Special report: An audit of City of Apache Junction out-of-court settlements

City employees have caused tens of thousands of dollars in damages to municipal vehicles over the last five years, records show.

Officials initially declined the release of records, stating it was a research project and that no municipal database existed. Later it was determined that such claims were handled by a different entity and the records could be produced.

The city or its insurance carriers paid when a municipal employee drove into high water and caused a vehicle’s engine to seize, when a driver damaged a bumper by hitting a fire hydrant and when one backed into a tree stump, records show. Another insured driver backed into a tree, causing damage to the open door on the vehicle.

While most of the claims concerned vehicles, the majority of the $373,421 paid in policy years 2014, 2015, 2016, 2017 and 2018 came from two items. They were when the daughter of an Apache Junction Police Department officer was injured at home by a K9 bite, costing $82,477.35; and a resident claiming their property was at an increased flood risk, costing $165,210.97, according to the records.

Records sought

On Jan. 21 the Independent e-mailed the City of Apache Junction a public records request for “A five-year snapshot of out-of-court settlements. Please include when it was filed, when the settlement was made, how much was the settlement, claimant, description of loss or claim and the department.”

Apache Junction City Clerk Kathy Connelly at a recent Apache Junction City Council meeting.

On Jan. 28, City Clerk Kathy Connelly said in an e-mail that she needed the time frames/dates identified for the records sought.

The Independent on Jan. 29 asked for out-of-court settlements for the last five years — 2018, 2017, 2016, 2015 and 2014.

On Feb. 5, City Clerk Connelly in an e-mail denied the request because it was a research project.

“In response to your attached public records request regarding out-of-court settlements, the city does not maintain a database or composite record of this type of information. The city attorney has determined that what you are asking for would be a research project and beyond the scope of the state public records law. The Arizona public records law does not require that we compile statistics, prepare special reports, do research or create records that do not already exist. Thank you,” the city clerk said in the e-mail.

On Feb. 5, the Independent sought to revise the request, stating in an e-mail to the city clerk “Please provide the amounts the city has paid over and above its premium for out-of-court settlements insurance in the years 2014, 2015, 2016, 2017 and 2018 and who the money went to. If the ‘who’ is not available without the extra research, please provide how much in total by year.”

That request was also denied.

“Your revised public records request still constitutes a research project, which is beyond the scope of the state public records law. You have not identified a document that we can produce for you since the city has no database or centralized records system regarding out-of-court settlements. The state public records law does not require that we compile statistics, prepare special reports, do research or create records that do not exist,” Ms. Connelly wrote in a Feb. 5 e-mail.

Further investigation determined that while the municipality didn’t have the records, a contracted entity does.

City Attorney Joel Stern. (Independent Newsmedia/Arianna Grainey)

“Southwest Risk handles all of our court cases. You can call them. They probably have it. It’s not our record,” City Attorney Joel Stern said in an interview after the Feb. 5 Apache Junction City Council meeting.

Mr. Stern is not the attorney for claims, he said.

“Remember, I’m not the attorney on those. Southwest Risk, with our contract, they assign an attorney to losses. Not claims, though. So I’m not the assigned attorney, so I wouldn’t be keeping track of that anyway,” Mr. Stern said.

The Independent on Feb. 11 e-mailed Ed Bantel of Southwest Risk, asking for a five-year snapshot of out-of-court claims/settlements, from 2018, 2017, 2016, 2015 and 2014.

Mr. Stern, in a Feb. 13 e-mail, said the municipality would be providing the requested documents.

“SWRS contacted me today and they will attempt to obtain the records they have on-hand pursuant to your request to the best of their abilities. Once they have the information, they will send it to me and I will forward to the city clerk. This item will be treated as a public records request and the cost of the materials at time of production will be 25 cents per page. I will contact you once I am certain the materials are ready for pickup at the City Clerk’s Office with an accompanying payment,” he said.

A City Clerk’s Office employee called Feb. 19 and left a voice mail that the documents were available. The five legal-sized pages picked up Feb. 21 cost a total of $1.25. They list the out-of-court settlements in 15 subcategories, including policy year, claim number, loss date and description, coverage and net incurred cost.

Risk/retention pool, insurance, vehicles

The City of Apache Junction is part of an insurance pool with other municipalities through the Arizona Municipal Risk and Retention Pool. Coverages include workers’ compensation, property, liability and specialty, according to amrrp.org.

The city pays an annual premium for its general insurance coverage, according to the municipality’s July 1, 2017-June 30, 2018 comprehensive annual financial report at ajcity.net.

The pool also provides member cities with workers’ compensation coverage, as required by law, and risk-management services, it states.
“The city is responsible for paying premiums, based on an experience rating formula that allocates pool expenditures and liabilities among the members. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years,” according to the document.

Al Bravo, Apache Junction’s public information officer, explained in an e-mail where to find the liability deductible in the city’s budget. Budgeted costs to the city were $50,000 for the liability deductible in both fiscal years 2018-19 and 2017-18; and $363,000 for property insurance for 2018-19 and $480,000 in the adjusted budget for 2017-18, according to page 21 of the 2018-19 final budget at ajcity.net.

The municipality has 120 vehicles, according to a February 2017 presentation made to the City Council for discussion on a proposed lease-to-purchase option for vehicle procurements.

Net incurred expenses, by year

The following are claims that resulted in net incurred expenses to the City of Apache Junction. They are by policy year, then loss date; loss description; coverage type; and net incurred.

Policy year 2014-15:

  • Sept. 8, 2014; claimant alleges city negligent for approving permit that placed their property at flood risk; premises operations liability; $165,210.97.
  • Sept. 13, 2014; insured struck wall in parking lot; collision; $9,946.65.
  • Sept. 14, 2014; insured backed into tree causing damage to open door on vehicle; collision; $1,099.16.
  • Sept. 15, 2014; insured struck tire on freeway causing damage to front bumper; collision; $777.19.
  • Oct. 9, 2014; insured drove into high water causing engine to seize; comprehensive; $7,580.99
  • Dec. 23, 2014; insured vehicle backed into other vehicle as it was going through the parking lot of Circle K (VIN No. 7589); auto liability; $551.31.
  • Jan. 7, 2015; new street design caused the curb to be too high on entrance to driveways per claimant; premises operations liability; $587.10.
  • Jan. 28, 2015; insured vehicle (VIN No. 0419) hit a light pole; collision; $4,414.14.
  • Feb. 2, 2015; insured vehicle (patrol car — VIN No. 8480) hit a fire hydrant and damaged bumper — no damage to fire hydrant; collision; $1,411.96.
  • March 4, 2015; prisoner allegedly caused damage to glass window in detention room holding cell; building; $155.
  • April 1, 2015; F-150 patrol vehicle struck another patrol vehicle in the parking lot. VIN No. 0319; collision; $4,947.22.
  • May 9, 2015; DUI claimant struck parked police vehicle (VIN No. 4185); collision; $13,281.31
  • May 25, 2015; insured vehicle while reversing collided with the rear driver side bumper of insured vehicle; ($1,000).
  • July 15, 2015; municipal vehicle failed to yield from stop sign, pulling in front of claimant vehicle on through street; auto liability; $4,776.46
  • July 15, 2015; municipal vehicle failed to yield from stop sign, pulling in front of claimant vehicle on through street; collision; $16,767.87

Policy year 2015-16:

  • Sept. 8, 2015; patrol vehicle’s driver was at his residence when he struck a tree; collision; $2,602.83
  • Sept. 9, 2015; police vehicle hit gate at police department and damaged the side; collision; $966.53
  • Sept. 10, 2015; police vehicle driver drove into automated gate when entering the property; auto liability; $280.
  • Feb. 6, 2016; claimant allegedly tripped on parking stall concrete block and hit head on curb; premises operations liability; $272.
  • Feb. 22, 2016; insured police vehicle No. 1 backed into insured police vehicle No. 2; collision; $1,554.10
  • May 8, 2016; other vehicle backed into insured vehicle; collision; $152.
  • May 16, 2016; vandalized; comprehensive; $1,190.74
  • July 28, 2016; insured vehicle allegedly backed into other vehicle; auto liability; $149.

Policy year 2016-17:

  • Aug. 8, 2016; insured vehicle was rear ended by other vehicle; collision; $417.50
  • Sept. 6, 2016; claimant alleges that they were rear ended by a city street sweeper; auto liability; $1,900.
  • Sept. 6, 2016; claimant alleges that they were rear ended by a city street sweeper; collision; $90.
  • Oct. 6, 2016; claimant alleges police K9 attacked and bit her; E&O (Errors and Omissions) liability; $70,521.85.
  • Oct. 6, 2016; claimant (the canine officer’s daughter and resident of household) alleges police K9 attacked and bit her; E&O liability; $11,955.50.
  • Oct. 8, 2016; insured vehicle struck a concrete support for a light pole; collision; $3,114.80
  • Dec. 5, 2016; other vehicle was changing lanes and struck insured vehicle; collision; $226.90
  • Dec. 27, 2016; insured vehicle struck by stolen vehicle while in pursuit; collision; $6,501.41
  • Dec. 29, 2016; insured vehicle struck fixed object; collision; $279.14.
  • Jan. 19, 2017; insured was third vehicle — vehicle No. 2 rear ended vehicle No. 3; collision; $90.
  • March 13, 2017; break in at the Prospector park maintenance yard, property was stolen and damaged; building; $2,544.01
  • March 13, 2017; break-in at the Prospector Park maintenance yard, property was stolen and damaged; inland marine; $5,166.50.

Policy year 2017-18:

  • Aug. 14, 2017; insured vehicle entered intersection and other vehicle struck insured; auto liability; $22,335.
  • Aug. 14, 2017; insured vehicle entered intersection and other vehicle struck insured; collision; $3,445.72
  • Sept. 14, 2017; claimant alleges binoculars were taken from his employee desk drawer and not returned; contents; $109.07.
  • Nov. 27, 2017; insured struck by another vehicle; collision; $1,627.72
  • April 9, 2018; insured vehicle backed into tree stump; collision; $1,492.79.
  • April 25, 2018; other vehicle rear ended insured vehicle; collision; $628.40.
  • May 7, 2018; insured vehicle struck a stop sign; collision; $2,300.02.

Editor Richard Dyer can be reached at rdyer@newszap.com

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