SOUTH PORTLAND — An agreement that would have resulted in the dismissal of a lawsuit against the city over its health care program for city councilors was rejected by the council in a closed-door meeting last week.

The plaintiff in the case, Albert DiMillo Jr., provided The Forecaster with a copy of the draft “Stipulation of Dismissal.”  It would have required the city to hold at least one public workshop or forum before July 9 to discuss councilor participation in the city’s employee health insurance program.

In exchange, DiMillo would have agreed to drop the lawsuit, which was filed in January, until at least Nov. 15.

The result is that city councilors are likely to continue to discuss the issue only in private, without answering questions from constituents about the legality of the benefit. Councilors have been instructed by their attorney, Sally Daggett, not to discuss the issue publicly.

DiMillo is suing the city in Cumberland County Superior Court over the 35-year-old practice of allowing councilors to opt into the city’s employee health care insurance pool. DiMillo and others argue that the City Charter, which limits councilor compensation to $3,000 a year, makes no provision for health care benefits. 

Last fiscal year, the city spent more than $50,000 to insure Councilors Maxine Beecher, Tom Coward, Tom Blake and former Councilor Jim Hughes. The proposed 2013 budget includes about $34,000 in councilor health insurance for Blake, Coward and the remainder of Beecher’s final year (she must leave office this fall because of term limits).

If all seven councilors took the full-family benefit this year, it would cost the city $106,000 or more and cost the councilors nothing.

DiMillo and Gary Crosby, a resident who organized a petition urging councilors to stop taking the health care benefit, said they met with Mayor Patti Smith and Dagget on March 27. Together, they said, the four drafted the dismissal document in hope the full council would accept it at its next meeting.

On April 2, the council went into executive session to discuss the proposal and left that night without putting the issue to a vote, indicating that Smith and Daggett were unable to convince at least four councilors to accept it. 

DiMillo said he originally offered to drop the lawsuit only if the city ended councilor health insurance. “In my mind, I’ve given up 99 percent of the issue, but they still disagreed,” he said. 

Neither Daggett nor Smith responded to requests for comment this week.

Councilor Rosemarie De Angelis, who has been a critic of the health benefit, declined to discuss what happened during the executive session.

But De Angelis said she’s frustrated the lawsuit is preventing the council from having the public conversation necessary to address questions about councilor health care. 

Maine law allows governmental bodies to privately discuss issues involving pending litigation. Councilors are not require to disclose what happens in executive session.

But when De Angelis brought the issue to councilors late last year, before DiMillo filed the lawsuit, residents caught a glimpse of where the councilors stand.

At that point, the city consulted an outside attorney, William Plouffe, who said allowing councilors to opt into the employee health care program is illegal under the City Charter. Daggett had said there was nothing in the charter prohibiting councilor health insurance, and thus it was not illegal.

The council was divided on whether to move forward. De Angelis wanted the policy gone, and Smith argued it created a “tiered” system under which some councilors cost the taxpayers more than others. Both agreed it was the council’s responsibility to address the issue.

The councilors enrolled in city insurance at the time – Beecher, Blake, Coward and Hughes – resisted any action, saying it should be up to residents to push the issue if they wanted it changed. Coward proposed doing nothing, relying on Daggett’s assessment that nothing illegal was taking place.

On Monday, during a council workshop, De Angelis urged the council to remove the city councilors’ insurance from the proposed fiscal 2013 budget. She said it is unethical to spend money on costs that couldn’t be justified publicly.

“We have to be able to talk about this. We can’t fund something we can’t talk about,” De Angelis said. “If someone wants to say we can’t talk about it because we have a lawsuit going, then I’d say we need to get rid of it.”

Crosby said he’s upset the council didn’t sign the dismissal agreement, but that he’d still like DiMillo to drop the lawsuit.

“Once it’s dropped, (councilors) no longer have the secrecy of executive session to hide behind,” he said Wednesday. “I’d love to see the lawsuit dropped, so we can go after them in public and make them answer questions.”

“They are now going to spend taxpayer’s money to end up in court and fight it, which is a shame,” he said.

No councilors supported De Angelis’ proposal to remove the health care spending from the budget.

Mario Moretto can be reached at 781-3661 ext. 106 or mmoretto@theforecaster.net. Follow him on Twitter: @riocarmine.