Beatrice Six

Four of the members of the group collectively known as the Beatrice Six at a reception in Lincoln in January 2009. From left, they are James Dean, Ada JoAnn Taylor, Tom Winslow and Debra Shelden. The two others are Joseph E. White, who died in 2011, and Kathy Gonzalez.

LINCOLN — Gage County officials long thought they lacked the insurance to cover liability for a deeply flawed investigation that sent six people to prison for a murder they did not commit.

But in the year since a federal court jury ordered the county to pay $28 million to the Beatrice Six, those elected officials have challenged what they were told about insurance.

In addition to appealing the jury verdict, the officials have filed lawsuits against the county’s insurers. A legal firm hired to pursue the case believes the county can make a case for payment of at least some of the Beatrice Six judgment.

“We’ve said from the beginning the county has a good-faith basis to pursue coverage,” said Joel Nelson, one of the Lincoln attorneys hired by the county. “We still very much believe that, and we are going to push those cases as fast as we reasonably can to get determinations.”

None of the people wrongly convicted of the 1985 rape and killing of a 68-year-old grandmother in Beatrice has collected a cent of damages for the time they spent locked away in Nebraska prisons — more than 70 years in total. And one year later, the threat of bankruptcy still hangs over the southeast Nebraska county of 22,000 residents.

As with most aspects of the Beatrice Six case, some of the claims raised in the insurance dispute are unprecedented in Nebraska jurisprudence. But it comes down to two main questions: Did the county have coverage for what amounted to a colossal case of law enforcement malpractice and, if so, how much of the losses would be covered?

When Joseph E. White and the others wrongly convicted of murder filed their civil rights lawsuits in 2009, then-Gage County Attorney Randy Ritnour sought to answer those questions.

The first denial of coverage came from the county’s current insurance provider, the Nebraska Intergovernmental Risk Management Association, a quasi-governmental risk management pool the State Legislature created in 1988 to provide insurance for counties and other governmental bodies. Currently 81 of Nebraska’s 93 counties belong to the association, as do 10 other governmental subdivisions.

In 1989, when Gage County sheriff’s investigators claimed to have solved the 1985 slaying of Helen Wilson, the county did not belong to the pool. By the time it joined the association in 1997, White was seven years into a life term for first-degree murder and was probably little more than an afterthought to most residents of Beatrice.

But after last year’s July 6 verdict, the Beatrice Six case took on a new and ominous meaning in Gage County. Jurors who sat through a monthlong trial in U.S. District Court in Lincoln ordered the county to pay $7.3 million to the estate of White, who died in 2011 in a workplace accident at an Alabama coal refinery. Just three years earlier, he became the first person released from a Nebraska prison because of post-conviction DNA testing.

The tests on crime scene evidence preserved by Beatrice police found ample DNA, but none of it matched any of the six people convicted of the crime. Instead, genetic markers recovered from dried blood and semen stored for 20 years in an evidence locker matched a lone sexual predator, a man who had died in 1992 in Oklahoma.

In all, jurors awarded $28 million to White, Ada JoAnn Taylor, Tom Winslow, Kathy Gonzalez, James Dean and Debra Shelden in a case their lawyers called “the worst miscarriage of justice” in Nebraska. It is known nationally as the most DNA exonerations stemming from a single conviction.

The damages — now exceeding $31 million, with attorney fees, costs and interest — far exceed the $9 million the county collects in tax revenue each year. Those kinds of numbers motivated the insurance review, said Myron Dorn, chairman of the Gage County Board.

“We felt that citizens of Gage County deserved a lot better answer than ‘Gage County, you don’t have insurance,’” he said. “It may be that we won’t get anything back — we realize that — but we felt it would be irresponsible not to try.”

Based upon court records, here’s what the review has found in the county’s favor:

In 1997, the question of liability coverage for public officials and law enforcement officers was a primary topic of negotiations between the county and the Nebraska Intergovernmental Risk Management Association. The insurer’s sales pitch to the county included a pledge to cover “all prior acts” of liability by public officials.

Liability coverage for law enforcement was retroactive to Aug. 2, 1989 — the year during which most of the law enforcement activity in the Beatrice Six case occurred.

The assurances about coverage “were essential reasons the county joined NIRMA” in 1997, the lawsuit states.

Additional documents showed the law enforcement provision of the policy covered personal injury that included “false arrest, detention, imprisonment, malicious prosecution or violations of the federal Civil Rights Act.”

The county has asked Lancaster County District Judge Jodi Nelson for a declaratory judgment stating that the association must cover the county and pay claims tied to wrongdoing by its sheriff’s deputies during the Beatrice Six investigation.

In a formal response to the lawsuit, the insurance association flatly disputes the county’s contention that losses are covered.

Charles Campbell, the York, Nebraska, lawyer who represents the insurance pool, points to policy language that specifically excludes claims due to “acts committed with dishonesty or intent to deceive and defraud.” The insurer argues last year’s verdict shows investigators acted deliberately to solicit, fabricate or manufacture evidence “they knew or reasonably should have known was false.”

Although the Nebraska Attorney General’s Office conducted an exhaustive review of the Beatrice Six investigation, criminal charges never were brought against the sheriff’s deputies or prosecutors responsible for the wrongful convictions.

Still, what if the judge eventually rules on the county’s behalf? What might the Nebraska Intergovernmental Risk Management Association have to pay? And could such a decision shift the bankruptcy threat to the governmental insurance pool?

The association’s legal filings say that any coverage provided to Gage County offered a maximum liability limit of $5 million per occurrence. Of that, the association would pay $300,000 out of pocket, and the rest would be paid by a private, third-party insurance company the group contracts with to cover large losses.

Based on an annual report of the association’s financial condition in 2016, the pool nets nearly $4.7 million in annual premiums and maintains a reserve fund of about $13.6 million. The reserve fund can be tapped when claims exceed premium collections in a given year.

The $5 million coverage limit represents the maximum liability exposure for a public entity under Nebraska law, said Craig Nelson, executive director of the insurance association. So a judicial finding against the Nebraska Intergovernmental Risk Management Association would not jeopardize its financial solvency, he added.

But county officials may seek clarification on whether the $5 million limit applies to the six collectively or to each one individually. If the court were to rule the limit applies to each of the Beatrice Six, the association could be on the hook for most of the $28 million, the county would likely argue.

In addition, the lawsuit argues that if the county did have coverage, the association had an obligation to provide legal defense to the county. The private lawyers hired to defend the county in federal court have racked up close to $1.5 million in fees. In addition, the county has been ordered to pay close to $2 million in legal fees for the half-dozen lawyers who’ve represented the six in the lawsuit.

Another key issue in the insurance lawsuit involves the coverage retroactive date the association wrote into its first policy with the county: Aug. 2, 1989. Before that date, all of the six had been arrested by sheriff’s deputies. After that date, all were convicted and sentenced to varying prison terms.

If the court rules that the county did have insurance coverage, it must also determine whether the liability occurred at the time of arrest or at the time of conviction.

The county has filed a second lawsuit against Employers Mutual Casualty Co., which provided general liability coverage to the county from Feb. 2, 1989, to Feb. 2, 1990. That policy provided coverage of up to $1 million for each occurrence, with a $2 million aggregate limit.

Employers Mutual also has denied the coverage, pointing to policy language that excludes coverage for professional staff. The company argues that the sheriff’s deputies and county attorney are professional and, therefore, not covered.

Several additional private insurance companies contracted to provide the association with coverage for major losses have been named as third-party defendants in the case. One of the third-party defendants is Berkshire Hathaway Homestate Co., an insurance provider owned by the same parent company that owns The World-Herald.

Considering that the appeal of the jury verdict has not yet been argued before the 8th U.S. Circuit Court of Appeals, a decision on the court case seems unlikely before next year. It remains to be seen whether or not the insurance dispute will be resolved by then.

joe.duggan@owh.com, 402-473-9587

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