City recoups $60,000 from insurance carrier in Spectrum settlement

Sunday February 10, 2013

PITTSFIELD -- The mayor and city solicitor have negotiated an agreement with Pittsfield’s liability insurance carrier that will recoup more than half the amount of a controversial lawsuit settlement with Spectrum Healthcare Systems.

Mayor Daniel L. Bianchi said the insurance carrier, Massachusetts Interlocal Insurance Association (MIIA) Property and Casualty Group Inc., agreed late last month to pay the city $60,000. The city had sought reimbursement for the $100,000 it paid in August as part of a settlement of a lawsuit filed by Spectrum to resolve a dispute over a proposed methadone clinic.

The nonprofit group sued Pittsfield after the administration of former Mayor James M. Ruberto sought to block a building permit for the clinic. The Bianchi administration, which came into office in January 2012, subsequently settled the suit in a controversial agreement that allowed a permit for the clinic on Summer Street and paid Spectrum $100,000.

In the written agreement with the city’s insurer, MIIA agrees to pay the city $60,000 to resolve their disagreement over liability coverage, but states that "it is not to be construed as an admission of any coverage obligations owed to the city by MIIA under the [city’s] policies."

City Solicitor Kathleen E. Degnan said Thursday that she and the mayor continued talking to the carrier after the first response was a denial of coverage for the $100,000 Pittsfield had to pay Spectrum in the lawsuit settlement.

"Obviously, they disagree, but they did end up paying [$60,000]," she said.

Bianchi said Thursday, "I’m pleased. I was disappointed with the denial but pleased we could negotiate."

The mayor said MIIA at first rejected an appeal of its original denial and later offered a lower settlement amount before finally agreeing to pay Pittsfield $60,000.

The lawsuit filed by Spectrum in U.S. District Court and the Bianchi administration’s decision to settle it in August by agreeing to a permit for a methadone clinic here and to a $100,000 payment sparked controversy and criticism from city councilors and others. The debate raged before the council and in the media for several weeks, especially over the $100,000 payment, the fact the Bianchi administration settled a dispute with Spectrum that the Ruberto administration had fought in court, and over Degnan’s handling of the suit settlement.

Bianchi has vigorously defended the lawsuit settlement, which he said was necessary because the Ruberto administration had "illegally" denied a building permit for the methadone clinic. He said that he saw very little chance the city would prevail in the courts and that it could be liable for much more than $100,000, based on similar lawsuits.

Some councilors and others said they thought the city might have prevailed in court or at least avoided the $100,000 payment.

The state Department of Public Health had earlier determined that the city needs a methadone clinic to serve the number of addicts who reside here. Methadone is commonly used to treat addiction to painkillers and opiates, such as heroin.

And Bianchi defended Degnan against harsh criticism from some councilors and rejected a call for her to be fired. He termed an unsuccessful attempt at a no-confidence vote in the council on the solicitor and other criticism "playing politics" on the part of some councilors.

Ward 5 City Councilor Jonathan Lothrop, one of those critical of the handling of the Spectrum settlement, said Friday, "I am very happy we have received some compensation, and I think it is time to move forward."

Lothrop said, however, that he still sees a need for greater communication on the part of the Bianchi administration with the council, particularly briefings concerning pending legal matters. He said this biggest concern last year was that he felt the council was kept in the dark concerning details of the Spectrum settlement and asked to approve the $100,000 payment without knowing of the state of the lawsuit negotiations.

Ward 1 City Councilor Christine Yon issued a statement Friday on the insurance settlement, saying: "I am happy that a partial payment from the insurance company will relieve some of the burden from the taxpayers; however, I believe if we had been properly represented no funds should have been paid to Spectrum.


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