Employee Lawsuits Cost Kentucky County Group Millions, Report Says

A string of employee terminations by the Kentucky Association of Counties has cost the agency millions of dollars, according to a published report.

The Lexington Herald-Leader says documents it obtained show KACo spent a total of $2.1 million related to employees who were fired or had their contracts terminated. In addition, the agency spent $118,000 to buy out its former executive director.

That’s more than the individual spending of top officials at KACo that has come under scrutiny. The Herald-Leader has reported previously that its analysis shows Executive Director Bob Arnold and four other directors spent $600,000 on travel, entertainment and meals in 2007 and 2008.

State auditor Crit Luallen said last month, after the media reports, that her office would review spending at the agency.

While some say the money spent to settle lawsuits could have provided more services to counties, others stood by Arnold, citing the agency’s healthy finances.

The association is paid by county governments for providing services such as lobbying, legal advice and insurance.

“I may not agree with everything Mr. Arnold has done, but I do believe he has brought the business back to where it needs to be,” said Sandy Lee Watkins, who was president in 2000 when Arnold was hired. “It’s profitable again.”

LaRue County Judge-Executive Tommy Turner, who is a longtime KACo board member, said he didn’t know how much the firings cost.

“Any dollars that have been paid out, either as attorney costs or settlement costs those are dollars that deplete our bottom line,” he said.

The lawsuits by former employees alleged that they were fired as revenge for blowing the whistle on a “hostile workplace” fostered by former KACo executive director Michael D. Magee, who is Arnold’s friend.

Arnold declined to speak to the Lexington newspaper and KACo General Counsel Tim Sturgill said he couldn’t discuss personnel matters or discussions between staff and board members.

Magee declined to comment to The Associated Press.

A civil trial last year over the firing of former employee Jenni Clark shed some light on what led to the firings.

In 2000, several employees voiced concerns about a “hostile workplace” to KACo’s general counsel at the time, Joseph Meyer. Employees complained that Magee retaliated against those who complained about an alleged relationship he was having with another employee.

Meyer prepared a report about the concerns for the KACo board in time for its meeting on June 29, 2000, but an executive committee met privately beforehand and voted to put Magee on administrative leave.

The board then bought out Meyer’s contract for $71,353. He filed suit and settled in January 2004 for $175,000, according to court documents, plus $125,055 in related legal bills that KACo’s insurance paid.

When the executive committee entertained bringing Magee back with sanctions, 11 employees hired Frankfort lawyer Phillip J. Shepherd, who sent a letter about the employees’ concerns to the 34 KACo directors.

By the time of the board meeting, Magee resigned and Arnold was named as his replacement.

Janet Meyer, who was among those who hired Shepherd, was fired Nov. 17, 2000, the day after Arnold’s contract was finalized.

Arnold testified last year that Janet Meyer had “no defined work to do.”

“At this time, I thought that was a luxury that KACo could not afford to have someone sitting around (waiting) for something to happen,” he said.

By the end of Arnold’s first year, nine of the 11 employees who had hired Shepherd had resigned or were fired.

Five who were fired sued for wrongful termination in February 2003; KACo settled the suit in 2005. The terms were confidential, but a letter from attorney J. Scott Mello to the KACo board says the total settlement and attorney fees cost $931,155.

Three months later, employee Jenni Clark was fired at Arnold’s request, according to testimony from the civil trial.

Arnold denied at the trial that Clark was targeted because she was among those who hired Shepherd.

Current KACo President J. Michael Foster, the Christian County attorney, said board members were “advised that there was a very defensible reason for the termination, but a jury found otherwise.”

Clark was awarded $536,780 for lost wages and benefits and $300,000 in other damages in April 2008.