Full Circle: When Insurance Companies Want Their Money Back

In most personal injury cases — whether it’s an auto accident or a slip and fall — it’s usually an insurance company that pays the resulting settlement in any case. Companies try to undershoot the amount they believe one is owed in damages and a lawyer puts together a convincing argument with compelling evidence to persuade why their client deserves a certain amount of money.

That said, insurance companies are very knowledgeable and know how much any case is worth in terms of damages. After a settlement has been made, everyone goes back to “normal” and the case is all but forgotten. It takes a very special set of circumstances to cause an insurance company to sue someone to get their money back, like a scenario playing out in Hanover, WA.

The Hanover Area School District
What happened was that the Hanover Area School District had overpaid a special education student transportation contractor. After several months of failed negotiation attempts to get the money back, the insurance company, American Alternative Insurance Corporation, paid the district for their loss. Now it’s the insurance company who is suing the contractors Frank J. and Dorothea Ciavarella in the amount of $244,121 plus interest and costs.

The district isn’t off the hook though, as a state auditor’s office had investigated the initial overpayment where amongst several other issues, the office called out a school board member on abstaining from voting to approve the payments to the contractors who happen to be closely related. The contractors in particular just so happen to be the parents of a board member.

In the case lies four counts against the contractors: 

• Breach of contract for failing to return the money after being notified of the error.
• Unjust enrichment by keeping the money despite knowing of the error and over-payment.
• Conversion of “the overpayment money for their exclusive use.
•  Negligence “for failing to realize the over-payments that were being made to them” and “failing to reimburse the overpayments.” 

Looking at the details more clearly, one could argue that in there may have been some conspiring between the district and the contractors and that ultimately, the real victim wasn’t the district, but rather the insurance company for getting wrapped up in the matter in which, a separate case may need to be opened up against the district.

State Auditor General Eugene DePasquale said, “The district should also develop a strong anti-nepotism policy that would apply to board members and administrators.” He also laid out that board members should be required to disclose potential conflicts of interest.

DePasquale’s office has referred this matter to the Ethics Commission and no ruling has been issued just yet. 

If you have suffered a legitimate injury, contact a lawyer, like a personal injury lawyer or car accident lawyer Kansas City, MO trusts from Royce Injury Attorneys, today.