Cherokee County could face more than $50 million in costs related to lawsuits over its Department of Social Services practice of separating children from families with an unlawful form to bypass judicial approval.
The county’s insurer is taking multiple steps to limit its payout, the most recent an appeal to lower or eliminate a federal jury’s $4.6 million award after a four-day civil trial over one family’s case.
Another lawsuit filed in Wake County seeks to absolve the county’s insurer from the bulk of costs to come.
If the insurer is successful in reducing its liability, then the county itself could bear tens of millions of dollars related to more than a dozen cases where Cherokee County Department of Social Services workers used Custody and Visitation Agreements to pressure parents into relinquishing custody of their children.
The county lost the first federal civil suit in May after a jury in Asheville found the county’s Department of Social Services office had violated the constitutional rights of Brian Hogan and his daughter by removing her without judicial oversight.
Hogan’s lawyers are lining up several similar cases — and each successful case could net its own multimillion-dollar judgment. How much might the county and its taxpayers be eventually responsible for? Officials had not said, until a Cherokee County commissioners meeting in July.
As commissioners discussed asking the voters’ opinion on consolidating its three high schools and an alternative school onto one campus, Commissioner Cal Stiles said the consolidation would be “the largest expenditure ever in Cherokee County history.”
“That’s not true,” said Commissioner Gary “Hippie” Westmoreland a few minutes later. “These lawsuits that we’ve got. … We are being sued by our lawyers because they know we’re going to lose.
“Our lawyers said we’re going to lose $50 million in these lawsuits,” Westmoreland continued.
Stiles urged Westmoreland to quiet, while Commissioner Dr. Dan Eichenbaum raised his gavel. Commissioners started talking over one another, and Eichenbaum eventually tapped the gavel on the table and wagged his finger at Westmoreland.
Commissioners said Westmoreland’s comments referenced a discussion from an earlier meeting in a closed session. Jan Griggs, another commissioner, told Carolina Public Press in an interview that Westmoreland’s comments in open session were “totally inappropriate” because commissioners “truly don’t know” what the final amount will be.
“Truthfully, we still need to wait for everything to get through the legal system,” she said.
‘Stuck cases’ tackled with CVAs
During the May federal civil trial, the county’s trial attorney, Sean Perrin, said the county used 30 CVAs to separate families as far back as 2008. Former DSS attorney Scott Lindsay testified in a 2018 custody case that he received a copy of the document from another attorney while attending a continuing legal education course in 2007 or 2010 — or perhaps earlier.
Social workers testified in the May trial that they began using the CVA form to close “stuck cases” or “weak cases” after being pressured by supervisors to close cases. When parents signed the form, they were told they no longer had custody of the child until he or she turned age 18.
Hogan, who is illiterate, signed the Custody and Visitation Agreement presented to him by social workers, thinking that if he did not, the state would take his daughter away and he would never see her again.
The persistent efforts of social workers along with the official-looking document thrust before them hoodwinked dozens of parents. While the CVA is formatted to look like a legal document, two judges subsequently ruled the CVAs unlawful. The second judge invalidated any existing CVAs.
In parallel criminal court proceedings, a grand jury indicted three workers with more than three dozen felonies and misdemeanors for separating families without court oversight. Perjury was among half a dozen charges against former director Cindy Palmer, who remains employed by Cherokee County DSS as the business officer.
Former DSS attorney Lindsay faces nearly two dozen felony and misdemeanor charges, including 20 obstruction-of-justice charges related to the child removals for his role in furnishing the agreement to social workers.
Former Child Protective Unit supervisor David Hughes made a deal with prosecutors last month. In exchange for truthful testimony “in any proceeding,” the state dropped 10 felony obstruction-of-justice charges against Hughes, and he pleaded guilty to two misdemeanors.
Appeals to judge attempt to limit cash payout
Cherokee County’s liability insurer, the N.C. Counties Liability Property Joint Risk Management Agency, is trying to limit its payouts on multiple fronts.
The insurance entity sued the county in June, arguing it is not responsible for paying the $4.6 million Hogan judgment because, in a nod to the criminal indictments against Palmer, Lindsay and Hughes, DSS workers were dishonest or broke the law when they provided CVAs to parents.
Even if the insurer is responsible for paying the Hogan judgment, the filing says it should be limited to the policy’s terms of $2 million per year per “wrongful act” — or $4 million total including all legal bills. Any amount not paid by the insurer would be the fiscal responsibility of Cherokee County and its taxpayers.
On another tack, Perrin recently asked the judge in a filing to overturn the $4.6 million jury award or to reduce it. Attorneys for Palmer and Lindsay also signed on to the appeal. While Perrin represents Cherokee County against the lawsuits, the defense is paid for by Cherokee County’s policy.
Perrin argues the $4.6 million award was excessive and asked the judge to lower it or allow a new trial.
The jury’s verdict “provided more damages than those that would fairly compensate him,” the defendant’s filing says.
Hogan earned between $17,000 and $18,000 per year in the past two years and was “sporadically employed” while his daughter was away from him, the filing says. His low wage is another argument against a high-dollar award, defense attorneys said in their filing.
“There was no evidence that Brian received medical treatment as a result of the Defendant’s actions, suffered any physical injuries, was prescribed medication to deal with issues caused by the Defendants, lost any income or suffered any monetary damages,” the lawyers for Cherokee County wrote.
Hogan also did not seek medical attention for the distress caused by Cherokee County when the county separated him and his daughter without judicial oversight, the filing states.
Damages awarded to his daughter were also excessive, the lawyers argue. Even an upper-limit estimate of therapy for three years would only cost $126,100 — far less than the $3.1 million awarded by the jury.
The lawyers point out that the teen “did not undergo counseling for being away from her dad, was not prescribed any medicine and did not suffer any physical injuries.”
The attorneys also point out that the jury’s questions before announcing their judgment indicate “that their verdict was not based on actual damages, but upon sympathy.”
The defense also points to the jury’s question during deliberations. The jury sent a note to Judge Martin Reidinger: “What percentage of damages allotted will be going to Brian and (his daughter)? Will any of the money allocated be paid to expert witnesses and lawyers? May we designate any compensation toward any cause, e.g., college tuition?”
Perrin and his co-counsel argue the question indicates the jury was ruled by sympathy over deciding fair compensation.
However, Hogan’s attorneys said the defense did not object to the judge’s response to the jury at the time, which was to not concern themselves with the issues raised in their question, and to return “a dollar figure that is sufficient to compensate each of the plaintiffs for the damages that have been caused.”
Hogan’s attorneys said no legal basis exists for calling the award “excessive.” During closing arguments, attorney Melissa Jackson asked the jury to pay the Hogans for the time they were separated at $300 per hour — the same rate as one of the defense’s expert witnesses.
While attorneys for the county and other defendants cite several cases where awards were substantially lower, Hogan’s lawyers say the cases are quite different because their separation “created by DSS … avoided all judicial oversight and was designed to avoid judicial oversight.”
“The Defendants may not believe that a young girl’s humiliation and terror at having no parents during puberty carries no emotional damage,” Hogan’s attorneys stated in their response. “But the jury clearly found otherwise.”
Judge Redinger could rule on the motions within the next few months, said one of Hogan’s attorneys, David Wijewickrama.
As the appeal stretches out, the defendants may have to pay interest on the award at 8% per year, according to other filings in the case.
The Hogans’ lawyers say the defendants should pay $885,600 in interest on top of Hogan’s daughter’s $4.1 million award, and $428,500 in interest for Hogan’s $1.5 million award — another $1.3 million and counting.
If the county itself is left owing, it could have outside help in opening up its coffers. Governments that cannot pay for their expenses can have their financial affairs taken over by the state treasurer’s Local Government Commission, although this happens rarely.
“The Local Government Commission is tasked with the financial oversight of over 1,300 units of local government and closely monitors situations throughout the state that may threaten the fiscal stability or viability of those units,” according at statement from the LGC staff last month. “LGC staff is aware of and is monitoring the situation in Cherokee County.”
The $50 million question
In addition to the Hogan case, five other lawsuits are in various stages in the federal court of the Western District of North Carolina. There could be dozens more — and each could net their own multimillion-dollar verdict. Westmoreland said the $50 million figure “wasn’t out of the realm of happening.”
Eichenbaum declined to comment, citing the pending legal matters.
The finances of these lawsuits paint a grim picture for taxpayers if the county continues to lose in court.
“We’re a poor county, and we’re trying to better our schools and a lot of different things,” Westmoreland said. “This is going to be devastating to us.”
Cherokee County has among the lowest property tax rates in the state, according to information from the state treasurer’s office. In 2019, the county collected a little over $17 million from property taxes.
“I’m worried about our citizens and what it could do to them financially and how we are going to get out of it,” said Westmoreland in an interview with CPP.
“If our insurance company wins (the lawsuit against the county) and we have no counsel, the only way we could pay for it is by raising taxes. I don’t want to do that.”
Westmoreland said there’s been talk of a settlement among commissioners and lawyers “from day one.”
“We should settle. They should settle” he said, but then paused and stopped himself. “I can’t talk about it. I can’t tell you whether they are in that position or not.”
When asked if the $50 million figure he cited in a public meeting was if the county fights every lawsuit in court instead of settling, he elaborated.
“Not if we settle,” Westmoreland said. “Right? I hope not, if we settle.”
If the county gets in a financial squeeze, Westmoreland said it could take money away from schools and other essential county services.
“I’m just sad that that happened,” Westmoreland said. “I know the kids were hurt. And it’s just a bad deal. It’s bad for the people of the county. And it’s sad for the people that it happened to.”