Montclair and its insurer have agreed to settle a suit by the township’s chief financial officer for $1.25 million, after she alleged retaliation for raising concerns that members of the township council were receiving healthcare coverage they weren’t entitled to as part-timers.
The settlement with township CFO Padmaja Rao was announced during a council meeting Monday night, one day before a municipal election in Montclair that will result in an entirely new mayor and council when the township reorganizes in July.
The settlement of the suit, filed in October 2022, was later confirmed by one of Rao’s lawyers, Nancy Erika Smith.
Rao’s concerns involved coverage the mayor and council members received from the township under the State Health Benefits Program or SHBP. The insurance plan for state workers is also available to full-time county and municipal employees and elected officials.
Questionable coverage provided by Montclair and other local governments to local elected officials was the focus of a recent investigation by NJ Advance Media. NJAM found that several had been covering elected officials characterized on budget document as part-timers, or making payments to them in lieu of coverage, despite a 2010 state law requiring that recipients work at least 35 hours a week.
State authorities have filed criminal charges against three current and former Wildwood officials, alleging they fraudulently collected benefits, as Smith and others say investigators are probing whether Montclair officials committed any crimes.
The settlement, first reported by Montclair Local, calls for Rao to receive $250,000 for emotional stress and for the remaining $1 million to go to the law firms of her co-counsels, Smith and Roosevelt Nesmith.
Interim Township Attorney Paul Burr said the settlement did not amount to any admission of liability by Montclair or the former township manager named in the suit, Timothy Stafford.
“There’s no admission of any wrongdoing by the township or by Mr. Stafford,” Burr said at the meeting.
The township fired Stafford in May 2023 after Rao and at least one other employee alleged abusive behavior by him. His lawyer, Phillip George, said Wednesday, “The matter’s been resolved,” but declined to comment further.
Township officials said Montclair’s insurer, the Garden State Municipal Joint Insurance Fund, known as JIF, would cover 20% of the settlement, or $250,000. The rest would come out of local taxpayers’ pockets via township coffers.
“We are paying a million dollars, then?” Montclair resident Erik D’Amato asked during the public comment portion of Monday’s meeting.
It was one day before D’Amato won a 1st Ward township council seat in Montclair’s municipal election for mayor and all six council positions on Tuesday, according to results posted by the Essex County Clerk’s office.
When the winners are sworn in in July, there will be an entirely new mayor and council, after Spiller and all but one council member declined to seek re-election in the wake of Rao’s suit and related attention focused on the health benefits issue.
Councilman Robert Russo was the only incumbent who sought another term — and lost — even though he did not receive healthcare and criticized his colleagues for accepting it.
“Incumbency was a disadvantage,” Russo said in an interview Wednesday.
Even so, Russo characterized the election as “a victory” because it meant Montclair would be rid of Spiller and all the current council members and because two of his running mates on a “Good Government” slate, Roddy Moore and Aminah Toler, did win council seats.
Spiller did not respond to requests for comment. Councilor William Hurlock, who serves as deputy mayor, and Councilor Lori Price Abrams did not respond to requests for comment.
Councilor Roger Terry, who was appointed in October to fill a seat vacated by the resignation of Peter Yacobellis and did not receive health benefits, said he made it clear at the time that he never intend to seek a full term. Councilor David Cummings said his decision not to run “had nothing to due with Rao.” Councilor Robin Schlaeger did not respond to a request for comment, but Schlaeger had previously said the time was right to move on.
Russo left Monday’s council meeting before a 5-0 vote to approve the settlement, later saying he could not tolerate the abuse he received from his colleagues. He said he supported the settlement for Rao’s sake, though he was unhappy that the township’s reluctance to settle the case ended up costing taxpayers so much in attorney’s fees. Spiller did not attend the meeting.
Smith said Rao’s emotional distress stemmed from Stafford, Spiller and other township officials’ resistance to her efforts to comply with the state health plan’s requirements and their efforts to exclude her from meetings and otherwise make it difficult, if not impossible, for Rao to do her job.
Smith said the $1 million to be split by her firm and Nesmith’s is for the countless hours of research, depositions and other legal work they put into the case, which dragged on because the township refused to agree to a fair settlement.
“I’m happy to be paid. I have to pay my staff and keep all the lights on,” Smith said Wednesday, noting that, as a local taxpayer, she will bear a share of the settlement cost. “I’m not happy about this. I live in Montclair!”
Burr, the interim township attorney, did not respond to a request for comment on Smith’s assertion.
Smith said an earlier settlement offer that called for Rao’s resignation was an example of the township’s unreasonable stance. Under the deal approved Monday, Rao will keep her job.
“She’s looking forward to working with a new council,” Smith said.
NJ Advance Media Staff WriterRiley Yates contributed to this report.
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Steve Strunsky may be reached at sstrunsky@njadvancemedia.com
