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Washougal’s insurance won’t fully cover finance director

By Marissa Harshman, Columbian Health Reporter
Published: November 7, 2009, 12:00am
2 Photos
Jeffrey Bivens
2003 photo
Jeffrey Bivens 2003 photo Photo Gallery

Jeffrey Bivens’ license to practice law suspended

Washougal Finance Director Jeffrey Bivens’ legal past is now creating problems at City Hall.

Nine months prior to his hire with the city, Bivens’ license to practice law was suspended for 18 months by the Washington State Bar Association. The suspension was for charging unreasonable fees, conflicts of interest, failure to preserve the identity of clients’ property and dishonest conduct, according to the association.

That suspension alarmed the city’s insurance company, Washington Cities Insurance Authority, and prompted the company to refuse to fully insure Bivens, according to Mayor-elect Sean Guard and Councilwoman Jennifer McDaniel.

“It boggles me that the city even hired him, especially in the position (of finance director), given his history and his record,” Guard said.

State law requires the finance director to have an official bond conditioned on the honest and faithful performance of duties. The city of Washougal requires the finance director be covered by a public surety/fiduciary bond, which protects against losses caused by misconduct. The city’s insurer will not provide Bivens with that coverage.

Bivens scheduled a phone interview with The Columbian to discuss the issue but did not answer his phone at the scheduled time. He later answered questions by e-mail but did not comment on the suspension.

The state bar association cited two matters that lead to Bivens’ suspension.

n In one instance, Bivens offered to purchase a firearm used by his client’s husband to commit suicide. Bivens said he would credit the value of the weapon to his client’s account with the firm in lieu of fees. The client agreed and Bivens took possession of the firearm. He was unsuccessful in selling the weapon and did not credit his client’s account or pay his client or the firm for the firearm, according to the state bar association.

n In the second instance, Bivens told clients they owed the firm $800 in fees. The clients said they couldn’t pay and offered to give Bivens items from a pawn shop they owned in lieu of the fees. Bivens agreed and took possession of a 12-gauge shotgun, a semi-automatic rifle, ammunition, a gun bag, a reciprocal saw and a fly rod. The items had a total value of $807. Bivens did not give the items to the firm, pay the firm the value of the items or credit the clients’ account, according to the state bar association.

The Washington State Bar Association’s complete explanation for the suspension is available at www.columbian.com/docblog.

Hiring history

Bivens was hired as Washougal’s director of finance and economic development May 19, following the departure of former Finance Director Becky Hasart. His annual salary is $110,000, according to the city’s human resources department. Bivens was a sitting member of the Washougal City Council prior to being hired as a city employee.

When the Washington State Auditor’s Office conducted an accountability audit of the city, it found that Bivens was not covered by the city’s bond policy. The auditor’s office highlighted the noncompliance in an Oct. 16 letter sent to the city.

Mayor Stacee Sellers has not responded to several interview requests by The Columbian, and City Attorney Don English has not returned calls for comment on the issue.

On Oct. 16, Bivens learned that the city’s insurer would not provide him with a public surety/fiduciary bond. Bivens then requested quotes for coverage from three companies, all of which offered him coverage, he wrote in an e-mail. As of Oct. 20, which was his next day of work, he had received surety/fiduciary bond coverage of $50,000, he said.

Bivens said the city’s insurer covers him with a $2.5 million liability bond, which is the blanket policy that covers most city employees. He receives surety/fiduciary bond coverage of $50,000 through a different company.

Even though Bivens has obtained coverage, the city’s attorney is now researching whether the policy is sufficient because it provides far less coverage than the city’s $2.5 million policy, Councilwoman McDaniel said. The city council will need to approve the bond amount, but so far, the issue has not come before council, she said.

Bivens said the city council has never enacted into law the amount of coverage that should be required for his position.

The city’s $2.5 million policy provides coverage to all employees for one annual premium, Guard said. If Bivens’ surety/fiduciary bonding was covered by that policy, as the former finance director was, the city would not incur additional costs for Bivens’ coverage, mayor-elect Guard said.

But because he requires a separate policy, the city could face additional costs. State law requires the city pay the cost of the surety/fiduciary bond, the city’s attorney said at an Oct. 30 meeting of the city council. When asked if he would request reimbursement from the city for the out-of-pocket cost of obtaining the coverage, Bivens cited state law that requires the city pay for the insurance premiums.

The city currently pays $206,871 to Washington Cities Insurance Authority, which covers all of the city’s insurance requirements, Bivens said.

The lack of bonding is not the only issue that prompted questioning of Bivens’ employment with the city.

Hiring questioned

Several citizens and city officials cried foul when Bivens was hired. Sellers hired Bivens without publicly posting an opening for the combined finance and economic development position. Sellers said she believed Bivens’ skills better matched the city’s needs than did those of initial applications for the finance director position. She later admitted to The Columbian the situation should have been handled better.

The hire also resulted in numerous people contacting the state auditor’s office. The auditor’s office concluded that several factors contributed to the concerns and created an appearance of a conflict of interest. Those factors include the lack of public resignation by Bivens from the city council prior to the appointment, lack of formal selection process and delivery of business cards prior to the city council’s confirmation of the appointment, according to the auditor’s office.

Bivens said the city council unanimously approved his contract based on his qualifications. Bivens has a bachelor’s degree, law degree and a master’s degree in the laws of taxation, he said. He did not specify from which universities he obtained his degrees.

Bivens and Sellers also came under scrutiny for attending a four-day conference of the International Council of Shopping Centers in Las Vegas in May. The auditor’s office criticized charges Sellers made on her city-issued credit card, which included about $700 in charges for meals and alcoholic drinks. At the time of the trip, Bivens was in the process of being hired as the director of finance and economic development.

Guard worries the refusal of the city’s insurance company to provide coverage for Bivens could lead to other problems. For instance, the city is set to receive grant money for various projects. A stipulation to receive those funds revolves around the city’s bonding capability. Guard questions whether the city could be at risk of losing that money or be required to obtain more coverage if Bivens is not bonded at a high enough amount.

In the end, Guard said the issue comes down to a policy decision.

“The council needs to make a decision,” Guard said. “It should be that if the position requires bonding, you need to be bonded through the city insurer and bonded up to the city’s limit.”

Marissa Harshman: 360-735-4546 or marissa.harshman@columbian.com.

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Columbian Health Reporter