News in Brief

Philadelphia – A lawyer for the ruined Physicians Insurance Co. told a federal court judge that two professional firms responsible, in part, for the insurance company’s downfall have agreed to a settlement with the state.



The insurance company’s collapse was the biggest failure of a U.S. property-and-casualty insurance company in the 1990s. At its peak in the early 1990s, Physicians Insurance Co. was Pennsylvania’s second-largest medical-malpractice insurer.



Zachary Grayson, a lawyer for Physicians Insurance, told Senior Judge John P. Fulham in a hearing that state attorneys had confirmed a settlement with the Philadelphia law firm of Dilworth Paxson L.L.P. and the Media-based actuarial firm of Maher & Associates.



The state insurance department refused to comment on the matter.



Dilworth Paxson officials did not return calls seeking comment.



David Pennington, who is defending one of Physicians Insurance’s accountants, corroborated Grayson’s statement, that state lawyers had spoken of the settlement.



Maher had been a defendant; the state had been considering legal action against Dilworth Paxson.



A state civil fraud lawsuit is still pending against Physicians Insurance.



Insurance department officials have estimated that the Philadelphia law firm Dilworth Paxson was liable for between $20 million and $60 million in losses suffered by Physicians Insurance since 1994, according to federal court depositions from April.



Dilworth Paxson had represented Physicians Insurance from its founding in the mid-1980s until the insurer was declared insolvent in 1997.



State officials say its unfunded liabilities total $300 million.



Christopher Maher agreed to pay the state $132,500, plus up to $75,000 in future profits from an insurance-software claims system he developed, the firm’s attorney, Michael Kristofco, said.



In exchange, Pennsylvania will drop Maher from its lawsuit against Physicians Insurance, and Maher has agreed to assist the state insurance department in its investigation of the insurer, Kristofco said.



Maher had not admitted to any wrongdoing as part of the settlement, and settled because “it would have cost as much” to fight the state in court, Kristofco said.

Jury Sides with Cops in Racial Profiling Case

Scranton – A federal jury hearing a racial profiling case has sided with three Scranton police officers who arrested a black former state constable, against whom charges were eventually dropped.



Officers Robert Stelmack, Philip Condron, and Joseph Lafferty were accused of arresting Terrence Blacknell because he was black, a violation of his civil rights.



The two-day trial was held in Williamsport, during which the jury found that Blacknell’s rights had not been violated by the officers.



A Dec. 21, 1996, criminal complaint against Blacknell said he broke into a Scranton home and threatened the residents.



The officers arrested Blacknell on charges including burglary, criminal trespass, and terroristic threats. District Justice James Kennedy ordered the charges dropped after an alibi witness testified for Blacknell in a Jan. 6, 1997, hearing.



Blacknell subsequently filed his civil lawsuit, which said he was suspended from his constable duties as a result of the arrest and he subsequently lost re-election to the post.



The lawsuit originally had named then-Police Chief George Murphy and the City of Scranton, but both were dropped from the suit before the trial.

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