Family Ties to State Insurance Fund Pose No Conflict of Interest, Rep. McLeod Says

July 12, 2013

Investigative Reports

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Insurance PolicyAs the great-nephew of a deceased South Carolina governor, state Rep. Walt McLeod III has a family history steeped in public service and the law.

The 76-year-old Newberry County Democrat, a private-practice attorney in Little Mountain, has served in the S.C. House since 1997 and is a former mayor of Little Mountain. His brother, Peden McLeod, an attorney in Colleton County and a former Walterboro City Council member, served in the House from 1972-79 and in the Senate from 1979-90 representing Colleton County; and in 1990 became the state Legislative Council director, a position he held until 1998.

Their great-uncle, Thomas Gordon McLeod (1868-1932), was a House and Senate member representing Sumter and Lee counties, lieutenant governor and governor from 1923-27.

Their father, Walton “Stumpy” McLeod Jr.(1906-1994), was the senior partner in the Walterboro law firm of McLeod, Fraser & Cone and served as the Walterboro city attorney for 60 years. After his death in 1994, Peden took over their father’s position in the law firm, according to brother Walt.

And the six-lawyer firm has been doing very well lately representing state and local agencies, The Nervefound in a review of payouts from the state Insurance Reserve Fund (IRF), which insures state and local government entities for liability and property damage claims.

The S.C. Comptroller General’s Office recently posted IRF records online, covering the first three quarters of last fiscal year, from July 1, 2012, through March 31.

The Nerve’s review of those records during the nine-month period found that a total of $527,517 in legal expenses was paid in 16 closed cases in which the McLeod, Fraser & Cone firm represented state or local agencies.

“Paid expenses” in the online database include defense attorney fees and other legal costs, such as expert witness fees, though it doesn’t cover plaintiff attorney fees, according to information from the S.C. Budget and Control Board, which oversees the IRF.

The defendants in the 16 cases included the state Departments of Education, Transportation and Social Services; and Allendale, Colleton and Hampton counties.

Paid losses to plaintiffs in the closed cases totaled $871,500, The Nerve’s review found. The claims included six slip-and-fall cases, an accident involving a school bus, and two other accidents reportedly caused by potholes.

In an interview Thursday with The Nerve, Rep. McLeod said he had nothing to do with the assignment of his brother’s law firm to IRF cases, and that he has never handled IRF cases while in private practice.

“He (Peden) inherited it from somebody else,” the lawmaker said, explaining that likely what happened was that his brother assumed the representation of public agencies that had been represented by their father before the IRF came into existence.

Efforts Thursday by The Nerve to reach Peden McLeod were unsuccessful.

Rep. McLeod said before he joined the House, he worked as a staff attorney for about 28 years at the S.C. Department of Health and Environmental Control. He recalled that during his tenure there, he would “insist” that IRF staff hire local law firms to defend claims against DHEC facilities in those counties.

“When a jury hears a case, they are more comfortable with a local person than with a stranger representing (a defendant), and that alone will help the defendant receive a better trial,” he said.

In a written response to The Nerve, Budget and Control Board spokesman Michael Shelton said when a lawsuit is filed against an IRF-covered agency, IRF staff assigns attorneys from an approved list to defend the suit. According to Shelton, assignments are based on a “combination of factors,” including:

  • Rotation on the list;
  • Geographical area;
  • Type of case/complexity of the suit;
  • Allegations made in the suit;
  • Experience and expertise needed to defend the suit;
  • Strengths of the plaintiff attorney;
  • Client wishes; and
  • “Equitable use” of all attorneys on the list.

A copy of the attorney list provided to The Nerve shows that the McLeod, Fraser & Cone firm is among six firms assigned to the “Beaufort District,” which covers Allendale, Beaufort, Colleton, Hampton and Jasper counties. The Budget and Control Board (BCB) in 1999 assumed responsibility for assigning lawyers to IRF cases, BCB spokeswoman Rebecca Griggs said in a written response Thursday to The Nerve.

Generally, awards against public agencies are limited under the state Tort Claims Act, which caps awards in most cases at a total of $600,000 per case; the cap in medical malpractice cases involving doctors is $1.2 million, Griggs said.

The Insurance Reserve Fund covers state and local government entities employing a total of more than 177,000 workers, approximately 35,600 public vehicles, and 17 hospitals with more than 1,800 publicly employed doctors and dentists, according to the BCB’s website. The fund insures public property valued at nearly $30 billion; the fund is supported with premiums paid by covered agencies.

Nerve intern Emily Dawes contributed to this story. Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.