State paid nearly $19.6 million to settle claims in fiscal 2015

DES MOINES — Efforts to resolve construction issues at the state's new maximum-security prison in Fort Madison caused a sizable spike in the amount of money paid to settle claims and judgments brought before the State Appeal Board last fiscal year, officials say.

State negotiators agreed to pay more than $12.3 million to Walsh Construction Co. to resolve disputes associated with the 800-bed prison that carried a $131 million price tag but was plagued by design flaws, delays, mistakes and cost overruns.

Corrections officials announced Saturday that they had moved the maximum-security offenders from the existing penitentiary to the new facility, but the Iowa Attorney General's Office is looking into costs associated with the project that likely will be the subject of future litigation.

The prison project contributed heavily to the nearly $19.6 million the state paid in fiscal 2015 for judgments and settlements to resolve claims and disputes caused by employee mistakes, workplace misconduct or other damages involving government operations.

'Those were the big payouts,' said State Treasurer Michael Fitzgerald, a State Appeal Board member. 'Hopefully next year we'll be back down in the $4 (million) to $6 million range.'

More than $2 million in settlements stemmed from the state's troubled 2009 film tax credit program. The fiscal 2015 payments went to producers of registered movie projects entitled 'When September Ends,' 'Lucky' and 'Underground.'

In all, judgments and settlements paid via the state's regent institutions totaled more than $3.5 million — including almost $2.1 million for malpractice or medical-related claims brought against doctors at the University of Iowa Hospitals and Clinics in Iowa City.

Joseph Barry, the state's risk manager within the Iowa Department of Management, said the overall number of claims brought against the state appeared to be down last fiscal year, but the payout 'is way high' due to settlements involving the prison, the film tax credits and regent universities.

'Hopefully that doesn't trend,' Barry said. 'Every couple of years something falls out of the woodwork and increases the amount.

'This year it just happened to be the Iowa State Penitentiary and the settlement with the contractor. That was a big portion of that.'

Last fiscal year's payments to resolve settlements and judgments against the state were the highest since fiscal 2008, when a record $23.5 million was paid to settle claims tied to the Iowa Lottery's TouchPlay program.

Nearly $13.2 million was paid in fiscal 2012 to settle claims stemming from the now-defunct state film tax credit program. In fiscal 2014, the state posted one of its lowest years for settlements and judgments at nearly $2.9 million.

'Obviously we'd like to keep the numbers as low as possible, but it will vary from year to year depending on any kind of litigation,' said David Roederer, director of the state Department of Management who also serves as a State Appeal Board member.

'It's always a concern, and what we do on a month-by-month basis (is) we evaluate the claims that come in and we try to learn from those and try to take steps so that it doesn't happen again,' Roederer added. 'We also follow up if it was employee error, what if any disciplinary action would be taken because of that.'

INSIDE SOME OF THE 2015 PAYMENTS

A lawsuit filed by a former Iowa State University employee fired in 2010 resulted in a state payout of $686,658 to satisfy a court-approved judgment. Dennis Smith, an editor for the school's College of Engineering's marketing office, alleged he was unjustly terminated in retaliation by his former boss.

A separate $750,000 judgment was paid as reimbursement for medical costs resulting from a 2003 incident in Germany being supervised by University of Northern Iowa student interns.

According to State Appeal Board documents, Blake Jermon was attending a camp in Hanau, Germany, when the group went on a field trip to a local pool. Jermon was injured at the pool and later died as a result of complications from the injuries.

Also, a $3.5 million settlement was reached with Kris and Cathy Hill resulting from a lawsuit alleging negligence by UIHC for treatment of a subdural hematoma which resulted in permanent neurological damage, with the state paying half and University of Iowa Physicians contributing 50 percent of the settlement sum.

Among the judgments, the state was ordered to pay $546,000 to a former Iowa Department of Corrections worker who brought a discrimination lawsuit. Deborah Campbell sued, claiming she was treated unfairly because of her gender and age when she was fired in 2008 after working at the department for 10 years.

In other claims, the state paid nearly $400,000 to settle negligence claims brought by family members after a 98-foot-tall dead cottonwood tree fell onto their tent while they were camping at Lake Manawa State Park in Pottawattamie County. Also, a $35,000 jury verdict was paid to resolve a claim that the state took too long to provide orthotic footwear to an inmate at the Iowa State Penitentiary.

Chart: State Payouts By Year