Singing River’s recent filing in federal court admits several times that it is highly likely that SRHS will not be able to make settlement payments as described. The motion was intended to stop new litigation filed by attorneys Earl Denham and Harvey Barton on behalf of SRHS retirees. In making the argument, Singing River makes admissions that the likelihood of default on settlement payments is much greater than what they are telling the public.
Insurance Lawsuit Could Severely Damage SRHS Finances
Singing River has been battling with Federal insurance company since July over the issue of coverage limits and defense costs in the pension litigation. Judge Louis Guirola ruled that the only coverage available for pension matters was limited at $1 million – not the $41 million SRHS claimed. He also ruled that even though the policy is limited at $1 million, Federal must continue to pay unlimited attorneys’ fees for SRHS.
Federal appealed Guirola’s ruling and has asked the appeals court to reverse the ruling as well as making Singing River start paying for legal fees while the case continues. If Singing River loses, it could liable for more than $1 million in unexpected legal fees. Below are excerpts from the filing:
If the Fifth Circuit does not stay Federal’s obligation to pay but reverses the October 2, 2015 judgment, Federal has threatened to seek reimbursement of all fees paid pursuant to Moeller in excess of the $1 million liability limit.
Should the Fifth Circuit grant Federal’s Motion to Stay, SRHS faces a substantial, immediate dumping of fees and expenses. Consistent with this Court’s October 2, 2015 Judgment, these fees and expenses should properly be borne by Federal in accordance with their duty to defend as a matter of law once they chose to reserve rights. If these defense costs are imposed on SRHS, it will have a significant deleterious effect on SRHS’s financial health and the class settlement fund.
Some,or all, of these costs, if imposed on SRHS, will significantly reduce SRHS’s financial prospects going forward and will detrimentally affect the economic viability of the settlement and SRHS’s ability to make timely contributions to same. … As the Court knows, any failure to timely make payments can result in Jackson County’s withdrawal of its $13.6 million contribution and preclude SRHS from being able to meet its bond obligations.
Upon the approval of the settlement, Singing River will have to pony up $2 million. If the appeals court also finds that SRHS must reimburse its insurance company, SRHS could be hit with an additional $1-2 million at nearly the same time. These are also amounts that were not included in the SRHS budget.
The whole truth is not being told. This filing demonstrates the precarious razor’s edge upon which this settlement is balanced. It likely to fail. The attorneys will get their $6 million thanks to the taxpayers of Jackson County and the pensioners will be worse off.
Our opinion: The settlement was always one that was designed to fail, they just didn’t plan on it happening so fast.