and former chief of staff would be held
responsible.
2:32:38 PM
Senator Wielechowski referenced Section 1983 claims as
mentioned by Ms. Mills and asked her to explain the
rationale.
Senator Wielechowski asked why the federal government
allowed Section 1983 claims for damages.
Ms. Mills informed that Section 1983 claims had to do with
the deprivation of a civil right, primarily looking at some
kind of constitutional right where a court determined the
right was deprived by some action.
Senator Wielechowski referenced a decision by Judge Sedwick
which cited that the doctrine of qualified immunity shields
officials from civil liability so long as the conduct did
not violate clearly established constitutional rights of
which a reasonable person would have known. He asked if the
department agreed with the statement.
Ms. Mills relayed that she was not the attorney on the case
and was not comfortable citing the case law.
2:34:37 PM
Senator Wielechowski believed the judge's opinion
reiterated the findings of the United States Supreme Court.
He referenced the doctrine of qualified immunity, which
protected officials. He cited that the court established
that there was a right to sue clearly established if there
was a clear foundation and existing precedent. The court
went on to say (in the Blanford case) that the First
Amendment violation was clearly established and would have
been known to any reasonable government official. Further
the court stated that it was beyond debate, based on
supreme court precedent, that it was unconstitutional to
require non-policy-making employees to signal a commitment
to a political agenda in order to retain their jobs.
Senator Wielechowski continued that the court found there
was no qualified immunity when a clear violation of a
constitutional right had occurred. He cited a November 27,
2018, letter from ten legislators that indicated the
requested resignations were a clear violation of
constitutional rights. He asked if Ms. Mills recalled the
letter and if the letter had been considered in determining
whether the employees should be restored.
Ms. Mills reiterated that outside counsel was used for the
cases, and she had not been the attorney of record nor had
she reviewed the records. She only knew what the decisions
held and what the appeal was about, and what the appeal
points were. She did not have anything further to add.
2:37:17 PM
Senator von Imhof asked if the legislature had to
appropriate $200,000 and $275,000 for the API doctors to be
paid a settlement.
Ms. Mills cited that one doctor was paid $220,000 and one
was paid $275,000.
Senator von Imhof asked if the doctors would receive
anything if the legislature did not appropriate the money.
Ms. Mills answered "no."
Senator von Imhof pondered that the Department of Law
settled with the doctors and pledged money it was not in
control of. She considered that the department had passed
the issue on to the legislature based on political
decisions made by the governor.
Ms. Mills understood Senator von Imhof's characterization
of the events. She asserted that the state could have been
liable for a greater amount and would have had to pay
through a court order. The case ended up resulting in a
settlement that was subject to appropriation, which did not
obligate the legislature. She continued that along with all
the historical precedent that she was aware of, the case
came to an appropriate settlement to avoid further expense
and unnecessary litigation on the issue.
2:39:18 PM
Co-Chair Stedman asked for help with understanding how
common the situation was with previous governors or
governors in other states coming up against qualified
immunity.
Ms. Mills had not been able to do a review of other states.
She thought someone in the other body had done a law search
and had not found many occasions when the court found
similarly to the case involving the governor and the API
doctors. She considered past instances of challenges where
a governor was named, and thought it was pretty common and
she recalled two to three current cases.
Co-Chair Stedman understood that all governors got
litigated. He asked how often the issue of qualified
immunity came up, and had it come up with other Alaska
governors.
Ms. Mills was not aware of other cases where qualified
immunity had been found not to apply.
Senator Wielechowski noted that particularly in the
Blanford case, the governor and his chief of staff had been
sued in their official capacity as well in their individual
capacity. He thought it was rare that any public official
was found to have violated a person's rights in their
individual capacity, but that is what the court had found.
He cited that the court said it was "beyond debate" that
the action was so clearly political that the court took a
rare decision to find the governor and chief of staff
personally liable. The state was found not liable, and the
governor and his chief of staff were found personally
liable. The state had agreed to settle and pay the
governor's and chief of staff's personal attorney's fees
and personal liability for settlement of hundreds of
thousands of dollars. He thought the matter was troubling
to many Alaskans.
Ms. Mills wanted to point out that there were still claims
of good faith and fair dealings that had not been
discussed. She recommended that the committee talk to
counsel for the ACLU, who would not make the same
characterization as made by Senator Wielechowski.
2:43:40 PM
Ms. Mills addressed Item 6, ACLU et al. v. Dunleavy, which
had related to a case involving a line-item veto of the
Court System by the governor. She noted that there was a
comment made in the veto form about the purpose of the veto
related to a Planned Parenthood case, which the court had
found to be improper. She explained that the case was not a
damages case, but rather a declaratory relief case in which
the court stated that the veto action was not proper. She
detailed that the attorney's fees were about $88,000 to
$89,000 for the department, and about the same amount for
the opposing party in the case.
Co-Chair Stedman asked if the case was a fairly common item
in the budget process since statehood, or if it was
uncommon.
Ms. Mills was not familiar enough with the vetoes including
when the court system had previously received a veto. She
was not aware of a similar case.
Co-Chair Stedman could not recall other vetoes tied to
actions by the courts.
Senator Wielechowski thought Co-Chair Stedman was correct
and thought it was clear that the governor could not veto
another branch because of not liking a decision it made. He
mentioned separation of powers. He pondered how the
governor was being advised on how the actions might be
unconstitutional. He wondered if the governor was
disregarding legal advice.
Ms. Mills commented that the reason there was attorney-
client privilege was in order to have candid conversations
between counsel and policymakers. She could not address the
matter at a deeper level.
Senator Wielechowski shared concern over the fact that Ms.
Mills could claim attorney-client privilege while the
legislature had to pay the bill. He hoped there were some
different policies in place, and he understood the governor
had to get advice. He struggled over the fact that the
administration could do whatever it wanted, and the
legislature had to pay for it as the appropriating body.
2:48:03 PM
Ms. Mills addressed Item 9, Alaska State Legislature v.
Dunleavy, et al, which involved the forward funding of
education. She noted that the case was currently on appeal
before the Alaska Supreme Court, and there were currently
no attorney's fees to be paid. The superior court had found
in favor of the legislature regarding the forward funding.
She thought the case was fully briefed and was awaiting the
court decision. The department's cost in the case was
$76,470. She continued that no attorney's fees would be
paid until the case was concluded and it was determined
that there was an amount owed.
Co-Chair Stedman asked if the case was one in which the
governor sued the legislature.
Ms. Mills affirmed that the governor could not sue the
legislature. She recounted that the governor stated he did
not believe he could pay the education funding, and the
legislature had appropriated the funding two years
previously. The legislature had sued the governor and the
administration shortly before, and an agreement was settled
upon to make sure the monies could be paid out.
Senator Wielechowski was concerned about the policy
ramifications if the administration were to win the case.
He recounted that there were two different issues in the
case. The legislature had passed a $30 million one-time
appropriation outside the funding formula for education,
and the governor simply refused the pay the funds out. He
emphasized that the governor could not simply refuse to pay
something the legislature had appropriated. He listed the
second issue of the forward funding of education. He
thought if the governor prevailed in the case, such a
judgement would eviscerate the capital budget process. He
discussed the ongoing nature of capital project funding. He
thought winning the case would indicate atrocious public
policy.
2:51:54 PM
Senator von Imhof considered Item 9 and read that the
department had spent $76,000 in department funds, after
which the court held up the defense of the legislature as
legitimate.
Ms. Mills stated that the superior court had held that the
legislature was in the right, and the matter was on appeal.
She did not want the public to have misconceptions about
capital projects and clarified that the case had been about
an appropriation that was made on revenue that did not
exist at the time. She furthered that capital project
involved funds for the next fiscal year, rather than money
that would be available in a different fiscal year in the
future.
Co-Chair Stedman asked the director of Legislative Legal
Services to come to the table. He referenced Item 5 through
Item 8, which dealt with litigation against the governor
himself. He pointed out the question of the difference
between being represented as the governor by the Department
of Law versus as a private citizen. He referenced an issue
with former Governor Sarah Palin known as "Trooper-gate" [a
case involving the possibly illegal July 2008 dismissal of
the Department of Public Safety commissioner] in which the
governor's employees were responsible for dealing with the
legal issues themselves rather than having the department
to act as counsel. He pondered the ability of the attorney
general in deciding on the administration's involvement in
cases, and whether the treasury was vulnerable to the
current and future attorney general's decisions on the
matter.
2:55:03 PM
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE, addressed the department's discretion in
whether to represent the governor, and deferred back to Ms.
Mills to consider what analysis was done to determine
whether or not the department would provide representation
at public expense. She summarized that if the federal court
decision was the end of the case, there would be no
question that it was not appropriate for the state to
provide the cost to satisfy the judgement based on the
court's decision with respect to the qualified immunity,
and the court's decision that the governor was not
protected with qualified immunity. She continued that as
Ms. Mills articulated, the case was under appeal and there
was not a final decision on the merits by the 9th circuit
or the Supreme Court of the United States.
Ms. Wallace affirmed that the attorney general had pretty
wide discretion by statute to decide whether or not it was
appropriate to settle a case on behalf of the state. She
mentioned the unprecedented nature of a case in which the
governor was not protected by qualified immunity. She was
not prepared to say it had not happened in other states but
acknowledged that it was a rare circumstance. She pondered
the unique question of whether it was appropriate that the
state was willing to settle a lawsuit in which a federal
court only stated there was personal liability for the
governor and the former chief of staff. She thought there
was an open public question of whether use of state funds
to resolve the matter was appropriate.
Ms. Wallace acknowledged a risk of the use of funds being
challenged, but thought it was not unprecedented for
governments to cover judgements and settlements in other
cases where qualified immunity had been deemed to not
shield a government employee. It was her understanding that
the cases were more common with police officers and other
peace officers. She thought given the uniqueness and
unprecedented nature of the case relating to the governor,
there was some risk of challenge if the money was
appropriated. She thought that the real policy decision for
the legislature was due to the fact that if the legislature
did not appropriate the funds, the plaintiffs in the suit
would not be compensated as agreed upon by the state.
Co-Chair Bishop understood that Ms. Mills had indicated
that in the cases relating to the API doctors, the
plaintiffs agreed to the terms of the settlement knowing
that the funds were subject to appropriation.
Ms. Mills affirmed that the settlement document clearly
made the payment amount subject to appropriation.
Co-Chair Stedman asked Ms. Wallace to address Item 9, and
the litigation dealing with appropriation. He recalled that
the governor was going to sue the legislature, and he
thought it was not possible.
3:00:34 PM
Ms. Wallace noted that the Alaska Constitution specifically
prohibited the governor from filing suit against the
legislature. She thought there could be confusion because
there were multiple lawsuits pending relating to disputes
between the legislature and the governor. She referenced
Item 9, which correctly described the forward funding
matter that was currently pending before the Alaska Supreme
Court. There was a second matter also pending before the
Alaska Supreme Court, the Taylor v. Legislative Affairs
Agency case, which was initiated by the attorney general
against the Legislative Affairs Agency in the summer of
2021 with respect to a dispute between the legislature and
the governor over the effective dates of the operating
budget.
Ms. Wallace recounted that when the budget was originally
passed by the legislature, it had failed to get the votes
sufficient to approve the special effective dates of the
budget. She continued that there was some dispute between
the branches of government in terms of the options the
governor had to keep the state open without an effective
operating budget. She cited that despite the clear
constitutional restriction, the attorney general had filed
suit against the administrative agency of the legislature
to attempt to litigate the substance of the claims. The
legislature hired outside council to represent the
Legislative Affairs Agency. She thought there might be some
mix-up on the spreadsheet with regard to departmental cost.
She noted that column 9 seemed to reflect the departmental
cost for the legislature in retaining outside counsel in
the second matter, in which the Legislative Affairs Agency
had a ruling in its favor from the superior court, which
held that under the constitution the lawsuit was
prohibited.
3:03:48 PM
Ms. Mills addressed Item 10, which involved the Power Cost
Equalization (PCE) Fund litigation, which was brought by
the Alaska Federation of Natives (AFN) against the state
the previous summer. There was no settlement or damages
amount, but an amount listed for attorney's fees. The case
involved whether the PCE Fund was subject to the sweep of
the CBR. The court determined that half the plaintiff's
argument was correct, which had to do with whether the PCE
Fund was in the General Fund or not. The court found that
it was not in the General Fund, and the state decided not
to appeal the case. The department costs were $49,685. She
apologized that the case was left of the spreadsheet. The
amount for the attorney fees was $84,217, which represented
60 percent of the amount sought by the plaintiffs. The
judge had determined the plaintiffs should not be awarded
the full fees and reduced the amount to 60 percent.
Co-Chair Stedman thought there were concerns that multiple
administrations had always viewed the PCE Fund as non-
sweepable, and the there was a political change with the
current governor and his first OMB director who deemed the
fund as sweepable and removed the funds. He referenced
money spent on the matter for what he considered merely a
political re-definition. He thought some of the members of
the legislature found it concerning that some of the new
legal opinions were costing time and thousands of dollars
while providing nothing but confusion. He thought there was
some advantage that the PCE Fund was now settled, but it
was not yet certain whether the Statutory Budget Reserve
(SBR) was subject to the sweep. He referenced language
produced by the Department of Law as to the different
opinions on the matter.
3:08:04 PM
Senator Wielechowski was curious if the department
considered the issue of the PCE Fund to be resolved,
considering that there was a superior court decision that
was not appealed to the supreme court.
Ms. Mills noted that although the state had to adhere to
the superior court decision regarding the PCE Fund, the
decision was not binding. She did not think there would be
a differing determination on the issue from the Alaska
Supreme Court, but it could occur in the future and the
administration or executive branch would have to adhere to
the decision. She mentioned the Higher Education Investment
Fund, which she considered a different case and dealt with
the availability of the appropriation and not whether it
was in the General Fund.
Senator Wielechowski clarified that because the decision
was not appealed to the supreme court, the decisions on the
PCE Fund and other decisions the court made that were not
appealed were not binding.
Ms. Mills concurred.
Senator von Imhof asked why there was a superior court.
Co-Chair Stedman thought there was not sufficient time to
discuss Senator von Imhof's question. He emphasized that
the monetary total for the ten cases being discussed was
$2.1 million, and cited concerns in the legislature.
Senator Olson asked if the $2.1 billion could be pulled out
of the governor's budget.
Co-Chair Stedman relayed that the governor's budget was
being considered in the Senate Finance Budget Subcommittee
and the subcommittee may not want to discuss the matter.
Senator Olson wondered if the funds had ever come from the
governor's budget in the past to settle similar issues to
the judgements and claims being discussed.
Co-Chair Stedman thanked the testifiers. He discussed the
agenda for the following day.
ADJOURNMENT
3:12:22 PM
The meeting was adjourned at 3:12 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 040422 Law Judgments and Settlements Backup for 4-4-22 SFC Meeting.pdf |
SFIN 4/4/2022 1:00:00 PM |
|
| 040422 Judgements and Settlements of Significant Interest SFC.pdf |
SFIN 4/4/2022 1:00:00 PM |