County now facing federal lawsuit from ex-employee

Suit also seeks emergency order for COBRA eligibility to be put into place
Wednesday, November 23, 2022
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All three Stillwater County commissioners and the county human resources manager have been named as respondents in a federal lawsuit filed by a recently terminated employee who is alleging the county denied her COBRA insurance benefits in violation of the Public Health Services Act.

All three respondents have been ordered to appear in federal court on Tuesday, Nov. 29.

This case is in addition to the lawsuit in state district court involving the termination of health insurance to county retirees.

The federal suit also seeks an emergency injunction to make the county offer the former employee — Cathy McClurg — COBRA insurance.

“Continuity in health coverage is critical to Cathy for many reasons — the most urgent one being that she is insulin-dependent diabetic. Out of pocket, insulin alone costs $1400 per month,” according to court documents filed on Monday, Nov. 21 by McClurg’s attorney, Melinda Driscoll of the Fred Law Firm in Billings.

Named as plaintiffs are Stillwater County Commissioners Steve Riveland, Tyrel Hamilton and Jeff Ruffatto and HR Manager Jennifer Hoines.

McClurg is currently paying for prescriptions on her own and has had to stop taking some, due to finances, according to the lawsuit.

Stillwater County Attorney Nancy Rohde acknowledged Tuesday morning that the county is aware of the federal lawsuit and has no comment.


McClurg was the licensed operator of the Absarokee sewer for 16 years. In July of 2022, following an incident involving raw sewage spilling and an interaction with a private contractor whom McClurg referred to publicly by a derogatory name, McClurg was called to Riveland’s office where he and Hoines told her she had been accused of “unprofessional behavior” toward the contractors and was being placed on administrative leave pending an investigation, according to the federal lawsuit.

The following morning, a Stillwater County Sheriff’s Deputy served McClurg with a letter from Rohde “restating that Cathy was on administrative leave, pending investigation” and that the matter was “confidential,” and any “breach” of confidentiality could subject McClurg to disciplinary action, according to lawsuit.

In early August, McClurg was interviewed by an investigator from an out-of-town law firm about the events in July. At the end of the interview, the investigator told McClurg that she would receive a report of her findings.

On Sept. 29, 2022, McClurg was called into Hoines’s office at which time Ruffatto read a termination letter.

The letter was signed by Ruffatto and Hoines and “generally indicates that the investigation determined that Cathy had violated several Stillwater County policies, but no specific factual findings are enumerated, nor is the investigator’s report included or referenced” according to the lawsuit.

The termination letter detailed the violations as follows: “…the investigation substantiated that you failed to adhere to verbal and written-reporting obligations which is in direct violation of the Stillwater County Handbook of Personnel Policies tt30 Prohibited Conduct & Guidelines for Appropriate Behavior (/:130 A-16, tt30 B, 1, 2, 7, 9). It was also substantiated that your conduct was in direct violation of the Stillwater County Handbook of Personnel Policies tt34 Proper County Representation (tt34 A), tt30 Prohibited Conduct and Guidelines for Appropriate Behavior (1130 8-1, 2, 3, 7, 9).”

At that point, McClurg told the two that she had prepared a resignation letter, which they accepted. It is unclear if McClurg is considered to have been terminated or resigned. She was given no information at that time about continuing health coverage, according to the suit.

When McClurg formally requested the report in writing, Rohde informed her that “the investigation results are ‘confidential,’ and that a ‘summary of the findings’ were provided in (McClurg’s) termination letter,” according to court documents.

On Oct. 12, McClurg paid payroll $2,124.65 to cover her monthly premium. The check was accepted and McClurg heard nothing more. When McClurg attempted to fill her monthly prescription on Oct. 28, it was denied.

After calling the health insurance provider, McClure learned that her coverage had been terminated on Oct. 1. She reached out to Hoines, explained what had happened and on Nov. 3, received a response from Hoines that stated she would “be looking into and researching this matter,” according to the lawsuit.

McClurg’s attorney became involved and was told that McClurg did not qualify for COBRA coverage because she was terminated for “gross misconduct” as a result of an independent investigation by a third party, according to the lawsuit.

The News has filed a Freedom of Information Act with the county to obtain that third party report, as well as any and all claims paid to that third party with taxpayer money.

A more detailed story of this case will be reported next week.