Gov. Dunleavy, ACLU of Alaska defend state paying $495,000 settlement to sacked psychiatrists

Gov. Dunleavy has defended the state of Alaska paying a $495,000 settlement for a wrongful termination lawsuit.
Published: Feb. 18, 2022 at 4:39 PM AKST
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JUNEAU, Alaska (KTUU) - Gov. Mike Dunleavy has been joined by the American Civil Liberties Union of Alaska in defending a settlement agreement they reached which is set to see the state of Alaska pay $495,000 to two former psychiatrists who won a wrongful termination lawsuit against him.

The governor was responding to an opinion piece written in the Anchorage Daily News by Jahna Lindemuth, a former attorney general who served under Gov. Bill Walker. She argued it’s both “illegal and unethical” for the state to make that payment as Dunleavy, and his former chief of staff Tuckerman Babcock, were found personally liable for the firings.

“Just as the state cannot pay an official’s mortgage or credit card debt, it is illegal under our constitution for the state to pay this settlement,” she wrote.

Stephen Koteff, the legal director of the ACLU of Alaska, was the lead attorney in the case, representing the two psychiatrists against the governor. He penned a separate opinion piece, arguing that it’s routine for the state to cover the legal costs of its employees, and that Lindemuth is “flat wrong.”

“To be upset that Dunleavy and Babcock are not hung out to dry personally is one thing. But to suggest that public funds being used to settle this case somehow violates the constitution is a misleading, misinformed statement that could have dangerous consequences,” he wrote.

The dispute stems from a yearslong legal fight that was settled earlier in the month.

The incoming Dunleavy administration had sought the resignations of about 800 at-will employees in November 2018. Drs. John Bellville and Anthony Blanford, who were employed at the Alaska Psychiatric Institute, had refused to submit their resignations and re-apply for their jobs in what was seen as a request for loyalty by the incoming governor.

U.S. District Judge John Sedwick sided with the two psychiatrists in October, saying in his order that the move violated both the Alaska and U.S. Constitutions. His order stated that by violating the psychiatrists’ constitutional rights, both Dunleavy and Babcock faced being held personally financially liable.

Dunleavy and Babcock appealed, but the settlement was reached before the question of personal financial liability was resolved by the appeals court. Bellville is set to receive $275,000 for damages, lost wages, and attorney’s fees, and Blanford is set to receive a lump sum of $220,000.

“More importantly, the settlement makes it clear that no future governor, or anyone else in state government, can take a politically motivated employment action against a non-policymaking employee because of their political affiliation or beliefs,” Koteff wrote in his op-ed.

The question now is who should pay the financial costs of the settlement. The governor said it is right for the state to pick up the tab.

“We believe that if ordinary citizens that happen to want to run for office are then subject to certain court actions in their capacity of what they are — whether it’s governor, legislator, school board official — we think it makes it very difficult for folks to be able to execute their jobs in the right way,” Dunleavy said on Thursday.

The Legislature will now need to decide whether to appropriate the $495,000 needed to pay the settlement to the two psychiatrists. The issue came before the Senate Finance Committee on Thursday.

The committee looked at a memorandum issued by the Alaska Department of Law on Wednesday, arguing that Dunleavy and Babcock should be indemnified by the state.

“The current Attorney General, along with prior attorneys general, have routinely determined State employees should be provided State-paid indemnification and representation for even serious errors if those errors occurred in the scope of their employment and the employee did not engage in willful misconduct or gross negligence,” the memo said.

Sen. Bill Wielechowski, D-Anchorage, a member of the finance committee and an attorney, is not convinced. He believes there is “a very strong likelihood that you’ll see a lawsuit” if the Legislature approves paying the settlement.

“The state had no liability, therefore the state should not be paying this,” he said in an interview with Alaska’s News Source on Friday. “They’re instead conferring a benefit to someone in the executive branch. It’s a violation of the Executive Branch Act. It’s not something any other citizen would get.”

Court documents state that the $495,000 settlement figure is up to the “discretion” of the Legislature.

“Refusing to fund the settlement would simply be punishing the victims of the Dunleavy administration’s game of chess, in which public employees became disposable pawns if they appeared to have the potential to get in the way of the governor’s political agenda,” Koteff said on Friday.

The Senate Finance Committee is set to learn more about the settlement in a future hearing. A House Finance Subcommittee looked into the issue on Friday, too.

Rep. Andy Josephson, D-Anchorage, said he wanted to learn more, but said the fight over the settlement plays into an electoral battle for the governor’s office at this November’s election.

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