U.S. District Judge A. Richard Caputo of the Middle District of Pennsylvania has approved the $17.75 million settlement that Robert K. Mericle, the builder of two juvenile detention facilities who allegedly paid millions in "finder’s fees" to former Luzerne County Court of Common Pleas Judges Michael T. Conahan and Mark A. Ciavarella Jr., agreed to last December in a civil suit brought by a class of juvenile plaintiffs.
The suit stems from the "kids-for-cash" scandal in Luzerne County.
Mericle’s attorneys, along with counsel for the plaintiffs, filed the settlement agreement in the U.S. District Court for the Middle District of Pennsylvania on December 16, 2011.
Almost exactly a year later, on December 14, Caputo issued an order approving the settlement.
Under the settlement agreement in Wallace v. Powell, according to court documents, Mericle and his company, Mericle Construction Inc., would pay $17.75 million into the settlement fund with no admission of liability, resolving all claims against them.
The settlement provides for an additional $1.75 million payment to the plaintiffs if Mericle is successful in a separate suit against his insurer, according to court documents.
On February 28, Caputo entered an order conditionally approving the class and preliminarily approving the settlement.
Remaining as defendants in the suit are Ciavarella and Conahan, as well as Robert Powell, the former co-owner of PA Child Care who admitted to paying millions in kickbacks to the two judges.
Additional defendants include the two detention facilities — PA Child Care and Western PA Child Care — as well as Mid-Atlantic Youth Services, the company that operated the facilities, and Sandra Brulo, the former deputy director of forensic programs of the county’s department of probation.
The consolidated suits in Wallace allege that Conahan and Ciavarella conspired with the other defendants and used their influence as judicial officers to select PA Child Care and Western PA Child Care as detention facilities, and that they intentionally filled those facilities with juveniles to earn the conspirators excessive profits.
Conahan pleaded guilty in 2010 to one count of racketeering and is currently serving a 17.5-year federal prison sentence in Florida.
In February, a federal jury in Scranton found Ciavarella guilty of 12 of the 39 counts of corruption filed against him, including racketeering, racketeering conspiracy, honest services mail fraud, money laundering conspiracy and a host of tax fraud charges. He is now serving 28 years in an Illinois federal prison.
In a June 2009 plea agreement, Powell pleaded guilty to failing to report a felony to federal authorities and with being an accessory after the fact to a tax conspiracy, but alleged his involvement in the scheme escalated as the judges forced his hand.
On December 27, 2011, Powell began serving an 18-month sentence in a federal prison in Florida.
Mericle has also entered a guilty plea but has yet to be sentenced.
The largest single portion of Mericle’s settlement will be reserved for juvenile victims who suffered physical or psychological harm as the result of being sent to detention centers by Ciavarella, according to court documents.
In addition, more than $8 million — plus any money left over after the rest of the payments are allocated — will be reserved for class members with "unique specified situations," such as physical injury or illness, psychological harm or suicide, according to court documents.
Those payments will be made in addition to money allocated to juvenile class members according to which facilities Ciavarella sent them to, according to court documents.
After attorney fees, according to the settlement, class members who appeared before Ciavarella but were not sent to a juvenile detention facility between January 1, 2003, and May 28, 2008, will receive $500 from the $410,000 "Probation Benefit Fund," according to court documents.
Each class member Ciavarella sent to a detention facility other than PA Child Care or Western PA Child Care during that period will receive $1,000 from the $820,000 "Non-PACC/WPACC Benefit Fund," according to court documents.
Class members Ciavarella sent to either PA Child Care or Western PA Child Care will receive $5,000 from the $3.65 million "PACC/WPACC Benefit Fund," according to court documents.
Meanwhile, class members who are parents or guardians of juveniles who either had to make payments to or had wages garnished by Luzerne County as a result of Ciavarella’s adjudications will be reimbursed those amounts from the $500,000 "Parent and/or Natural Guardian Benefit Fund," according to court documents.
Under the settlement, any leftover money from the "Probation Benefit Fund" and the "Non-PACC/WPACC Benefit Fund" is to be added to the "PACC/WPACC Benefit Fund." If any money is left in the "PACC/WPACC Benefit Fund" after the required distributions are made, the balance is to be transferred to the "Enhanced Benefit Fund," which will go toward juveniles "with specified unique situations," according to court documents.
That fund will be at least $8.04 million, court documents said.
Under the settlement, the factors for determining whether a class member is eligible to receive payment from the Enhanced Benefit Fund include age, number of juvenile petitions and number of days spent at PA Child Care, Western PA Child Care or another detention facility.
Class members who became physically injured or ill, as well as those who suffered psychological harm or educational difficulties as a result of detainment ordered by Ciavarella, may also be eligible for payment from the Enhanced Benefit Fund, according to court documents.
Situations where a juvenile committed suicide as a result of detainment ordered by Ciavarella may also warrant payment from the Enhanced Benefit Fund, court documents said.
The payments will be managed by a claims committee consisting of one attorney each from four of the firms representing plaintiffs in the class action: Hangley Aronchick Segal Pudlin & Schiller, Anapol Schwartz and the Juvenile Law Center in Philadelphia, along with Pittsburgh-based Caroselli Beachler McTiernan & Conboy. Class members Ciavarella sent to either of the two Mericle-built facilities — PA Child Care and Western PA Child Care — will each receive $5,000, while those who were sent to other facilities will receive $1,000 each and those who were never detained will receive $500 each, according to court documents.
In addition to approving the settlement, Caputo awarded the plaintiffs’ requested attorney fees and costs in the amount of $4.3 million.
Marsha Levick of the JLCand Daniel Segal of Hangley Aronchick could not be reached for comment at press time.
Sol H. Weiss of Anapol Schwartz said the settlement approval means "kids will finally get paid and that’s a good thing."
"It came at the right time," Weiss said.
William Caroselli of Caroselli Beachler said he was "very happy to have been of service to our clients as well as to the members of the class in bringing [the settlement] about."
Eric Kraeutler of Morgan, Lewis & Bockius in Philadelphia, lead counsel for Mericle in the civil suit, could not be reached for comment at press time.