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Cherokee County commissioners voted Wednesday to settle nearly two dozen lawsuits related to the county’s unlawful separation of families for $42 million.
In a statement read during its final budget hearing of the fiscal year, County Manager Randy Wiggins said mounting costs, including more than $300,000 in legal fees and the possibility the county would lose its lawsuit with its insurer, which would drop the lawsuit as part of the settlement, propelled the county toward its decision.
“A number of factors were considered by the county in making this agreement,” Wiggins read to the crowd at Wednesday’s meeting from the county’s statement. “The potential of future judgments like Hogan for which the county did not have the cash to pay.”
Wiggins referred to an earlier plaintiff, Brian Hogan and his daughter, who sued after the Cherokee County Department of Social Services separated them after his wife had a heart attack. A federal jury awarded the pair $4.6 million after a four-day civil trial. That amount, attorney fees in that case and three previous settlements in other cases are separate from the cases the county voted this week to settle.
During the civil trial last year, the Hogans testified to the trauma they endured while being unlawfully separated.
Brian Hogan, who cannot read, said he felt like a failure of a father because he got conned by social workers. His daughter testified that she withered under the rule of an overbearing grandfather, who forced her to wear dresses and often refused to allow her to speak with her parents while they were separated for more than a year.
Ultimately, the jury in that federal trial, when Hogan and his daughter sued the county, awarded the Hogans $4.6 million.
In the settlement agreement that commissioners unanimously approved on Wednesday, the county agreed to pay half of the $42 million in yearly installments through the year 2030. Its insurer, the N.C. Counties Liability Property Joint Risk Management Agency, will pay the other half.
The insurer will also drop its lawsuit against Cherokee County, in which the agency said the county’s former DSS director and its former attorney did not aid in the defense of the lawsuit.
Both individuals have also faced several felony charges related to the scheme.
The parent of another child begged the DSS director at the time, Cindy Palmer, not to place her child in a home where older children were known to sexuially abuse the younger ones. The woman’s pleas were ignored, and she later discovered her boy had been molested.
Another child’s medical condition was ignored while in one of these illegal placements and will suffer the consequences of that neglect for the rest of her life, court records show.
In all, lawyers filed 26 lawsuits against Cherokee County’s Department of Social Services after families realized they were separated unlawfully by its social workers. Workers sometimes used a document called a Custody and Visitation Agreement, which appeared official but was later ruled as “the product of both actual and constructive fraud.”
Parents have testified that they were essentially coerced into signing the papers. However, no judge oversaw the process, and parents and children were not represented by lawyers.
That was the point, one social worker testified in a federal civil trial. Cherokee County DSS had been losing cases, and using the CVA, or other documents in a substantially similar way, saved time and money.
Once the agreement was signed, social workers never checked in with the children to see how they were doing. Children were not offered services, as is typically expected when children are in legal placements.
Palmer was initially charged with several felonies under state law and last year pleaded guilty to one: obstruction of justice. She had no prior criminal history and was sentenced to 24 hours of community service for leading the office — less than one hour per child who was affected by the unlawful agreements.
“I never forget for a minute the only reason we are here … is because somebody got hurt real bad,” said David Wijewickrama, an attorney for the plaintiffs.
“Bad things happened to children. That’s the reason we are here. No amount of money will undo whatever it is these children went through.”
Prior to this global settlement, the county settled three other cases. Along with the Hogan verdict and attorney fees, the county and its insurer will pay roughly $53 million.
Martin Reidinger, federal chief judge of the Western District of North Carolina, will have to approve the settlement before funds can be dispersed, because the plaintiffs include several minor children. Wijewickrama expects that hearing to take place sometime in August.
Without the agreement, Cherokee County was also unable to borrow money for capital projects “until the cloud of financial uncertainty of pending litigation was removed,” Wiggins said in a statement.
The Local Government Commission at the state Treasurer’s Office monitors the fiscal health of public agencies. Cherokee County had not filed its required 2020 fiscal year audit with the Treasurer’s Office and was placed on the unit assistance list this spring. Cherokee County also was under a fiscal accountability agreement with the Treasurer’s Office, records from that agency show.
Who has to pay?
To pay for the settlement, commissioners approved spending $2 million in reserves and approved an 11-cent mill rate increase, of which 8 cents is to pay for the settlements. The mill rate is a tax on property value, of 1 cent per $100 in value. For a median-priced home, of $163,000 according to the U.S. Census Bureau, the settlements will increase property taxes by $130 per year.
The workers who separated children and families against state law and policy no longer work for Cherokee County, Wiggins said.
After the discovery of these methods in late 2017, the county’s DSS board placed Palmer on paid leave.
She eventually resigned as director, but the county immediately rehired Palmer into the DSS finance position she had occupied for years before that. Palmer, whose husband is Sheriff Derrick Palmer, remained in that post until late 2021, when she resigned weeks before pleading guilty to a felony.
“It is the hope of the Board of Commissioners and all of Cherokee County government that the settlement of these cases will allow the Department of Social Services to grow and to restore the confidence of the people that DSS serves every day,” Wiggins said from his statement.