WyCo’s BPU settles an electrocution case for more than it had to

Nick Moeder, a 27-year-old Shawnee resident, was playing a wee-hours round of disc golf in Rosedale Park, in southeast Wyandotte County, on June 16, 2013, when he stepped on a live electrical wire. A strong storm the previous day had knocked down power lines throughout the metro; this one had been on the ground for about 11 hours. Moeder died instantly.

Evidence soon surfaced that the downed line had been reported to authorities at least twice in the hours leading up to Moeder’s death. The Kansas City Board of Public Utilities, the ratepayer-owned utility in Wyandotte County responsible for that line, apologized publicly for its slow response, but a lawsuit was inevitable.

Late last month, the Unified Government of Wyandotte County/Kansas City, Kansas, and the BPU settled with Moeder’s mother, Wanda Christensen, for $1.65 million.

The settlement award runs counter to the BPU’s legal arguments early in the lawsuit. In its initial response to the lawsuit, as well as in subsequent filings, the utility said it wasn’t liable for Moeder’s death — and that, even if it was, it wasn’t on the hook for more than $500,000.

The Kansas Tort Claims Act sets a $500,000 limit for damages in lawsuits filed against governmental entities.

As the lawsuit moved through the courts, however, the BPU eventually stopped claiming that $500,000 was its liability limit. Why did the BPU finally settle for more than what a jury could have legally awarded if it had found the utility responsible for Moeder’s death?

Since 1986, the BPU has held an excess-liability insurance policy. It’s the type that essentially waives the $500,000 cap for damages and exposes the utility to damages beyond what’s ordinarily allowed by law.

The policy insures the BPU for up to $35 million per incident, and up to $70 million in the aggregate. It’s underwritten by Associated Electric & Gas Insurance Services in Hamilton, Bermuda. The BPU pays an annual premium of $546,479.

David Mehlhaff, a spokesman for the BPU, confirms that the policy’s existence clears the way for lawsuit awards in excess of $500,000.

“We can also purchase additional insurance on liability,” he tells The Pitch. “Part of the reason is the [Kansas] Tort Claims Act only protects us in Kansas. We’re on the state line. We have infrastructure on the state line.”

So, Mehlhaff explains, if a utility pole along the state line were to fall and damage property or harm a person standing in Missouri, a lawsuit could be brought in that state, without Kansas’ statutory $500,000 cap on damages. Federal-court lawsuits could also lead to higher damages.

Wyandotte County’s border with Missouri is fairly limited. It starts at the intersection of State Line Road and County Line Road, near Roeland Park, and goes north through the West Bottoms until it reaches the confluence of the Kansas and Missouri rivers. From there, the border runs along the Missouri River, where it’s difficult to imagine BPU infrastructure posing much risk to people or property in the Show-Me State. Given the limited square mileage of at-risk infrastructure, couldn’t the BPU tailor an alternate, possibly cheaper insurance policy that would cover only claims arising from Missouri?

“There are a number of reasons for excess liability, but ultimately it’s a management decision for doing so,” Mehlhaff says.

The $35 million policy, like most BPU policies, was brokered by Metroplex Insurance Agency in KCK.

Metroplex is run by an old-guard Wyandotte County insider named Patrick Scherzer, who served on the Wyandotte County Board of Commissioners in the days before the county’s unification with the Kansas City, Kansas, government. In addition to brokering BPU’s insurance policies, Scherzer, according to records, has donated money to candidates running for the BPU’s board. Earlier this year, he supported Chris McCord’s candidacy for the BPU, along with some of his other business associates. (McCord, however, lost a close race to Norman Scott.)

Metroplex collects a cut of any policy it brokers. The $35 million liability policy carries a much larger premium than most of BPU’s other insurance policies. For example, BPU’s commercial automobile policy carries a $22,913 premium; its policy for excess workers’ compensation has a $104,616 premium. In all cases, Metroplex takes 12.5 percent a year of the premium as a commission.

When asked why his company had sought such a high-dollar policy for the BPU, Scherzer had no comment.