The Daily Record

Elected Officials Gain Law Work From Morris' Insurance Fund

Mt. Olive attorney denies that practice is conflict of interest

Daily Record — Sunday, March 5, 2006

BY SARAH N. LYNCH
DAILY RECORD

Attorney Ronald Heymann was a councilman in Mount Olive when he started getting paid to do work for the Morris County Joint Insurance Fund.

He got on the panel of about 16 attorneys used by JIF after talking to his township's municipal attorney, John Dorsey, who founded the fund in 1987 and still serves as attorney to its board of directors.

Heymann served 12 years on the council before deciding not to run again in 2001. He remains on the list of JIF attorneys, but he said he hasn't gotten any work from the fund since leaving office.

"It's political. It's a political process and I am a politician no longer," he said.

"That would be my theory behind it. I must not be in the loop."

The relationship between the JIF and municipal officials has come to light as part of an ongoing battle in Mount Olive over who has the right to appoint the township attorney -- the council or the mayor.

Dorsey's law firm continues to represent Mount Olive despite Mayor Richard De La Roche's efforts to replace him. The council president is an attorney who recently began getting paid to do work for the JIF. He has said he will recuse himself from any votes involving Dorsey or the JIF.

Dorsey is a lawyer, a prominent Republican, a former state senator and a powerful figure in the JIF. He has nominated certain local elected officials for a pool of defense attorneys working for the JIF.

Meanwhile, some of these same local politicians have voted for Dorsey to be their towns' municipal attorney, Morris JIF documents show. The connection has some saying that the relationship has become politicized and, at the least, gives the appearance of a conflict of interest.

In a telephone interview, Dorsey said he does not feel that the Local Government Ethics Law applies to these situations.

"I don't believe there's any conflict," he said. "I don't believe there is even an appearance of conflict."

At stake for the lawyers named to the JIF defense pool are billings that typically are $118,000 per quarter. There are roughly 16 attorneys on the panel, although not every one of those get cases. Morris JIF records indicate that Heymann and Hanover Committeeman John Tort get $135 an hour for any JIF cases they may handle. Mount Olive Council President Robert Greenbaum receives $150 per hour, according to Morris JIF records.

The JIF allows towns that join to pool together for lower insurance premiums. It can provide both health benefits and insurance to municipalities.

Dorsey's fees

Meanwhile, Dorsey's law firm has been collecting substantial fees from Mount Olive and Hanover. Complete figures were not available but Mount Olive paid Dorsey's firm $175,060.91 in 2004 and $192,901.39 in 2005. The actual paid amounts for each year include a $72,000 annual retainer, miscellaneous litigation and developer escrow agreements.

Hanover paid Dorsey $170,785 in legal fees in 2005, according to Township Administrator Joseph A. Giorgio. This amount includes a set retainer amount of $75,000 in addition to litigation costs. The set retainer amount for 2006 also is $75,000.

Hanover records show that Tort annually voted "yes" between 1999 and 2006 to renew Dorsey's town attorney contract and to authorize a professional service agreement with Dorsey's firm. Tort also voted in favor of renewing Hanover's three-year membership in the Morris County Joint Insurance Fund in 2004 and 1998, even though Tort simultaneously was a member of the JIF's defense panel. He did not vote on it in 2001 because he was absent, records show. Tort said he has been on the defense list for at least the last 12 years.

In Mount Olive, Heymann voted in 2000 to renew Dorsey's contract and again in 2001 he voted to renew Mount Olive's membership in the JIF. He was serving on the defense panel in both those years.

Greenbaum has not voted on JIF or Dorsey's contract since he was placed on the defense panel last year. He has said he will recuse himself should these issues come before him.

In addition, Tort and Greenbaum are both defense attorneys for the statewide Municipal Excess Liability Fund where Dorsey serves as fund attorney. Greenbaum also is on the list for the Environmental Risk Management Joint Insurance Fund where Dorsey acts as attorney.

Ethics guidelines

In its Local Government Ethics Law, the state sets forth guidelines for locally elected officials. Among those guidelines are the following:

"Even if there is no violation of the law, although it certainly seems like there is an appearance of a conflict here if not an actual conflict, just the appearance of this type of conflict ... is the kind of thing that continues to make citizens lose trust, faith and confidence in our elected representatives," said Ev Liebman, the program director of NJ Citizen Action.

The state's Department of Community Affairs declined to comment, as it is the department's policy not to discuss specific situations. In order to investigate the matter, someone would have to file a complaint through the department's Local Finance Board.

The state's Office of Attorney Ethics also has not received any complaints specific to this situation.

The relationship has caught the attention of Paul Bangiola, a Democrat from Mount Olive who now serves as a spokesman for De La Roche who has tried to have Dorsey replaced as township attorney.

JIF 'highly political'

"The Joint Insurance Fund is highly political and well known to be so," Bangiola said. "It is especially disturbing where he is deciding whether or not a particular attorney who is a member of a governing body, which will make a determination as to whether or not he will continue to serve as municipal attorney and at what rates, is also at his mercy as to whether or not the elected officials will earn money from the JIF."

Dorsey said the process has been in place for 18 years and no one has ever objected to it.

"Nobody has ever criticized the system and nobody has found fault with the system,"he said.

Dorsey downplayed his role and said he could not even remember how some of the elected officials got onto the panel.

"I don't put the people in the panel – people ask to be on the panel," Dorsey said.

"The only thing I have ever done is draw the appropriate resolutions. I draw the resolution. It's a standard resolution. Sometimes I don't even draw it."

He reiterated that he had been cleared of ethics charges. (An attorney ethics probe launched in 2001 cleared Dorsey's name after the investigation concluded that his multiple roles as town attorney in Boonton, Hanover and Mount Olive and as the Morris JIF attorney do not pose a conflict of interest).

Dorsey emphasized how successful the Morris JIF has been over the years. The fund has saved taxpayers in about 39 towns millions of dollars in liability insurance.

"I would emphasize again that while you raise this issue, there are a whole lot of people that could have raised objections if they thought there was anything wrong," he said.

"They don't believe anything has been done that is improper or adversely affects any of the entities that belong or are insured by the joint insurance fund."

Not a conflict

David Grubb, the executive director of the statewide Municipal Excess Liability Joint Insurance Fund, said that when he also was an elected official in Bergen County, lawyers determined that it is not a conflict of interest for an elected official to vote on matters pertaining to the JIF while working as a JIF vendor because it's a governmental agency. If it were a private insurance company, only then would it constitute a conflict, he said.

"It's not a conflict of interest ... because we are talking about the entity being a governmental entity as the term is meant by statute," Grubb said.

He also said he did not think it was a conflict for these elected officials to vote on Dorsey's contract renewal.

For his part, Tort said he does not recall voting specifically on Dorsey or JIF over the past few years, but he said Dorsey's hiring and the JIF renewal are generally lumped into a "consent agenda."

"If I did vote on it, it was by unanimous motion," he said

Tort also said Dorsey did not supervise the workers' compensation attorneys, of which he is one, nor did Dorsey assign these types of cases.

Heymann said he did not see a conflict because he almost never represented Mount Olive in defense cases and was never supervised by Dorsey.

"I had one Mount Olive case in my whole career," he said.

Greenbaum said he has supported Dorsey in the past by voting for his contract, but that was before he got on the defense panel sometime in mid- to late 2005. He said he has ceased doing so since he was placed on the panel.

"I don't want anyone to question the decisions I make," he said.

He had no comment on the actions of other elected officials who have chosen not to recuse themselves, saying his decision was a personal one.

Greenbaum did say that he thought Dorsey probably has a large say on who gets on the panel.

"It would be foolish to assume he's not involved in certainly recommending who the directors should consider for the position, but I assume that the directors ultimately have the ability to say no, this person is not qualified," Greenbaum said.

"But it would be foolish to assume that John's recommendation doesn't carry a lot of weight."

Heymann said the type of workmen's compensation cases he had been handling have been going to two other attorneys who also are elected officials: Greenbaum and Hanover Committeeman John Tort.

As for Greenbaum, he already has had two cases since the start of 2006.

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