Ronnie Holloway, the schizophrenic man beaten by Passaic Police Officer Joseph Rios III during an arrest two years ago, accepted a $350,000 settlement earlier this year in which he agreed not to sue the city, documents show.

The settlement, obtained by The Record and Herald News on Friday, precludes Holloway or any of his heirs from collecting further damages from the city, the Passaic Police Department, Rios, or his partner during the arrest, Erica Rivera.

Rios was acquitted last week of police brutality charges in state court, and the settlement prohibits Holloway from any further legal action, such as filing a civil rights lawsuit in U.S. District Court. The settlement also releases the city from responsibility for future medical costs associated with the beating.

Taxpayers are still not off the hook, however. Rios was suspended for two years without pay while awaiting trial. Now that he's been acquitted, Rios is seeking reinstatement — and that will likely cost the city nearly $200,000 in back pay, based on his salary of $97,294.

"Our position is that Officer Rios should be reinstated as soon as we work out the details," said his attorney, Anthony Iacullo. "We plan to meet with Mayor Blanco, the City Council and Chief Diaz sometime next week."

The city is not expected to oppose Rios' reinstatement, although the timing of his return to the department could not be worse. The city is stuck in a budget crisis and planning the layoff of 45 employees beginning Aug. 14.

Rios, a seven-year veteran of the Passaic Police Department and an Iraq war veteran, was accused of beating Holloway, a diagnosed schizophrenic, after spotting the man standing on the corner of Main Avenue and Sumner Street around 11 a.m. on May 29, 2009. Rios was riding with Rivera, who spotted the man with no shirt on underneath his hooded sweat shirt and ordered him to "zip up."

When Holloway didn't immediately comply and words were exchanged, Rios got out of his squad car and repeatedly beat Holloway with his nightstick, then threw him across the hood of the car. Holloway was arrested, spent the night in jail, but was never charged.

The altercation was captured on a surveillance video camera located outside a tavern on the corner. The incident made national headlines when the video went viral, and the Passaic County Prosecutor's Office began an investigation, which led to his indictment on charges of aggravated assault and official misconduct.

After a nine-day bench trial, Judge Donald J. Volkert Jr. cleared Rios of both charges. In his verdict, Volkert acknowledged that the video shows Rios using a lot of force, but said it was a "textbook" case of police using their power to subdue an unruly man.

Many Passaic residents disagree and are threatening to protest at City Hall when Iacullo meets with city officials next week.

"That's going to open up a whole can of worms," said Kasim Washington, a community activist and onetime City Council candidate. Washington says it would be dangerous for Rios to be put back on patrol.

"We don't want him coming back wearing a Superman's 'S' on his chest," Washington said. "Think about the first time he has to make an arrest. Our position is that he should be transferred out of the city. We don't want him in the city no more."

Holloway, who lived with his mother on Burgess Place off Main Avenue, has since moved. The settlement agreement precludes him, his friends or any family member from talking about the case to the media.

Keith Furlong, a spokesman for the city, said the city had no legal grounds to oppose Rios' reinstatement. But as of late Friday he hadn't heard of any meeting between Rios and city officials.