Chicago State University has sued an insurance company, saying a court should force the insurer to help the school pay more than $4.2 million to satisfy a judgment resulting from a lawsuit brought by a former who claimed the university had wrongly fired him for exposing an attempt by the university's former president to improperly collect a pension.
On Feb. 3, Chicago State filed suit in
Cook County Circuit Court against Illinois National Insurance, asking the court
to declare the school’s policy through AIG-affiliated Illinois National requires
the insurer to pay toward the judgment awarded by a Cook County court to former
Chicago State lawyer James Crowley.
The university also asked the court to
find the insurer had committed fraud by attempting to deny the coverage,
alleging the insurer charged CSU an enhanced premium for the insurance, when it
had no intention of paying a claim.
The lawsuit centers on court orders
requiring Chicago State to pay Crowley for retaliating against him after he
blew the whistle on some of the alleged misdeeds of former CSU President Wayne
In February 2014, a Cook County jury
sided with Crowley, awarding him $480,000 in back pay and punitive damages of
$2 million. Cook County Judge James P. McCarthy then doubled Crowley’s back pay
award to $960,000 and ordered CSU to pay Crowley’s attorneys $318,000, plus
The verdict and judge’s orders were
upheld on appeal in March, and on Jan. 31, 2017, the judge again boosted the
damages owed to Crowley and his attorneys, ordering CSU to pay an additional
$252,552 in “front pay,” further attorney fees of $167,112 and post-judgment
interest of $513,400.
In all, CSU is now on the hook for
more than $4.27 million in damages in the case.
Crowley had been fired in 2010,
allegedly for mishandling his duties to oversee the university’s convocation
center. However, Crowley had asserted that was merely a pretense to retaliate
against him for releasing documents, requested under the Freedom of Information
Act, which exposed Watson’s attempt to wrongly draw a pension for his work heading
up the City Colleges of Chicago, even as he assumed the reins at Chicago State.
State pension rules had required Watson to wait three months between jobs to
begin drawing his pension.
With the information public, the State
Universities Retirement System denied Watson’s pension request.
Crowley also alleged the university
had then professionally hounded him, filing a complaint with the Illinois
Attorney Registration and Disciplinary Commission. The ARDC rejected that
But that was another element in the
university’s treatment of Crowley which state appellate justices declared was ““thoroughly reprehensible.”
the court actions, Chicago State had filed claims with Illinois National,
seeking coverage for the judgment.
the lawsuit alleged, Illinois National declined the coverage. Mediation to end
the dispute failed in December 2016.
State argued the denial of coverage was improper, as the policy included
coverage for losses from “damages (including front pay and back pay), judgments
… [and] statutory attorneys’ fees…”
policy also included supplemental coverage for punitive damages, for which the
university paid an “additional premium,” the lawsuit said.
the university said the insurer’s denial of coverage violated Illinois state
fraud law, as the denial means the school “paid premium for illusory punitive
damages coverage that Illinois National had no intention of honoring.”
State is represented in the action by attorneys with the firm of Neal Gerber
& Eisenberg LLP, of Chicago.
States’s action comes even as Illinois National is pursuing a legal malpractice
action against the law firm of Pugh Jones & Johnson P.C., of Chicago. In
that lawsuit, the insurance company has alleged the Pugh Jones firm’s mistakes
in defending the university, including rejection of purported settlement offers
from Crowley’s counsel, led to the hefty judgment against CSU.
National has asked the court to order Pugh Jones to refund all fees paid to the
insurer and repay Illinois National for any coverage it may provide to Chicago
State to cover the Crowley judgment.
lawsuit is pending in Cook County court.
National is represented by the firm of Lewis Brisbois Bisgaard & Smith LLP,