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The Associated Press June 22, 2011, 11:55AM ET

$65.5M settlement offer in La. public housing lead

Companies that once insured New Orleans' public housing authority or its former managers are offering $65.5 million to settle claims that lead in those developments hurt children who lived or visited there between late 1987 and early 2001.

The size of any payment would depend on how badly a child was hurt. Exposure to lead in early childhood can cause brain damage, behavior problems and physical problems including stunted growth. It can even be lethal.

"There are a lot of educational problems, behavioral problems" among the children for whom the class-action suit was filed in 1994, attorney Gary Gambel said Tuesday. He said extensive tests on them found both elevated levels of lead and "the problems you would expect from this sort of lead poisoning."

The lawsuit filed by Gambel now also includes hundreds of earlier lawsuits that "were going nowhere" because the Housing Authority of New Orleans got federal permission in the late 1980s to drop its liability insurance, Gambel said.

"The housing authority had no insurance -- or so people thought -- and was not paying judgments," he said.

The situation changed after plaintiffs' lawyers identified the insurance companies and made arguments why they should be held liable.

People not already part of the lawsuit have until Oct. 20 to join. That's also the date for people who object to it to explain why, in detail. A hearing about whether the settlement would be fair is scheduled Dec. 21.

"If you do not register to receive a Claim Form, and you do not submit a Claim Form when they become available, you will not get any money from these settlements. If you do not like the settlements but you do not object, you will lose your right to be heard in Court," the Minnesota company administering the proposal says on a website,

As many as 10,000 people could be paid under the settlement, according to the website run by the notice administrators, BMC Group/Analytics Inc. of Chanhassen, Minn. Gambel said he thinks the figure is more likely about 5,000, but "you'd rather estimate high so people don't receive less than what they expect to receive."

Payments would go to qualified people who had spent time in a development run by the authority before Feb. 17, 2001.

Gambel said plaintiffs' lawyers may ask for as much as 40 percent of the settlement.

The U.S. Department of Housing and Urban Development took HANO over in 2002 and changed its oversight team in 2009, but the agency's public housing had long been considered among the nation's worst. It had been on HUD's list of troubled agencies since 1979.

Gambel said some the insurance companies had insured HANO directly, but the largest contribution to the proposed fund, $57 million, was from the company that insured a property management firm that managed the authority for several years in the early 1990s.

All 10 developments named in the lawsuit were built before 1978, when lead paint could no longer be used in residences. Starting in the 1990s, some were torn down and replaced with mixed-use developments, and others were repaired and renovated after Hurricane Katrina.



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