Despite Bidder’s Better Ranking, Palm Coast City Attorney Told Council to Stick With Contractor His Firm Represents

The insurance company, Preferred Governmental Insurance Trust, or PGIT, a subsidiary of Brown and Brown of Daytona Beach, has filed an appeal of the decision. The city’s finance director and City Manager Matt Morton have denied the appeal. The council will now hear it at Tuesday’s meeting.

The case brings to light some of the seeming arcana of bid processes that nevertheless have far-reaching consequences on insurance coverage that affects employees, including firefighters, and, to some extent, residents and others beyond city employment who interact with the city and may have a cause of action for one reason or another. The case also points to a degree of arbitrariness in bid procedures despite analyses and ranking systems: the city, according to a background memo by the manager, “reserves the right to accept or reject any or all proposals submittals, or any part of a submittal, for any reason and without penalty prior to or after the rankings are made by the City.”

Palm Coast government has been getting its insurance coverage for general liability, auto, property and workers compensation through the Florida League of Cities since 2009. The coverage ensures that the city complies with all federal, state, and local rules. More recently has included provisions for covid-19 and cancer among firefighters. Over the summer, the city requested proposals from insurance firms for the coming year, starting Oct. 1. The League of Cities was one of only two respondents. PGIT was the other. Five city staff members analyzed the proposals and ranked PGIT well ahead of the League of Cities, 93 points to 78, out of 100. They unanimously recommended going with PGIT.

That ranking was filed the last day of June. The council discussed it at an Aug. 11 workshop, learning that PGIT’s proposal would save the city $130,000 compared to the policy then in existence, and $88,000 compared to the League of City bid. That was significant because the council had been concerned about the League’s significant premium increase the previous year. “If you recall by way of the budget process last year,” Morton had told the council at the Aug. 11 meeting, “we had come up for renewal, received a significant increase in our premium, and through conversations and an ask for reconsideration of that premium increase, Florida League of Cities did in fact reduce substantially what they were going to charge us for this fiscal year for the premium. From that situation it was decided we probably should go out and take a look and see what the marketplace would bear.”

PGIT provided for that lower premium. According to an outline by city staff, PGIT coverage provided for no exclusions or “sub-limits” related to covid or communicable disease claims, zero deductible on auto liability coverage (compared to a $25,000 deductible pre claim previously in effect through the League of Cities), reduced windstorm deductible from 5 to 3 percent, and “greatly improved” coverage for sewer back-ups, Equal Employment Opportunity Commission complaints (EEOC).

But it was immediately apparent during and after the city staff’s presentation that the city manager and the city attorney were not quite on board yet.

Morton at the August workshop cautioned to the council that he intended to further discussions with his team–and have his team discuss the matter with the city attorney–to “make sure we’ve adequately addressed all the questions so we know what we’re buying and making sure that it’s not just an initial dollar savings upfront, but that we have confidence that in the event of a large claim or subsequent claims or through the litigation process, how much control we still have as we’ve come to enjoy, that those issues are definitely answered beyond a shadow.” Morton was also concerned about the autonomy the city would have if and when it entered into litigation, and to “make sure we hadn’t missed anything in our due diligence.”

The city attorney also noted that certain questions had to be answered. “We have worked with both of these companies, and both are very good companies, they’re the two largest providers in the state as far as to local governments go,” the attorney said. “We’ve had the pleasure of being the city attorney for the City of Palm Coast and also through the League, litigating some of these insurance claims, so we wanted to make sure this process ran the way that it did, too. But Anthony Garganese in our office is the one that works primarily on these types of claims and in going through an initial level wanted to make sure that the coverage that is being afforded now also transpires over to this potential new provider.”

There was little discussion from the council during the 20-minute segment, other than questions about ongoing litigation–whether it would be carried over to the contract with the new company (it would be) and a question about PGIT ‘s experience.

By the Sept. 1 council meeting, Garganese had produced a five-page memo for the council. His conclusion: stick with the League of Cities. Morton after briefing the memo recommended that the city not switch providers. Council members had no questions. Matthew Montgomery, PRIA’s executive vice president, tried to call in but was not successful. The council voted unanimously to stick with the League. Montgomery got through at the end of the meeting. “I realize that the vote is done,” he said, but still wanted to address what he said was an “inaccurate” analysis of his firm’s proposal. “We’d certainly like an opportunity to be heard,” he said.

He had just the usual three minutes granted public speakers.




“I would submit that we are significantly better both in limits and coverage,” Montgomery said, going on to cite errors in the analysis and the advantages the committee had recognized in PRIA’s  favor. “I could go on a lot longer but I see I only have a minute 30.” He said he would seek a recourse “so we can be evaluated fairly.”

That’s the bid protest Flagler Beach attorney Dennis Bayer filed on behalf of PRIA, which actually amounts to a three-pronged challenge: one challenge is on the manner in which the finance director and the city manager rejected the appeal appeal. The second challenge is on the merits of Garganese’s memo. The third is about Garganese’s existing relationship with the League of Cities.

Morton had denied the initial appeal through the administrative levels because the bid protest appeal bond had not been accompanied by a check or cashier’s check made payable to the city, an objection that drew a sharp rebuke from Bayer, who does extensive work in front of and with municipal and county governments (he has been a city attorney previously) and knows their procedures well: “It would appear that the City is seeking to chill or prevent challenges of bid denials by allowing for an automatic forfeiture of appeal bonds without any due process being afforded to the appealing party. The process here only confirms this concern–both the Finance Director and the City Manager summarily stated that my client’s appeal was without merit without providing any detail or substantive comment.” Bayer also did not take kindly to Morton dismissing the PRIA executives failed attempt to get through at the Sept. 1 meeting before the vote.

To the claim that Garganese has a conflict of interest,  Morton replied: No conflict exists for Mr. Garganese, who merely acted as instructed by the City Council.” But the second clause doesn’t explain the first, and the first is demonstrably inaccurate: Garganese’s firm lists the Florida List of Cities among its clients on its own Clients’ page.

“Mr. Garganese clearly mis-stated the contents of the bid proposal,” Bayer wrote in his Sept. 24 formal notice of a protest to the city clerk, “which had the requirements to the bid proposal for the types of coverage, the amounts of coverage and the deductibles. Mr. Garganese then proceeded to allow the bid to be awarded to his client, the Florida League of Cities, which utilizes his law firm to handle litigation and claims. This is a clear and unequivocal conflict of interest which should obligate the City to obtain independent legal counsel for review of this appeal.” (The city manager, to avoid conflicts, has not hesitated to hire outside counsel in recent months to conduct what he dubbed independent investigations of employees who have since resigned or been pushed out.)

“The PRIA bid proposal,” Bayer concluded, “was superior to the Florida League of [Cities]’ and it had overwhelming support from the city’s staff and, in particular, the Risk Management Department.”

The protest document is below.