The Timpanogos Community Mental Health Center has filed a lawsuit against an Illinois insurance company, claiming the company owes the center up to $1 million as a result of last year's $3.5 million health center scandal.
According to the lawsuit, filed in 4th District Court, Timpanogos Mental Health purchased a "public employees blanket bond" from Lumbermens Mutual Casualty Co. in 1985. Lumbermens Mutual is a member of the Kemper Group.The suit says Timp Mental Health paid premiums through 1988 for bond coverage, which, according to a copy of the contract, insured the center "against loss sustained . . . through any fraudulent or dishonest act or acts committed by any of the employees, acting alone or in collusion with others during the bond period . . . ."
Joseph Joyce, legal counsel for Lumbermens Mutual, said company officials have yet to see the lawsuit.
"We haven't received the complaint. It would be premature to make any type of a comment. We're looking at six weeks before filing an answer to that," Joyce said.
Following a lengthy investigation by the Utah attorney general's office last year, three former top Timp Mental Health officials were charged with 117 felony counts of misuse of public funds, felony theft and state income tax invasion.
The salaries the officials paid themselves and other employees was "greatly in excess of those authorized by law, authorized by the governing board, or authorized under the merit system by which the plaintiff operated," the lawsuit says.
Because the money was taken dishonestly, the Timp Mental Health Authority Board is seeking $100,000 per year per employee who wrongfully took or accepted unauthorized funds.
"Defendant has failed and refused to pay any sums to plaintiff despite repeated requests for performance on the contract in question" even though the insurance company has had ample time to do so, the lawsuit says. "The failure of the defendant insurance company to tender even the undisputed amounts due under the contract has been an oppressive, malicious and willful act on the part of the defendant."
The Timp Mental Health Authority Board has filed civil suits against former Timp officials Glen R. Brown, Carl V. Smith and Craig W. Stephens in an effort to recover money. The lawsuit asks the court to rule that the civil suits not hinder the center's "rights to recover under the agreement of the insurance in question."
In addition to seeking $100,000 per year for employees who misused funds during the three-year period in question, Timp Mental Health also is seeking attorney's costs and fees, and damages "for the bad faith conduct of the defendant."