St. Paul schools pay more for legal insurance – lots more

April 23--After a string of lawsuits and settlements with students' families and former employees, costs of legal insurance for St. Paul Public Schools jumped almost 280 percent this year.

That increase stands out, even amid rising costs for such coverage districts in Minnesota and beyond have seen in recent years. This year, the St. Paul school board approved a $595,600 premium cost for a policy known as school leaders' legal liability.

Documents released by the district show a wide variety of cases its insurer has handled recently under that policy, including allegations of age discrimination, wrongful termination and false advertisement.

Costs for that type of coverage have gone up statewide. People are suing public schools more and demanding more when they do.

"Over the last decade, the frequency and severity of educator legal claims have grown dramatically," said Jim Ketterson, president of Minneapolis-based Riverport Insurance, which provides coverage to St. Paul, Anoka-Hennepin and other Minnesota school districts.

Minnesota prices also have increased since the mid-2000s to make up for low premiums offered then by national insurance carriers seeking a foothold in the state, experts say. But those steep increases have been leveling off, said Tom Gallagher at Marsh & McLennan Agency.

On average, the 50 or so districts his agency works with saw single-digit premium increases this year.

The legal liability insurance generally covers claims or lawsuits against the district and a variety of personnel, including school board members, principals and district volunteers. Those claims can include employment disputes, discrimination charges, data privacy issues and others -- or, as St. Paul attorney Jeff Lalla explained it, most claims that do not involve bodily injury or property damage.

St. Paul's legal liability policy does not cover most special education-related claims, he said.

When a legal demand is made or a lawsuit is filed, the district forwards the claims to its insurer. The company enlists an attorney to defend the district, if necessary.

St.

Paul, which is Minnesota's second-largest district, buys its coverage as part of a package that includes general liability coverage for physical injuries, auto and crime insurance. Overall, the district's legal liability hike was offset by decreases in premiums for general liability and auto coverage. The total package for the year increased by 47 percent to about $880,000.

The legal insurance cost increases have not been as dramatic at Minnesota's other large districts.

Anoka-Hennepin, which is slightly larger than St. Paul, saw a 4 percent increase, to about $140,000. But that district switched to a policy that includes deductibles, which limited the premium hike. St. Paul considered adding a deductible, as well, but decided that would be too risky.

In Rosemount-Apple Valley-Eagan, the state's fourth-largest district, the cost of that coverage rose 40 percent. Minneapolis, the third-largest district, is self-insured, but it is considering whether to start buying insurance, a district spokeswoman said.

Based on the documents St. Paul provided, its legal liability provider has reached half a dozen settlements with former employees or families of students in the past two years ranging from less than $800 to at least $200,000.

Early last year, the district also settled a federal court case in which the families of several former students alleged a teacher at the Heights Community School disparaged black students. They sued the district and the school principal, arguing that officials did not intervene. In a rare move, the judge sealed the settlement amount.

The district did not admit wrongdoing in those cases.

Riverport also helps handle a couple of ongoing lawsuits, including one by a Shoreview-based mental health treatment center that sued several large districts that stopped paying tuition for students there.

Ketterson, the Riverport president, said his company does not discuss pricing for individual clients. Riverport and its affiliated companies have worked with Minnesota districts for more than 20 years, insuring such high-profile cases as tornado damage, school shootings and bullying.

Ketterson said that generally Riverport takes into account its recent expenditures defending the district, the number of educators working there and district efforts to control legal costs through policies or employee training, among other things.

Generally, districts have seen growing costs for such coverage as both the number of claims per educator and their amounts have more than doubled in 10 years -- a trend Ketterson said is not unique to Minnesota.

Gallagher, the executive vice president of the schools and public entities division at Marsh, said districts his company works with saw as much as 50 percent legal liability premium increases as recently as two or three years ago. Now, premium costs seem poised to flatten, he said.

Denise Drill, an expert in school finance and insurance at the Minnesota School Boards Association, noted out-of-court settlements are appealing because they arrest significant attorney costs -- even in cases when the district might have a strong case against a claim. The insurance company makes the call on whether to settle, but district leaders usually have some say.

In St. Paul, school board chairwoman Mary Doran said a colleague on the board inquired about the premium increase, which was approved as part of a package of board actions without discussion.

"We just happened to have more claims that year," she said, adding, "I wasn't overly concerned, but it's something I will be more mindful of."

Recent cases

Here are the most recent legal cases that St. Paul Public Schools has forwarded to its insurance company, in the order in which they were resolved:

2012

--The district and a former assistant director of human resources settled a pair of lawsuits stemming from the director's 2007 termination. In 2008, the district sued her, saying she was not abiding by the terms of a separation agreement, which included $75,000 and five days of pay. She sued the district and a number of employees, alleging defamation, age discrimination and whistleblower claims. Settlement: $200,000.

--The district settled a teacher's complaint with the Minnesota Department of Human Rights alleging age discrimination. Settlement: $792. District agreed to provide training for some managers.

--Two coaches at Johnson High School threatened to sue, alleging they were fired because the school wanted to replace them with Asian coaches to oversee increasingly diverse teams. Settlement: $22,000.

2013

--The district settled with a former teaching assistant at Ramsey middle school who alleged he was fired when he said he would file a worker's compensation claim involving an injury during gym class. Settlement: $10,000.

--The U.S. District Court dismissed an age discrimination suit by four former Arlington High School employees who said they were transferred involuntarily to less desirable positions and passed up for leadership assignments. Settlement: None.

--The district settled a suit by several former Heights Community School families who alleged a teacher discriminated against black students and the district didn't intervene promptly. Settlement: Judge sealed amount.

--The district settled a suit alleging a special education student at Linwood-Monroe Arts Plus magnet school was improperly transferred to a different school after the district misidentified his disability. Settlement: $20,000, 150 hours of compensatory education services.

--LifeSpan, a Shoreview-based center that provides education and mental health treatment, sued the St. Paul district after it and other large metro districts said they would no longer cover the tuition for students receiving treatment there. St. Paul settled an earlier case involving an 8-year-old for $10,000. The lawsuit is still pending.

--A former Humboldt High School student sued, alleging that the school principal injured her in breaking up a hallway altercation. The district has filed to dismiss the lawsuit.

Mila Koumpilova can be reached at 651-228-2171. Follow her at twitter.com/MilaPiPress.

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