State Sues Travelers Insurance for $16 Million Tied to Landfill
Saturday, September 04, 2010
A state agency has sued the Travelers insurance company for at $16.6 million to cover money stolen by employees and other officers at the state landfill, a GoLocalProv investigation has learned.
The case stems from corruption perpetrated by former commissioners and employees at the Rhode Island Resource Recovery Corporation, the quasi-public agency that manages the state landfill in Johnston. In fall 2009, a state audit found that as much as $75 million in taxpayer money had been wasted by the gross mismanagement and widespread wrongdoing at the landfill.
The report concluded that commissioners and managers at Resource Recovery had shown “apparent disregard for their fiduciary and ethical responsibilities to the Corporation, as well as the businesses, residents and tax-payers of the State of Rhode Island.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAs a result, the report said Resource Recovery lost sight of its mission, leading to a whole slew of wrongdoing, including: “improper charitable contributions, inappropriate and excessive real estate purchases, self dealing, conflict-of-interest issues, related-party transactions, and a clear contempt for its own policies and procedures relating to the procurement of goods, services, and materials, and administration of personnel matters. This environment caused RIRRC to incur unnecessary costs.”
Now the state is hoping to get a portion of the lost $75 million back—at least $16,602,500 to be exact—from Travelers Casualty and Surety Company of America, a Connecticut-based company which provided Resource Recovery with commercial crime coverage.
On March 5 this year, Resource Recovery filed a claim under the policy and then filed a lawsuit against the insurance company on March 11 in Providence County Superior Court. The suit sought a declaration that Travelers Insurance policies covered its losses, according to court documents obtained by GoLocalProv.
Six months later, Resource Recovery and Travelers are locked in a bitter battle over legal procedure and other technicalities in U.S. District Court, where the case was moved in July, according to a GoLocalProv review of court records. Resource Recovery is accusing Travelers of “pursuing a strategy of delay and evasion,” “shirk[ing] its responsibility” in responding to the claim, and ignoring messages in an August 16 court memorandum.
Travelers denied the allegations in a September 2 court filing, pointing out that Resource Recovery filed its lawsuit less than one week after filing its insurance claim. Travelers said Resource Recovery did not notify it of the suit or serve the complaint until three months later.
The state has already recovered some of the $75 million it lost at the landfill.
In June, the state won a $5 million settlement with the RSUI Indemnity Company, which provided directors and officers liability insurance to Resource Recovery. But only $3.5 million of that settlement actually went to taxpayers, since the law firm representing Resource Recovery, the Boston-based K&L Gates, retained the remaining $1.5 million as its fee.
Resource Recovery has also filed related lawsuits against two of its auditors and a money manager, seeking an unspecified amount of damages, according to a GoLocalProv investigative report.
This story was released in conjunction with 630 WPRO, a GoLocalProv media partner.
