Suffolk County: Insurers balking at $7.8 million claim

Suffolk officials who had said insurers would pay the bulk of a $10.8 million federal court award over the county’s breach of contract in a Ronkonkoma solar project now say the firms have denied their $7.8 million claim.

The county has sued to overturn the decision.

Suffolk, which self-insures most claims, has paid $3 million of the judgment to EDF Renewable Development Inc. for blocking installation of solar panels at the Ronkonkoma Long Island Rail Road station parking lot.

Jason Elan, spokesman for County Executive Steve Bellone, last month said outside insurers would pay the rest, under county polices for catastrophic coverage.

However, even before the federal Second Circuit Court of Appeals upheld a lower-court ruling in the breach of contract case, the county in March filed a lawsuit against Ironshore Indemnity Inc., Lexington Insurance Co. and Starr Indemnity and Liability to overturn the denial of its claim for reimbursement that dates back to Dec. 28, 2012.

In court papers, the county says the insurers say the claim was not covered because it was filed late, and because of “Ironshore’s belief that the plaintiff was not requesting monetary relief from the county but instead was seeking non-monetary relief.” Ironshore officials did not return calls for comment.

The county says it made a timely claim. It said denial of the claim is “void and ineffective” because the insurer did not specify a proper reason.

The county also asserts the insurers “have only one opportunity to issue a disclaimer” of coverage and any “attempt to issue a second disclaimer to alter the bases to exclude otherwise covered events is prohibited by law.” County officials declined to say whether the insurer later tried to cite another basis for the denial.

“We believe we have a legitimate claim,” said County Attorney Dennis Brown, who would not speculate about how long it may take to pursue the lawsuit in court.

What makes timing important is that the deadline for paying the remainder of the federal court award is Dec. 15. The county typically bonds for large court awards, but the comptroller’s office said the deadline passed July 28 for the October bond issue.

Despite the time constraints, Elan said, “The County remains optimistic that we will secure the insurance proceeds for the balance of the judgment.”

Paul Sabatino, a Huntington Station attorney and a former chief deputy county executive, said he doubted the county’s chances.

“Their umbrella coverage kicks in for catastrophes like people being killed in a car accidents or defective bridges. It doesn’t cover cases where the county incompetently breaches a contract with a vendor.”

The county originally agreed to allow EDF to install solar panels at a half-dozen sites including the 2,200-space Ronkonkoma lot. Officials said the deal would generate $10 million for Suffolk over 20 years.

Bellone blocked the installation, fearing it would interfere with the $450 million, 1,450 unit Ronkonkoma Hub project.

Legis. Tom Cilmi (R-Bay Shore) urged presiding officer DuWayne Gregory (D-Copiague) to launch a “full investigation” of the situation.

“This was totally avoidable had we simply performed on the contract,” said Cilmi. “One bad decision will now cost taxpayers . . . in excess of 20 percent of our general fund tax levy.”

Gregory said he has agreed to an inquiry and plans to meet with legislative counsel early next week about how to proceed.

“We definitely should take a look at it,” Gregory said. “We have to do our due diligence to make sure that something like this does not happen again as a good steward to the taxpayers.”