San Diego pays $200K to whistleblower fired after alleging illegal use of water, sewer funds

San Diego is paying $200,000 to a city official who was fired in 2019 after she tried to stop an alleged accounting scam at City Hall involving more than $1 million in sewer and water funds.

The City Council voted 9-0 Tuesday to approve the payout to Susan LaNier, who also will get a city pension as part of the settlement. LaNier, who was hired in 2009, was fired six months before she would have been entitled to a city pension.

LaNier, who was deputy director of public utilities before she was fired, filed a lawsuit in 2019 claiming officials terminated her in retaliation for her repeated attempts to shed light on the allegedly illegal diversion of sewer and water funds.

She contends city officials had made a habit of relying on sewer and water funds, which come from ratepayers, when there was not enough revenue in the general fund, which comes primarily from sales, property and hotel taxes.

Officials accomplish this, LaNier’s lawsuit says, by exaggerating how much departments within the general fund, such as human resources, help with the operations of the city’s sewer and water systems.

This allows city officials to inflate how much sewer and water ratepayers must contribute to the operating costs of those general fund departments, which LaNier characterizes as a “hidden tax” on sewer and water ratepayers.

California’s Proposition 218 limits what cities can charge for governmental services like sewer and water to the actual cost of providing those services, but LaNier’s lawsuit says city officials ignored that restriction.

“The city has a long history of engaging in this unlawful conduct,” says LaNier’s lawsuit, noting that a county Grand Jury report in 2006 made similar accusations about the city.

LaNier says in her lawsuit that she was able to document the allegedly illegal conduct in the city’s Streets Division, Human Resources Department and Purchasing & Contracting Department.

“Despite reporting these improprieties to her superiors, who had the power and authority to investigate, discover or correct these unlawful practices, no remedial action was ever taken,” the lawsuit says. “Instead, LaNier was fired for her refusal to remain silent regarding these violations.”

The lawsuit says city officials made the situation significantly worse by announcing LaNier’s termination simultaneously with the departure of some other public utilities officials who were fired for their involvement in a separate billing scandal.

In mid-2017, city officials discovered that many city water customers had been receiving higher-than-expected bills. A subsequent city investigation concluded the problem was primarily erroneous meter readings by city employees.

Lanier’s lawsuit contends city officials intentionally fired her along with workers involved in the meter reading scandal because of her relentless efforts as an auditor to shed light on the alleged Proposition 218 violations.

“Public uproar over errors committed by certain public utilities personnel in reading water meters — an area over which LaNier had no involvement or control — provided an opportunity for top city officials to rid themselves of an internal auditor they viewed as a troublemaker,” the lawsuit says.

LaNier’s lawsuit says the unwarranted damage to her reputation has prevented her from finding another job with similar pay and benefits.

LaNier’s attorneys in the case were Dan Gilleon and Samuel Clemens. Superior Court Judge Richard Strauss oversaw the settlement.