Tax Revenues Likely Insufficient And Insurance Coverage Looks Like It Will Be Disputed/Might Be Insufficient To Cover Total Loss.
Joe Duggan who works in the Lincoln, Nebraska bureau of The World-Herald, wrote a recent post about a $28 million jury verdict which a Gage County, Nebraska federal jury awarded to the Beatrice Six and against Gage County for a deeply flawed investigation that sent six people to prison for a murder they did not commit. With additional fees, costs, and interest, the total tally against Gage County is now over $31 million.
The problem for Gage County (a southeast Nebraska county of 22,000 residents), like many other governmental entities, is to locate the funds to pay for such a result, even though it has been appealed to Eighth Circuit Court of Appeals. Apparently, the County only collects $9 million in tax revenues each year, such that bankruptcy looms unless another source of payment can be obtained.
Enter County’s potential insurance coverage. County has filed lawsuits against their insurers, even though primary provider the Nebraska Intergovernmental Risk Management Association, a quasi-governmental risk management pool created by the Nebraska Legislature in 1998 to provide insurance for counties and other governmental bodies, has denied coverage. The Association, in responding to the lawsuit against it, disputes the verdict/associated expenditures are covered losses. Even if there is coverage, Association claims that any coverage is capped to $5 million per occurrence, which means that County would only be made somewhat whole if the dollar limit occurred as to each of the six plaintiffs. Beyond that, the Association nets only $4.7 million in annual premiums and has a reserve fund of about $13.6 million, further complicating the financial conundrum faced by County. There is a second lawsuit against another carrier, which has also denied coverage and with the policy apparently only providing coverage of up to $1 million per occurrence with a $2 million aggregate limit.
Quite a financial maze 1, right?
1Photo. Hedge maze at the Getty Museum of Art, Los Angeles. Photo credit to Carol M. Highsmith. 2013. Library of Congress.