Wordsworth plaintiffs in deal to pursue insurance proceeds

Plaintiffs in abuse cases against the bankrupt Wordsworth Academy Inc. have reached agreements with the human services agency that will allow them to negotiate for insurance settlements while the Chapter 11 case continues, pending bankruptcy court approval next month.

Bankruptcy automatically freezes all pre-petition claims. The stipulation between Wordsworth and three attorneys representing five plaintiffs, including the family of David Hess, who was suffocated last October in a West Philadelphia facility operated by Wordsworth, says the plaintiffs agreed to accept insurance proceeds and not make additional claims on the bankruptcy estate.

“We’re agreeing to limit our claims to the available insurance coverage,” Steven F. Marino, who is representing the Hess family, said Wednesday. It is not sufficient, but it is certain, he said.

Without this agreement, the victims would be waiting in line with many other unsecured creditors for the bankruptcy to be resolved.

Separately, former Wordsworth chief executive Debra Lacks objected to a proposal to increase the annual salary of current CEO and chief financial officer Donald Stewart to $175,000 from $145,000 retroactively to July 1.

Such an increase would be “a misuse of public funds which are paid to Wordsworth by the city and state for the benefit of children,” Lacks’ Wednesday filing said. Lacks, who was replaced last year by an interim CEO after Hess’s death, has filed a $72,665 claim in the bankruptcy case.