The needler in the haystack.

Tuesday, January 10, 2012

PMUA execs' severance settlement a scam?

Plainfield Municipal Utilities Authority (PMUA) Commissioners meet tonight at 6:00 PM in a public hearing on the service rates voted at their December meeting.

The rate hearing will be immediately followed by the Board's January meeting.

Severance settlement issues with former executives Eric Watson and David Ervin may be taken up by the Commissioners in a executive session following the public hearing and public meeting.


Questions are beginning to emerge whether the severance claims of the former executives are part of an 'occupational stress' arbitration scam carefully put into place over a period of time and executed incrementally setting the stage for a major payout to Watson and Ervin.

Consider the following --

The PMUA settled with two former employees (see documents here and here) for 'emotional distress' for $7,500 each in September of 2010. While the amounts are relatively small (compared to the $107,000 the Authority settled with former Field Operations Director John Johnson in 2005 -- see here), they do set a precedent of settling separation claims on the basis of 'emotional distress' and before an arbitrator's decision.
Watson and Ervin had one-year contracts for 2009, which DumpPMUA has posted on its website -- Watson and Ervin.

The language of both includes the stipulation under section 3.3 that --
'...if the Agreement is the Employee for good cause, the Employee shall be entitled to his salary and continuation of his benefits for the duration of the term of the Agreement...'
An additional clause was added to the four-year contract entered into between the PMUA and Watson and Ervin in 2010 --
3.4  If Employee is terminated for cause or if Employee voluntarily terminates this Agreement prior to the end of its terms without just cause, Employee shall not be entitled to a continuation of salary or benefits beyond the termination date unless agreed to by the Employer.
These clauses suggest both the employees and the Authority were positioning themselves for possible termination of the employment agreement and a contested severance dispute, which we now witness in the current arbitration.
When the former executives announced their resignations in March 2011, much was made of the stress of their dealings with the public, covered in Mark Spivey's story in the Courier (see here),  but which I pooh-poohed at the time (see my post here). That was before knowing about the 'emotional distress' severance payments.
And that has caused me to rethink the import of the story I was told at the December 28 meeting --

...according to this individual, they encountered a commissioner while walking down the street one day after Watson and Ervin had left the agency, and the commissioner volunteered that Mr. Watson said he had received death threats [in connection with a workforce reduction] and was very upset about it. Further, a doctor who examined him was said to have been alarmed about his blood pressure and wanted him hospitalized. The commissioner opined that Mr. Watson stepped down because of this 'health emergency' and considered it 'work-related'.....
The person who related that story to me now believes the Commissioner was knowingly trying to build sympathy for Mr. Watson in anticipation of public disclosure of a settlement.
There are no smoking guns here. Nothing about this chain of events proves a scam is in place. But this is Plainfield and we have been snookered more than once, so I am naturally suspicious.
The PMUA Commissioners find themselves with a couple of options, only one of which is taking the proposed settlement offered by the former exectives' attorney. They can make a counter-proposal, or they could let the arbitration continue.
Why not bet on the arbitrator?
The merit of claims to settlements for 'emotional distress' is as yet untested. If the Commissioners choose to settle, the Arbitrator would not intercede (even if the settlement was thought to be blatantly inequitable), since negotiated settlements are preferred over pressing through to a ruling.
Is it possible the Commissioners are tempted to take the easy way out -- Watson's and Ervin's settlement offer -- not because the PMUA's case is weak, but because a ruling by the arbitrator in the PMUA's favor would shut the spigot on future claims of this type? Meaning the gravy train would be derailed for future 'friends in need'?
Whatever the Commissioners decide, and whenever they decide it, they now have the full attention of the ratepayers. That has to count for something.

Board of Commissioners Meeting


Tuesday | January 10
6:00 PM

PMUA Headquarters
127 Roosevelt Avenue

(corner East 2nd Street)
Parking in agency lot or on street

-- Dan Damon [follow]

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Not a PMUA Thug said...

You can bet that any settlement will be sent to the governor's office! PLAIN AND SIMPLE WATSON AND ERVIN RESIGNED THEIR POSTS and are not entitled to any more monies. The board has already paid out over $275k + an additional $75k for sick and vacation time. It's no wonder the PMUA's rates are out of control. The average property owner pays 3-4 times MORE per month than our Scotch Plains counterparts!

Anonymous said...

Great Job Dan!!!