Laguna Beach councilmember’s insurance deal with water district scrutinized

Laguna Beach Councilmember Steve Dicterow is running for reelection on Nov. 3.

Bradley Zint, Special to the Independent

A reportedly “unwritten” financial hardship policy by the Laguna Beach County Water District that Mayor Pro Tem Steve Dicterow used for years to provide his wife with health insurance is being called into question by a local political action committee.

In an Oct. 2 post on its Facebook page, Liberate Laguna alleged that Dicterow obtained “a pretty sweet deal” allowing him to go long periods of time without paying his wife’s insurance premiums to the district. The group made similar allegations in a citywide mailer distributed last month.

Liberate Laguna also was critical of Dicterow’s timing of when he did eventually pay the premiums. That occurred after they came to the attention of former Mayor Kelly Boyd, who filed public records requests seeking more context on the matter.

On the Oct. 2 post, Liberate Laguna also asserted that Dicterow went more than five years without paying any of the premiums, “racking up” a debt of $11,000 in those years.

According to public records reviewed by the Independent, however, Dicterow did not go five years without making any payments. Rather, he paid a lump sum of $9,000 in 2018 toward them and another payment of $2,219.51 in 2019. Following the second lump payment, Dicterow made regular payments toward the premiums before cutting off the coverage in late 2019.

Dicterow told the Independent he also made a large payment in 2016, but couldn’t recall the amount.

Between 2016 and 2019, the monthly premiums ranged from about $170 to $220. In 2019, Dicterow also paid nearly $890 in accrued interest on his outstanding medical premiums.

As a member of the City Council, Dicterow, who is up for reelection, simultaneously serves on the water district board. The district has covered his personal medical insurance. But the premiums came up when he wanted to obtain coverage for his wife, who is legally blind and requires medical attention.

In early September, Dicterow posted a press release on his website giving his side of the allegations, calling them “baseless claims.”

He noted that he faced significant financial hardship in 2012, when he was elected to the dais after last serving from 1994 to 2006. Circa 2012, Dicterow said he contacted Renae Hinchey, the water district’s general manager, to see if she had any options to “handle a financial hardship situation.”

Dicterow said he was told he qualified for an “unwritten financial hardship program” that allowed him to defer monthly payments but required repayments once they reached a certain level.

“Let me emphasize that I love my wife, but I would never do anything illegal or that even appeared illegal,” Dicterow wrote in his press release. “This was an existing program.”

In an interview this week with the Independent, Dicterow stressed that he has paid back everything he owed, and paid the outstanding premium balances when asked to do so by Hinchey.

“It was always a struggle to get the money together. But I did it,” he said.

“I paid interest. The district was made whole,” Dicterow added. “Every penny.”

Dicterow, an attorney and businessman by trade, faced criticism in years past following his personal bankruptcy filing in 2014. He said, as of now, his family is now financially stable.

Boyd, who left the council in 2018, questioned the timing of Dicterow’s payments.

In an email reviewed by the Independent, Boyd said he inquired about Dicterow’s situation in October 2018. In the weeks before his last council term as mayor expired, Boyd said he was told by Hinchey that Dicterow was “about three months behind and would be paying it soon.”

Boyd said Hinchey never mentioned that Dicterow was or had been on an “unwritten” financial hardship program.

According to public records Boyd obtained and the Independent reviewed, Dicterow paid the $9,000 on Nov. 1 — soon after Boyd’s initial inquiry to Hinchey and for an amount far greater than three months’ worth of premiums.

Dicterow also wrote out a check for $2,219.51 on June 24, 2019 — a few days after Boyd filed public records requests about the matter.

In his email, Boyd said he was “appalled at the seemingly deliberate deception made to me by the general manager during my 2018 phone inquiry, while I was mayor and board president!”

He added that “these type of ‘quiet’ arrangements are not what a council member/board member should be undertaking with a general manager. Are ratepayers given such pass on not paying their bills?”

Hinchey has since retired from the water district.

Christopher J. Regan, the district’s interim general manager, did not respond to questions Wednesday about Dicterow. Rather, he and district counsel Megan Garibaldi provided the Independent with a series of already-fulfilled public records requests about the issue.

When asked about the nature of the “unwritten” financial hardship program, if it is now “written down” and if anyone else is using it, Garibaldi deferred to a Sept. 21 statement from Andrea Miller, the district’s human resources and office administrator.

Miller said the district does not have a “formal financial hardship program.” Rather, the district used “discretionary provisions” in its health insurance policy to work with Dicterow. The district’s policy gives the general manager “discretion in the event of non-payment.”

Miller added that no other current board members have inquired about the program, and that it may have been used in the past with employees, “but there are no specific instances in recent memory.”

Liberate Laguna co-founder Samuel Goldstein, a real estate developer and owner of the downtown Heisler Building, said Wednesday that the public has a right to know about what happened with Dicterow and the medical premiums, particularly why they went unpaid for years at a time.

“We don’t know of any city agency that has hardship [programs] for over five years,” Goldstein said, adding that the scenario was “murky. It shouldn’t have happened.”

Liberate Laguna, which has endorsed Bob Whalen and Larry Nokes for council, has received money from development interests in the past, according to its campaign disclosure forms. It was founded in 2017.

Brian Adams, a consultant for Liberate Laguna, also questioned the ethics of Dicterow voting to give Hinchey pay raises while he was simultaneously benefitting from her discretion on the financial hardship plan.

“To me, that’s a pretty clear conflict of interest,” Adams said.

In an interview, Dicterow said “the law is clear. I am permitted to vote” on Hinchey’s pay raises.

He noted that her raises were approved with unanimous consent. “No matter how you look at it, she was getting what she was getting with or without me,” Dicterow said.

In Dicterow’s press release, he wrote that the council members agreed to her compensation boosts because “she did an outstanding job, including ensuring Laguna’s water future by resolving a 40-year fight with Huntington Beach to supply the majority of our water. All she did was let me join an existing program.

“From this they want to build a house-of-cards accusation that I did something wrong. This local group knows it is all nonsense and not true. They are the ones corrupting our local conversation. I refused to be intimidated. Instead, I’m asking everyone to reject the mean-spirited political antics of misdirection and misleading attacks. We all deserve better.”

Dicterow also wrote that the council, while at a water district meeting in August 2019, discussed his financial hardship program. The district’s attorney stated it was permissible and legal, and the council agreed. Dicterow abstained on that vote.

Dicterow said Wednesday he has also consulted with Mark Rosen, an election law attorney, on his actions. He said Rosen considered the conduct legal.

Dicterow also submitted an inquiry about the matter in September with the California Fair Political Practices Commission. On Oct. 5, the commission denied to provide formal advice “where the request relates to past conduct.”

“This was a legitimate financial hardship program,” Dicterow told the Independent on Wednesday. “The truth is I did nothing wrong.”

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  1. RE DICTEROW: There is NO LBCWD public record of Dicterow’s statement that the matter was discussed, action taken, and he abstained in a Board Meeting. I asked for any record of that from the Human Resources Administrator in an email. Her reply is, “Glad to help! You have all the records that the District has regarding the meeting on August 14, 2019. As the minutes reflect, there was no reportable action or any discussion that happened during closed session. Paula would not be able to provide any additional information due to Closed Session being confidential.”


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