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A federal jury awarded a father and his daughter $4.6 million earlier this year after finding that Cherokee County and its Department of Social Services workers unlawfully separated them several years ago.
The legal battle for who is responsible for paying that money has already begun, and it could be years before Brian Hogan and his daughter see a penny of that money — if at all.
The county is insured through the N.C. Counties Liability Property Joint Risk Management Agency, but that organization says it is not obligated to pay the millions owed by Cherokee County and its employees because public officials were dishonest or broke the law, according to a filing last month in Wake County Superior Court.
The contract with Cherokee County does cover “wrongful acts” at $2 million per act.
If the court determines the agency is obligated to pay, the filing says, it should be limited to $4 million in the Hogan matter — $2 million for each year during which Hogan and his daughter were unlawfully separated with a document called a Custody and Visitation Agreement.
The CVAs said they granted custody of a child to someone else until the child turned 18 years old. While they appeared to be a legal document, they did not carry the force of law. Two District Court judges ruled they were invalid legal instruments.
“The CVA is the product of both actual and constructive fraud on behalf of the Cherokee County Department of Social Services, its agents and employees Attorney Scott Lindsay and Director Cindy Palmer,” a judge’s decree said in 2018.
The risk management pool for the N.C. Association of County Commissioners may anticipate additional lawsuits. The organization has two insurance products, one for workers’ compensation and another for limited liability and property insurance. Seventy-one of the state’s 100 counties are members of one or both pools.
Hogan’s attorneys filed federal civil cases for three more families, and even more lawsuits are likely, as county social workers enacted at least 30 CVAs since 2008, with the bulk of them starting in 2016 and 2017.
Asked for comment about the litigation, a spokeswoman for NCACC said it is a legally distinct entity from the N.C. Counties Liability Property Joint Risk Management Agency. However, the NCACC created the risk management agency, according to the NCACC website.
David Wijewickrama, who represents parents and children named in the insurance company’s lawsuit, said he expects to file a response within a week.
“My clients in their answer will have a disagreement of opinion,” Wijewickrama said. “In light of (George) Floyd and other civic abuses by governments or government authorities, municipalities are realizing they have no defense but to be held responsible and accountable for the rogue actions of their employees.”
The insurer’s filing also said neither Lindsay’s nor Palmer’s actions are covered because they refused to cooperate with their defense in the civil trial — a breach of contract. During depositions before the Hogan trial, both asserted their Fifth Amendment right against self-incrimination in response to more than 200 questions.
“Lindsay and Palmer’s assertion of their Fifth Amendment rights and their refusal to answer almost any question related to the underlying lawsuits resulted in the court instructing the jury that an adverse inference could be drawn against them in the Hogan trial,” the insurance company lawsuit says.
Both Palmer and Lindsay, along with former social work supervisor David Hughes, face three dozen state felony and misdemeanor charges related to the Custody and Visitation Agreements, following indictments by a Cherokee County grand jury last year.
Among the indictments is a felony perjury charge against Palmer, who testified on Feb. 28, 2018, that the first time she heard of a CVA was on Dec. 6, 2017. She became director in 2016 and was in meetings with social workers where CVAs were discussed, according to testimony at the May federal trial.
The contract with Cherokee County does not cover “fraudulent, dishonest or criminal behavior of any Covered Persons,” according to the lawsuit from the N.C. Counties Liability Property Joint Risk Management Agency.
Hogan’s case and his daughter’s case were the first in what could be dozens of civil lawsuits in the coming months and years against Cherokee County DSS’ practice of resolving “stuck cases” outside of judicial authority.
Social workers testified during the Hogan trial that they did what they thought was in the best interest of the child and were told by Palmer to follow the instructions of the attorney, Lindsay, related to child removals. Lindsay told staff to use a form letter to orchestrate the CVAs, according to previous court testimony from both Lindsay and staff.
However, social workers ignored law and policy at the expense of the rights of parents and children, said Melissa Jackson, an attorney who represented Hogan.
“Cherokee County was not doing what was in the best interest of the children,” Jackson said in closing arguments during the May federal civil trial. “They were doing what was in the best interest for them. An easy, cheap, quicker way.”
In all, the jury found that Cherokee County had an official practice or custom that violated the rights of Hogan and his daughter, and that the county failed to adequately train employees on the rights of parents and their children.
The jury also found that Palmer and Lindsay violated Hogan’s and his daughter’s due-process rights, that Palmer and Lindsay “acted in a grossly negligent manner” and caused injury to Hogan and his daughter, and that Lindsay obstructed justice.
Hogan, who is illiterate, testified during the May trial that he did not understand what he was asked to sign and that if someone had explained it to him, he never would have signed it.