State settlements settle back near yearly normal

More than $4.65M paid out during fiscal year 2016

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DES MOINES — State government paid more than $4.65 million from the general fund in fiscal year 2016 to settle claims and resolve disputes caused by employee mistakes, workplace misconduct or other damages — a total that is down significantly from the previous year, according to state records.

State settlements and judgments paid during the 12-month period that ended June 30 were down fourfold from fiscal year 2015, when efforts to resolve construction issues at the newly built Iowa State Penitentiary caused yearly payments authorized by the State Appeal Board to spike to nearly $19.6 million.

“It seems to go in cycles,” said Joseph Barry, the state’s risk manager within the Iowa Department of Management who tracks settlements and judgments for the three-member appeal panel.

“Last year was a pretty normal scenario,” Barry added. “Obviously, if it isn’t zero, it’s always higher than you want it to be, but I don’t know if that’s reality. As long as it’s not those spikes, the more we can stay away from those issues the better.”

State Department of Corrections payouts — some still related to design flaws, delays, mistakes and cost overruns at the 800-bed prison in Fort Madison — topped $1 million last fiscal year after state negotiators agreed to pay more than $12.3 million to Walsh Construction Co. in fiscal year 2015 to resolve project disputes.

Another carry-over cost in fiscal year 2016 was one of the last of the remaining settlements from the now-defunct state film tax credit program that drove claims to $13.2 million in fiscal year 2012. State Appeal Board members approved a $700,000 payment to the makers of the 2010 film “Janie Jones” to settle contract disputes with three companies that invested money in the movie based upon an expectation of state tax credits that weren’t paid. The final settlement was based on an audit of the movie’s expenses.

The largest category of state payouts in fiscal year 2016 involved malpractice or medical-related claims brought against doctors at the University of Iowa Hospitals & Clinics in Iowa City that resulted in more than $1.6 million in settlements.

“On a normal year, that’s usually our biggest issue,” Barry noted.

The state agreed to pay $1.125 million of a $3.75 million award to settle a lawsuit brought by a couple that accused UI Hospitals and Clinics physicians of delaying a Caesarean section, resulting in a brain injury to the baby caused by oxygen deprivation.

Other payouts included $800,000 to settle a medical negligence lawsuit claiming the hospital failed to diagnose spinal fractures resulting in a permanent back injury, and a $300,000 award to settle a lawsuit alleging medical negligence at the UI Hospitals & Clinics relating to aspects of a hernia surgery that resulted in chronic pain and disability for a university professor. The medical settlements were divided between the state and the UI Physicians group.

In all, judgments and settlements paid via the state’s regent institutions totaled $1.659 million.

The appeal board also accepted a $235,000 settlement to resolve a lawsuit challenging conditions of confinement involving a former resident at the now-closed Iowa Juvenile Home. Lawyers for the girl alleged she was confined in seclusion at the state’s Toledo facility in violation of her constitutional rights and that the home’s use of isolation cells constituted negligence. The allegations were resolved with no admission of wrongdoing, according to board documents.

During the recently completed fiscal year, board members also approved a judgment ordered by a federal judge for $298,919 in attorney fees stemming from a challenge the Iowa Right to Life Committee brought against the Iowa Ethics and Campaign Finance Board over state forms and the reporting requirements for political action committees; an $80,000 payment to an estate in the 2013 death of a patient at the Iowa Veterans Home in Marshalltown; and a $10,000 payment to settle allegations related to sexual orientation and disability discrimination brought by a former Iowa Workforce Development employee.

The high mark for state payments to resolve settlements and judgments remains fiscal year 2008, when a record $23.5 million was paid to settle claims tied to the Iowa Lottery’s TouchPlay program.

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