Tensions simmered at Tuesday’s Frankfort Plant Board over submission of a formal claim to FPB's insurance carrier under its directors and officers liability policy.
FPB Chair Anna Marie Pavlik Rosen suggested that the board first pass a motion to pay a legal bill before submitting a claim to the insurance company for representation of Rosen and Vice Chair Walt Baldwin in a dispute with the Frankfort City Commission.
“I move to direct FPB to indemnify its directors for expenses incurred in performance of their official duties per KRS 96.173, which states compensation of expenses in any and all liabilities in whatever kind or character incurred by the board or any officer of the employee thereof shall be payable solely and only out of the revenues obtained by that board,” said Rosen.
When Rosen opened the floor for discussion, FPB member Stephen A. Mason immediately said that he’d asked staff to look at a copy of the insurance policy that was included in the agenda for the board's Jan. 18 meeting, in which there was an exception clause to the indemnification. He noted that in the next policy that went out on Feb. 5, the clause was missing.
“So my question is: Who took it out, when did they take it out and why did they take it out?” Mason asked.
Siding with Mason, board member Dawn B. Hale said she went back and viewed a YouTube video of the Jan. 18 meeting and "there was no discussion of anything having to do with them changing policy or the board coverage.”
Rosen said that the FPB’s insurance company changed the policy.
Mason responded, asking at whose request or whose direction the insurance company changed the policy when the FPB had voted on a different policy.
Addressing Rosen, Hale said: “Before the board meeting of February 16, you expressed your concern over the directors' liability coverage and so he said he was able to get that removed from the claim. This wasn’t brought to the board’s attention.”
Hale said she came into Tuesday’s meeting expecting to vote to approve the motion because she feels board members should have their legal expenses covered. If not, it could have a chilling effect on future board members.
“But I don’t see where a single board member has the authority to ask insurance to do anything,” Hale said. She claimed that asking the insurance company to remove the exclusion directly benefited Rosen and FPB Vice Chair Walt Baldwin.
“I have a problem with that ethically,” Hale said. "You’re asking us to approve a bill after the fact. As with anything else the plant board does before money can be spent, it has to be approved.”
Rosen responded that the move was intended to protect board members. Baldwin then claimed it was disingenuous for Mason and Hale to question their fellow board members.
“It seems like you’re trying to make something out of nothing,” Baldwin said.
At one point, Mason and Baldwin began speaking over each other, with Mason demanding, “Who from the board directed the insurance company to change it?”
Eventually, Rosen acknowledged that she asked for the policy to be changed.
Baldwin said he spoke with the FPB’s attorney and others and everyone was comfortable with the change. “It just seems you’re complaining about us having better insurance,” Baldwin told Mason.
“No, I’m complaining about the process of getting us there,” Mason said. “I’m always for better, but I want to get there the right way. I don’t want to get there in a way that looks questionable.”
Finally, Rosen moved to approve the motion by individual board member votes. Mason voted “no.” Hale sat silent for a moment before saying: “This vote really pains me. I want to vote ‘yes’ because I think board members should be covered from legal action taken against them …, but I also feel that policy and procedure is important and I think that ethics are important.” She eventually voted “no.”
Despite Mason and Hale’s objections, the motion passed 3-2 with Rosen, Baldwin and Jeff Bradshaw approving.
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