NC: School district wins a round in lawsuit to get insurers to pay Molestation settlement

Published Wed, Nov 19, 2008 12:00 AM
By KATE CERVE
kcerve@beaufortgazette.com
843-986-5517

http://www.beaufortgazette.com/local/story/623403.html

A Beaufort County School District dispute with its insurance carriers over molestation settlements moved forward Wednesday after a judge issued a decision favoring the school district.

Beaufort County Master-in-Equity Marvin H. Dukes III denied the insurance carriers' request that he reconsider a June decision.

"It wasn't a touchdown but a first down, if you're a football fan," said school board Vice Chairman Bob Arundell, who also is a lawyer.

The district sued the S.C. School Boards Insurance Trust and United National Insurance in the Court of Common Pleas in June 2007, seeking to recover about $4.6 million the district paid to six victims of former Coosa Elementary teacher Philip Underwood-Sheppard.

In June, Dukes ruled both insurers must treat each of the victim's claims separately. The district's liability insurers filed a motion asking him to reconsider.

The district's insurers contend all cases of sexual misconduct by Underwood-Sheppard should be handled as a single claim. United National Insurance, therefore, said Beaufort County's coverage is capped at $500,000 for sexual abuse.

The School Boards Insurance Trust is responsible for paying $150,000 per claim, according to the policy. The school board, therefore, is seeking $150,000 for each victim instead of the $150,000 total the trust said it should pay.

Arundell said the insurers could still try to appeal Wednesday's decision. Arundell said the case is tentatively scheduled for trial in March.

"It's another battle victory in the war against the insurance company," he said.

School board Chairman Fred Washington Jr. said, "In our opinion, it helps to solidify our case. At any level, it's better to have a ruling in your favor than not."

Underwood-Sheppard pleaded guilty to molesting at least nine students ages 6 to 13 and was sentenced to 25 years in prison in 2003.

To pay for the $4.6 million settlement, the County Council passed a small tax increase in school operations taxes paired with an equivalent offset in school debt taxes.

A seventh case was paid by the insurance companies. Since then, the district has settled for $500,000 with an eighth victim who came forward after the initial settlement. A ninth victim died.