State will pay $495,000 to settle wrongful-firing lawsuit brought by 2 Alaska Psychiatric Institute doctors

Two Alaska Psychiatric Institute doctors wrongfully fired by Gov. Mike Dunleavy and his former chief of staff, Tuckerman Babcock, have settled their case for a combined $495,000 payment and a pledge barring future governors from similar actions, with few exceptions.

“This agreement applies in the future to the state of Alaska and not just this governor,” said Stephen Koteff, director of legal affairs for the Alaska chapter of the American Civil Liberties Union, which represented the plaintiffs.

“Violating people’s rights arbitrarily should come at a cost,” Koteff said. “And we think this is a reasonable settlement that should make people realize that they should think twice before taking such consider actions down the road.”

The settlement is the latest development in a three-year-old legal dispute that began when Dunleavy and Babcock asked for the resignations of hundreds of state employees during the transition from former Gov. Bill Walker.

Doctors Anthony Blanford and John Bellville refused to submit letters of resignation, were fired anyway, and were among the employees who sued over the issue. Federal district court Judge John Sedwick ruled in their favor in October.

Though Sedwick said Dunleavy and Babcock were personally liable for the firings, the text of the settlement agreement calls for the payments to be made by the state of Alaska.

The agreement was signed Tuesday and released Wednesday by the Alaska chapter of the American Civil Liberties Union, which represented Dr. Anthony Blanford and Dr. John Bellville.

Blanford will receive $220,000 and Bellville will receive $275,000, some of which will be used to pay legal fees.

More important than the payment, Koteff said, is an agreement prohibiting Dunleavy or future governors from similar transition firings unless the employees are “policymakers” or in a position where political affiliations are an appropriate requirement for the job.

Because the state of Alaska was a defendant in the lawsuit, alongside Dunleavy and Babcock, the agreement may last after Dunleavy leaves office.

Cori Mills, head of the civil division of the Alaska Department of Law, said it isn’t unusual for the state to pay the costs of the settlement and has done so in other cases. In addition to the settlement, the state also paid to hire private attorneys to defend the governor and Babcock.

Jeff Turner, the governor’s deputy communications director, said, “It is important to recognize that neither defendant, Gov. Dunleavy or his former chief of staff, have admitted to any wrongdoing as part of the settlement. Rather, it was simply determined to be in the state’s best interest to settle the matter, with a reasonable settlement value, that avoids the risk and expense of continued litigation.”

“Gov. Dunleavy maintains that it is important for the state’s incoming chief executive during the transition period to have the authority to make policy changes, which includes staffing changes for those in policy positions, to ensure the new administration’s vision can be carried out,” Turner said.

In Alaska, when a new governor is elected and takes office, it has been traditional for the incoming governor to ask top-level officials for letters of resignation.

Dunleavy requested many more letters than usual, and Babcock said at the time that those letters were “sending out the message, ‘Do you want to work on this agenda, do you want to work in this administration? Just let us know.’”

Some state employees claimed the letters amounted to a loyalty pledge to the new administration. Blanford and Bellville refused to submit letters of resignation.

“We have an ethical responsibility to not align ourselves with any political cause or ideology, and I’m not going to do that,” Blanford said at the time.

After two were fired, they filed suit in January 2019 alongside a former Department of Law attorney, Libby Bakalar, who was also fired. Bakalar did submit a resignation letter.

A fourth employee filed a separate lawsuit, and the state settled that case for $75,000 in 2021.

Bakalar later split her case from that of the two doctors. Last month, Sedwick ruled in Bakalar’s favor, though the decision was not as clear-cut as it was with the doctors.

Bakalar’s case has not been settled, and her attorney, Mark Choate, is seeking a trial for damages instead of a settlement.

Of Wednesday’s agreement in the doctors’ case, he said, “It’s nice to see that some of the people who were hurt by the governor’s and Tuckerman Babcock’s actions are getting some relief.”

Because the state of Alaska will be paying the settlement, the Alaska Legislature will have to approve it as part of the annual budget process.

“While it’s a shame the governor’s purge of state employees has wasted hundreds of thousands of dollars of state money,” said Rep. Zack Fields, D-Anchorage, “in the end, our judicial system has reaffirmed the importance of a merit-based and nonpolitical civil service system.”