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Risk retention group dispute leads to Illinois Supreme Court

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An Illinois county has petitioned the state’s Supreme Court to review a lower court ruling saying a risk retention group was not required to pay excess fees incurred over a policy’s $250,000 limit.

The case originates from a 1994 murder in Normal, Illinois, for which Alan Beaman was initially convicted, court records show. His conviction was reversed in May 2008, and he sued the county prosecutors and officers in 2010 in McLean County Court for wrongful arrest and prosecution.

The case went on for three years. McLean County had a self-insured retention of $250,000, but fees resulting from defending plaintiffs from the Beaman lawsuit exceeded $250,000, according to court records. McLean County filed a claim in April 2013 to cover the excess costs with States Self-Insured Risk Retention Group Inc., with whom it had a policy from March 1, 2008, through March 1, 2009.

States Self-Insured refused to cover McLean County’s legal fees because they were incurred outside the policy period for the prolonged legal matter, according to records.

On April 12, 2013, the plaintiffs in that case filed a lawsuit against States, saying it should pay the additional court costs. McLean County Circuit Court ruled on June 9, 2014, that the insurer should pay the costs because the January 2009 dismissal of the charges against Beaman occurred during the policy period.

The insurer appealed that ruling to the 4th District Appellate Court in Springfield, Illinois, which reversed the judgment June 2, 2015, stating the insurer did not have to pay the fees because the personal injury to Mr. Beaman occurred outside of the policy period.

The appeals court said in its ruling that it agreed with States’ argument that “the occurrence of Beaman’s ‘personal injury’ within the meaning of the insurance policy was his arrest and prosecution, not his exoneration.”

McLean County filed it’s petition for review to the Illinois Supreme Court on July 7, asking “why would the petitioners in this case, after carefully reading States’ policy, have any reason to believe that policy would not cover them if they were sued by a plaintiff claiming damages from the tort of malicious prosecution?”

The court has not indicated whether it will accept the case for review.

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