Upper Darby Mayor Barbarann Keffer’s administration is divulging precious few details about a life insurance matter in which the township cut a $24,000 check from the general fund in an apparent attempt to make up a shortfall in the death benefit paid to the widowed husband of a township employee.
Although conclusions are elusive, all available evidence suggests Upper Darby either failed to communicate the higher benefit to its insurance carriers or was possibly not keeping up with its end of the contract, such as staying current with higher premiums.
Keffer responded to an initial set of questions from Broad + Liberty but did not answer two follow-up emails, one of which presented her with new evidence that appears to directly contradict her original answer.
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Ann Law became a township employee in 2014. She was diagnosed with breast cancer in August 2018, according to Ann’s husband, Michael. She passed away in May 2021.
“It was probably one of my most difficult tasks I’ve ever performed,” Mike said with a matter-of-fact tone that covered up his emotions, referring to not only the loss but the crushing paperwork of settling one’s affairs in the wake of a death.
Some weeks after Ann’s death, Mike remembers getting a life insurance death benefit check for $30,000 or $31,000 — he admits he was in a daze much of the time. Weeks after that, things began to get strange.
An employee from the township called Mike and said the death benefit was supposed to be more than what he originally received. It was supposed to be $55,000.
Mike occasionally checked back with the township about the matter, and in September, he physically went to the township building to pick up the remainder. The $24,000 check, from a Santander bank account, was marked as “general fund.”
What had happened? How was it possible that Law did not get the full death benefit of $55,000 the first time?
“In early 2021, my administration successfully negotiated with TWU [Transport Workers Union] Local 234 for a contract that included increasing life insurance benefits from $30,000 to $55,000. As a show of good faith, this increase was conferred on OPEIU [Office and Professional Employees International Union] Local 153,” Keffer told Broad + Liberty on Oct. 13.
“Around the same time, an employee sadly passed away,” Keffer continued. “The original life insurance payment was issued under the $30,000 death benefit, as this occurred before our insurance broker was notified of this change in the collective bargaining agreement. We continue to use the same carrier for life insurance and are current on our premiums for al 22 life insurance plans.”
After Keffer provided that answer, Law discovered further documentation he says he culled from his wife’s email.
An email dated Sept. 30, 2019, shows a representative of the soon-to-be union distributing an unofficial copy of the contract the union expected to sign. That unofficial copy clearly shows that at that early time, the OPEIU was already negotiating for a $55,000 death benefit on life insurance.
Broad + Liberty presented this information to Keffer, seeking further clarification, but she did not respond to that email.
Additionally, on Jan. 1, 2020, the OPEIU local office sent a message to its Facebook followers, noting that, “A couple of benefits kick in today for all Union Employees… and your life insurance pg. 38 increases to 55K today.”
Finally, an online contract for the TWU local office representing Upper Darby shows the $55,000 death benefit was a part of its contract from 2017 to 2020, well before Keffer says her administration negotiated the amount as a benefit increase.
All this evidence appears to contradict Keffer’s version of events.
I was treated so unprofessional, no empathy, no nothing, and now they may have put me in a bad situation.
Given the way the payments rolled out — an initial $31,000 from the life insurance company followed by a $24,000 check from the general fund — two scenarios seem likely: either the township failed to alert one of its life insurance carriers that the death benefits for a group of employees had changed, or the township had fallen out of compliance with some element of the life insurance contract that would have allowed the company to legally pay the lower amount.
Setting aside possible mismanagement issues, other legal problems crop up as a result of how things were handled.
Upper Darby’s Treasurer, David Haman, has a lifetime of experience with life insurance, including working as a life insurance agent, being a professor of financial planning in an accredited master’s program, and serving as an expert witness for jury trials involving insurance matters. He says Law may unfortunately be facing taxes on the $24,000 because of the township’s mistake.
“Gross income is not taxable income. You start with gross income, so anything that is required to be included on the front of your tax return, that’s what we call gross income. When we get to the back of your tax return, that’s where we apply deductions and credits to get to taxable income,” Haman began explaining.
“So then the [IRS] code refers you to another section on life insurance where the exception says that life insurance benefits — death benefits — received under a life insurance contract are generally excluded from gross income. So, if you get some proceeds that say this is life insurance, if it’s under a life insurance contract, say through a life insurance company, it then gets excluded from gross income.”
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The distinction drawn by Haman matters because it would appear they directly apply to Law.
The $31,000 was paid to him by a life insurance company that had a contract, so that money would be excluded from gross income — meaning it’s not taxed.
The $24,000, however, was paid by the township, and the township did not have a direct contract with Law. So that second amount came from a source that lacked a contract, making the money taxable.
“You have the same problem when you then go to the state of Pennsylvania and the Pennsylvania statutes,” Haman added. “So, the taxpayer here is likely to find himself with tax deficiencies from both the federal government or the Department of Treasury and the state of Pennsylvania.”
Understandably, Law is simmering with frustration.
“My whole experience with that was so unprofessional. I was treated so bad, I was treated so unprofessional, no empathy, no nothing, and now they may have put me in a bad situation.”
Keffer is not running for re-election this year, a decision she made in the wake of her DUI charges earlier this year.
Upper Darby Town Council President Brian Burke is the Republican nominee for mayor. He will face Democrat Ed Brown, who is currently the President of the Upper Darby School District Board of Directors.
Law said he is a Republican, but that he doesn’t closely follow township politics. He said he was compelled to bring the matter to light after reading stories about the township’s fights over finances through the course of 2022, as well as the parking scandal that emerged this summer.
Todd Shepherd is Broad + Liberty’s chief investigative reporter. Send him tips at email@example.com, or use his encrypted email at firstname.lastname@example.org. @shepherdreports