Editor’s note: This story is by Tommy Gardner, a staff writer for The Hardwick Gazette.
HARDWICK — The Vermont League of Cities and Towns assessed a $22,383 penalty against the town of Hardwick for pulling out of the League’s health insurance plan.
Hardwick dropped the VLCT coverage and subsequently joined the International Brotherhood of Electrical Workers union’s health care plan to save roughly $44,000 in premiums for the upcoming fiscal year.
Hardwick Select Board Chair Marcus Brown said VLCT had known for several months that Hardwick was working to switch to a different insurer. Brown said the League’s Health Trust board “changed the rules” by adopting the exit fee policy.
Board member Richard Brochu was more blunt: “This is absolutely, positively out of order.”
Hardwick paid the fee last week to avoid an additional 1 percent interest penalty.
Steven Jeffrey, VLCT executive director, said the Health Trust Board had Hardwick in mind when it instituted the penalty at its Nov. 13 annual meeting. Jeffrey said other towns and municipal entities had already pulled out, and VLCT wanted to recoup its loss of revenue for insurance payments.
When the Health Trust board adopted the new policy at its annual meeting in mid-November, it was a month and a half before the beginning of its new fiscal year. The new policy states a municipality must give at least 30 days’ notice if it wants to pull out of the plan, prior to the end of the fiscal year. If it does not, the VLCT will assess the municipality for one month’s worth of insurance premiums.
“The policy was done based on things that had already transpired,” Jeffrey said. “Several horses got out of the barn and we decided we needed to close the barn door.”
Two other towns – Jericho and Randolph – dropped the VLCT health insurance plan before the League’s Health Trust board adopted the penalty.
The Tri-Town Water district in Bridport is the only other town besides Hardwick that has been penalized; it must pay a $5,000 fine. The municipality left the Health Trust’s insurance plan on Jan. 1, according to Darwin Pratt, chairman of the district.
Pratt said his predecessor was in failing health when the Health Trust adopted the exit fee policy and Tri-Town’s board members were not aware of the penalty provision until after the former chairman died. Tri-Town lost its appeal to VLCT.
Kathleen Hemmens, vice chair of the select board, said it is unclear whether Hardwick will move forward with an appeal.
The League sent the town of Hardwick and other municipalities a letter on Oct. 10 announcing the proposed bylaw change. The League sent a second letter dated Dec. 15, with the new bylaw attached.
The last letter, sent in March, announced that Hardwick would be assessed the $22,000 exit fee. The town did not discover the notices until this month.
Hemmens said after the town and former Town Manager Rob Lewis ended their official relationship at the end of May, she discovered the penalty letter, mixed in with other paperwork, in his office.
If the town were to win the Aug. 12 appeal, the VLCT would reimburse the money, but Hemmens said the prospect of winning an appeal is slim.
“They don’t have sympathy for the ignorance argument,” she said.
