Private company withdraws offer; public funds to be paid on time, via arbitration
INDIANAPOLIS – The State of Indiana will proceed with distributing its $6 million in supplemental relief funds to victims of the State Fair stage-rigging collapse now that one company has withdrawn its part of a $7.2 million private settlement offer after not reaching agreement with enough claimants by today’s deadline, Attorney General Greg Zoeller announced.
Two companies named as defendants in State Fair lawsuits, Mid-America Sound Corporation and James Thomas Engineering Inc., had offered a combined private settlement of an additional $7.2 million in their insurance funds, in exchange for a sufficient number of State Fair victims releasing both companies from lawsuits. Under a settlement plan facilitated by the Attorney General’s Office, claimants were invited to share in the public and private funds, a total $13.2 million, if enough accepted the companies’ terms. Although 51 of the 62 eligible claimants agreed to the proposal, 11 declined or did not respond, and Mid-America decided not to exercise a waiver option and announced that the requisite threshold was not met in order to proceed with its tendered offer. With one company withdrawing its private funds, the Attorney General’s Office will proceed with distributing $6 million in State-only funds to eligible claimants as set out by statute, and will seek to facilitate discussions between claimants and the second company, JTE.
“Because State Fair victims said they needed financial assistance sooner rather than later, my office made an effort to facilitate a private settlement to increase the relief available. It was worthwhile to try to bring the claimants and defendant companies together; but since the parties did not reach an agreement, we will move to distribute the original $6 million the Legislature appropriated, well before the January 2013 deadline, and we will continue to look for opportunities to serve the victims,†Zoeller said.
As the lawyer for state government, the Attorney General’s Office defends the State and its funds from lawsuits, but Zoeller said his mission also was to attempt to do more for the victims. In March, the Legislature approved a bill, House Enrolled Act 1376, that had two objectives: It set aside $6 million in state funds as supplemental relief for State Fair victims, and it gave the Attorney General the flexibility to attempt to resolve indemnification claims made by Mid-America against the State. (Mid-America claims in legal pleadings that the State must cover its legal costs in lawsuits related to the stage-rigging collapse, a contention the State denies.) The bill included wording the Legislature passed requiring claimants who receive supplemental funds to not sue the State under an indemnification claim.
In the meantime, State Fair victims and their attorneys indicated they needed funds promptly for medical and financial needs and could not wait for several years while the State and Mid-America were in litigation. Under the proposed public-private offer, Mid-America would release the State from indemnification claims and offer its available insurance funds if the claimants would release Mid-America from their lawsuits, meaning the Attorney General then would be able to make available additional money for victims on an expedited basis.
The other defendant company, James Thomas Engineering Inc., did not have any indemnification claims and is not suing the State, but it also agreed to participate in the conditional settlement offer.
The Attorney General’s Office negotiated with the consortium of claimants’ attorneys and the two defendant companies, and Zoeller on June 22 publicly announced the combined settlement proposal with the included resolution to the indemnification issue, and the mutual release requirements. Claimants had until August 1 to submit their signed release forms, and Mid-America and James Thomas Engineering had until midnight tonight, August 15, to review the claimants’ releases and determine whether a sufficient number and ratio had joined to make settling cost-effective or otherwise appropriate for them, rather than continued litigation.
As of Wednesday night’s deadline, with 51 claimants signed, Mid-America Sound Corporation could not agree to tendering its insurance funds and withdrew its offer, meaning it is not released from lawsuits. Claimants still can pursue suits against that company or against other defendants in the State Fair disaster that were not part of settlement discussions.
By contrast, James Thomas Engineering Inc. did not make a claim of indemnification against the State. Zoeller said the Attorney General’s Office is willing to continue to facilitate discussions between claimants’ attorneys and JTE in hopes of reaching a resolution that might benefit victims.
Next, the Attorney General’s Office intends to distribute the State money to each of the 62 claimants who agree to the terms included within House Enrolled Act 1376, and will provide them instructions soon for obtaining funds. Though the withdrawal of Mid-America’s private settlement offer means that its indemnification claims in multiple lawsuits are not extinguished, the State will continue to oppose Mid-America’s legal assertion of indemnification in court. Zoeller is confident the State’s case is strong and that the State is prohibited based on applicable statutory and constitutional provisions from indemnifying the company for any liability or legal expenses in claimants’ lawsuits, though it could take years for that litigation to conclude.
Last December, Zoeller’s office with the assistance of victim-compensation expert Kenneth Feinberg distributed the first round of expedited relief: $5 million in tort claim funds to claimants, representing the maximum in state liability. This year, the Legislature passed House Enrolled Act 1376 to provide $6 million in supplemental relief beyond the liability cap to victims of the State Fair tragedy. The Legislature gave the Attorney General a deadline of January 2013 and flexibility to distribute the supplemental money through an arbitration process.
A three-member arbitration panel already has started its work reviewing the claims victims submitted to determine specific amounts they will receive out of the $6 million. Participating estates of fatality victims will see their amounts increased from approximately $300,000 the State paid them last year to $700,000 each. The statute also says that claimants with non-permanent physical injuries will be reimbursed for 100 percent of their out-of-pocket medical costs, after insurance, and taking into consideration the 65-percent payments made in December. Arbitrators will calculate individual amounts for claimants with permanent and non-permanent physical injuries. Checks will be issued this fall, before the January 2013 deadline. In the meantime, Zoeller’s office will explore other options for assisting victims.
“No amount of money ever will replace the lives lost or alleviate the anguish suffered by families in the State Fair tragedy. Some said we should have distributed the $6 million and walked away, but we had a duty to do more for the victims and try to secure additional funds to assist them with their substantial financial needs. We worked with a large group of claimants’ attorneys in structuring a reasonable and equitable settlement proposal,†Zoeller said.
“On a personal note I will admit to some disappointment, but I believe the public-private effort was nonetheless worthwhile. Without putting the State at any risk, we provided an opportunity to speed more than twice the funds to the victims, which has always been my focus. It’s not my role to assign blame that an agreement was not reached, but I will continue to offer whatever assistance my office can provide,†Zoeller added.
The Attorney General’s Office will circulate additional information to eligible claimants and their attorneys by the end of the week.
