Island Park insurer: Let locals pay


With the 1990 federal lawsuit against the Village of Island Park reportedly nearing settlement, that lawsuit has been coupled for more than 210 years by the court with another that has sat largely in the background — a suit by the national company that insured Island Park during that period that asked the court to move the burden of any financial settlement away from the company and onto former officials and residents of the village.

That companion case, which has been working through the Eastern District federal court system parallel to the government’s case against the village, is called National Casualty Co. Vs. the Incorporated Village of Island Park, in which the village’s insurer seeks to limit its liability in the central lawsuit brought in 1990, by holding the village’s former mayor and its former village trustees — Jacqueline Papatsos, Charlotte Kikkert, Phillip Taglianetti and James Fallon — liable for the damages.

Court documents obtained by the Herald show that on August 13, a civil hearing was held before Chief Magistrate Judge Steven Gold, the judge who has been working on the case for many years. According to the “Minute Entry” registered after the hearing, “[National Casualty, Island Park and the Government] report that all required approvals of federal officials have been obtained, and the Village board meets later this week and is expected to issued its approval at that time. The parties will promptly seek to .. remand this issue from the Second Circuit. The parties will submit a letter by September 4, reporting on the status of their efforts to discontinue [U.S. vs. Incorporated Village of Island Park and National Casualty Vs. the Incorporated Village of Island Park.]”

The village board met on August 15 and approved a motion to authorize its attorney to sign a consent decree settling the cases. That decree must be approved by Gold.

While the details of the settlement have not been released, the village has promised a meeting “in the near future” to reveal the settlement details to village residents.

The original federal lawsuit was filed by a Hispanic resident of Island Park, who charged that he was rejected for a federally subsidized house in the village because of discrimination. The homes had been constructed in the village under a federal Housing and Urban Development department program designed to bring affordable housing to minorities in areas where no such housing then existed.

The plaintiff, Richard Rodriguez, filed the suit after The New York Times reported in June 1989 that a Department of Housing and Urban Development audit had accused Island Park officials of rigging the selection to favor politically connected villagers and to keep out minorities.

Among those selected for the homes, according to the HUD report were a cousin of Senator Alfonse M. D’Amato, several Island Park insiders, including the son of Geraldine McGann, a high-ranking HUD official. Island Park is the hometown of Mr. D’Amato, a Republican, and Mrs. McGann.

Rodriguez, a 35-year-old airline worker, argued in his suit that he had tried many times to apply for one of 44 houses subsidized by the federal program in the early 1980’s. But village officials, he said, repeatedly rejected his applications.

In October of 1990, the village’s insurer, National Casualty Company, a Scottsdale, Arizona based national insurer, moved in federal court to take a least part of the financial burden of any settlement from the company and move it to the local officials, based on the theory that they had perpetrated the illegal act and should bear the burden.

In 1995, the federal judge then hearing the case, Leo Glasser, ruled that Island Park violated the Federal Fair Housing Act and False Claims Act. He appointed Magistrate Steven Gold to recommend the penalties and remedies to be imposed.

Two years later, Gold, who had inherited the case after the retirement of Glasser, recommended that Island Park pay a $5.4 million fine —slightly more than $1,000 for every man, woman and child in the village. In addition, the village was to develop a plan and actively recruit minorities to move there. Prosecutors in the case also recommended that Island Park redo a lottery for the original 44 homes and build an additional 44 that would be sold only to minorities.

The case has been working slowly through the court since that time.