ELYRIA —  The city’s insurance company won’t cover the entire amount Police Chief Michael Medders was ordered to pay an officer who sued him because the law won’t allow it.

Insurance companies are prohibited by state law from paying the punitive damages awarded in lawsuits — and, in Medders’ case — $2 million of the awarded $2.5 million was for punitive damages.

Dan Kelso, president of the Ohio Insurance Institute, said punitive damages are designed to punish someone who did something wrong deliberately.

“Punitive damages are only to be awarded when there’s an intentional act — an intention to do something wrong,” Kelso said.

It’s the difference between a driver accidentally rear-ending another car and deliberately ramming something, Kelso said.

When Medders was ordered by a federal jury in January to pay the $2.5 million — $500,000 in compensatory damages that the city’s insurance will cover — the jury concluded that Medders had retaliated against police Officer Hetzel See, who as union president was a vocal critic of the chief. He had complained to the FBI about problems he saw in the department, although charges were never filed based on those complaints.

The jury ruled that Medders’ actions were a violation of See’s right to free speech.

“The jury just found that his actions were truly outrageous, and that’s the reason for the punitive damages,” Jillian Davis, one of See’s attorneys, said.

See was fired in April 2002 after he tried to resign as an evidence technician while also serving as a road patrol officer. When his resignation was rejected, he refused to continue in the job and was fired for insubordination.

An arbitrator later ordered See reinstated, saying a 30-day suspension would have been an appropriate punishment. See said after he returned to work, Medders continued to harass him until he filed a lawsuit against the chief and the city in 2003. The city was later dropped as a defendant in the case.

Medders and his attorneys have refused to comment on the case, but in motions seeking a new trial, they contend that there wasn’t enough evidence presented to the jury to justify a finding against the chief or the $2 million in punitive damages.

“Such an amount is truly draconian and would bring about the financial ruin” of Medders, his attorneys wrote.

See’s attorneys, on the other hand, argue that Medders’ ability to pay the award doesn’t matter, although they are negotiating a settlement with Medders that could resolve the case.

“You can only get so much out of a person,” Davis said.

Medders’ attorneys also contend that the chief lacked the authority to actually fire See. That power, they argue, rested with then-Safety Service Director Eric Rothgery, and Medders only made the recommendation.

But See’s lawyers counter that Medders never raised that issue until just before the trial and the chief effectively had the power to terminate See’s employment.

Even if he didn’t, they argue, Rothgery relied on the chief’s decisions when he fired See.

Lorain Law Director Mark Provenza said Lorain officials told two of its police officers — Stanley Marrero and Jesus Sanchez — that they were on their own to deal with lawsuits accusing them of sexual misconduct while on duty. The two officers also are facing criminal charges, and their alleged behavior wasn’t sanctioned by the city, Provenza said.

“They acted outside the scope of their employment,” he said.

Avon Law Director John Gasior said no insurance company would provide coverage against punitive damages, even if state law didn’t prevent them from doing so.

Providing such coverage, he said, would be an offer of protection to people who knowingly did wrongdoing.

“It’s intentionally designed to make you feel the pinch so you don’t repeat the conduct,” Gasior said.

Contact Brad Dicken at 329-7147 or bdicken@chroniclet.com.

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