“Can I Be Sued for That?” Liability and Liability Insurance Trey Allen NC Emergency Management Association 2014 Spring Conference March 24, 2014

Purchase Liability Insurance? Key Factors Risk of being held personally liable –Nature of work –Legal defenses –Coverage purchased by governmental unit Cost of purchasing sufficient liability insurance

Part I: Risk of Being Held Personally Liable

Official capacity claim Individual capacity claim Official Capacity v. Individual Capacity

Potential for Claims Against Emergency Workers? Potential claims arising from emergency management functions? Likelihood of claims being made directly against emergency management workers?

The Doctrine of Governmental Immunity bars tort claims against local governments arising from negligence or intentional misconduct of their personnel in performance of governmental functions. It does not bar tort claims for injuries arising from proprietary functions. Governmental Immunity

Governmental Immunity (cont’d.) Governmental v. Proprietary Functions Governmental function = discretionary, political, or legislative in nature; performed for the public good on behalf of the State. Proprietary function = commercial or chiefly for the private advantage of the compact community.

Governmental Immunity (cont’d) G.S. 166A-19.60: “All functions hereunder and all activities relating to emergency management as provided for in [Chapter 166A] or elsewhere in the General Statutes are hereby declared to be governmental functions.”

Governmental Immunity (cont’d.) Estate of Williams v. Pasquotank County Parks & Recreation Dept., 366 N.C. 195 (2012).

Governmental Immunity (cont’d) Local gov’t may waive governmental immunity by: Purchasing liability insurance or Participating in governmental risk pool.

Public Official Immunity General Rule: Gov’t personnel are personally liable for their intentional or negligent conduct. Doctrine of Public Official Immunity bars tort claims against “public officials” in their individual capacities for acts undertaken within the scope of their duties unless they act maliciously or corruptly. Doctrine does not protect public employees.

Public Official Immunity (cont’d) Public official –Office created by constitution or statute –Takes oath of office –Exercises discretion in performance of duties –Exercises sovereign power of state Public employee –Duties are ministerial in nature

Public Official Immunity (cont’d) Public Official Immunity isn’t waived by purchase of liability insurance!

G.S. 166A Immunity granted when : Performing any EM functions under Chapter 166A, other statutes, or local ordinance Complying with order, rule, or regulation issued under Chapter 166A, other statutes or local ordinance Immunity granted from: Death or injury to person Damage to property No immunity for harms resulting from willful misconduct, gross negligence, or bad faith.

Gov’t Liability Coverage Most counties participate in NCACC risk pool. Some counties have purchased liability insurance from insurance companies.

A Risk Pool is a special type of non-profit entity that enables its members to pre-fund the financial risk of accidental loss though the collective assumption of their individual risk. Gov’t Liability Coverage (cont’d)

Insurance Company –Corporation with stockholders –Managed by private board of directors –Profit Motive Gov’t Liability Coverage (cont’d)

NCACC Risk Pools Coverage for 67 of 100 counties for liability/property or workers’ compensation Coverage for 51 counties for both Also coverage for 46 separate entities –Regional jails, libraries, transportation, COGs, etc. Gov’t Liability Coverage (cont’d)

General Questions Common nature of General Liability Policies Other coverages that apply? Conditions to be aware of? Exclusions which might apply Difficulties in past concerning coverage? Gov’t Liability Coverage (cont’d)

NCACC Pools Coverage Design Property General Liability * Commercial Automobile Crime Law Enforcement Liability Public Official Liability * Employment Practice Liability Workers Compensation Gov’t Liability Coverage (cont’d)

NCACC General Liability: “The Pool will pay on behalf of a Covered Person any Damages a Covered Person becomes legally obligated to pay because of an Occurrence that occurs during the Contract Period.” Liability Coverage (cont’d)

Examples Bodily Injury to 3 rd party Property damage of a 3 rd party Personal Injury (libel, slander, etc.) Contractual coverage for “covered contracts” May include nominal level medical payments Defense costs in your behalf Liability Coverage (cont’d)

Exclusions Any claim or Suit to which a Covered Person is entitled to sovereign immunity or governmental immunity under North Carolina Law Claim or suit alleging Public Officials, Law Enforcement or Employment Practice Wrongful Acts; Punitive damages, fines, penalties, etc. Gov’t Liability Coverage (cont’d)

NCACC Public Officials Liability: Agree to pay on behalf of because of Public Officials Wrongful Act – defined as:

…any error, misstatement or misleading statement or act or omission or neglect or breach of duty including misfeasance, malfeasance, or nonfeasance by a Covered Person while acting within the scope of his/her professional duties or Pool approved activities. Gov’t Liability Coverage (cont’d)

Exclusions Any claim or suit to which a Covered Person is entitled to sovereign immunity or governmental immunity under North Carolina Law Claim or suit brought about through fraudulent, dishonest or criminal behavior of Covered Person Gov’t Liability Coverage (cont’d)

Common Conditions & Definitions Notice of Loss – as soon as practicable Assistance & Cooperation in process Pools right to adjudicate and settle claims Medical Reports, Proof of Claim Other Insurance - Excess Vs Escape Definitions seek to clarify/refine scope Gov’t Liability Coverage (cont’d)

PART II: Cost of Purchasing Sufficient Liability Insurance

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QUESTIONS? Trey Allen UNC School of Government

Grump v. Hazzard County Plaintiff Donald Grump