Behind The Scenes Of Government, Millions In Payouts And Little Transparency

Mar 11, 2019

Credit Mr.TinDC / Flickr https://www.flickr.com/photos/mr_t_in_dc/3345998000#

In June 2005, a 63-year-old woman was thrown from a tram at the North Carolina Zoo in Asheboro. It tipped and landed on her, seriously injuring her shoulder and requiring years of treatment. The state paid out $85,000 more than a decade later.


North Carolina officials agreed in 2015 to pay $100,000 to a Cumberland County family whose father’s body had been left to rot, unrefrigerated, for two days in a hospital morgue following an exam.

And in Wilmington the same year, the city spent $9,000 settling a claim after police yanked a woman from her own bed half-naked and handcuffed her while serving a warrant at the wrong address.

In these cases and hundreds of others large and small, government officials in North Carolina have shelled out millions through insurance and taxpayer money to quell the risk of legal action – whether it’s from an employee alleging discrimination or a driver hit by a local school bus.

Despite their sometimes large price tags, these settlement agreements can be a massive cost-saving measure, saving public agencies from prolonged court battles or expensive judgments against them.

But the payouts add up quickly.

And with little uniformity in how these agreements are tracked and shared with the public, a collaborative investigation by nine newsrooms across the state found the total costs sometimes hard to calculate. The project was timed to coincide with Sunshine Week, a national celebration of open government and the public’s right to know that takes place every March.

Settlements between private individuals -- a corporation and a former employee, for example -- can be secretive by nature, and the public isn’t necessarily entitled to know the details. But when a government agency is involved, those agreements must by law be disclosed to the public except in rare cases.

Reporters in January requested five years of settlement agreements from more than 60 agencies across North Carolina from different levels of government, from county school boards to the governor’s office. The thousands of pages of documents revealed massive variations in the types and volume of cases agency lawyers have handled since 2014, some of which have plodded through the legal process for a decade or more.

Whether the ultimate resolution is for $60 or $600,000, lawyers on both sides of the courtroom say the intent is to make a deal before the legal maneuvering becomes too costly for either party.

It’s a process that can be more of an art than a science, said N.C. Attorney General Josh Stein, whose lawyers litigate on behalf of state agencies.

“It's playing poker,” Stein said. “You've been dealt a hand of cards. Somebody with the same hand of cards can end up winning the pot, someone else with the same hand of cards may fold and walk away.”

State payouts add up to millions

The cost of running government services involves human beings making mistakes, breaking rules and suffering accidents. That can cost taxpayers millions of dollars.

For example, the state Transportation Department paid $15.3 million in workers' compensation claims over the five years between 2014 and 2018, records produced by the agency show. That doesn’t include medical expenses the state made, nor administration costs to manage the claims. The cases include $101,000 for a 54-year-old DOT dump truck driver who suffered a back injury in a crash.

Sometimes settlements came after workers -- like an information specialist at the North Carolina Zoo in Asheboro -- fought back against reassignment to an easy-to-fire patronage job instead of one with civil service protections.

Such settlements almost always also include thousands of dollars in attorney fees.

Even relatively new agencies aren’t immune. The state Department of Military and Veterans Affairs, created in November 2015, has so far struck settlement agreements totaling about $58,000.

According to the agency’s records, the largest settlement involved a worker’s compensation claim that resulted in a $55,000 settlement -- an employee injured in November 2016 while lifting sod.

“It is understood by employee that future health care may be needed by employee, and that the acceptance of this settlement will release employer from any liability to pay for the same or provide compensation during time of treatment,” the agreement states.

In 2014, a lawyer with the Department of Administration ended a prolonged legal battle over her firing after agency officials offered a payout of about $400,000. That case, filed by Millie Hershner, dragged on for five years. The state settled before the case reached the North Carolina Supreme Court, a route that increased the ultimate cost of attorneys fees to more than $150,000.

“Mainly, I wanted to keep my job,” said Hershner, who ultimately retired from the state as part of the agreement. “They wouldn't let me do that.”

In another case, the Department of Commerce in 2015 paid out $250,000 to Bruce Ramaekers, an analyst at the North Carolina Utilities Commission who also challenged his firing the year before.

Reached by phone, Bruce Ramaekers declined to comment on the settlement, saying it was confidential and "not appropriate for me to discuss."

His attorney, Raleigh-based personnel lawyer Michael Byrne, was paid another $15,000 for legal fees.

Byrne declined to discuss the specifics of the case. But he frequently represents public employees who want to fight back against what they claim are unfair disciplinary actions and terminations. He said some agencies he deals with are reasonable when considering whether to settle. Others, he said, refuse to back down in a manner “approaching childishness.”

“Most of my cases these days with the agencies tend to be settled,” Byrne said. “At the risk of sounding that way, I think it's primarily because I've beaten them so much.”

But employees aren’t the only recipients of state payouts.

In March 2011, 76-year-old retired Army Sgt. Maj. Larry Kono died at his home in Fayetteville. His body was sent to the morgue at Cape Fear Valley Medical Center to receive a physical exam by a nurse practitioner contracted by the Office of the Chief Medical Examiner.

After the exam, Kono’s body was left unrefrigerated in a body bag for days.

"It was horrible,” Gregory Kash, the lawyer who represented Kono’s family when it sued the state and the hospital. “He was grossly deformed."

The funeral home advised against the family viewing the body.

In a memo justifying the $100,000 settlement to the family on behalf of the state Department of Health and Human Services, Special Deputy Attorney General Gerald K. Robbins was unequivocal.

“The exposure to liability going to trial would be potentially hundreds of thousands (possibly millions) of dollars if this case made it to a jury,” Robbins wrote in 2015.

Kash declined to comment on the family’s settlement with the hospital, which he said “was resolved to the satisfaction of the parties.” Unlike the state, the private hospital can keep that agreement confidential.

But he said the state made the right call in this case.

“In our estimation they were the least culpable of the two parties,” Kash said. “They did a very good job of stepping up and getting out of this at an early stage.”

Stein said that’s the calculation lawyers for his agency have to make in every case after considering the facts.

“Sometimes the state was wrong. No person -- certainly no corporation, no entity -- is going to be right in every instance,” Stein said. “So when the state's wrong, we have to make a payment. If we don't settle these cases, and we just litigate them to the max, sometimes you run the risk of the adjudicator or a jury getting really upset with you.”

That can mean the state pays more in the long run.

In Kash’s experience, he said the state’s lawyers do a pretty good job avoiding larger settlements than necessary -- especially in the Kono case.

"As a taxpayer, I'm quite pleased with the way in which they handle taxpayer money,” he said.

For local governments, costs add up

Even on the municipal and county level, the costs of settlements can still tick up to the multi-millions.

Between January 2014 and December 2018, the city of Durham paid out more than $2.8 million in settlements, documents show.

About $2 million of that was for one settlement in April 2013, when a pedestrian, Reyes Abreo Gonzalez, was hit by a city employee driving a city water management truck.

Other settlements included a $50,000 payment to the North Carolina Innocence Inquiry Commission related to the Duke lacrosse scandal. Claims against the Durham Police Department also resulted in $140,000 in payouts over accusations of unreasonable seizure, assault and excessive force.

Interim City Attorney Kimberly Rehberg said many of these cases are dismissed on legal grounds, and that Durham doesn’t settle most cases filed against them.

The city of Charlotte provided documents describing the settlement terms of more than 50 lawsuits.

Among other things, the documents show that the city paid $950,000 last year to the family of a man who in 2017 was killed by a speeding police car. A Charlotte-Mecklenburg police officer was driving up to 100 miles per hour in a 35 mile-per-hour zone when his car slammed into James Michael Short.

The city also provided a spreadsheet detailing nearly 3,000 settlement payments from 2014 through 2018. The spreadsheet shows that the city paid out more than $28 million for settlements over that time period. More than 20 of the payments made by the city exceeded $100,000.

The largest of the settlements: $9.5 million paid by the city to settle a lawsuit by former inmate Timothy Scott Bridges, who was pardoned in 2016 after serving more than 25 years in prison for an alleged rape and assault -- and after DNA tests found that the semen at the north Charlotte rape scene was not his.

In Wilmington, a number of cases dealt with falls on city sidewalks and cars being damaged by potholes and manholes on city streets. Many resulted in no payout to the claimant, but there were exceptions.

It cost the city’s insurance company $15,639 to settle a woman’s claim after she fell in a hole on a city sidewalk, fractured her ankle and hired an attorney.

“[E]ach claim is taken on its’ own merits and investigated separately, so there is no standard rule for accepting or denying a claim,” Wilmington spokesperson Malissa Talbert said. “Almost all claims are handled through the City process without ever going to court.”

The city spent another $9,045 settling a claim after Wilmington police busted into an apartment, pulled a woman out of bed and handcuffed her. She was undressed from the waist down, and repeatedly asked the male officers to cover her exposed body -- a request they refused. Authorities later realized they were at the wrong address, and the woman they’d handcuffed was not connected to the warrant they were trying to serve.

“I was scared. I was terrified. Humiliated,” the woman told WECT after the incident that prompted her lawsuit. The station withheld her name because of the nature of the incident.

The city of Asheville released records of cases with records of six settlements valued at $25,000 or more.

The largest settlement was for $650,000 to Johnnie Rush. The settlement file does not state the underlying complaint, but Rush was severely beaten at the hands of Asheville police in August 2017.

In 2014, Chapel Hill settled for $250,000 a lawsuit brought by Lance Swick, who made 17 claims against Chapel Hill police saying his rights were violated on two occasions when he was arrested.

In all, there were nine settlements involving Wake County between 2014 and 2018, with five of those cases involving the Wake County Sheriff’s Office. The settlements ranged from $250,000 to the family of Ralph Madison Stockman IV who overdosed in jail in 2016 to $2,500 to Ana Cabanas after the county failed to provide an interpreter during a housing hearing in 2016.

Cumberland County was involved in 30 lawsuits from 2013 to 2018 that settled for more than $5,000. Many of the cases involved zoning issues, including disputes over firing ranges.

But the documents also include the settlement of two lawsuits filed in 2013 by former employees of a baseball team burned when a commercial gas grill exploded at J.P. Riddle Stadium in May 2012. The two men spent weeks at the N.C. Jaycee Burn Center in Chapel Hill.

The county and the City of Fayetteville settled the two cases for a total of $1.15 million in 2018.

The city of Fayetteville settled six major cases from 2014 through 2018 for a total of $800,000, with half of the cases involving allegations of improper police actions.

In 2015, the city paid out a $100,000 settlement of a lawsuit filed by the the mother of Gregory Paul Townsend, who was shot to death by a police officer on Nov. 17, 2011, during a traffic stop.

According to the lawsuit, Officer Bobby Cash detained Townsend for illegally crossing the median to enter a parking lot. When Cash approached Townsend’s car, a fight ensued, and the officer fired several shots at Townsend, police said.

According to a wrongful death lawsuit filed by Townsend's mother, Townsend was unarmed and was shot three times in the back

In 2015, the city paid out a $30,000 settlement of a lawsuit filed by Darwin Johnson his wife, who alleged they were treated differently by Fayetteville Police Officer Shane Koehler because they were black.

In the case, Johnson, a soldier, said he was falsely arrested on assault charges after his wife was involved in a minor crash in the McDonald’s drive-through in April 2011.

The city and Koehler wrote letters of apology to the Johnsons as part of the settlement.

“In looking back on it, while I believe I handled the situation appropriately, I also realize the incident embarrassed you and for that I am genuinely sorry," Koehler wrote.

For some agencies, the wait continues

Several agencies had yet to provide a single page of records by press time.

And nearly a month after the original request was filed, Department of Public Instruction spokesperson Drew Eliott said reporters should have directed the inquiry to the attorney general’s office, which negotiates the claims on behalf of the state. Every other state agency uses lawyers with the attorney general’s office in a similar manner, but no other agency sent reporters there to get records.

Durham Public School officials said they were still in the process of compiling the documents requested, as did Durham County, the city of Raleigh and Guilford County.

Greensboro didn’t initially provide anything either. Kurt Brenneman, who administers the Greensboro’s public information library, blamed "a mix-up on our end." Greensboro later released several files on Thursday, but not in time for analysis in this article.

Mecklenburg County was less responsive. By press time, officials there had not provided any settlement documents. They did, however, provide a spreadsheet with information summarizing payouts in 38 cases since 2014. The total amount paid out in those cases: about $456,000.

Winston-Salem Forsyth County Schools reported problems releasing any documents over the span of a month-and-a-half. Chief Marketing and Communications Officer Brent Campbell said the request was substantial and would have to wait in line behind several others.

Seven regional managed care organizations operate as a unique form of local government across North Carolina, governed by appointed boards and state Department of Health and Human Services oversight. These entities oversee administration of behavioral health services through Medicaid and Medicare dollars.

Per North Carolina law, the entities are subject to the same public records disclosure rules as local governments.

Each of these agencies was asked for its settlements. Several provided documents.

But others doubled down on their reasons for not providing records promptly when notified the request was part of a larger Sunshine Week project.

Carol Wolff, general counsel for Orange County-based Alliance Behavioral Healthcare, wrote that they were working to compile the agreements and that "most of these will need to be heavily redacted, if provided at all."

Eastpointe, an LME-MCO based near the southeastern coast, never acknowledged the records request at any time or responded in any way.

New Hanover County, meanwhile, strategized on how and to what extent they’d comply with the request for settlement agreements.

"Only settlement [agreements] which result from a filed lawsuit [are] public record… As I said previously we can arguably respond that we don’t have a record that compiles a list of settlement [agreements] and we don’t have to create…I think that may be upheld but not sure," Deputy County Attorney Sharon Huffman wrote in an email to several county staff members on Jan. 15, the same day reporters requested the records.

Huffman said it was a "time consuming” request, and indicated she already had a busy workload.

New Hanover County provided only copies of settlement agreements for lawsuits that had been formally filed, but no information on claims they’d handled in-house that still may have cost taxpayers a considerable sum of money. They later agreed to provide additional information, but not in time for this report.

In contrast, several agencies large and small responded swiftly and completely. One of them: the N.C. Department of Agriculture & Consumer Services.

Minutes after a reporter sent an email with his request on Jan. 15, Public Affairs Director Andrea Ashby called to clarify the scope of the information being sought and arranged for the reporter to work with the personnel who would gather the records.

By the end of February, the Agriculture Department provided more than 600 documents. Some of these records show:

• Dollar General stores were fined every year from 2014 through 2018 for overcharging customers with price-scan errors. (The Ag Department’s Standards Division inspects retail pricing equipment for accuracy.)

• The Agriculture Department in 2017 tried to charge the Waterkeeper Alliance environmental organization almost $3,000 to fill a large request for public records. The Alliance sued to challenge the fee. To settle the dispute paid almost $700 to the group for its legal fees and made a $2,000 donation to the Sunshine Center of the Open Government Coalition at Elon University.

School payouts subject to extra secrecy

Local boards of education also reached settlements, including for cases as simple as contract disputes over buildings or accidents on school property.

But they also faced claims from families of children with special needs, who alleged that their children were not receiving the services, support or safeguards required by the federal Individuals with Disabilities Education Act. To the extent these agreements were provided in response to records requests, many were heavily redacted to protect students’ privacy according to federal law.

In Wake County, the school system has paid out more than $1 million in special-education cases filed by families who accused Wake schools of not providing their children a free and appropriate public education. The $1 million total doesn’t include the tuition payments for private schools and other services that the district agreed to pay to families to help their children overcome their learning disabilities.

Overall, the school system and its insurance carriers have paid out at least $6.1 million for 152 settlements over the five-year period. A third of the money was paid out in just two different cases where a parent and a student suffered serious injuries in falls at schools.

Most of the cases in Cumberland County Schools involved accidents on school property. The documents included a $2 million settlement with a former high school student shot in the neck at school in October 2011.

But that doesn’t include any of the agreements related to special-education cases, which board attorney Nickolas Sojka said contain confidential student information.

Like other state and local agencies, school districts across the state have paid hundreds of thousands of dollars to employees who challenge their termination or make discrimination claims.

And the districts also foot the bill in cases of serious and minor injuries.

In Buncombe County, for example, the school system paid its largest case in 2014, when it settled with the family of a child who died during football camp for $875,000.

Other payouts include accidents with district vehicles or students and employees hurt on school property. But they also include settlements that seem somewhat unique to schools in particular.

New Hanover County Schools for example, paid $61 to a Wilmington woman -- the smallest settlement reporters found among thousands of pages of requested documents.

The money went to repairs to her windshield, damaged by a rogue softball outside Hoggard High School.

Confidentiality may violate law

The media coalition’s review of the settlement agreements also revealed some that contain confidentiality provisions that likely run contrary to state law.

"The public records law prohibits public agencies from entering into confidential settlements," Amanda Martin, chief legal counsel for the N.C. Press Association, said. "The only exception to that rule is for medical malpractice settlements. I suppose an agreement could provide that the parties wouldn't talk about it, but they cannot button up the settlement and remove it from public view."

Aside from redactions for confidential medical records or a student’s academic records, Martin said settlements by default are public record.

Even when these clauses exist, they seem to acknowledge that fact.

A settlement from a managed-care organization out of Asheville, for example, stipulates that “each party agrees that it will not disclose the terms of this agreement to anyone” unless required by, among other things, the state public records law.

Although Byrne, the Raleigh personnel lawyer, sees these provisions as unenforceable, he says they’re still problematic.

“It seems to me by doing that, these entities are deliberately thwarting the public's right to know,” Byrne said. “They're thwarting their duty to be transparent and open to the public.”

Yet some agreements go further, imposing gag orders on plaintiffs.

New Hanover County paid Antoine Graham $85,000 and Jerry Melvin $70,000 after deputies unloaded a firestorm of bullets into their SUV while the men allegedly tried to drive away from a DWI checkpoint in 2013. Graham was shot. The formal settlement agreement shows the county required the plaintiffs’ silence in exchange for the payout.

“The plaintiff further agrees not to provide interviews or information to any news reporter, news media organization, or the like, or to any website, concerning the terms of the settlement,” Graham’s settlement agreement reads in part. “If the plaintiffs are asked by anyone about the terms or conditions of this Settlement and Release, he will limit his response to the following: ‘The matter has been resolved.’ If the plaintiff is asked by anyone about the videos, he will limit his response to the following: ‘No comment.’”

One $78,000 Forsyth county settlement with a former sheriff’s lieutenant, Jonah Wood, made headlines in July 2017 in the Winston-Salem Journal. A provision of that settlement was that Wood could not publicize the agreement, which is still subject to North Carolina public records law.

The Journal article quoted a long catalog of public officials and lawyers with similar responses: No comment.

This story was reported by Emery P. Dalesio, of the Associated Press; Frank Taylor, of Carolina Public Press; Ames Alexander and Ann Doss Helms, of The Charlotte Observer; Steve DeVane, John Henderson, Rachael Riley and Paul Woolverton, of The Fayetteville Observer; Dawn Baumgartner Vaughan, Lynn Bonner, Will Doran, Keung Hui, Anna Johnson and Andy Specht, of The News & Observer and The Herald-Sun; Ann McAdams and Brandon Wissbaum, of WECT; Tyler Dukes, of WRAL News; and Jason deBruyn, of WUNC.

CORRECTION: The radio version of this story incorrectly stated that the Governor's Office had yet to provide records by press time. That is incorrect; the Governor's Office had provided the requested records by late February.