Rhode Island Resource Recovery Wins Judgment Against Insurer to Cover Losses

Date: May 27, 2011

Source: News Room

The troubled Rhode Island Resource Recovery Corporation (RIRRC) won a federal judgment against its insurance company Traveler's which had sought to limit coverage for losses totaling $75 million over the past decade. According to the Providence Journal, Travelers Casualty and Surety Company of America had sought a ruling that money squandered by the RIRRC's former leaders should be treated as a single loss under its insurance policy, which would have made it liable for only $1 million in coverage. Instead, RIRRC's lawyers argued that the misspent money constituted more than a dozen distinct losses from multiple employees. U.S. District Court Judge William E. Smith left the amount of coverage to a jury, but ruled that he interpreted the policy to allow coverage for more than a single loss. At issue are losses brought to light in 2007 by RIRRC's new director Michael OConnell and detailed in a Sep. 2009 forensic audit report documenting years of waste and mismanagement, flawed multimillion-dollarland deals and construction projects, cronyism, suspected fraud and bid-rigging, bogus workers' compensation claims and overtime scams. Among them was a $19-million transfer station that was redundant and cost 383 percent more than originally estimated. RIRRC is a quasi-governmental entity that manages the vast majority of the state's waste stream.

To read the article, visit: www.projo.com/news/content/RESOURCE_RECOVERY_RULING_05-28-11_R8OB6TT_v8.2f64dc3.html.

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