Prattville resident Gerald Cimis has been warning the Prattville City Council for more than two years that it is breaking the law by providing third-party health care benefits to part-time attorneys.
Even if offering the benefits to the attorneys were legal, Cimis said the city is “playing Russian roulette” as it could ultimately be stuck with the bill if its catastrophic insurance provider finds that the city’s attorneys weren’t eligible for its plan.
Cimis isn’t just any resident: in addition to serving 20 years as a clinician in dentistry, he also worked as an independent medical consultant for the Alabama Medicaid Agency and Alabama Attorney General’s Office for many years, investigating both state and federal healthcare insurance fraud cases.
The Department of Public Examiners has already warned the city once in February 2024 that its offering of health insurance benefits to part-time attorneys constituted an “unallowable use of public funds.”
“After extensive review and research of the City’s Human Resources Policies and Procedures Manual, the City’s Blue Cross Blue Shield Group Health Insurance Plan, and additional records and communications obtained pursuant to Section 41-5A-12.1, Ala. Code 1975, the Department, in consultation with the Attorney General’s office, believes the (city prosecutor and city attorney) are not eligible to participate in the City’s Group Health Insurance Plan,” wrote Christine Harden, assistant chief examiner.
The letter laid out two options for the city to pursue: either “contract with these individuals to provide additional compensation to obtain insurance coverage with a third-party health insurance carrier of their choosing” or “revise its current Human Resources Policies and Procedures Manual and Group Health Insurance Plan to allow insurance coverage for independent contractors.”
“Otherwise, the City’s continued coverage of these individuals will be an unallowable use of public funds,” Harden wrote.
The city chose to revise its policy manual in December 2024, and City Attorney Andrew Odom, one of the part-time attorneys receiving benefits, told APR he believes the revisions have resolved the issue.
“It is my understanding that the issue has been resolved by the HR Manual being update to permit the limited health insurance benefits for clearly specified appointed positions, including City Attorney, City Prosecutor and City Judge,” Odom said. “Therefore, the City has complied with what it was directed to do by the Alabama Department of Examiners of Public Accounts.”
Cimis believes that is only half-true—while the city can offer its self-insurance to part-time attorneys now that it has revised the HR manual, Cimis told APR that does not mean the city can offer those contractors third-party insurance.
“What the City refuses to acknowledge is this is only a partially true statement,” Cimis said. “Those benefits are limited to the City’s self-insured health policy, currently administered through Blue Cross Blue Shield. It does not include any third-party health insurance for contractors. The Code of Alabama, 1975, (Sections) 11-91-1, 11-91-2, and 11-91-3 only permits third-party insurance for employees, not contractors.
“In addition, each of the third-party Group Municipal insurance policies (MetLife Life and Dental, VSP Vision) specifically state eligibility is limited to employees and their eligible dependents. The City also offers Flexible Spending Arrangements (FSAs) to these attorneys. IRS Regulations and Pub. 969 specifically prohibit FSAs for contractors. Per Treasury Reg.1.61-21 (a)(4), fringe health benefits (both self-insured and third-party) are to be reported on IRS Form 1099-NEC as taxable.
“Yet the City, despite my advance written warnings, has issued W-2s, exclusively reserved for employees, to three attorneys, ostensibly to avoid these contract attorneys having to pay state and federal taxes on these fringe benefits.”
Cimis provided numerous documents to APR supporting his claims, including an e-mail from City of Prattville HR Director Lisa Thrash to Cimis confirming that Odom, Municipal Judge Louis Colley and City Prosecutor Bradley Ekdahl received W-2s for 2024 despite being contractors and not employees.
Cimis also told APR he contacted more than a dozen cities across the state and has yet to find another that provides health benefits to attorneys who merely contract with the city.
Cimis has reported his findings to the Alabama Department of Public Examiners, the Alabama Attorney General’s Office and the IRS, among others, and told APR that he discussed the “scheme” with someone at the attorney general’s office as recently as Aug. 6.
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