Federal panel lets McHenry County off hook for $6 million

McHenry County will not have to reimburse its former insurer for more than $6 million the insurance company spent to settle a lawsuit against the county, a federal arbitration panel has ruled.

The ruling ends eight years of litigation stemming from a Buffalo Grove-based energy company's proposal to build an electrical power plant north of Huntley.

"That's a chapter in the county's history that now is done," McHenry County Board Chairman Ken Koehler said Thursday.

Insurance Company of the West sought the $5 million it paid Indeck Energy Services Inc. in 2002, prompting Indeck to drop its $40 million lawsuit against the county.

The San Diego-based insurer sued McHenry County for the $5 million plus more than $1 million in interest, saying the county's policy shouldn't have covered that cost.

The county argued that it didn't owe the insurer anything because the policy covered the $5 million, and the insurance firm didn't consult with the county before making the payment.

The arbitration panel sided with the county, finding that the money spent to settle the Indeck lawsuit was covered under the county's policy with Insurance Company of the West.

The county learned of the decision in a letter from the arbitration panel Wednesday.

"It was just total jubilation," Koehler said.

Insurance Company of the West declined to comment.

Indeck sued the county in August 1999 after the McHenry County Board denied Indeck's request to build a power plant near routes 47 and 176.

Part of the lawsuit was settled in 2002 after Insurance Company of the West paid Indeck $5 million. The rest of suit was dropped under a settlement the parties announced in April.