Legal coverage iffy, county told

If suit lost, only fee repayment guaranteed, firm says

FAYETTEVILLE — An attorney representing Washington County sent letters to County Judge Joseph Wood last month and Thursday saying the county’s risk management pool may not cover a “negative outcome” in a lawsuit brought by a former county employee. Legal costs to defend the county are covered, according to the letters.

Former Chief of Staff George Butler filed the lawsuit in April against the county, Wood and several employees in their professional and individual roles. Employees have hired a separate lawyer. No trial date has been set.

Butler said in the lawsuit employees should return taxpayer money used by the county to pay for six department heads because they were hired without following Quorum Court-approved employee policies. The combined annual salaries budgeted for the six is $377,458, according to documents released earlier this year.

Attorneys for employees and the county have denied Butler’s allegations, according to court filings.

Some justices of the peace say they are concerned about the possible costs should a judge or jury rule against it. The county’s budget remains tight and the lawsuit adds to that pressure, said Justice of the Peace Butch Pond, a Republican representing eastern Washington County.

“It’s not just the lawsuit that’s looming,” Pond said.

The county has a $65 million budget and about a $4 million gap between spending and revenue, Treasurer Bobby Hill said in an email. Unappropriated reserve is about $6 million, including reserve for jail and insurance. Justices of the peace have struggled to build the reserve for years, Pond said.

Revenue figures don’t include money left over at the end of the year.

Pond said the lawsuit makes him more likely to support raising property taxes. The county must be responsible for itself, he said.

The county pays into a risk management pool to protect it financially, but only legal defense costs will be covered, according to letters to Wood from Rainwater, Holt & Sexton law firm in Little Rock. The firm, paid for through the Association of Arkansas Counties, is defending the county.

Jason Owens, a Rainwater, Holt & Sexton lawyer, wrote Thursday the association’s fund will decide later whether to “deny coverage” if there is a “negative outcome” to the county’s case. Owens didnt return several messages left at his office last week.

The county’s agreement for the association’s coverage doesn’t include the kind of

claims Butler has put forward, attorneys say.

“The [risk management fund] will pay for legal defense of this lawsuit on behalf of the county, however, if the county is found to be liable for an excluded claim, then the [fund] would not cover any judgment which arises from that excluded claim,” said Brandy McAllister, Risk Management Services counsel with the Association of Arkansas Counties.

Washington County is among 51 Arkansas counties paying into at least one Risk Management

Fund protection via the association, McAllister said in an email. The fund is meant to “provide stable and competitive pricing” for services, including general liability, according to the association’s website.

The association’s plan to hold off on a commitment to pay for all the costs leaves Washington County without needed cost estimates, said Justice of the Peace Eva Madison, a Democrat who represents northeast Fayetteville.

Madison is chairman of the Finance and Budget Committee.

“This court needs to know what that [cost] could be,” Madison said. “I think they owe us a decision.”