Insurance lawsuit nets Kenai cash

Posted: Sunday, January 09, 2005

Thanks to joining up with a class-action lawsuit, the city of Kenai will see a tidy sum of cash that city officials thought would be lost forever.

City Attorney Cary Graves announced at the Kenai City Council meeting Wednesday that the city will receive settlement money for a suit in a worker's compensation insurance matter.

Cigna's workers compensation package covered the city until June 30, 2000, when it was acquired by Ace, another insurance provider. Upon that end, Ace decided it was not going to make payments from the last period and maintained it was not required to make those payments.

"We bought the policy with the understanding we would get a refund from the premium we paid based on our amount of losses, and the company just didn't pay it back," said Larry Semmens, Kenai financial officer.

"We disagreed with that and so did others," Graves said.

The city had paid in and got nothing back. Other entities were small cities like Kenai and medium-sized private firms from the rest of the country.

"I got the permission of the council that we be included in the class-action lawsuit. Cigna settled out of court, and in December we got a notice telling us what we were owed. That came to $63,865, which was consistent with our estimates," Graves said.

Graves and Semmens made that estimate based on previous years' averages.

"We feel the numbers are accurate and we're not going to challenge the decision. We feel pretty good about it," Graves said.

Semmens said the city had been trying to contact the company continuously and finally had a breakthrough when Graves saw a small article in "Lawyers USA Weekly" about the lawsuit. Graves then contacted the lead lawyers listed in the article.

"When I saw the article I realized that was us. I e-mailed them immediately and they told me we were on the list," he said.

The city joined a list of at least 107 other entities involved with the lawsuit that had a total payout of $14 million. Graves said the company settled out of court and agreed to pay all the money on the dividend it withheld.

The class action lawyers got 25 percent of the payout, which, according to Graves, "is actually very reasonable."

"To pursue this by ourselves would have been tough to do, because it would have taken a lot of time and resources. It would have been too expensive for us to go for an $80,000 claim, so this worked out really well for us," he said.

"This is a good thing. We really could have gotten nothing," Semmens said.

In other business, the council:

n Passed Ordinance 2075-2004, a fiscal year budget adjustment that decreases estimated revenues and appropriations by $16,896 in three senior citizens funds.

n Passed Resolution 2005-1, which transfers $11,300 from the general fund to pay utilities at the Alaska Regional Aircraft Firefighting Facility for the Arctic Winter Games.

n Passed resolution 2005-2, which supports legislation to extend provisions of House Bill 242 rehired retiree employment waiver.

The next council meeting is scheduled at 7 p.m. Jan. 19 in the council chambers.

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