By RICK KRON
Leader staff writer
Sherwood Mayor Virginia Hillman calls a recent $200,000 lawsuit filed against the city a “difference of opinion.”
Central Arkansas Risk Management Association (CARMA) filed the suit last week in Pulaski County Circuit Court. CARMA claims it loaned or advanced the city $300,000 above the compensation it paid under the insurance policy for tornado repairs and the city only paid back $100,000.
The case will be heard by Pulaski County Circuit Court Judge Alice Gray, but no date has been set yet.
Hillman said the consensus of the original agreement was to pay back what the city could. “We believed the rest of the debt was forgiven,” she said.
Hillman said either she or a representative from the city attended all the CARMA board meetings until the city left the insurance carrier for a Municipal League plan in April 2012. “Nothing was ever said to us at those meetings,” she said.
Hillman added that the agreement was to review the money situation within a year and the insurance board never did that.
She said the current board is not the same board the city worked with originally. When Benton left the insurance group, it also had problems with CARMA over premiums owed, the mayor noted.
Hillman said insurance runs the city about $275,000 annually. It was important to have better coverage and higher limits than what was offered by CARMA, the mayor continued. “That’s why we moved to the Municipal League,” she said.
The money CARMA gave the city came after an EF2 tornado, on April 3, 2008, damage Sherwood’s sports complex, the high school, other city facilities and about 100 homes. An EF2 tornado can have winds up to 135 miles per hour.
“FEMA was very slow in providing help, plus we weren’t adequately or properly protected to cover the loss,” the mayor explained.
Hillman, along with former Mayor Bill Harmon, went to CARMA and got the $300,000. In the meantime, they told the insurer that they would work with FEMA.
FEMA finally came through with some assistance, but not nearly enough funds.
“I recall that meeting, and all the municipalities and entities were worried that they weren’t adequately covered either,” the mayor said.
Hillman said CARMA claims it sent out notices for the city to review its coverage. But the mayor said someone should have come out from the insurer and reappraised the city’s needs.
“Our coverage was not adjusted for rate of inflation,” she explained.
CARMA states in its lawsuit that the city did repay $100,000 to the association in February 2010, but the city did not answer a June 28 letter from the association demanding the remaining $200,000.
Hillman said the city has 30 days to answer the lawsuit and hasn’t decided on a response.
She said that the damage at city facilities from the tornado was more expensive than what the city’s insurance policy covered. The additional money were necessary for repairs, Hillman noted.