Alaska House refuses to pay doctors illegally fired by Gov. Dunleavy

JUNEAU — The Alaska House of Representatives this week rejected a $495,000 legal settlement with two former Alaska Psychiatric Institute doctors illegally fired by Gov. Mike Dunleavy and his former chief of staff in 2018.

The House voted 20-17 on Thursday to strip the money from a state budget line item for settlements.

The decision is not yet final and would not revive a lawsuit brought by the doctors, but if the amendment is adopted by both the House and Senate, it would leave the doctors without financial compensation.

“If this amount is not appropriated, the settlement would not be paid, which means the doctors would not receive the payment that was part of the compromise of the settlement,” said assistant attorney general Grace Lee, a spokeswoman for the Alaska Department of Law.

“The bottom line is that the very people who secured this victory … are the ones being punished and made to pay,” said Stephen Koteff, the legal director of the ACLU of Alaska, which represented the doctors.

Rep. Matt Claman, D-Anchorage, sponsored the amendment and said it is unacceptable for the state to pay for the settlement because a federal judge found Dunleavy and former chief of staff Tuckerman Babcock personally liable for their decision to ask for the resignations of about 800 at-will state employees at the start of Dunleavy’s administration.

Two API doctors, Anthony Blanford and John Bellville, refused to submit letters of resignation and were fired. They sued, and in October, U.S. District Court Judge John Sedwick ruled that Dunleavy and Babcock had violated the U.S. Constitution and Alaska Constitution by requiring political loyalty in order to be employed by the state.

The state, which was a party to the lawsuit and paid for the governor’s defense, prepared to appeal, but the ACLU and state reached a settlement agreement that included a payment and a pledge by the state to not repeat the actions that prompted the lawsuit. In exchange, the ACLU dropped the suit.

The Alaska Legislature has never refused to pay a legal settlement approved by the state, but Claman said Alaska — and possibly the entire United States — has never seen a governor held personally liable in a summary judgment decision. That kind of decision is issued before trial and typically represents a more difficult legal hurdle for plaintiffs.

A line in the settlement agreement says that the payment is “subject to legislative discretion and is not and cannot be guaranteed.”

“It was, what we believed, was a pro-forma aspect of this,” said Koteff of the ACLU.

Claman declined to say whether the ACLU made a mistake but did say that as an attorney, he has negotiated more than 100 settlements and has never made a settlement not contingent on payment.

Lee, from the Department of Law, said officials there believe that if the Legislature fails to pay for the settlement, “it will have repercussions on the willingness of other parties to sit down with the Department of Law to settle with the state. This increases expenses and would result in more cases going to trial.”

Koteff said he’s already having second thoughts about how to approach settlements with the state going forward.

In other cases, legislative amendments defunding particular programs or items have been negated by departments’ ability to shift money from other sources. Alexei Painter, the Legislature’s lead budget analyst, said Thursday’s amendment appears to have been written in such a way that it would be legally difficult for the Department of Law to pay the settlement if it wished to do so.

Thursday’s amendment was mostly along caucus lines, with members of the House’s coalition majority generally in favor and members of the House’s Republican minority generally opposed.

Wasilla Republicans David Eastman and Christopher Kurka, members of the minority, voted in favor of the amendment, and majority Rep. Kelly Merrick, R-Eagle River, voted against it. Two members of the majority and independent Rep. Sara Rasmussen, R-Anchorage, were excused absent.

During the discussion, several members of the minority said the amendment appeared to be motivated by this year’s governor’s race. Dunleavy is running for reelection, and several of the amendment’s supporters are co-chairs of the campaign for Bill Walker. Kurka is a candidate for governor as well.

After the vote, Claman said he would have offered the amendment if it was one year into Dunleavy’s term or at any other time.

He said there’s no way to avoid the fact that it’s a political issue because the governor’s initial actions were political.

“It’s political on day one of his administration, it’s political on the very last day of his administration. You can’t really ask the state to pay your personal liability and have it not be political,” Claman said.