Portland prepares for fight with insurance company over $1.5 million in legal costs, including James Chasse case

From The Oregonian, January 4, 2012

The city of Portland is prepared to sue its former insurance company for unrecovered legal defense costs of about $1.5 million tied to nine cases, including the high-profile wrongful death suit filed by the family of James Chasse.

READ – Unnumbered Portland City Council Resolution: Authorize City Attorney’s Office to take action, including initiation of legal proceedings, to recover legal defense costs

Details of the dispute between Portland and Chartis Inc. remained elusive Wednesday, however, even after the Portland City Council voted unanimously to authorize litigation to recoup city costs.

The city’s dispute centers on money the city has spent, mostly for work by city attorneys, to defend itself against lawsuits, City Attorney Linda Meng said Wednesday. Recovering some or all of that funding would pump money back into Portland’s constrained budget.

But it also raises questions about city transparency.

Although city leaders previously received briefings about the matter, they voted Wednesday with no discussion. Publicly available documents accompanying the vote didn’t include cases in dispute or the amount of money at stake — facts that the city attorney’s office released only after repeated inquiries.

Meng also did not provide financial specifics, other than to say that the Chasse case had the largest expense.

Longtime government watchdogs say the city should have been more deliberate.

“Something like this, that was such a high-profile event that everyone knows about and was such a large amount of money, it should have definitely been discussed in open session,” said Dan Handelman of Portland Copwatch, which frequently calls attention to items on the City Council agenda that otherwise would receive little scrutiny.

Two of five members of the City Council were willing to comment Wednesday, and both defended the decision.

“We’re going after an insurance company to get money we think taxpayers are owed,” Commissioner Amanda Fritz said.

When asked about the transparency of the decision, Commissioner Dan Saltzman said, “That’s a good point” before suggesting it could have been a strategy to avoid tipping off Chartis.

Meng said the costs are from the past five years, though at least one lawsuit whose costs are in dispute was filed in 2003 and at least two in 2005.

The insurer has argued that its policy covered only outside counsel, and the city disagreed. Not all of the claims have been denied, and the city is still dealing with Chartis on some issues, Meng said.

A spokeswoman for Chartis did not return a message left Wednesday.

Of the nine cases disclosed by the city, the lawsuit filed by Chasse’s family is the most noteworthy.

Chasse died in 2006 from blunt-force trauma to the chest after being detained by police. An autopsy found that the 42-year-old, who suffered from schizophrenia, had 16 broken ribs and a punctured lung. Portland reached a record $1.6 million settlement with his family in 2010, which didn’t include the city’s defense costs.

Also on the list: the city’s expenses in fighting a lawsuit filed by police officer Bert Nederhiser, who was demoted after shooting at a suspect and nearly hitting officers; an arbitrator’s award to Tom Hurley, an injured firefighter who didn’t work for 17 years and ran a restaurant before being fired, then returned back to work; a wrongful termination case by former parks employee Mary Ann Huff; and a discrimination case filed by a Pakistan native who repeatedly applied for city engineering jobs and alleged he was passed over in favor of white applicants.

Portland’s legal office has the equivalent of 57 full-time employees and an annual budget of about $9.6 million. Attorneys handle about 2,000 cases and review about 6,000 contracts a year.