June 22--A federal appellate court has ruled an insurance company is not responsible to pay any damage claims against Robert Mericle relating to the "kids for cash" lawsuits, meaning participants in a $17.75 million settlement reached last year will not receive an additional $1.75 million.
A three-judge panel of the Third Circuit Court of Appeals on Wednesday upheld a federal judge's ruling that Travelers Property Casualty Co. did not have to defend or pay damages for Mericle because he knowingly committed the acts that led to the suits.
In a separate ruling Thursday, the same panel ruled attorney Robert Powell, who co-owned the two juvenile detention centers at the heart of the scandal, and Mid-Atlantic Youth Services, which operated the centers, also are not entitled to coverage from the General Star Indemnity Co.
The ruling in the Mericle case directly affects juveniles and their parents who have filed claims for part of the settlement reached in December with Mericle, the real estate developer who built the PA Child Care and Western PA Child Care juvenile detention centers that were co-owned by Powell.
Marsha Levick, an attorney with the Juvenile Law Center, which represents the claimants, said the ruling won't have a major impact on the amount of money the claimants will receive.
The plaintiffs are still entitled to receive a portion the $17.75 million Mericle earmarked to pay claims, but they won't get $1.75 million more that was contingent upon whether Mericle prevailed in his coverage dispute with Travelers.
"It would have provided a little more money into the settlement, fund but not enough that it in any way undercuts the very favorable agreement we negotiated with Mericle," Levick said.
Mericle, Powell and Mid-Atlantic Youth Services were among numerous defendants named in nine lawsuits that were filed in 2009 relating to the juvenile justice scandal that led to charges against Mericle, Powell and former Luzerne County judges Mark Ciavarella and Michael Conahan.
The lawsuits, which were consolidated into a single class-action lawsuit, alleged Conahan and Ciavarella conspired with others to improperly incarcerate juveniles at Powell's centers in order to enrich themselves.
The insurance companies denied coverage, citing exceptions in the policies that preclude coverage for intentional and/or criminal acts taken by the policy holders.
U.S. District Judge A. Richard Caputo sided with the insurance companies, leading to the appeal to the Third Circuit Court.
Mericle, Powell and Mid-Atlantic Youth each argued the claims against them included allegations of negligence, which would trigger coverage, in addition to allegations of intentional conduct.
The Third Circuit Court disagreed, saying the complaints in the case only alleged intentional conduct.
Mericle and Powell also argued the criminal conduct to which they pleaded guilty was not a direct cause of the alleged harm that was done to the juveniles.
Mericle pleaded guilty to withholding information on a crime in connection with his payment of $2.8 million to Conahan and Ciavarella to reward them for referring him as the builder of the centers. Powell pleaded guilty to the same charge for assisting the ex-judges in concealing the source of the money Mericle paid them.
In rejecting their arguments, the Third Circuit Court said the complaint alleges those actions were part of an overall scheme to violate juveniles' rights, ensuring the Powell centers operated at or near capacity.
(c)2012 The Times Leader (Wilkes-Barre, Pa.)
Visit The Times Leader (Wilkes-Barre, Pa.) at www.timesleader.com
Distributed by MCT Information Services