Orleans judges spent generously on supplemental insurance, audit ...

In a long-awaited and blistering report on the spending habits of New Orleans judges, the state's legislative auditor highlighted one year's worth of insurance premiums: in 2010, the 13 judges of Orleans Parish Criminal District Court collectively held 249 supplemental insurance policies fully funded by the court.

That averages 19 policies per judge, at a cost of $14,500 apiece.

In three years, Auditor Daryl Purpera found, the criminal court judges and their counterparts in New Orleans civil and city courts illegally used public money to buy more than $800,000 in such "excessive and unnecessary" supplemental coverage on top of their state-funded healthcare plans. The extra programs included whole life insurance plans with cash surrender values, and tens of thousands paid to a company called Exec-U-Care, which reimburses deductibles, co-pays and other out-of-pocket medical expenses.

Monday's reports, totaling 100 pages split between criminal and civil courts, were released more than a year after the Metropolitan Crime Commission questioned the judges' decades-long, multi-million-dollar use of their judicial expense fund - collected from fines and fees they impose on convicts.

"I knew there were problems, but I'm still stunned by the level of abuses," the commission's president, Rafael Goyeneche, said after reading Monday's report.

The auditor analyzed three years of the practice, and found that Orleans Parish Criminal District Court judges improperly spent $637,367 between 2009 and 2011 "to provide themselves with supplemental and additional insurance benefits." Civil and City Court judges did the same with $191,073.

The practice has been in place since at least 1994, and Goyeneche estimates millions have been spent on supplemental insurance.

State law forbids judges from receiving any compensation above the judicial salary set by statute at more than $130,000 a year, and specifies that insurance premiums can be paid only at the same rate as other state employees.

The auditor recommended that the court immediately halt the practice, seek reimbursement from the judges for all improper payouts, require that any interest on life insurance policies be returned to the court and report the additional income to tax collectors.

The judges canceled the policies in February, after they became publicly problematic, and reimbursed the court $71,983 in cash surrender values of the cancelled life insurance policies, according to the audit.

Both courts responded to Purpera's report with near-identical, 15-page rebuttal letters that called the audit "misleading and unsound."

Robert Kazik, judicial administrator for Criminal District Court, and Piper Griffin, chief judge of Civil District Court, questioned the office's authority to second-guess the court, suggesting that the state Supreme Court was the only entity with the power to condemn district judges.

Their rebuttals made two main points: the use of the judicial expense fund for supplemental insurance is a widespread and long-standing practice, known for decades to the Supreme Court, which ruled in its silence to tacitly approve of it.

Valerie Willard, spokeswomen for the Louisiana Supreme Court, said the court has never taken up the issue at all.

"It hasn't been tacitly approved," she said, "and it hasn't been tacitly denied."

In 1994, the Orleans Parish courts hired a lawyer and an accounting firm to analyze the practice, and both determined it permissible, the courts' response noted.

Many judges, individually, told the auditors they simply didn't know: they signed the insurance documents handed to them on their first day and assumed the judges before them had determined the practice was proper.

Tthe two courts also claimed that other courts in the state allow judges to buy supplemental insurance out of the judicial expense fund, though did not name specific jurisdictions.

Locally, Jefferson Parish Chief Judge John Molaison said that his bench has never used its judicial expense fund to pay for supplemental insurance policies.

Adrienne Stroble, Court Administrator for the 22st Judicial District Court, which covers St. Tammany and Washington parishes, said that court's 12 judges used to spend $20,000 from the fund to cover dental insurance, though no additional supplemental policies were offered. They discontinued the practice in July 2011, after Goyeneche's complaint of Orleans judges alerted them to the potential problems, Stroble said.

Goyeneche said St. Tammany's action is evidence of the deterrent effect Monday's report is likely to have on any court still paying premiums from the judicial expense fund.

"The value of this report is basically to fire a warning shot to every other court in the state: you better stop this or the auditors are going to come knocking on your door, too," he said.

Goyeneche pointed to the 249 policies held among 13 judges in 2010. Each judge had multiple life insurance and long-term care policies. Some had multiple policies for their spouses; all but one had several critical-illness policies, and one judge had more than one accident policy.

Between 2009 and 2011, the judges held between 197 and 249 policies between them, costing between $7,280 and $14,566 per year per judge, all on top of their state benefits.

"These are redundant policies, but because it wasn't their money, it didn't really matter how much it cost," Goyeneche said.

The judicial administrator described the redundancy as "clerical oversight" based on enrollment in a new policy before cancelling the old one.

And the judges insist that the judicial expense fund is not public money, it's "self-generated money." Because it comes from fines and fees collected, not taxpayer-funded state accounts, it's not subject to the same law as general public money, they argue.

State law limits the judicial expense fund to "any purpose connected with, incidental to, or related to the proper administration or function of the court or the office of the judges thereof..."

The court argues that supplemental policies fit that definition. One judge told the auditor that when he took the bench 11 years ago, "he was told being a judge is stressful and that maintaining good health was important."

Goyeneche believes otherwise: the court has in recent years bemoaned budget cuts and threatened to halt trials early without money to pay for security and clerks. The judicial expense fund is better suited for those expenses, he countered.

Purpera, the auditor, agreed: "It would appear to be a tremendous conflict of interest for judges to be able to assess fines and fees that they may then use for their own personal benefit," he wrote in his rebuttal to the judges' rebuttal. ?

The controversy has already spurred discord at the courthouse. District Attorney Leon Cannizzaro initially referred the case to the Attorney General, noting that the judges could have committed malfeasance and gross misconduct, and might be subject to removal from office. In the letter, he confessed that he might have also taken advantage of the supplemental benefits during his 17-year tenure on the bench.

The judges, meanwhile, began recusing themselves from cases tried by Cannizzaro, citing the accusations laid out in his letter.

Assistant Attorney General David Caldwell, who leads the office's public corruption unit, said Monday that his office is still reviewing the auditor's report to determine whether the spending constitutes a crime.

Monday's audit also looked at the judges' travel spending and employee record keeping.

Criminal court judges had not documented their travel expenses as required by law, and paid "excessive amounts" for lodging during training and meetings.

The court has no policy for travel record-keeping for reimbursements - one judge told the auditor he "uses the honor system" when dealing with travel expenses.

Those who did keep records often omitted key facts: the dates, for instance.

"Without complete travel records of detailed receipts, we could not determine the business purpose of all travel expenses," the report concluded.

Several judges on the civil bench, similarly, "incurred lodging expenses which appear excessive" while traveling for meetings and training.

The auditor also analyzed the judges' employees' times and attendance records, and found that in both criminal and civil courts employees under the direct supervision of judges were not required to document their time and attendance at work.

Source: http://www.nola.com/politics/index.ssf/2012/11/orleans_judges_spent_generousl.html

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