Appeals court sides with school district in molestation-settlement case

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Appeals court sides with school district in molestation-settlement case

Published Wednesday, February 23, 2011   |  554 Words  |  

The Beaufort County School District gained a major victory Wednesday from the S.C. Court of Appeals, which upheld a lower court's ruling that favored the district in a dispute with insurance carriers over settlement payments to victims of a former teacher convicted of child molestation.

"The way I would describe it is that it's like hitting a grand slam in the bottom of the eight inning of a tie game," said former Board of Education member Bob Arundell. "Now we've got a four-run lead, but there's still another inning to go."

Arundell, who did not seek re-election in November, had been the board's liaison with the district's lawyers.

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

In June 2008, the Beaufort County Court of Common Pleas ruled both insurers must treat each of the victims' claims as separate events. That would entitle the district to more than $5.5 million in annual insurance coverage against sexual abuse and harassment claims.

The district's insurers appealed, saying all cases of sexual misconduct by Underwood-Sheppard should be handled as a single claim. That would mean the district is entitled to far less money because its insurance coverage per claim is capped. The insurers also argued the district's policy does not distinguish between "sexual abuse" and "sexual harassment," thus the district would not be entitled to make two claims on its settlement for each victim, even if the seven were considered separately.

The court's three-judge panel, which heard arguments in September, disagreed.

"This has been a long time coming," Arundell said.

However, the lawsuit won't necessarily end with Wednesday's ruling, he pointed out.

The decision could be appealed to the full Appeals Court, then to the S.C. Supreme Court, school district attorney Frank Holleman of the Wyche Law Firm in Greenville said in a memo released by superintendent Valerie Truesdale.

In his memo, Holleman called the court's decision to uphold all lower-court rulings appealed by the insurance companies "a strong victory for the Beaufort County School District." However, he said the decision simply dealt with the interpretation of the policy. Even if the companies don't appeal, a court still must determine how much the district is entitled to.

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

To pay the $4.6 million settlement for six victims, Beaufort County Council in 2007 passed a small tax increase in school operations taxes, paired with an equivalent offset in school debt taxes.

A seventh case was handled entirely by the insurance companies. The district later settled for $500,000 with an eighth victim who came forward after the initial settlement. A ninth victim died.

Wednesday's decision could mean millions of dollars to the district, which is grappling with budget shortfalls that could total more than $12 million over the next two fiscal years.

However, Truesdale said it would be "inappropriate to speculate on how money might be spent when there is very little chance of receiving funds anytime soon."