State’s $25 million payout in DCS abuses case is the largest ever of its kind

The Indiana attorney general and Department of Child Services’ decision to settle a lawsuit brought by a wrongly prosecuted family yielded the largest payment of its type in state history.

Attorneys for the state and for the Finnegan family in northern Indiana concluded a long-running lawsuit last month when the parties agreed to settle a federal civil rights complaint at a cost to taxpayers of $25 million.

The money will be paid from the tort claims fund from general tax revenue dollars. The Finnegan settlement is outsized — about two to three times the total of all settlements, judgments, claims and litigation costs the tort claims fund has paid in any of the past five fiscal years, according to state budget data. Between 2000 and 2016, the total of claims paid from that fund in any fiscal year ranges from $3.3 million for 2002 to $13.5 million in 2012 — $4.7 million of which was partial state compensation for victims of the Indiana State Fair stage collapse.

Corey Elliot, spokesman for Attorney General Curtis Hill, said the settlement was a good deal for Hoosiers. The Finnegans had won a $31.3 million jury award the state was appealing, and taxpayers also could have been on the hook for millions in attorney fees in that case. The $25 million settlement includes all legal fees and costs.

“By settling, we saved taxpayers about 30 percent from what we estimate we likely would have owed in damages, attorney fees, and costs if the appeal was unsuccessful,” Elliot said in a statement. “Also, it is highly unusual for parties to settle by such a large margin, so this is a particularly good settlement for taxpayers.”

Rich Waples, an Indianapolis attorney who was part of Roman and Lynette Finnegan’s legal team, argued the damages portion of their trial to a federal jury in South Bend. In October 2015, the jury found the conduct of Pulaski County DCS workers and a state police officer toward the family beginning 10 years earlier “shocked the conscience.” Waples said he had argued $25 million was on the low end of damages the Finnegans should receive, but he said the family was pleased the case was finally resolved.

While the state admitted no wrongdoing in agreeing to the settlement, Waples said, “I think they’re recognizing tremendous harm was done here to the family, and they agree with the jury that they should be adequately compensated for it.

“What the state did was kind of blow up the family,” he said. “It’s a testament to how strong the family was that they were able to come back together again.”

Roman and Lynette Finnegan were investigated and charged with neglect after the death of their daughter Jessica in their home in Francesville in 2005.

But even after an investigation showed the girl died due to a prescription medication error that caused a fatal drug interaction with another medication she took to treat a lifelong heart condition, DCS continued to pursue false neglect substantiations against the parents.

A Pulaski County judge found investigators had falsified official records to justify the false substantiations that he ruled were arbitrary and capricious. DCS’ intervention also resulted in the removal of the Finnegans’ other children, who were placed in foster care.

The jury awarded $31.3 million in damages to be divided among the Finngeans and their three children, Johnathon Abair, Tabitha Abair and Katelynn Salyer. Damages included more than $12 million for actions of state actors as well as compensatory damages on 22 First, Fourth and 14th Amendment violations involving the Finnegans.

Waples said in the course of the civil litigation that followed after the parents were cleared and the abuses of DCS agents became known, Roman Finnegan lost his job as a sergeant at the Department of Correction and the family lost its home. The family also suffered enormous emotional strain, Waples said.

“Paying out this much money to the family sends a pretty strong message, a pretty clear message, that what happened to the Finnegans was wrong,” he said.

The $25 million settlement will be paid from the state treasury because Indiana law forbids liability insurance to cover acts of the state and its non-policy-level employees with a few narrow exceptions. Indiana’s Tort Claims Act limits total payouts from a single event to no more than $5 million, but that limit does not apply to judgments in federal court.

The Tort Claims Fund does not receive a budgetary appropriation. Rather, the money is transferred from the general fund to pay settlements and judgments that arise against the state.

The state auditor in annual financial reports for each fiscal year provides a forecast based on pending litigation of how much the state is expected to be obligated to pay from the fund in the next year. The estimate for this current fiscal year was $10 million. The Finnegan settlement will push the total to more than $31 million.

DCS Director Mary Beth Bonaventura and Deputy Director of Communications James B. Wide declined repeated requests for comment on why the agency chose to settle the case, and about whether the agency had taken any steps to safeguard against future conduct of case workers and managers for which the state could be liable.•