School district reaches settlement with insurers in molestation case

September 22, 2011 

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A $2.65 million settlement between the Beaufort County School District and two insurance carriers brings a four-year lawsuit to an end.

The settlement in a dispute with United National Insurance and the S.C. School Boards Insurance Trust was approved Tuesday by the Board of Education, though it was about $2 million less than what the district paid out to victims.

School board Vice Chairman George Wilson said the possibility the case would drag out several more years if appealed to the S.C. Supreme Court and the legal costs that would entail made the settlement the right choice. "We as a board are very pleased," Wilson said Thursday. "We consider it a win."

The district sued the insurance carriers in June 2007 to recover about $4.6 million the district paid to six molestation victims of former Coosa Elementary School music teacher Philip Underwood-Sheppard.

To pay the victims, the County Council passed an increase in school-operations taxes in 2007, paired with an equal reduction in school-debt taxes. Wilson said Thursday that meant there was no net increase for taxpayers.

The carriers had paid $650,000 several years ago for the entire settlement, saying the molestation cases should be combined into a single claim.

In June 2008, the Beaufort County Court of Common Pleas ruled the insurers must treat each of the victim's claims as separate events. That meant the district could have had more than $5.5 million in annual insurance coverage against sexual-abuse and harassment claims.

The insurance carriers appealed, and the S.C. Court of Appeals sided with the district in February. The carriers filed in June to have the case considered by the S.C. Supreme Court, a spokesman at the court clerk's office said.

The $2.65 million check is expected within 30 days.

The money comes amid school closures, increased class sizes and the decision to cut about 80 positions in the district. In total, about $6 million in budget cuts were made this year.

Wilson said it has not been decided what the $2.65 million would be used for.

Follow reporter Rachel Heaton at twitter.com/HomeroomBft.

Related content

  1. Appeals court sides with school district in molestation-settlement case; Feb. 23, 2011
  2. School district, insurers argue before Court of Appeals panel about sex-abuse settlement coverage; Sept. 14, 2010
  3. School district wins first round in abuse payment battle; June 21, 2008

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