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The Times
  • Herkimer loses appeal in self-insurance case

  • The village of Herkimer’s appeal of a 2011 trial court ruling on the Herkimer County Self Insurance Plan has been denied, but the village could still appeal the decision based on the recommendation of its attorney. The Appellate Division, Fourth Department, of the state Supreme Court ruling, issued Feb. 1, ...
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  • The village of Herkimer’s appeal of a 2011 trial court ruling on the Herkimer County Self Insurance Plan has been denied, but the village could still appeal the decision based on the recommendation of its attorney.
    The Appellate Division, Fourth Department, of the state Supreme Court ruling, issued Feb. 1, unanimously upheld the trial court ruling in the seven-year legal challenge brought by local municipalities against Herkimer County individually and as administrator of the Herkimer County Self Insurance Plan.
    “I’m happy for the plan,” said Steven Billings, Herkimer County personnel officer and administrator of the county workers’ compensation self-insurance plan, when contacted Friday. He noted the lawsuit was initially brought by seven municipalities in 2006 and he stepped into his current position the following year. He added the plan has spent more than $250,000 in legal fees and expert witness fees to defend the claims and allegations of mismanagement brought by the municipalities.
    Billings said the village could appeal the latest decision to the state Court of Appeals, but that court does not accept all cases. “It’s in the hands of the village how they choose to react,” he said.
    “From my point of view, these are tough economic times and we need to stop paying lawyers,” said Herkimer County Administrator James Wallace. In addition to the $250,000 spent by the self-insurance plan, he said the village has probably spent hundreds of thousands of dollars in the legal action and that doesn’t include the amounts the other local municipalities spent on legal fees. “It’s time to move on and work together to try to find solutions for the taxpayers,” he said.
    Herkimer Mayor Mark Ainsworth said Friday he was waiting for attorney Michael Longstreet, of Syracuse, to review the decision and could not comment.
    Longstreet sent a statement by email saying, “The Appellate Division’s decision is brief, with little analysis or rationale. It found that ‘damages’ award in this case is not a form of ‘future damages’ and did ‘not actually constitute compensation for future losses’. It therefore concluded that the trial court did not err in refusing to instruct the jury to discount any damages award to present value. We believe that the finding ignores the fact that most of the damages were intended to compensate the county for future expenses. ... we believe that the Appellate Division’s opinion improperly punishes the village, instead of awarding a reasonable estimate of the actual losses incurred.”
    The statement added, “We have recommended that the village seek leave to appeal to the New York Court of Appeals.”
    The trial court judgment had determined the villages of Herkimer and Ilion and the town of Frankfort were responsible to pay more than $6,000,000 to cover their obligations to the Herkimer County Workers’ Compensation Self-Insurance Plan, which terminated Dec. 31, 2005. The village of Herkimer’s liability was set at $2,451,108.87; the village of Ilion, $1,667,704.09; and the town of Frankfort, $2,074,711.44. In addition, the local municipalities were responsible for paying statutory interest of 9 percent per year until the judgments were paid.
    Page 2 of 2 - The village of Herkimer appealed the $2.4 million judgment, but the Appellate Court stated the award of pre-judgment interest was fair compensation for the period in which the village held money that rightfully belonged to the county.
    The self-insurance plan was formed in 1956, according to a news release issued by Billings. Under the plan, Herkimer County and all participating municipalities chose to band together in a self-insurance plan to cover the cost of workers’ compensation coverage for municipal employees throughout the county. After nearly 50 years, the plan was terminated at the end of 2005. All participants were responsible for paying their proportionate share of the future liabilities of the plan which, at the time of the termination, included more than 200 open workers’ compensation cases for employees of participating members.
    The villages of Herkimer, Ilion, Frankfort and Newport and the towns of Frankfort, Webb and Salisbury sued Herkimer County as administrator of the plan, alleging the county had mismanaged the plan over its nearly 50 years. The villages of Newport and Frankfort and towns of Web and Salisbury eventually settled their obligations to the plan and withdrew from the litigation.
    After an eight-day trial before Supreme Court Justice Anthony Paris, an Oneida County jury unanimously dismissed all of the claims of the remaining three municipalities and ruled in favor of the county.
    Later Paris ruled in addition to the more than $4 million sought by the county, the local municipalities were required to pay approximately $2 million of interest resulting in combined judgments exceeding $6 million.
    He stated in his ruling despite attempts to resolve the indebtedness of the three municipalities to the plan, they “steadfastly resisted and refused to accept any reasonable compromise.” Paris said the municipalities had “produced no credible evidence of plan mismanagement.”
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