Ten Years After Scandal $18 million lawsuit has little impact on South Gate

The $18 million settlement that South Gate agreed to in 2009 with 16 local police officers, who in 2002 brought a lawsuit against the city where they alleged being the victims of racial discrimination while serving the , has not had a serious impact on the city’s finances.

“It didn’t cost South Gate anything, other then its $250, 000 self-insured retention (SIR),” said Raul Salinas, City Attorney for the city of South Gate, as he explained the city's liability insurance policy. “Those officers were all paid by the insurance company.”

The SIR, which is the amount that must paid by the insured entity before the insurance company pays the remaining costs, much like the deductible in a car insurance policy, was used to cover all of the lawyer fee’s related to the lawsuit.This means that none of the money from the multimillion settlement came out of the city’s budget. 

According to the Los Angeles Times, many officer’s in the lawsuit claimed that their association with Rick Lopez, a dismissed acting Hispanic Police Chief, whose selection led to the recall of City Council members associated with imprisoned local politician Albert Robles, had led to various racially motivated injustices towards them.

According to Salinas, who served as the City Attorney during the time of the settlement, the fear of losing the city’s insurance coverage was an important factor in the City Council’s decision to accept the settlement.

“The potential risk is that we could have lost our insurance coverage,” said Salinas.

Had the chosen to go to court, and lost to the plaintiff’s for a superior sum then that of the settlement that was negotiated by the city’s insurance agency, the city would have potentially payed millions more then its SIR. The latter fear was considered viable because the insurance carrier could have succesfully dropped the guaranteed $18 million protection.

“This would have taken away from services that could have been provided for the residents,” said Salinas, in reference to the possibility of having lost the protection. 

Despite the expensive settlement, the city’s insurance premiums were not affected, said , Finance Director for the city of South Gate.

South Gate’s membership in the Independent Cities Risk Management Authority (ICRMA), an association of 22 cities in Southern California that pool their resources to increase purchasing power and to limit their overall liability insurance costs, can make it difficult for premiums to increase sharply. 

“What this does is lower the risks for cities in terms of exposure,” said Cook. “One lawsuit will not determine our rate over time, [because] we are in a risk pool with other cities. ”  

The city's Finance Department has provided South Gate’s yearly insurance premiums since 2009:

The $250, 000 SIR that was used to cover the legal costs of this settlement came from its 2002 to 2003 premium payment. 

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