Muscle Shoals City Council faces issues centered on medical reimbursement program

City Accountant Dennis Norton addressed the Muscle Shoals City Council during the Jan. 5 meeting on a review of the 2023 and 2024 fiscal years.

He said the Council will probably face penalties from the Internal Revenue Service.

The issue stems from participation in a medical reimbursement program through Citadel Benefit Group.

Norton said being part of the program was risky based on IRS guidelines.

At the recommendation of Norton, the city sought legal counsel on the matter in 2023, and a law firm from Huntsville told the City to cut ties with the program.

Norton said despite recommendations made by the firm to help mitigate any penalties, he found the city had made no changes and was still participating in the program six months later.

Josh Kelley of Citadel Benefits Group addressed the Council prior to Norton during the work session.

He said that recent allegations against his company involving insurance and tax fraud were false, along with reports of improper payments to former Mayor Mike Lockhart.

“These accusations are completely untrue, damaging my integrity, my livelihood, and my family’s name in this community. What hurts the most is that I’ve never been given the opportunity to defend myself,” Kelley said.

According to Norton, Lockhart and City Clerk Brittney Walker were among city officials told by the law firm to end participation in the program.

Mayor Billy Hudson and the City Council voted unanimously to end participation during the Jan. 5 meeting.

Hudson said the matter would be investigated thoroughly.

On Jan. 12, per the Shoals Insider, Muscle Shoals City Clerk Brittney Walker was placed on administrative leave.

Walker, a Deshler graduate, has worked for the City of Muscle Shoals since 2019. She became city clerk in 2021.

Hudson said Walker was placed on leave after an internal investigation was made related to a city audit.

It is unknown at this time if the two are related.

Hudson said after the Jan. 20 City Council meeting there was no update to either matter at the time.