Snowflake Council Agrees To Repay $73K Received In Error

Town Manager Brian Richards was Snowflake’s finance director in 2005 and explained that he received a call from the Risk Pool, the town’s insurance provider, asking for an address to send a check. He asked why the town would receive that money, and was told that it was named beneficiary by a past employee who had recently passed away.

Since that time a representative from the pool was sent to Snowflake and asked Richards to sign an agreement to refund the money over a period of five years.

This item was discussed at a previous council meeting and Town Attorney Robert Hall was asked to research the issue to find what the town’s legal obligation is.

“What I wanted to see was the file, and see why they thought there was an obligation,” Hall told the council last week. “There really wasn’t that much information.”

Hall said that the pool bought an annuity to cover one of Snowflake’s employees, but there was no paperwork showing how this occurred. It is possible someone put the town as beneficiary instead of the pool. When the employee passed on, the money was sent to the town.

Hall said that there are two issues. The first is the statute of limitations. Did the pool exercise its claim soon enough? Hall said that if it were litigated it would probably be dismissed due to that principal. The second is that when something like this is done, and they don’t do anything over a period of time, they have lost their ability to collect.

“What is the morality of it?” asked Councilman Byron Lewis. “I’d pay it back.”

“I don’t see any moral obligation to paying them back,” said Mayor Tom Poscharsky, noting that the pool needs to do some soul searching and find out why in 10 years nothing was done to get the money back. “I’m against it, and if they want to talk about it, I’d be glad to talk to them.”

“They gave us money that wasn’t ours, and I think we need to give it back,” said Councilman Lynn Johnson.

“My thinking is what our moral obligation is, and are we liable?” said Councilman Terril Kay. “They made the mistake, and now are punishing the town, and asking for it 10 years later.”

“We also have the trustee position with the town to do what is best for the town,” said Poscharsky.

Lynn Johnson said he thought it would be a wash if it went to court and the town had to pay legal fees, which could potentially be more than the $73,000.

“Let’s treat this like a business,” said Kay, noting that this is unfair to the town and the pool should take half the problem. “We’ve also got to remember that this is a disadvantage of dollars; this money has been spent at no fault of our own.”

There was discussion on how it would affect the town’s relationship with the pool if the money is not refunded.

Hall expressed concern, citing the lawsuit by Eurofresh several years ago, and the fact that the pool offered to represent the town.

If the council did not vote to refund the money, the next step would be that the mayor would meet with pool officials, which he said he would be glad to do. There is a possibility that he could negotiate with the pool, with each entity paying half.

Vice Mayor Kerry Ballard agreed.

“What are we risking? asked Councilman Cory Johnson.

Hall responded, “A relationship.”

“Would a negotiated settlement damage our relationship?” asked Lewis.

“I don’t know; my sense is that it depends on how we approach it,” said Hall.

Kay encouraged council members to talk about it, noting that the town is not in the wrong by asking questions.

“I think we do want to do the right thing,” said Lewis.

Mayor Poscharsky asked if that was a motion, and Lewis moved that the mayor meet with the Insurance Pool board and ask questions.

“I think we should pay the money back if we all agreed it’s a mistake, it’s not our money,” said Councilman Stuart Hensley. “I know all you gentlemen and you would give the money back.”

Lewis withdrew his motion.

Vice Mayor Ballard moved that the town pay the $73,446.60 to the pool over a period of five years. Hensley seconded the motion, which passed with Ballard, Lynn Johnson, Hensley, Lewis and Cory Johnson voting in favor, and Poscharsky and Kay in opposition.