Records: Scottsdale pays millions in out-of-court settlements

A view of a flag signifying the city of Scottsdale at the Scottsdale City Hall complex in downtown Scottsdale (Independent Newsmedia/Melissa Fittro)

In the past three fiscal years the city of Scottsdale has paid nearly $6 million in out-of-court settlements, records show.

An out-of-court settlement is generally the resolution of a matter between two parties before a case reaches a judge or jury, city of Scottsdale officials say.

In total, 33 settlements were listed on a public records request issued by the Scottsdale Independent newspaper.

“There are different kinds of claims and cases that settle, but settlements are generally the same concept and structure: the parties find a mutually agreeable way to resolve the claim,” Scottsdale Public Affairs Director Kelly Corsette said in a June 14 written response to emailed questions.

“Settling a claim or lawsuit eliminates the uncertainty of potential outcomes and lowers the cost of litigation — both reasons that the vast majority of civil lawsuits are settled prior to reaching a judge/jury.”

Records show the city of Scottsdale’s total $5,814,695.94 payment in three years was broken down to be:

  • $1,823,500.00 through 10 settlements in FY 2014-15;
  • $1,025,171.97 through 12 settlements in FY 2015-16;
  • $2,966,023.97 through 11 settlements in FY 2016-17.

The 2016-17 fiscal year will end on June 30.

Claims range in amount from as low as $100 to $2.5 million in a condemnation case settled this year.

“The Hing settlement was really a payment for his land — money used by the city to settle the condemnation hearing at what we believe was fair-market-value for the property. So this one in particular is in a different category than a lot of these,” Mr. Corsette said.

Other claims include personal injuries, alleged negligence and vehicular accidents.

“Claims are reviewed by staff in the city attorney’s office and/or risk management,” Mr. Corsette explained. “In cases where staff determines the city may have some fault or liability, the city may pay the claim. In other cases, the city will deny the claim.”

If the city denies a claim, the individual may choose to file a lawsuit.

“Initial review is always completed by in-house staff,” he said. “If a claim/case proceeds, the city may hire outside counsel (if circumstances warrant, in special expertise is needed, for example.)”

Most settlements are paid through the city’s Loss Trust Fund, an account created for this specific purpose to be “maintained for payment of the risk management program’s operating expenses, claims administration, defense services, losses, anticipated losses, and insurance premiums,” Scottsdale’s city charter states.

The Loss Trust Fund is regulated by a city council-appointed board, and is responsible for recommending the city council regarding the administration of the fund.

The city charter states the council shall appoint five joint trustees; each person must have at least 10 years of senior-level management experience in banking, finance or healthcare.

The current Loss Trust Fund trustees are Russell Mosser, Richard O’Connor, Jim Stabilito and Suzanne Welch.

Condemnation cases are one exception, Mr. Corsette says. Other settlements can also be paid by the city’s insurance carrier.

Any settlement over $20,000 requires city council approval, Mr. Corsette says. Most often, these settlements are found within the consent portion of council’s agenda.

Included in each of the city council reports detailing the individual settlements is a “future budget implication” section, stating proposed settlements may be included in the city’s primary property tax rate for the next year.

“The eligibility of settlement and judgment payments for possible inclusion in the City’s primary property tax rate is based upon an Arizona Attorney General opinion,” the staff reports state.

“The City of Scottsdale has a long-standing practice of including paid tort settlements equal to or greater than $20,000.00 in the city’s primary tax rate to reimburse the Self-Insured Fund for payment of the claim.”

The city’s payment in settlement fluctuates from year to year, and Scottsdale doesn’t have comparative data of other municipalities, Mr. Corsette says.

“Claims and lawsuits against the city are a part of serving a large population of residents and visitors, and truly vary from year to year,” he said.

Northeast Valley News Services Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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