PRC uses ‘loophole’ to avoid discussing problems in public

State officials are using a loophole in state law to get around the state’s open meetings law to discuss a restructuring plan for the embattled Insurance Division, according to an open government advocate.

“You can use whatever semantics you want, but the question is: Are you discussing public business with this elected body? Yes or no?” said Sarah Welsh of the Foundation for Open Government. ”If that is happening, I think that is exactly what the OMA (Open Meetings Act) was designed to prevent.”

Welsh’s remarks came as State Insurance Superintendent John Franchini has said he plans to meet individually with members of the Public Regulation Commission (PRC) to go over details of a “corrective action plan” put together in response to a recent critical audit of the state’s insurance division.

The agency’s chief legal counsel and one Public Regulation Commissioner defend the action, saying the PRC won’t run afoul of the state’s open meetings law because of a quirk in how the PRC and the state’s Insurance Division relate to each other.

A strange relationship

The PRC doesn’t regulate the insurance industry, and therefore has no jurisdiction over the plan in question. But the PRC supervises the insurance superintendent, who is presenting the plan as a courtesy, officials said.

“This is about keeping the commissioners informed because they are supervisors of the superintendent,” David Barton, the Insurance Division’s chief legal counsel, said in a telephone interview.

Because they lack jurisdiction, Public Regulation Commission members can hear the details of the plan individually because they won’t be taking action on public policy, say Barton and Public Regulation Commission member Sandy Jones.

“We have a superintendent who has proactively come forward … and want to disclose this to the commission so we start to have better communications,” Jones said in an interview.

But Welsh dismisses that as a way to get around the state’s open meetings act.

“There’s a common misconception that as long as a public body doesn’t vote, or doesn’t plan to vote, it’s not a meeting,” Welsh wrote in an e-mail. “That’s simply not true. Any discussion of public business by a quorum is subject to the Act.”

Welsh added, “They may think they’ve figured out a ‘loophole,’ but they’ll lose the public’s trust and confidence in the process. So what have you really gained?”

Welsh appears to have past determinations by the Attorney General’s office to bolster her opinion of the situation.

Serial quorums are a no-no

All meetings of a quorum of members that are held to “formulate public policy, discuss public business or take action are required to be open to the public” and “cannot be circumvented by what are commonly referred to as ‘serial’ or ‘rolling’ quorums,” according to a letter from the Attorney General’s office on a 2007 Open Meeting Act complaint.

Serial or rolling quorums are where a public body’s members discuss public business or take action through a series of contacts “in person, by e-mail, telephone, letter or otherwise” between individual members outside of a public meeting, the letter says.

The 2007 complaint concerned actions taken by Santa Fe County School Board members who spoke by phone about a public issue before a meeting.

Barton, the Insurance Division’s chief legal counsel, said the 2007 case and the current situation involving the PRC are different. In one case the Santa Fe County School Board had jurisdiction over the subject being discussed. In this situation the PRC doesn’t have jurisdiction over the corrective action plan.

Adopting a higher standard than just legality

But Public Regulation Commission member Jason Marks says even if the commission lacks jurisdiction its members should attempt to be as open as possible.

“My position on this is that even if we meet the legal requirements of OMA (Open Meetings Act) and IPRA (Inspection of Public Requests Act), that shouldn’t be our standard,” Marks said. “Our standard should be to be as open as possible.”

Besides, the insurance superintendent should be proud of its corrective action plan, Marks said.

“The draft I saw is a good plan,” Marks said. “It talks about filling vacant positions, about training staff. It had specific classes for specific people, specific curriculum for specific people. It’s detailed. It’s not generic. And it’s got specifics on changing business practices … like how things will be reviewed.”

The National Association of Insurance Commissioners accredited the state’s Insurance Division after a recent audit, but the agency is on probationary status until a corrective action plan is completed to address deficiencies identified by NAIC auditors.

Among other things the auditors found that the state Insurance Division’s Financial Examinations Bureau is understaffed and that financial analysis staff had “marginally sufficient experience” and needed more training on insurance operations, reserves, accounting principles and other areas, according to the nine-page report.

A review of the insurance division staff analyses found them not to “be in-depth and challenging in nature” and staff analyses contained “numerous deficiencies,” the report noted.

Any discussions about a proposed reorganization of the Insurance Division would be conducted behind closed doors anyway, Barton said, because the restructuring would run afoul the state’s personnel code even if the plan doesn’t identify employees.

“Our divisions are so small you are talking about easily identified individuals,” Barton said. “Eventually all of this will be public.”

Barton explained that any reorganization of the Insurance Division that eventually took effect would have to go before the Public Regulation Commission for its approval.