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2013-1782013-178 Resolution Authorizing Supervisor to Enter into and Execute a Settlement Agreement in Connection with PETNY At a regular meeting of the Town Board of the Town of Wappinger, Dutchess County, New York, held at Town Hall, 20 Middlebush Road, Wappingers Falls, New York, on July 8, 2013. The meeting was called to order by Barbara Gutzler, Supervisor, and upon roll being called, the following were present: PRESENT: Supervisor - Barbara Gutzler Councilmembers - William H. Beale Vincent F. Bettina Ismay Czarniecki Michael Kuzmicz ABSENT: The following Resolution was introduced by Councilman Beale and seconded by Councilman Kuzmicz. WHEREAS, the Workers' Compensation Board (WCB) has assumed the responsibility for the administration and distribution of assets of Public Entity Trust of New York (PETNY), a municipal group self insurance trust in which the Town of Wappinger was formerly a constituent member; and WHEREAS, the WCB and several former members of PETNY previously executed a Tolling Agreement that tolled the applicable statute of limitations for any lawsuit and provided a mechanism to obtain discovery from the WCB; and WHEREAS, because of the unique nature and size of PETNY, WCB performed an updated Deficit Reconstruction using a strictly loss based allocation through December 31, 2012, ("2012 Deficit Reconstruction") which allocated the loss based liability for each former Trust Member, including the Member, for each fiscal year or portion thereof, during which a former Trust Member was a member of the Trust; and WHEREAS, the WCB has developed a settlement proposal that would allow it to release each former Trust Member that participates in the settlement and pays the amount required pursuant to the Agreement from any and all further liability to the WCB for the Deficit and any other liability or obligation to the WCB associated with the Trust and member's former membership therein; and WHEREAS, in accordance with the "Loss Based Allocation" formula, the WCB determined that the Town of Wappinger is entitled to a refund of $15,336.33; and WHEREAS, the Town Board acknowledges that at present the WCB has no funds which to refund the Town of Wappinger the aforementioned amount until such time as WCB recovers monies as referenced in paragraph 5.1 and 5.2 of the Settlement Agreement. NOW, THEREFORE, BE IT RESOLVED: 1. The recitations above set forth are incorporated in this Resolution as if fully set forth and adopted herein. 2. The Town Board Members have read the Settlement Agreement and understand the provisions thereof. 3. The Town Board hereby authorizes the Town Supervisor, Barbara A. Gutzler, to execute the Settlement Agreement by and on behalf of the Town in substantially the form attached hereto. 4. The Town Board further authorizes the Town Attorney, Albert P. Roberts, to negotiate any amendments to the Settlement Agreement deemed necessary to preserve the Town's rights. The foregoing was put to a vote which resulted as follows: BARBARA GUTZLER, SUPERVISOR Voting: AYE WILLIAM H. BEALE, COUNCILMAN Voting: AYE VINCENT F. BETTINA, COUNCILMAN Voting: AYE ISMAY CZARNIECKI, COUNCILWOMAN Voting: AYE MICHAEL KUZMICZ, COUNCILMAN Voting: AYE Dated: Wappingers Falls, New York 7/8/2013 The Resolution is hereby duly declared adopted. /(~-~-~i C RISTINE FULTON, TOWN CLERK For Settlement Purposes Only; All Rights Reserved SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT ("Agreement") is entered into by and between the New York State Workers' Compensation Board ("Board") and the Town of Wappinger, New York ("Member"), a former member of the Public Entity Trust of New York ("Trust"). The Board and the Member are also referred to herein individually as a "Party" and collectively as the "Parties." RECITALS WHEREAS, on or about January 1, 2001, the Trust was organized to operate as a group self-insurer and provide for the payment of workers' compensation benefits under the New York State Workers' Compensation Law ("WCL"); and WHEREAS, the Member was a member of the Trust for the period of time shown in the schedules to the Deficit Reconstruction and 2010 Assessment ("2010 Deficit Reconstruction"), which were distributed previously to the Trust's members; and WHEREAS, the Trust was subject to, and agreed to abide by the provisions of the WCL and the corresponding regulations, codified at 12 N.Y.C.R.R. Part 317 ("Code"), applicable to group self-insurers; and WHEREAS, based on the Board's determination that the Trust was in a significant deficit position, did not meet the financial standards required under the Code, and could not be restored to a financially stable position in a timely and appropriate manner, the Board assumed responsibility for its administration in January 2008; and WHEREAS, following dissolution of the Trust, the Board engaged Lumsden & McCormick ("L&M"), certified public accountants, to review the Trust's financial condition, calculate the amount of the Trust's cumulative deficit as of August 1, 2007 ("Deficit"), and allocate the Deficit among the former Trust members on a pro rata and joint and several basis; and WHEREAS, L&M reviewed the Trust's financial condition, calculated the amount of the Deficit, and allocated the Deficit among the former Trust members on a pro rata and joint and several basis, as set forth in the Deficit Reconstruction and the schedules thereto; and WHEREAS, because of the unique nature and size of PETNY, the Board performed an updated Deficit Reconstruction using a strictly loss based allocation through December 31, 2012, ("2012 Deficit Reconstruction") which allocated the loss based liability to each former Trust member, including the Member, for each fiscal year or portion thereof, during which a former Trust member was a member of the Trust; and WHEREAS, the Board has developed a settlement proposal that would allow it to release each former Trust member that participates in the settlement and pays the amount required pursuant to the Agreement from any and all further liability to the Board for the Deficit and any other liability or obligation to the Board associated with the Trust and the member's former membership therein; and WHEREAS, in accordance with the "Loss Based Allocation" formula, the Board determined that the Town of Wappinger is entitled to a refund of $15,336.33. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, which consideration the Parties acknowledge and agree is good and sufficient consideration, and intending to be bound by and to this Agreement, and all of its terms and provisions, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS: 1. The Board and the Member both acknowledge and agree that the amount set forth in Attachment A hereto represents the refund due the Town of Wappinger in the amount of $15,336.33. 2. (a) Within thirty (30) days of the Member's delivery of its full and final payment of its Loss Based Allocation, plus interest, if applicable, pursuant to this Agreement, the Board will deliver to the Member's attorney of record a full and complete release of any liability to the Board for the Deficit and any other liability or obligation to the Board associated with the Trust and the Member's former membership therein. (b) Within thirty (30) days after the date the Board delivers to the Member or its attorney of record an executed copy of this Agreement, the Board shall deliver to a list of all other former Trust members that also executed an Agreement. 3. Subject to the provisions of paragraphs 5.1 and 5.2 following, by executing this Agreement, the Member, for itself and its successors and assigns, hereby releases the Board, and its agents, servants, employees, successors, and assigns, from any and all manner of claims, demands, damages, causes of action, or suits that it has, might now have, or that might subsequently accrue to it, by reason of any matter or thing whatsoever, and particularly growing out of or that in anyway relates to or is connected with, directly or indirectly, the Member's former membership in the Trust. 2 4. Subject to the provisions of paragraphs 5.1 and 5.2 following, by executing this Agreement, the Member waives its right to maintain an action against the Trust's former administrator (C1ZM), former actuary (SGRisk, Inc.), former auditor (UHY, LLP) and former Trustees and further agrees to discontinue with prejudice any action it may have commenced prior to executing this Agreement against CRM, UHY, SGRisk and the former Trustees within ten business days of execution of this Agreement. 5.1. To the extent that there become actual recoveries allocable to PETNY from third parties including but not limited to various former key agents of PETNY including CR1VI, UHY, and SGRisk, Inc., any surplus of funds after all of the Trust's obligations have been satisfied, including but not limited to (i) repayment of prior statutory assessments relative to the Trust levied upon other self-insured employers in New York and (ii) other administrative costs relative to the Trust (the "Surplus"), will be distributed first to former Trust members that received a credit under the Loss Based Allocation, ("First Eligible Participants") and then to former Trust members that executed an Agreement and paid the amount of their Loss Based Allocation, plus interest, if applicable ("Second Eligible Participants"), provided, however, that the Board does not hereby promise, represent, or commit that any acts or actions it takes, directly or through agents, employees, and/or professionals, will create, generate, produce, or recover any Surplus. 5.2. The Surplus, if any, will be distributed to the First Eligible Participants on a pro rata basis until such credits are exhausted and then any additional surplus to the Second Eligible Participants on a pro rata basis, in the same proportion as the Loss Based Allocation paid by each such Second Eligible Participant. For the purposes of this paragraph, and specifically for the purposes of computing the total amount paid pursuant to Agreements and the amount, if any, to be distributed pursuant to this paragraph, any interest paid by any First Eligible Participant or Second Eligible Participant shall be excluded. 5.3. The Board hereby acknowledges that the Town of Wappinger is a "First Eligible Participants". 6. The Board shall not enter into any Agreement with other former Trust members or their representative counsel which contains more favorable terms than this Agreement unless the Board shall agree to extend the same terms to the Member. 7. By executing this Agreement, the signatories hereto represent and attest that they have the authority to bind the Party for whom they are signing, and by signing do so bind said Party to all of the terms and conditions of this Agreement. 8. The Effective Date of this Agreement shall be the date that it is signed by the Board as the last signatory thereto. 9. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York. 3 10. No dispute or ambiguity regarding this Agreement or any of its terms or provisions shall be construed against any Party on the basis that it drafted the Agreement. 11. If any provision(s) of this Agreement shall be found or held to be invalid or unenforceable in any respect, and for any reason, such finding or holding shall not affect the validity and enforceability of the remaining provisions so long as the material purpose of this Agreement can be determined and effected. 12. Unless otherwise specifically stated elsewhere in this Agreement, any correspondence or communication to the Board relating to this Agreement shall be made in writing and shall include delivery confirmation to the following: NYS Workers' Compensation Board Litigation Unit Attn: Michael Papa 328 State Street Schenectady, New York 12305 13. Unless otherwise specifically stated in this Agreement, any correspondence or communication to the Member relating to this Agreement shall be made to the Member's attorney of record via first class mail, and the Member's attorney of record shall be considered to be the Member's attorney of record unless and until the Board receives actual written notice of substitution of counsel for the Member. 14. The Member shall return this executed Agreement, together with Attachment A with a Payment Option selected, to the Workers' Compensation Board, Litigation Unit, Attn: Michael Papa, 328 State Street, Schenectady, New York 12305. 15. This Agreement, including Attachment A hereto, constitutes the entire agreement between the Parties. No modification of or to this Agreement shall be effective except if it is contained in a writing signed by or on behalf of both of the Parties. The provisions, terms, and conditions of this Agreement shall be deemed to bind the Parties, and their respective agents, servants, employees, successors, and assigns. 16. The Board expressly reserves all of its rights against the Member, and all former Trust members, subject, however, to the terms and provisions of this Agreement, including specifically the provision of the Agreement requiring the Board to deliver to the Member a full and complete release of any liability to the Board for the Deficit and any other liability or obligation to the Board associated with the Trust and the Member's former membership therein within thirty (30) days of the Board's receipt of the Member's full or final payment of its Loss Based Allocation, plus interest, if applicable. 17. The Board, intending to preserve its rights pursuant to General Obligations Law section 15-104 against all other former Trust members that do not execute an Agreement and settle with the Board, and due to the potential release of the Member pursuant to this Agreement, 4 does not release and hereby expressly reserves all of its rights against all other former Trust members that do not settle with the Board. 18. Notwithstanding anything to the contrary contained herein, in the event that a court of competent jurisdiction determines that the WCB's methodology in computing the Deficit Reconstruction including the Loss Based Liability was constitutionally or statutorily illegal or improper or violative of any applicable code and regulation, which determination would result in amore favorable outcome to the Town of Wappinger, then the Town of Wappinger shall be entitled to receive the more favorable outcome as determined by the court. 19. Nothing in this Agreement is intended to confer upon any person other than the Parties hereto any rights or remedies. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date(s) set forth below: State of New York, Workers' Compensation Board By: Robert E. Beloten, Chairman Date: Member: Town of Wappinger By: Barbara A. Gutler Title: Town Supervisor Date: 5 ACKNOWLEDGMENT STATE OF NEW YORK ) COUNTY OF ) ss.: On the day of , in the year 2013, before me, the undersigned, personally appeared ,personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name is (are) subscribed to within the instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. NOTARY PUBLIC STATE OF NEW YORK ) COUNTY OF DUTCHESS) ss.: On the day of , in the year 2013, before me, the undersigned, personally appeared BARBARA A. GUTZLER, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her capacity, and that by her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument. NOTARY PUBLIC 6