Luzerne County Judges

London-based firms say PA Child Care not covered in suits over juvenile placements

November 18, 2009

Insurers challenge juvie claims

By Jerry Lynott jlynott@timesleader.com
Business Writer
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SCRANTON – Two London-based insurance companies challenged a claim that its policies covered PA Child Care, owner and operator of a juvenile detention center sued in federal court over the placement of juveniles as part of $2.6 million alleged kickback scheme involving former Luzerne County judges Mark A. Ciavarella and Michael T. Conahan.

In papers filed Tuesday in U.S. District Court, Scranton, Alea London and Atrium Underwriters Limited said they have no obligation to provide coverage to PA Child Care and attorney Robert Powell, a former co-owner and operator, and attorney Gregory Zappala, the owner and operator of the facility in Pittston Township, for the actions outlined in four lawsuits by juveniles placed in the center.

Zappala, of Monroeville, was dismissed from the suits in July based on Powell’s admission Zappala was unaware of his former partner’s illegal activity.

But Powell and PA Child Care remain as defendants. Powell could not be reached for comment.

The insurance companies said they provided an annual limit of $2 million in coverage for personal injury as a result of an accident. But the policies excluded coverage for personal injury that occurred as a result of acts that were done with the knowledge they violated the rights of another person.

According to the insurance companies’ filing, the former judges conspired with PA Child Care and others to close down the Luzerne County-run juvenile detention center to “artificially create a need” for the PA Child Care center. Furthermore, Ciavarella and PA Child Care engaged in illegal activities that sent youths to the Pittston Township facility, the companies said. Among the activities was the alleged demand of money by Ciavarella from PA Child Care for ordering hundreds of juveniles to be sent to the center.

The former judges face racketeering charges for their alleged participation in a kickback scheme related to the construction of two juvenile detention centers and the placement of youths in the facilities in Pittston Township and Butler County.

Powell pleaded guilty in August to taking steps to conceal the payments to the former judges so that they could avoid paying federal income taxes on the money derived from the scheme. He was a co-owner of PA Child Care at the time he committed the felonies.

The builder of the centers, Robert Mericle, also pleaded guilty to felonies related to the payments to the former judges.

Powell and Mericle are free pending sentencing in federal court.

Jerry Lynott, a Times Leader staff writer, can be contacted at 570 829-7237.

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