Insurance will cover most Nuesse litigation costs

SANDUSKY Sandusky officials know they'll face legal expenses in the wake of the controversial firing
Tom Jackson
May 24, 2010



Sandusky officials know they'll face legal expenses in the wake of the controversial firing of former police chief Kim Nuesse.

And -- if they lose -- the city might have to pay out a big judgment.

But city officials also wield a big shield to ward off legal costs. Like most local governments dealing with the reality of lawsuits, the city spends considerable cash on legal insurance to spread out the cost of litigation from year to year.

The legal insurance covers both the expenses of litigation and much of the cost of a large judgment, said Ed Widman, the city's finance director.

Sandusky city manager Matt Kline fired Nuesse on June 17, citing her alleged dishonesty.

Nuesse, who contends she did nothing wrong, is pursuing at least two different avenues to get her job back. She has appealed to the city's civil service commission, which could reinstate her as chief if it ruled in her favor. As of Wednesday, a hearing on that appeal was tentatively set for 8 a.m. Monday.

Nuesse also has filed a complaint to the federal government's Equal Employment Opportunity Commission.

Both actions could lead to a lawsuit against the city.

Kline said Monday that possible costs to the city, and the fact the city has protection against large, sudden legal costs, did not weigh on his mind when he decided to fire Nuesse.

"It boils down to dishonesty," he said.

Widman said that for the coverage period of December 2007 to November 2008, the city paid $509,237 to participate in two insurance pools for litigation and a stop loss policy that kicks in when the city is hit with a big judgment. That fee included a normal premium of $429,000 and $80,000 the city borrowed to pay for an old case and had to pay back, Widman said.

Sandusky belongs to two separate pools that help spread the cost around and lessen the risk to any one community. One pool includes Sandusky, Huron, Willard, Bowling Green, Napoleon and Defiance, he said.

Losing a lawsuit is one of the factors that could affect rates, Widman said.

However, there are several other factors that can alter the cost of premiums, such as whether insurance companies are making money, Widman said.

"If there is a significant increase in the insurance market as a whole, we are not immune to that," he said.