Insurance Bidding Irregularities? Will Brownsville ISD Implode?


 Incumbent Insurance Agent Donates $50,000 to his own client.
A federal judge has dealt a stunning setback to the Brownsville Independent School District and the majority of the board by finding that former district chief financial officer Antonio Juarez to proceed with his lawsuit charging them as the district with retaliation and denying the defendants qualified immunity to his claim of retaliation. In an 18-page memorandum opinion and order, U.S. District Judge Andrew S. Hanen on June 23 said a jury should hear the suit in federal court after denying the BISD and the majority of the board their request for a summary judgement against the former CFO’s charges. Hanen said Juarez had successfully raised issues of fact that the defendants – individually and as BISD officials – must go before a jury to let them decide.
Hanen traced the origins of the case to the recommendation by Juarez to the board that they grant the district’s stop-loss insurance contract to American Administration General. Evidence indicated that at least three trustees – Joe Colunga, Rolando Aguilar, and Ruben Cortez – objected strongly to his recommendation that ultimately culminated in them ordering former superintendent Hector Gonzales to terminate his employment with the district.
Juarez started working for the BISD as its CFO in the fall of 2008. One of his duties was to make insurance recommendations to the BISD board of trustees. On Sept. 16, Juarez recommended that the district select AAG as its stop-loss carrier. At the heart of the dispute is Juarez’s claim that he was demoted and ultimately terminated from employment by the BISD and the defendants personally because he recommend that the board award Health Smart (AGG) the district’s $40 million stop loss insurance policy instead of to Oklahoma-based Mutual Assurance Administrators, Inc.
On Aug. 12, trustees awarded that contract for the 2009-2010 to MAA for $181,275 per month with an estimated worth as much as $40 million. At the time of the award, HealthSmart complained that its contract renewal efforts did not receive fair consideration by the district’s Employee Insurance Committee or the Board of Trustees. Sources also said that the four votes on the majority – board President Aguilar and trustees Colunga, Cortez and Rick Zayas – were acting in concert to award the lucrative contract to the company brokered by local insurance mogul Johnny Cavazos, who stands to pocket $4 million in commissions.Trustees Enrique Escobedo, Catalina Presas-Garcia and Minerva Peña voted against it. They are not named as defendants in the Juarez lawsuit. According to testimony in deposition by Gonzales, three of the defendants (Colunga, Aguilar and Cortez) accused Juarez of misinforming the board regarding the recommendation. Two of the trustees (Cortez andf Colunga) were adamantly opposed to the AAG recommendation, and after the meeting, both Colunga and Cortez met with Gonzales and said that they were lied to by Juarez. Gonzales said he would “look into it.” Then, in the following meeting, Cortez requested a consent item be placed on the agenda. The item was described as “discussion and possible action related to the apparent misinformation directed to the BISD board members at the last regularly scheduled meeting.” After the November meeting, Gonzales spoke with Juarez. Gonzales told him that the board “was upset with him, and that (Gonzales) was to terminate him” or else Gonzales would “suffer consequences.” There followed a series of events involving the transfer of Kent Whittemore from a warehouse position to the insurance department. Whittemore later filed a grievance against Juarez alleging that Juarez had not spoken truthfully to the board regarding whether the district’s consultant agreed with the insurance recommendation. Hanen said Juarez charged that this tactic – having employees file grievances against one another – was a de facto policy by board members to justify terminating them, as later happened to Gonzales. There followed a series of meetings between BISD employee Elizabeth Brito-Hatcher and former trustee Otis Powers, two of which were tape recorded by Juarez, where these individuals implicated four members (Zayas, Cortez, Aguilar and Colunga) in a conspiracy to have Juarez file a grievance against Gonzales. The message from Powers, which he attributed to various defendants, was that if Juarez would file the grievance against Gonzales and blame him for the statement about the insurance recommendation, Juarez would get his job back. During that meeting, Powers detailed “irregularities” in the board’s contracting procedures – for example, paying a woman without authorization and then trying to develop a contract to backdate to when they began paying her. Moreover, Powers noted that such behavior by the board was not uncommon, saying “they have always paid people like that, we have more than just her.”
A sample of the taped conversation between Powers and Juarez follows: Powers: Here’s the thing, the board hates Hector Gonzales.. Juarez: How do I handle it (the grievance)? You…ah, personally, you have to get Hector back. He told you what to do and why you had to do it. Did I talk to Colunga for you? Aguilar for you? I talked to them all, even Rick Zayas. The only one I didn’t talk to is Ruben (Cortez) too much. (Doc. 55, Att. 5)
Instead of going along with the conspiracy, Juarez filed a grievance against the majority of the board alleging they had violated the Open Meeting Act, and that the board had conspired in manipulating the insurance bidding procedures, and that the current and former trustees had attempted to engage him in a conspiracy to oust Gonzales. Then, on Jan 15, 2009, Juarez and his attorney Ben Neece met with two FBI agents and disclosed his belief that “the trustee defendants were manipulating the bidding process for the district’s stop gap insurance coverage. During that meeting, Juarez told the agents that Powers had asked him to file a false grievance report against Gonzales and played the recording of the Brito-Hatcher conversation for the agents. During the hearing on the Whittemore grievance, Juarez’s attorney objected to the proceedings charging that there had been “circumvention of…due process in this case though the use of bribery, coercion, and conspiracy…” He also stated that should the board rule against his client, “we feel that any action will be retaliation. I think the board is aware that Mr. Juarez has reported this activity to law enforcement agencies.” Following that meeting, Juarez’s original contract as CFO, the position from which he had resigned, was not renewed, and Juarez was also not offered a contract renewal for the position of Grants Administrator, which he had occupied following his conversation with Gonzales. As a result of these actions, Hanen found that Juarez had provided enough evidence to press forward with his claim in federal court and also found that he had provided enough facts to “establish(ing) that the official’s allegedly wrongful conduct violated clearly established law and that genuine issues of material fact exist regarding the reasonableness of the official’s conduct” and that those actions violated a constitutional right. Although Hanen said Juarez had not proven that he did not have a legitimate claim of entitlement to continued employment, he ruled that the non-renewal of his position might have been a retaliation and violated his First Amendment rights because his speech involved a matter of public concern, and that his interest in speaking outweighed the governmental defendant’s interest in promoting efficiency and that the protected speech motivated the defendant’s conduct. ” (BISD counsel) Mike Saldaña kept telling Zayas that the case would get thrown out of court,” said a former board member. “They never expected that they would have to answer in court for what they were doing. This doesn’t look good for the Gang of $4, especially with the reelection of Zayas and Cortez coming up in November.”
Editor’s Note: This appeared in El Rocinante, a local Brownsville Blog