Wrongful Convictions Lawyers Cash In by Targeting Insurers

The city of Idaho Falls this month agreed to pay $11.7 million to a man who spent more than 20 years in prison for a 1996 murder he didn’t commit.

But it’s mostly insurance money—not taxpayer dollars—that’s footing the bill, thanks to a strategy championed by a Kansas City, Missouri law firm.

The Lathrop GPM strategy encourages municipalities to settle civil rights claims in part because case law established by the firm shows cities can stick insurers for the bill.

The approach has forced insurers to pay more than $217 million in the last two decades, according to the firm. Lathrop GPM is poised to add to the total with successes in Idaho and Pittsburgh this month and ongoing cases in roughly a dozen other states.

Insurers have responded by raising the cost of premiums for what’s known as public entity liability insurance policies. Underwriters are also excluding some behaviors under the policies from coverage to prevent future payouts.

But such steps don’t prevent payouts under policies put in place decades ago.

“There’s nothing you can do about claims from the 1990s,” said John Chino, area senior vice president for insurance broker Arthur J. Gallagher & Co. “That’s what makes it a tough business.”

More than 3,100 people have been absolved from crimes in the US since 1989, according to the National Registry of Exonerations. The total has been increasing by about 170 people a year since 2014.

Hundreds of the former inmates filed civil rights lawsuits alleging that police and prosecutor misdeeds led to their imprisonment.

Court orders and settlements worth $2.5 billion have gone to 631 ex-inmates in civil rights and state tort suits since 1989, according to Jeffrey Gutman, a law professor at George Washington University and special contributor to the National Registry of Exonerations.

Legal Strategy

The civil rights lawyers bringing the cases hire Lathrop GPM lawyers to search for insurance policies that typically cover “bodily injury” caused by police or other employees.

The lawyers then try to persuade judges that annual insurance policies purchased by the municipality should pay out for every year an inmate was wrongly incarcerated—even as insurers argue for one payout limited to a single year’s policy.

Lathrop GPM argues that simply being in prison counts as a bodily injury.

“We’ve managed to take an area of law that was either a blank slate or a negative slate and we’ve now recovered hundreds of millions of dollars for exonerees,” said Bill Beck, a Lathrop GPM partner.

US Magistrate Judge Lisa Pupo Lenihan in Pittsburgh sided with Lathrop GPM this month in deciding that two insurers should be on the hook for payouts in the wrongful conviction of Kevin Siehl of Johnstown, Penn., in the 1991 murder of his wife.

Blood on Siehl’s shoe, which the prosecution alleged was his wife’s, turned out to be his own—a fact the prosecution did not disclose at the time of the trial or during multiple post-conviction proceedings.

Lenihan found that the prosecutors’ failure to turn over that exculpatory evidence was itself a wrongdoing that triggered policy coverage.

But Lenihan also found that the injuries Siehl suffered in prison, such as contracting Hepatitis C, ring worm, gall stones and a hernia from trauma to his stomach, also forced insurance policies to defend against the claims. That puts them in line to pay up.

The ruling opened up more than $7 million in insurance money for Pennsylvania’s Cambria County, which includes Johnstown, according to Lathrop GPM.

Lawyers for the insurance companies, Westport Insurance Corp. and Twin City Fire Insurance, did not respond to requests for comment on the case.

Brown said the ruling could go on to convince judges in other cases to accept its arguments—an example of how the firm has previously used its own victories to develop law in the area.

Growing Caseloads

Lathrop GPM’s Alexander Brown said he expects the number of successful payout cases will balloon as a national movement to reassess wrongful convictions gains steam. “This is going to affect everywhere,” he said.

Missouri last year passed a law allowing prosecutors to ask courts to vacate convictions they believe were wrong. Illinois lawmakers at the start of the year gave prosecutors power to seek resentencing in cases that “no longer advance the interests of justice.”

The legal judgments have raised costs for insurers, who have also been battling a surge in excessive force claims against the police departments they cover.

Some carriers have pulled out or slashed their exposure to the market, said Mark Turkalo, national leader for education and public entity placement at global insurance broker Marsh.

“You’re buying a lot less for a lot more” money, Turkalo said. “These trends, in the very short term, will unfortunately continue.”

A consortium of California public entities that purchases insurance together, known as PRISM, said in April that it was able to obtain $65.5 million in liability insurance this year, down from $170 million in 2015. In that time, seven reinsurance providers had dropped out of the market.

Prices for premiums have doubled in some markets and have yet to stabilize, said Sandra McFarland, a broker at Marsh.

One problem for insurers underwriting public entities is there’s no real way to determine whether a wrongful conviction occurred decades ago, McFarland said.

“You can’t plan to avoid them,” she said. “There’s no risk management against it.”

Civil Rights

Civil rights lawyers specialize in bringing tort claims and appealing to juries—they’re not insurance experts, said Nick Brustin, a New York civil rights lawyer.

That’s why such lawyers who represent the wrongfully convicted find their way to Lathrop GPM, he said. The firm has had a long history litigating insurance recovery cases outside of the wrongful conviction context.

“Insurance carriers will routinely try to refuse coverage on a variety of grounds,” Brustin said. “Lathrop GPM are the people who figure out a way around that.”

In a court case preceding the Idaho Falls settlement, Lathrop GPM successfully argued that insurers were liable for payouts in the wrongful murder conviction of Christopher Tapp.

A judge determined that “mental anguish” resulting from the wrongful conviction counts as a personal injury under the insurance policies. That triggered each year’s coverage to contribute to the cost of defending Tapp’s lawsuit. It’s what Beck calls “the holy grail.”

Tapp, after the $11.7 million settlement with the city, said no dollar amount could make up for the more than 20 years he spent in prison, The Associated Press reported.

“However,” he told AP, “the settlement will help me move forward with my life.”