Chicago State University to finally pay whistleblower $4.3 million

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Chicago State University agreed Thursday to pay a former school attorney $4.3 million, ending a long and expensive landmark whistleblower lawsuit.

The unexpected agreement came after the cash-strapped public university, whose delays had driven up the interest it owed, told a Cook County judge it would immediately pay James Crowley, who said he was fired in 2010 after reporting alleged misconduct by top university officials.

A jury in 2014 found in Crowley’s favor and ordered Chicago State to pay him more than $3 million, including $1 million in back pay and $2 million in punitive damages, along with attorney fees. But the school had avoided payment while it challenged the jury verdict.

That decision was upheld by the Illinois Appellate Court last year, and the judgment amount grew with the addition of 6 percent interest earned since the verdict and “front pay” — money Crowley would have earned if he had worked between the time of the jury decision and the final order.

Crowley’s case is believed to be the first stemming from a whistleblower claim filed under the state ethics act, which became law in 2003 and included remedies for employees who disclose unethical behavior.

“I’m relieved to have reached the end of this lawsuit. I look forward to personally moving on,” Crowley said Thursday. “I’m also hoping for the future success of Chicago State. It’s a worthy university with a noble mission, and its students deserve our support.”

A Chicago State spokeswoman did not have an immediate comment.

According to the court order agreed to by Crowley and Chicago State, $4,292,594.02 million held in a university bank account will be turned over to Crowley. The agreement comes after a judge on Feb. 1 ordered the university to pay the judgment or rack up about $21,000 a month in additional interest.

Chicago State asked to file written arguments on the matter, and a hearing date was set for May 1. But on Wednesday, the university told Crowley’s attorney, Anthony Pinelli, that it was ready to finalize the matter.

It’s unclear what drove the school’s decision, but university trustees met Friday, including in closed session, though they did not publicly discuss the Crowley lawsuit. The final payment amount includes interest from last month.

The payment comes at a difficult financial time for Chicago State, as the Far South Side university has no funds to spare during the most protracted budget stalemate in Illinois history. The budget impasse has left the state’s colleges and universities with only limited and unpredictable state funding during the past 20 months, and there are no plans for state funding this year.

The university, at risk of ending the school year with a deficit, has drained cash from its savings to support routine operations and has laid off hundreds of employees.

What’s more, the school’s insurance carrier has argued it is not obligated to cover the Crowley judgment. The insurance underwriter, Illinois National Insurance Co., informed university officials last year that Chicago State’s policy does not cover claims stemming from a “fraudulent or dishonest act or a willful violation of any statute, rule or law.” The university has sued the insurance carrier.

Pinelli called the whistleblower lawsuit “as dirty a fight as we had ever been in.”

“I think the result was fair,” he said. “I also think it’s important that we made significant law under the ethics act. … It is now a guideline for people who may lose their job because they point out misconduct by state officials.”

Crowley, who has worked temporary jobs since leaving Chicago State, had claimed he was fired after he refused to withhold documents about President Wayne Watson’s employment that a faculty member had requested under the Illinois open records law. He also said he was retaliated against after reporting questionable university contracts to the attorney general’s office.

Watson stepped down as president in 2015 and holds the title of president emeritus.

“To have carved out this area of the whistleblower law is humbling, and I hope to continuing inspiring people to uphold ethical standards in government,” Crowley said.

Courts criticized Chicago State throughout the case. In an unusually harsh ruling, a three-judge panel of the Illinois Appellate Court called the university’s behavior “thoroughly reprehensible” and suggested Watson and his top lieutenants acted with “malice and deceit.”

In his order last month, Cook County Judge James McCarthy again criticized Chicago State officials.

“The ethics act specifically provides that the employee may be awarded all remedies necessary to make the state employee whole,” McCarthy wrote, adding that Chicago State could have stopped the judgment from increasing “but rather chose to delay payment to its former employee.” The judge called the university’s handling of the lawsuit “yet another example of the management style and judgment exercised by the officials at Chicago State.”

jscohen@chicagotribune.com

Twitter @jodiscohen

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March 9, 2017 at 04:48AM

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Chicago State University to finally pay whistleblower $4.3 million

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