CAPE MAY — City Council agreed to pay a $369,000 settlement at a meeting Tuesday night to a gay former police officer who accused the city of discrimination.

Steven Pascal, an openly gay former officer, claimed in a 2013 lawsuit that Capt. Rob Sheehan and the Police Department created a hostile, anti-gay work environment and unjustly fired him three years ago.

Most of the settlement will be paid by the Atlantic County Municipal Joint Insurance Fund, the city’s insurer. The city previously planned to pay $50,000 toward the total, but said in a statement Wednesday that the joint insurance fund is considering reducing the city’s contribution.

A city statement said: “The City Council believes that the settlement is in the best interest of the city based upon the amount of damages claimed as a result of the harassment and wrongful termination claims.”

Neither Sheehan nor the city admitted guilt as part of the settlement, and Pascal’s claims are being dismissed with prejudice, meaning that the allegations can’t be brought back to court.

City attorney Anthony Monzo could not be reached for comment, and it is not clear why the city decided to settle the issue at Tuesday night’s council session. The five-person council previously considered it in September.

The decision to approve the settlement Tuesday night was unanimous, although Deputy Mayor Terri Swain left the meeting early and didn’t vote, City Clerk Louise Cumminsky said.

Sheehan, who was named as a defendant the lawsuit, is suing the city in a separate case to get his job back as chief after, he claims, he was improperly demoted.

Sheehan’s inclusion on the agreement sparked controversy on social media after Christopher Gray, the attorney representing him in the case against the city, released a document that claimed Sheehan was no longer part of the settlement.

“He put out a false press release,” Sebastian Ionno, Pascal’s attorney, said. “It (Sheehan’s name) was always going to be on the settlement.”

The city also published a statement condemning Gray’s press release. John Grady, the attorney representing Sheehan in the Pascal case, said the controversy “disrupted” the proceedings.

“It’s a good thing to put the case behind us,” Grady added about the settlement.

Pascal said in his suit that he was harassed by members of the public with anti-gay slurs. Two residents of Cape May who had harassed Pascal for months once threatened to “snap his neck in a dark alley,” according to court filings.

These incidents were witnessed by other officers and brought to the attention of Sheehan and then-Chief Diane Sorantino, the lawsuit states. No action was taken against the hecklers, and Sheehan opened a bogus Internal Affairs investigation, Pascal claims in the suit.

Pascal was fired after the investigation, which involved a probe into how he handled a traffic stop in 2012.

In Wednesday’s announcement, the city said Pascal’s firing was based on “erratic behavior” he displayed as an officer in the department. Two independent reports, one by a psychiatrist and the other by a psychologist, deemed him “unfit for duty,” according to the city.

The statement said the final decision to fire Pascal was made by City Manager Bruce MacLeod.

Ionno said Pascal has moved on and “tried to restart his life” in the years after being fired. He’s now a flight attendant living in a Pennsylvania suburb of Philadelphia.

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