The City of Boston has agreed to pay $1 million to settle a lawsuit with former city employee Hilani Morales, who alleged she was sexually harassed by former city health chief Felix G. Arroyo, and then retaliated against when she complained.
A highly anticipated jury trial, which was set to include testimony from several power players in the Boston political and legal scene, such as former mayor Martin J. Walsh and sitting federal Judge Mark L. Wolf, was about to begin in May when the city and Morales’s team reached a last-minute tentative agreement, though details of the settlement were not announced at that time.
On Friday, the Globe reviewed the finalized settlement terms, in which the city agreed to pay Morales $1 million — $365,000 for legal fees and $644,000 for emotional distress damages. Morales’s lawsuit, which was filed in 2018, named Arroyo and the City of Boston and alleged sexual harassment, a hostile work environment, and retaliation.
Morales’s attorney confirmed she signed the settlement and will drop all complaints and ongoing litigation against the city. Arroyo did not participate in the settlement negotiations, and the agreement between Morales and the city does not resolve his counterclaim, a defamation lawsuit against Morales, which is scheduled to go to trial in June 2025.
“The city has come to a mutually agreeable settlement for this case that dates back to 2017 under a prior administration,” said a city spokesperson in a statement to the Globe. “Through this settlement, the city avoids substantial additional costs from further litigation.”
Morales initially filed a complaint with the Massachusetts Commission Against Discrimination in 2017, claiming Arroyo sexually harassed her and created a hostile work environment while he was her superior in the Department of Health and Human Services. Morales then withdrew the complaint and filed the lawsuit against Arroyo and the city in Suffolk County Superior Court in 2018, accusing Arroyo of sexual harassment, discrimination, and misconduct. She also alleged the city transferred her to a different department, which she viewed as a demotion, after she spoke to the city’s human resources department about her concerns.
Arroyo has denied all allegations, and in addition to the defamation countersuit against Morales, he filed a wrongful termination lawsuit against then-mayor Walsh in 2020. Walsh fired Arroyo in 2017 after a four-week investigation into the accusations.
If the case had gone to trial, the jury was expected to hear testimony from both Walsh and Wolf, a well-known federal judge who had what Morales’s lawyer John Tocci characterized as “almost a father-daughter kind of relationship” with Morales. Wolf has claimed Morales told him about issues with Arroyo around the time they were happening.
In the original complaint, Morales claimed she was, at the time, in the middle of divorce proceedings that were paused when her husband required chemotherapy treatment. Her complaint alleges Arroyo used “his position of power and his awareness of Ms. Morales’ personal turmoil” to pressure her into a sexual relationship in 2016, which was “marked by the extreme imbalance of power between a mid-level staffer and a Cabinet head.” After Morales ended the relationship in 2017, she alleges, Arroyo continued to sexually harass and threaten her for several months, and on one occasion physically assaulted her.
The controversy largely derailed Arroyo’s political career at a time when he was considered a rising star in local politics. Arroyo had served two terms on the Boston City Council, ran for mayor in 2013, and comes from a prominent political family. His father, Felix D. Arroyo, is also a former Boston city councilor, Boston School Committee member, and Suffolk registrar of probate. His brother, former city councilor Ricardo Arroyo, lost reelection last fall after a series of controversies.
Representation for Arroyo did not immediately respond to a request for comment. Morales’s attorney referred to comments he made in May when the tentative agreement with the city was reached, saying while the years-long lawsuit has been extremely “tough” for his client, he believes she is “at peace” with the settlement resolution.
Niki Griswold can be reached at niki.griswold@globe.com. Follow her @nikigriswold.