District treasurer Mike Weis expressed concerns at a board meeting this past month, declaring the fee unnecessary.
He and board members suggested the district could take legal action against Ohio School Plan, its former insurer, if it didn’t cover any future lawsuits that were “already its legal responsibility.”
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After reviewing public documents regarding the fee, however, it’s clear offering the plan, called a supplemental extended reporting period, isn’t as uncommon as they suggested — in fact, it’s a required procedure. The fee would have guaranteed coverage of any new lawsuits occurring in the next three years related to the district firing its superintendent in April.
The deadline to enroll in the plan was Oct. 1.
“It’s fairly standard in the insurance industry and it’s the right thing to at least offer it to our formed insured,” said Joe Seay, president of Hylant Administrative Services, part of a third-party insurer representing the Ohio School Plan. “I find some humor in it being called unnecessary.”
Ohio School Plan dropped Huron Schools on July 1, shortly after board members voted 3-2 to fire superintendent Fred Fox for alleged misdeeds. Fox appealed the termination and is suing the three board members who voted to fire him. Ohio School Plan halted its coverage because of pending lawsuits, “lack of board focus” and more. It was only the second time Ohio School Plan halted coverage of a district in its 11 years.
Liberty Mutual Insurance now covers Huron Schools for $61,000 per year. Ohio School Plan’s coverage was $38,000 per year.
Typically, a client chooses not to enroll in a supplemental extended reporting period if its new insurer offers retroactive coverage or if the new insurer is superior to its old insurer, Seay said.
Liberty Mutual Insurance does offer Huron Schools some forms of retroactive coverage regarding Fox’s firing, specifically for unknown past circumstances, Weis said. Situations the board and district are already aware of, however, would not be covered under the new insurance plan.
Ultimately, Weis said whether new lawsuits would be covered would be determined on a situation-to-situation basis.
“We’re rolling the dice, in a sense, but we don’t really foresee anything happening that wouldn’t be covered,” Weis said. “We don’t see a great potential risk here, and we didn’t think it was necessary to enroll.”