The House’s rejection of settlement money is unprecedented, but so is the settlement

The Alaska Capitol Building.

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The House passed the operating budget on Saturday, advancing the Legislature’s one constitutionally required job after a long week of hearing (and mostly rejecting) amendments. Legislators rejected calls for a bigger PFD, leaving the state’s total planned payout at $2,600 split between the PFD and an energy rebate; they preserved the forward funding of K-12 education as well as fallback language in case a separate boost to the state’s per-student funding formula isn’t approved; They objected to several capital project requests and approved some others; extreme-right Republicans had a flurry of red-meat amendments, including firing Chief Medical Officer Dr. Anne Zink, that went nowhere; and they voted to withhold funding for state-funded abortions, a thing that the courts have already said is unconstitutional.

So, you know, pretty much par for the course in a year where we’re projected to have a surplus. 

But perhaps the most head-turning amendment came when the House voted to eliminate the roughly half-million dollars needed to pay the settlement in the First Amendment case brought by two former Alaska Psychiatric Institute doctors.

The two doctors were fired in Gov. Mike Dunleavy’s now-infamous loyalty pledge firings that required non-union employees to pledge support for the governor’s political agenda if they wanted to keep their job. The ACLU, which represented the doctors, and the state inked a settlement that shielded Dunleavy and former chief of staff Tuckerman Babcock from personal liability and left the state on the hook for nearly $500,000. The ACLU, the state and legislators supportive of the spending all argued that breaking into the state’s settlement payments to pick what they want to fund sets bad precedent.

Two wrongs, some Dunleavy-aligned legislators argued, don’t make a right. It’s injecting politics into the settlements, they argued.

Supporters of the cut, however, have pointed out that there is a significant difference between this settlement and every other settlement: That a federal judge found that Gov. Dunleavy and Babcock’s behavior was so deeply egregious that they were personally responsible. 

That’s no small feat and it was a decision made at the summary judgement stage of the lawsuit no less, meaning that it was abundantly clear that the two had committed something very serious. The state has not been able to provide any other examples where a governor lost executive privilege at the summary judgement level, and officials with the Department of Law argue that it was in the best interest of the state to settle the case as continuing it could open up the state to new, unforeseen liabilities. We don’t know that for sure, but what we do know is that it effectively shielded Dunleavy and Babcock from any responsibility for what a judge had already ruled they should be held personally liable for.

This is an administration that has wielded the Department of Law as a political cudgel—taking months off the recall effort with a dubious legal claim, spending heavily on a farfetched scheme to attack unions and sparred lengthily with the courts and Legislature over separation of powers—and it has long frustrated legislators. This settlement, which spares Dunleavy and Babcock of personal expense at the state’s expense, was too much for legislators to ignore.

“It’s political on day one of his administration, it’s political on the very last day of his administration. You can’t really ask the state to pay your personal liability and have it not be political,” said Rep. Matt Claman, the sponsor of the amendment, as was reported by the ADN.

It’s not clear what, if any, recourse the ACLU and the API doctors will have if the Legislature ultimately refuses to fund the settlement because the settlement specifically says the payment is contingent on approval from the Legislature. Stephen Koteff, the legal director of the ACLU of Alaska, told the ADN that he’ll be rethinking how he approaches settlements in the future, but it should also be noted that he’s not likely to run into many more cases where a judge has already delivered a ruling finding that the governor and his chief of staff could be held personally responsible for their conduct.

The budget now heads to the Senate, but if the API doctors and the state are hoping for a more receptive audience, then last week’s hearing in front of the Senate Finance Committee isn’t a good sign. Senators called the Department of Law before them to explain the scope and cost of all the politically motivated lawsuits triggered by the Dunleavy administration—more than $2 million just last year between the cost to litigate the cases and the judgements—and there was particular frustration when it came to the API settlement. 

There, Sen. Bill Wielechowski laid out in clear terms just why everything about the API settlement was problematic.

“The state was found not liable. The governor and chief of staff were found personally liable and yet the state then agreed to settle and pay the governor’s and chief of staff’s personal attorney’s fees and the governor’s and chief of staff’s personal liability for settling here of hundreds of thousands of dollars,” he said. “That’s what’s troubling to so many of us. The state was found to not owe anything and the governor and the chief of staff were found personally liable and yet the state then turned around and paid hundreds of thousands of dollars.” 

Some legislators mused about whether the office of the governor’s budget should reflect the cost of the settlement. Wielechowski went on to wonder what, if any, legal advice the governor was getting, noting that several of the cases “were not even close” when it came to the constitutionality of his decisions.

“I guess it just sort of makes me wonder when I look at this and look at some of the other cases, how is the governor being advised?” he asked. “Is he being advised on whether these actions are unconstitutional? Or is he just disregarding legal advice or is even getting advice?”

The Department of Law official, citing attorney-client privilege, declined to answer.

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1 Comment on "The House’s rejection of settlement money is unprecedented, but so is the settlement"

  1. This is in many ways the right action by the legislature. Based on the judge’s decision, the plaintiffs should ask the court to invalidate the ‘settlement’ and sue Dunleavy and Babcock in civil court. If they won’t pay personally, send it to collections, like for for any other economic miscreants.

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