With the case only in the deposition stage, a quasi-public Massachusetts authority says it has already spent $240,000 on legal fees fighting a $562,000 severance payment claimed by former employee Benson Caswell.
MassDevelopment, which for months has fought efforts by CommonWealth to find out how much the authority was spending on the court battle, abruptly changed course this morning, disclosing via a carefully worded email that it had paid the private law firm of McCarter & English $240,000 as of a September 8 invoice. The authority’s legal tab is probably much higher by now since depositions in the case began last week.
In its email, MassDevelopment said it has insurance to cover its litigation costs. Mark Sternman, a spokesman for MassDevelopment, said the agency is in the process of submitting to its insurance carrier invoices for legal work dating back to the start of the case in October 2010.
MassDevelopment is defending itself in a lawsuit brought by Caswell, the former executive director of the Health and Educational Facilities Authority. Caswell claims MassDevelopment owes him a $562,000 severance payment for terminating his employment when HEFA was merged with MassDevelopment. MassDevelopment claims the legislation merging the two authorities nullified the severance arrangement. The agency also says Caswell’s claim totals $650,000 once payments for disputed health insurance costs are included.
The case stems from a 2009 bid by Gov. Deval Patrick to place former state senator Marian Walsh in a high-paying HEFA job for which she had little training. Caswell resisted Walsh’s hiring and he claims in court documents that the denial of his severance payment is payback for that.
Administration officials say they are fighting Caswell’s severance payment because it is emblematic of a culture at state authorities that embraced fat paychecks and perks for top executives. Caswell earned a salary of $225,000 running HEFA, plus deferred compensation of $67,500, a bonus of $14,583, a $5,000 car allowance, a T pass, and a health club membership. Sternman, at MassDevelopment, said Caswell has already collected a $353,000 supplementary retirement payment since leaving the agency.
CommonWealth filed a public records request for information on MassDevelopment’s legal costs in June, but the agency refused to provide it, citing attorney-client confidentiality. CommonWealth appealed that decision to Secretary of State William Galvin’s public records office in July. MassDevelopment responded that the legal fees are one of many issues being addressed by the litigation and that releasing the information would negatively impact the agency’s ability to resolve the case.
At the end of September, Shawn Williams, the assistant director of Galvin’s public records office, declined to “opine on the public status of the responsive records.”
Earlier today, MassDevelopment decided to disclose the size of its legal tab anyway. Sternman said the agency was comfortable with releasing the information now because the discovery phase of the case is over. Depositions were taken last week of Caswell, Greg Bialecki, the governor’s secretary of housing and economic development, and Catherine Blue, deputy general counsel at MassDevelopment.
One recent filing in the case by Caswell includes some email traffic from the Patrick administration about the hiring of Walsh. Authorities generally operate independently of the rest of state government, but the emails suggest the Patrick administration viewed HEFA as a wholly-owned subsidiary.
In a March 2, 2009, email to a team of administration officials, Doug Rubin, then the governor’s chief of staff and now a private political consultant, outlined a plan to hire Walsh.
“Given the fact that we would like to make a change with the ED (executive director at HEFA) but face a difficult contract buyout, I would like to explore putting in a new deputy ED with the intention that that person would take over once the existing contract of the current ED expires,” Rubin wrote. “Sen. Walsh is a very good choice for this #2 spot – can we look into this?”
Rubin said in the email he wanted to give a Walsh hiring plan to the governor later that day or the next day. “We have been working on this issue for a while – ideally we could get it resolved and the deputy installed by the next board meeting,” he wrote.
The Boston Globe reported in June 2008 that Rubin received an email from Walsh’s political consultant, Michael Goldman, laying out a plan to place the senator at HEFA. Administration officials downplayed the email at the time, but apparently they were trying to figure out a way to replace Caswell with her without invoking Caswell’s severance payment.
According to court documents, three emails sought by Caswell’s attorney were withheld by the governor’s legal counsel under attorney-client privilege. According to a log of the confidential emails, all the emails were written by the governor’s legal counsel and sent to Rubin and others. The subject line of a December 1, 2008, email was “HEFA contract,” while the subject line of two emails in February 2009 was “HEFA severance.”
On March 12, 2009, the HEFA board tentatively approved Walsh’s hiring at a salary of $175,000 to fill the No. 2 job at the agency, a post that had been vacant for 12 years. The hiring, widely viewed as a patronage appointment, caused an uproar. Walsh later that month withdrew her name after the Globe obtained email traffic from HEFA indicating that Patrick’s aides had orchestrated her hiring and salary while repeatedly insisting that they had nothing to do with it.
Legislation was subsequently passed merging HEFA and MassDevelopment. The heads of the two agencies were ousted and a new person installed to replace them at a payroll savings of $309,000. Caswell filed suit when his severance claim was denied.