PORTLAND – The city of Portland on Monday paid out $276,500 in connection with a drunken driving accident two years ago in which a police lieutenant rear-ended two vehicles after a Police Department Christmas party.

City officials said Kimberly McLellan, 26, of Gorham will receive $245,000 for a back injury she suffered in the accident involving Lt. Ted Ross, who at the time was in charge of the department’s criminal investigation division.

The city also paid $26,000 to Kevin Hardy, whose vehicle was also rear-ended by Ross in the same crash, and $5,500 for damage to both vehicles. Since the city does not carry liability insurance, the settlement will be paid from a taxpayer-funded self-insurance fund.

The evening of the Dec. 17, 2002, crash, Ross attended a Christmas party hosted by Police Chief Michael Chitwood. He then went with colleagues to an Old Port bar for more drinks before he crashed a department-owned car on his way home.

In exchange for the payment, McLellan dropped a lawsuit that had not yet been filed, said her attorney, Daniel G. Lilley of Portland. The suit would have named the city, Chitwood and other unnamed officers as defendants, Lilley said, because the whole department shared blame for the crash.

“They had no policy about using city-owned vehicles while you are going to these Christmas parties,” Lilley said Monday.