School district, insurers argue before Court of Appeals panel about sex-abuse settlement coverage [The Beaufort Gazette, S.C.]

Sept. 15--The S.C. Court of Appeals heard arguments Tuesday in a dispute between the Beaufort County School District and its insurance carriers over settlement payments to victims of a former Coosa Elementary School teacher convicted of child molestation.

Attorneys for both the school district and its insurance companies presented oral arguments to a three-judge panel, according to Frank Holleman, who is representing the school district. Holleman, an attorney at the Wyche Law Firm in Greenville, also is this year's Democratic candidate for state superintendent of education.

Tanya Gee, clerk of the state Court of Appeals, said judges typically issue opinions about four to six weeks after oral arguments. They are not, however, bound to a specific timeline.

The district sued United National Insurance and the S.C. School Boards Insurance Trust in June 2007, seeking to recover about $4.6 million the district paid to six victims of former music teacher Philip Underwood-Sheppard.

In June 2008, the Beaufort County Court of Common Pleas ruled both insurers must treat each of the victims' claims as separate events. That means the district would be entitled to more than $5.5 million in annual insurance coverage against sexual abuse and harassment claims.

The district's insurers appealed the trial court's decision, saying all cases of sexual misconduct by Underwood-Sheppard should be handled as a single claim. That means the district would be entitled to far less money because its insurance coverage per claim is capped.

The lawsuit likely is far from over.

The decision issued by the Court of Appeals could be appealed, either by asking the full Appeals Court or the S.C. Supreme Court to hear the case, Holleman said.

Even if both parties accept the ruling, the trial court still would need to determine how much of its insurance coverage the district is eligible to receive in this case.

Underwood-Sheppard pleaded guilty to molesting at least nine students and was sentenced in 2003 to 25 years in prison.

To pay the $4.6 million settlement for six victims, Beaufort County Council in 2007 passed a small tax increase in school operations taxes, paired with an equivalent offset in school debt taxes.

A seventh case was handled entirely by the insurance companies. The district later settled for $500,000 with an eighth victim who came forward after the initial settlement. A ninth victim died.

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