EAST PALESTINE, Ohio — In a ruling in Youngstown’s U.S. District Court, federal Judge Benita Pearson confirmed what class members of the $600 million settlement with Norfolk Southern have long insisted — Kroll Administration fumbled the ball.

On Wednesday, Pearson ordered the removal of New York-based Kroll as the court-appointed settlement administrator responsible for the processing claims, determining award amounts and distributing funds to the over 55,000 claims filed against the railroad as part of the class action settlement. Global firm Epiq has been named the “substitute settlement administrator.”

“The court finds sufficient reason to believe that Kroll has not fulfilled its obligation to adequately administer the settlement and related court orders including, but not limited to, the court’s order approving and implementing the Plan of Distribution,” the order states.

“Kroll’s appointment as settlement administrator in the class action settlement is suspended and terminated, relieving it of the rights, duties and obligations of that position except as directed and ordered by the court.”

According to court documents filed on Sept. 6, two weeks before Pearson gave final approval of the settlement, Kroll had already billed co-counsel “for $2,361,940.74 for administrative expenses” and estimated that it would “bill an additional $14.6 million to complete administration of the settlement.” Kroll was taxed with processing both the direct payments (or property damages) and personal injury damages. An appeal of the final ruling put direct payments on hold. However, the personal injury payments were not impacted by the appeal process and were supposed to begin almost immediately.

That was nine months ago and the majority of residents who lived or worked within 10 miles of the disaster eligible for the personal injury payments are still waiting.

A handful of claimants have reported receiving funds and some of the amounts distributed were much lower than expected. The Morning Journal was provided with determination letters (letters sent out six weeks before the deposit of funds that determined the exact dollars an individual would receive) as low as $200.

A class member had two weeks to accept or challenge the amount determined by an allocation system. That system, as explained in the court-approved Plan of Distribution, awards a “base” of 100 points equivalent to a $25,000 share of the Voluntary Exposure Supplement program. The “base case” is therefore entitled to $25,000 per person with other individuals’ payments increasing or decreasing from the “base case” depending on the factors presented in their claim forms.

Eight factors are considered — location from derailment site, location direction from derailment site, timing of physical presence in impacted areas, age at the time of the derailment, if symptoms were experienced, the nature of symptoms, medical treatment received and if a diagnosis was given by a physician with each category also having sub factors. For example, a person, age 35, living 1.5 miles from the derailment site on Feb. 6, 2023 who reported symptoms of headaches and sore throat, but did not seek medical treatment and did not receive a formal diagnosis would score 90 points out of a possible 100 and receive $22,500. A person, age 48, living 7.3 miles away with reported exposure but no symptoms stands to get just six points or $1,500.

Kroll’s calculations of that formula ultimately led to Pearson giving the company the boot.

“Specifically, the court finds there is sufficient reason to believe that Kroll did not correctly implement the Plan of Distribution by failing to calculate the actual dollar value of each ‘point’ under the Voluntary Exposure payment program before disbursing payments to certain class members,” Pearson ruled on Wednesday. “In addition, the court finds there is sufficient reason to believe that Kroll miscalculated Voluntary Exposure payments to certain class members by failing to adhere to the distinction between the Village of East Palestine and the larger East Palestine area (the zip code 44413) as required by the Plan of Distribution.”

Class co-lead counsel asked for Kroll’s termination — not because claims were underpaid but rather overpaid. Pearson agreed.

“As a result of these probable errors, the court finds there is sufficient reason to believe that Kroll overpaid certain class members’ Voluntary Exposure claims to the detriment of other participating class members and the qualified settlement fund, and that Kroll’s appointment as settlement administrator should be immediately suspended and terminated, so as to protect the class from further potential harm,” Pearson ruled.

The order made no mention of the residents’ complaints regarding Kroll. Chief among them was Kroll’s inability to get payments out within 30 days – a promise that was made during a zoom meeting on Aug. 1 (20 days before the deadline to file claim was to expire) held by class co-counsel Seth Katz, Elizabeth Graham, Adam Gomez and Michelle Kranz to walk residents through the process. In that meeting, residents were told personal injury payments were expected no more than 30 days after the final approval. That statement was reiterated in a slideshow presented in the zoom meeting.

Nor did Pearson’s order address missing paperwork or documents — what Kroll called “deficiencies” — and alleged instances of class members being told Kroll had no record of them filing a claim in the first place despite residents reportedly filing out the necessary paperwork at one of two claims center in the village not once but twice. Also not addressed was Kroll’s statement in March to East Palestine Mayor Trent Conaway that estimated all personal injury letters would be sent out by the end of May.

May came and went, and residents continued to make appointments at the remaining claim center on Rebecca Street to remedy “deficiencies” that Kroll was still finding nine months after the deadline to file had passed. It was at the claim center on Thursday morning that residents first learned something was amiss as a line began to form outside the building which was locked with no employees.

By Thursday afternoon, the settlement website eastpalestinetrainsettlement.com created by Kroll to initially sign-up residents and later keep class members informed of updates listed the change. The notification was ordered by Pearson.

“Kroll is no longer the claims administrator,” it read. “Please direct any questions you may have to Epiq at 855-369-5685.”

It’s unclear how the change of settlement administrator will further delay the already-protracted claims process.

Pearson’s ruling orders Kroll “to facilitate the efficient and orderly administration of the settlement” and is “directed and hereby ordered to fully cooperate with Epiq to facilitate the transfer of the settlement’s administration from Kroll to Epiq. That includes transferring access, control and responsibility of the settlement website, email and toll-free number to Epiq, meeting with Epiq, redirecting all incoming inquiries to Epiq, and “completely transferring all available data, administration-related materials and case reports to Epiq as well as access to the settlement fund established by Kroll at Huntington Bank.

Pearson also ordered a third party to review Kroll’s performance and conduct.

“The court further directs class counsel to engage a qualified auditor to conduct a comprehensive review, audit and analysis of the issues raised and addressed by this order to determine the nature, scope and financial ramifications of any miscalculation errors that may have been made by Kroll in any payments that Kroll issued to class members prior to the date of this order,” she ruled.