Crestwood, Illinois, (population 11,250) is a village located in the nether regions of southern Cook County. This Chicago suburb was ruled by one family for years, beginning with Chester Stranczek. In the early ‘90s, he began refunding property taxes because he claimed to have not only balanced his budget, but he made serious inroads in his city’s spending. One national magazine called him the Mayor of the Year, and another named his town the “best-run” city in the USA.
Here is how he did it.
In 1985, his engineers told him that his water mains were leaking, and leaking badly. To replace them would have cost millions of dollars. The leaks meant that City of Chicago water (Lake Michigan — a tiny body of water that serves more than 20,000,000 with all their fresh water needs) was being bought and piped by Crestwood, and a good deal of it was spilling out of its ancient, leaky, mains, instead of making it to household taps and water supplies. The mayor had several choices, including the simplest — fixing the damn pipes. But Chuck was a TeaBuggerer before TeaBuggerers existed. Staunchly conservative, having a crucifix in his offices, and terrorizing those who stood in his way, Chuck figured out how to save even more money. Rather than fix the mains, he ordered opened a large, unused well pump and had that well water mixed with the Chicago supplied water.
However, five years earlier, around 1980, Crestwood was told by the US EPA that its well water was seriously contaminated with poisons and toxins, and rendered it unfit for human consumption. In 1985, the mayor conspired with his staff to secretly hook up the old well, with up to 1.2 million gallons of water a day being pumped from the toxic well. This was mixed into the Chicago water source to make up for the water main leaks.
By 2000, cancers were beginning to appear in the Crestwood population. By 2004, serious research was going into learning what the cause might be. By 2007, the water was a major suspect.
In 2009, the mayor denied that there was any contamination or improper water mixing. By then at least 8 people had died of cancer, a huge spike for such a small town. The EPA determined that the mayor, his son, the water manager, and several city workers were lying to investigators, to the EPA, the Illinois attorney general, and to the general public. Many law suits followed.
It was soon reported that Crestwood's public water supply was contaminated with vinyl chloride (a kinown carcinogen) and perchloroethylene, (PCE) a dry-cleaning solvent which causes a variety of cancers, including ovarian, thyroid, liver, liver damage and neurological problems.
Crestwood repeatedly denied all allegations and hired some of the most powerful and politically connected law firms in Chicago.
Eventually, criminal charges were filed. In 2013, after a trial lasting a week, a jury convicted Theresa Neubauer, the village's former water department supervisor, on one criminal count related to her involvement in the plot and 10 other counts for making false statements in official documents.
A second official, former water operator Frank Scaccia, pled guilty earlier to a single count of lying to environmental regulators.
During this period, then Governor Bloggo was in a pissing contest with Lisa Madigan, a turf war that no one won. Eventually, all actions began to go forward, including the criminal actions.
In September, 2015 after much litigation, the parties agreed to settle. Crestwood will pay (eventually) $15,500,000 to settle the outstanding 351 cases. Other litigation had included a declaratory action by Crestwood’s insurer, which sought a court determination that their pollution exclusion and intentional acts exclusions precluded any coverage. That insurer won their case and won on appeal in the 7th Circuit.
Another insurer simply hid and did nothing. More on that below.
There have been state and federal criminal actions filed on top of the state claims for bodily injury. Another civil suit against the city resulted in a global settlement for every present resident, which included a set amount for water charges and other minor items.
It has taken 7-8 years, but eventually justice is being accomplished. Chuck was determined to be senile as of 2013, so no charges were ever pursued against him solely because of his incompetence.
The people responsible for the poisoning were charged. People went to jail. Funds are being gathered to pay those individuals who died or suffered cancer or neurological disorders because of these chemical exposures.
What lessons can we learn from Crestwood and can we apply them to Flint?
1. The only reason that Chuck Stranczek was not criminally charged was because he was deemed incompetent. Look for Governor Snyder to raise that identical defense today.
2. Civil litigation, including two class actions, directly caused state and federal investigations, and eventually criminal charges for other Crestwood people. Because of the horrible facts, settlements for the injured are going forward. $15,500,000 split 351 ways does not sound like much for someone who lost a son, daughter, wife or husband. But it is better than nothing.
3. Several state authorities, including the State EPA were embarrassed by their failure to act sooner, and several high level people ended up resigning.
4. One insurer successfully defended its insurance policy and got a declaration that its coverage did not apply.
5. The water mains have been repaired. At long last. Chicago (clean) water flows through the system, not leaking out of it.
6. A bond will be issued by Crestwood sometime in 2016 to fund 80% of the settlement.
7. People are still dead, and many others stricken by cancer even though the water is now clear and the matter was settled.
That is so important, so let me repeat it.
7. People are still dead, and many others stricken by cancer.
One insurer acted appropriately. (Actually, Donald’s idea that Ted seek a declaratory judgment is not bad advice!) Their eventual Declaratory Judgment releases their policy from any coverage exposure. Given the number of years (25) and the exposure of those individual yearly policy limits (between $25-100,000,000 per policy period, depending on the year), that insurer (along with its excess umbrella carrier) got out of being on the hook for up to 1.8 TRILLION dollars.
Another insurer acted unwisely. They did nothing. They did not provide a defense for its insureds, they did no respond to calls for coverage. They really hid their heads and did nothing.
In Illinois, and in many other states, the duty to defend and the duty to indemnify are separate and independent of each other. Insurers frequently have to provide a defense, even though they have no duty to indemnify. But, the one thing that no insurer can do is to do NOTHING. What happens then is that the policy is effectively rewritten by the courts, deleting any policy defenses that may have existed. The newly rewritten policy may eventually add between $5 or 10 million more to the settlement pot, simply because they never even bothered to deny coverage or file a dec action.
So, hey, you local lawyers in Michigan. Why not consider suing everyone who had a hand in killing Flint Michigan? Starting with Governor Snydely Whiplash and his hand-picked mongrel managers who poisoned 100,000 innocents. Given how big of a travesty this is, there has to be a way of avoiding any municipal or state immunities. Let your civil lawyers push the rest of the case, much like we did here in Illinois.