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Article updated: 8/26/2013 5:21 AM

How insurance option slipped by Metra board

Daily Herald File Photo
 Former Metra CEO Alex Clifford, right, testified at an RTA hearing in July with his attorney Michael Shakman, left. Sitting a row behind is former Chairman Brad O’Halloran, far left.

Daily Herald File Photo Former Metra CEO Alex Clifford, right, testified at an RTA hearing in July with his attorney Michael Shakman, left. Sitting a row behind is former Chairman Brad O'Halloran, far left.

 
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Like a good neighbor, Illinois National Insurance Co. is there when it comes to employees suing over retaliation, wrongful dismissal or harassment.

So why didn't Metra's board go running to its insurer when ex-CEO Alex Clifford alleged former Chairman Brad O'Halloran and Director Larry Huggins wanted him out for rejecting political pressure over jobs and promotions? It could have spared paying up to $718,000 in a separation agreement with Clifford, RTA auditors said.

Board directors did inquire about insurance but were brushed aside this spring after Clifford and his attorney, Michael Shakman, accused O'Halloran and Huggins of misconduct, Director Jack Schaffer of Cary recalled.

Directors William Widmer, a labor attorney, asked "wait a minute, don't we have insurance?" and Norman Carlson, a retired accountant, said the insurer should be notified of a potential lawsuit, Schaffer said.

But board attorney Andy Greene, a consultant who officials say took his orders from O'Halloran, told them a lawsuit needed to be filed first before going to the insurance company.

"End of discussion," said Schaffer, the only board member to vote against Clifford's separation agreement in June.

Board leaders would go on to argue that the separation agreement was a business decision based on the expectation Clifford otherwise would sue under the Illinois Whistleblower Act.

O'Halloran told the RTA, "While we think we could have won a lawsuit, it would've taken years and cost millions of dollars in attorneys' fees and time on the part of our employees."

Board members said they didn't challenge the assertions of the legal team and chairman because it appeared their choices were limited.

Had the majority of the board known their insurance policy had a $150,000 deductible and a $10 million cap, the $718,000 settlement wouldn't exist, Acting Chairman Jack Partelow of Naperville said.

But, "we did not know about the $150,000 option," he explained.

Director Arlene Mulder, former Arlington Heights mayor, said no one laid out the insurance options for directors. "We were given two options -- fight Shakman and the deal we ultimately approved. I'm anxious to find out why we didn't know," she said.

During the crisis, O'Halloran was making a lot of the decisions and instructing staff, Mulder said. That unilateral approach wouldn't work in a local government like Arlington Heights, she added. "Nobody likes to be blindsided," she said.

Director Don DeGraff, the mayor of South Holland, concurred. "We had no idea about the insurance, or I would've strongly considered that option," he said.

O'Halloran would later testify to the Regional Transportation Authority that Metra was self-insured, which was incorrect, auditors said.

Blowing off the insurance company was a fatal mistake, business law expert Shawn Collins said.

In his April 3 letter, Shakman wrote that by endorsing lobbying by Illinois House Speaker Michael Madigan and other lawmakers over jobs, Huggins and O'Halloran violated the Illinois ethics act for state officials and employees. Should anyone retaliate against Clifford, he reserved "all his rights to seek appropriate legal and equitable relief," Shakman wrote.

Collins, a Naperville attorney who has litigated whistle-blower cases but is not involved in the Metra flap, thinks Shakman is warning Metra that ethics laws are being violated rather than giving notice a lawsuit is unavoidable.

"They're reading into it what they want," Collins said. "When an attorney writes a 'pay my client money' letter -- it's pretty obvious."

Furthermore, he said, whistle-blower lawsuits are "tough cases," and hardly slam-dunks. The would-be whistle-blower first must bring his claims to a government prosecutor who has 60 days to decide whether to act on it, Collins said.

The board should have waited for a pending report from the Illinois inspector general to see if Clifford's accusations were true, instead of deciding within two months to pay out a lot of money to "silence the accuser," Collins said.

He noted that to invoke the insurance policy, a lawsuit would have had to be filed and that meant exposing a scandal "that would blow the lid off the place," he said.

If Clifford sued saying Huggins and O'Halloran were retaliating against him, the policy explicitly covers "retaliation" complaints and would pay for a defense lawyer, Collins said.

"That's why you get insurance ... to get a lawyer to advocate for you. They know how these cases work and (insurers) are stingy by definition," Collins said.

So far, Metra has spent more than $300,000 on public relations and legal consultants to advise during the scandal.

"This is what you see when you play the game with someone else's money," Collins said.

For the record, Greene told me he couldn't comment on confidential advice to clients. O'Halloran, who with Huggins has denied any misconduct, did not return calls.

One more thing

Ironically, the Metra board designated authority for contracting with carriers to the executive director. Thus, the original 2010 contract and renewals of the agency's $99,837 policy with Illinois National Insurance Co. did not go to a board vote.

Coming soon

Pace and the CTA's new fare system, Ventra, is available to the general public Sept. 9. Ventra is a plastic card that can be used on both the CTA and Pace by tapping it at turnstiles and bus fare boxes. Users can purchase Ventra cards in advance at CTA stations, online and by phone. It will be available at local retailers, including most Jewel/Osco stores, effective Sept. 9. Metra is also required to offer a transit card that works on the CTA and Pace by 2015 but the agency is still working on the transition. For more information, go to https://www.ventrachicago.com/.

Your voice

Arlington Heights resident Debbie Nelson (who's also a Daily Herald employee) had a unique take on school bus safety, which I wrote about last week.

"My child has a disability and rides a school bus that does a pickup at our curb in the morning," Nelson wrote. "Aug. 21 was the first day of the new school year, and this morning I returned to the anxiety it brings when I'm helping to get my child on the bus. This takes some time and cars are backing up behind the bus -- the drivers visibly angry at having to wait -- some honking, some going around, and many speeding off and giving me a dirty look. It's really a shame."

Got thoughts on any transportation issue? Drop me a line at mpyke@dailyherald.com or follow me on Twitter at dhintransit.

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