Judge Rules On Town Of Syracuse, SBOA Lawsuit

SYRACUSE — Kosciusko Superior Court Judge Christopher Kehler has ruled in favor of the town of Syracuse in its case against the Indiana State Board of Accounts.
He issued his ruling late Wednesday.
The State Board of Accounts started an investigative audit in 2023, which was completed in December 2024. The audit covered January 2015 to Dec. 31, 2023. “The Examination Report ‘describe(d) the identified reportable instances of noncompliance found as a result of those procedures.'”
The SBOA’s investigation found “the town is paying premiums for insurance obtained by individuals (that) were not eligible for participation in the town’s group insurance.” The SBOA’s report further “opined that (town) Ordinance 2019-19 violated Indiana law because it ‘exceeds the specific manner required of all local units of government that chose to expend public funds in order to provide health insurance to its local public employees.’”
Ordinance 2019-19 allowed health insurance premiums, including Medicare insurance premiums, to be reimbursed to council members and town employees who were not eligible for the town’s health insurance plan. As a result of its investigation, the SBOA demanded current and former town council members, as well as current and former town employees, return those reimbursements, approximately $503,529.94. At the time the SBOA found “the payment or reimbursement of Medicare insurance premiums and supplemental insurance premiums is outside the ’specific manner’ that is required by IC 5-10-8-2.6, (the statute which all local units of government that choose to expend public funds in order to provide health insurance to its employee must follows.); which is limited to ‘purchasing polices of group insurance’ or ‘establishing self-insurance programs.’”
After the SBOA’s report came out, Syracuse Town Council President Nathan Scherer issued a statement which said, in part, “For decades, the town of Syracuse has reimbursed paid insurance premiums to employees and council members not on the town’s group health plan. This was done as a cost-savings measure and has never been questioned during multiple audits from the SBOA over many years.
“In fact, as recently as 2023, the SBOA told the town on two separate occasions that it saw no problem with the insurance premium reimbursement practice.”
It should be noted however, Scherer could not explain how reimbursing for Medicare premiums was a costs-saving measure for the town when asked during a Syracuse Town Council meeting. He responded by stating this kind of reimbursement had been done for years.
Approximately a week after the SBOA report was released to the public, the Syracuse Town Council sued the SBOA seeking:
“An order from the court declaring the following: 1) Indiana Code 36-5-3-2 authorizes Syracuse to compensate individuals by reimbursing insurance premiums, including Medicare insurance premiums and supplemental insurance premiums;
2) Ordinance 2019-19 does not violate IC 5-10-8-2.6(b);
3) IC 5-10-8-2.6 (b) does not prohibit Syracuse from reimbursing insurance premiums, including Medicare and supplemental insurance premiums;
4) The town may continue paying or reimbursing insurance premiums, including Medicare insurance premiums and supplemental insurance premiums, as provided in Ordinance 2019-19, as a form of compensation under IC 36-5-3-2;
5) The town did not misappropriate, divert or not account for funds by paying or reimbursing insurance premiums, including Medicare insurance premiums and supplemental insurance premiums;
6)Town officials do not owe $74,075.67 for the costs of special investigation under IC 5-11-1-27(m) because no funds were misappropriated, diverted or unaccounted for; and
7) All other just and proper relief.
On April 2, Indiana Attorney General Todd Rokita filed a complaint to recover the public funds from the town of Syracuse. At the time, the town’s complaint against the SBOA and the AG’s complaint against the town were consolidated.
In his order, Kehler ruled:
A) IC Code 36-5-3-2 authorizes Syracuse to compensate individuals by reimbursing insurance premiums, including Medicare insurance premiums and supplemental insurance premiums;
B) Ordinance 2019-19 does not violate IC 5-10-8-2.6(b);
C) IC 5-10-8-2.6 (b) does not prohibit Syracuse from reimbursing insurance premiums, including Medicare and supplemental insurance premiums;
D) The town may continue paying or reimbursing insurance premiums, including Medicare insurance premiums and supplemental insurance premiums as provided in Ordinance 2019-19 as a form of compensation under IC 36-5-3-2;
E) The town did not misappropriate, divert, or not account for funds by paying or reimbursing insurance premiums, including Medicare insurance premiums and supplemental insurance premiums and;
F) This order resolves all claims as to all parties to the complaint, the Court finds there is no just reason for delay and the court directs entry of a final judgement on the complaint under Trial Rule 54(B).
G) Given the complaint to recover public funds in 43D04-2504-PL-42 and this cause are interrelated, the Court confirms that all proceedings in 43D04-2504-PL-42 are stayed until further order of the court.