Murphy – Cherokee County citizens finally know just how much – and for how long – they’ll be paying for past mistakes by the Department of Social Services.
The Cherokee County Board of Commissioners, in a special meeting June 29, unanimously approved a $48.5 million settlement that resolves more than 20 remaining lawsuits stemming from separation of families by DSS. The county’s insurer, the N.C. Liability & Property Pool, will pay $24.25 million, while the county will be responsible for the remaining $24.25 million. The N.C. Liability & Property Pool also agreed to dismiss its own lawsuit against Cherokee County as part of the agreement.
Cherokee County will pay $4 million of the settlement by Feb. 15, 2023. The county will then pay about $2.9 million per year for seven years, beginning in July 2024 and ending in 2031. The payments will not accrue any interest.
The approval of the settlement will result in an additional 8 cents added on to the county’s 2022-23 millage rate, setting the new figure at 61 cents per $100 of property value. That means the owner of county property valued at $200,000 will pay an additional $160 per year solely because of the lawsuits.
“It was probably the most difficult decision I’ve been involved with since I’ve been a commissioner,” Commissioner Cal Stiles said. “We’ve agonized and laid awake at night worrying about it.
“It’s been a huge cloud over Cherokee County, but at some point we had to try to resolve it, and we’ve probably got as good of a resolution as we were going to be able to get. We know what it’s going to cost us per year to resolve this, and we can go about managing Cherokee County’s budget and the county without the uncertainty of the financial settlement hanging over our heads.”
Twenty-six lawsuits were filed against the county in 2018 and 2019, stemming from the Department of Social Services’ use of custody and visitation agreements to place children outside of their parents’ homes without court approval. Benjamin Zellinger, a special prosecutor with the State of North Carolina, said last year that DSS employees used CVAs on numerous occasions over the course of 10 years, partly because the agency was “greatly understaffed” and “cut a corner” to save time and money. As a result, no services were provided to children following their separation.
The first of those cases was tried in U.S. District Court in May 2021 and resulted in jury awards and attorney fees of more than $6.5 million for Brian Hogan and his daughter. The N.C. Liability & Property Pool subsequently filed a lawsuit that would absolve their responsibility to cover any other financial awards in the remaining lawsuits.
The insurer argued that the county’s policy did not include coverage for “fraudulent, dishonest or criminal behavior” committed by a “covered person” and damages “arising from the intentional, willful, malicious or criminal conduct.” The Hogan judgment was accruing interest at a rate of more than $78,000 per year.
As part of the Hogan judgment, the jury determined that former DSS director Cindy Palmer, and former county and DSS attorney Scott Lindsay, acted in a “grossly negligent manner,” violating the father’s and daughter’s due process rights.
Palmer pleaded guilty in October 2021 to one count of felony obstruction of justice, receiving one year of unsupervised probation. As part of the plea agreement, prosecutors dismissed several other charges, including willful failure to discharge duties, perjury and contributing to the delinquency of a minor.
Palmer became interim director of DSS in August 2015 and was appointed to the position full time in March 2016. She resigned as director in June 2018 amid the state’s investigation into the use of CVAs.
However, she was placed back in the role of business officer, a position she held for 11 years prior to being named DSS director. Palmer resigned as business officer on Sept. 27, 2021.
Former DSS supervisor David Alan Hughes also pleaded guilty to two misdemeanors in August 2021. Meanwhile, Lindsay remains charged with 20 counts of felony obstruction of justice, two counts of contributing to the delinquency of a minor and willful failure to discharge duties.
In another case, Cherokee County approved a $4 million settlement with Molly Cordell on Dec. 6, 2021, avoiding a trial that was expected to begin early this year. She and her younger sister, Heaven, were separated from their family by county DSS workers in 2016. Heaven Cordell also agreed to settle all claims against Cherokee County and DSS personnel last year for $450,000.
Molly Cordell said she felt like Cherokee County DSS effectively “forgot that (she) existed for three years.” She lived in a variety of places during that time, ranging from staying with her brother, to a home where she endured a sexual assault. At one location, she was forced to maintain a job and pay rent for a room that she described as a pantry off of the home’s kitchen.
County Manager Randy Wiggins read a prepared statement on June 29 in which he outlined several reasons for the $48.5 million settlement, including “the distinct possibility that the N.C. Liability & Property Pool would prevail,” leaving the county to pay all remaining lawsuits, legal fees and past judgments.
“If we had taken these (lawsuits) individually, there’s no telling what it would have cost the county at some point,” Stiles added. “I think Darryl Brown, our (county) attorney, working with the other attorneys that the insurance and the county had, did an excellent job. Darryl did an excellent job on behalf of the county working to resolve this.”
According to the county’s statement, the insurer will pay the $6.5 million Hogan judgment, plus any interest, and $17.5 million within 60 days of the approval of the agreement by U.S. District Court. Cherokee County paid nearly $300,000 in additional fees to outside legal counsel regarding the lawsuits. Additionally, the county was unable to finance certain capital projects “until the cloud of financial uncertainty of pending litigation was removed.”
The county’s written statement concludes by saying, “It is the hope of the Board of Commissioners and all of Cherokee County government that the settlement of these cases will allow the Department of Social Services to grow and to restore the confidence of the people DSS serves every day.”