December 30, 2021
One major policy item in Gov. Inslee’s proposed 2022 supplemental operating budget is an appropriation of $217.0 million from the general fund–state to the liability account, “to ensure the account is not in deficit.”
The liability account is used “for the payment of liability settlements and judgments against the state . . . or for the tortious conduct of its officers, employees, and volunteers and all related legal defense costs” (RCW 4.92.130). State agencies pay annual premiums to the account. Additionally, according to a 2020 study of Department of Children, Youth and Families’ tort costs, the state buys excess insurance coverage. The study notes that excess coverage premiums have increased from about $8 million a year in 2016 to more than $16 million in 2021. Meanwhile, “the total amount of coverage insurance companies are willing to sell the State has decreased from $75 million in 2016 to $50 million in the current year (FY2021).”
Washington is also a uniquely difficult venue for liability insurers compared to other jurisdictions. Washington is one of the few remaining states with almost no tort immunities. The State is also subject to joint and several liability, which means the State can be liable for 100% of the cost of a tort judgment if the plaintiff is free of fault, even if there are other at-fault co-defendants. The increasing severity of claims and increases in verdict amounts in Washington and nationwide limit the number of large liability insurers willing to cover the State.
The Department of Enterprise Services (DES) asked for $217.2 million in 2022 to return the liability account “to a positive cash balance.” According to the request, net income to the liability account has been negative since FY 2015, and the account’s cash balance has been negative since FY 2018. At the end of FY 2021, the account had a shortfall of $223.3 million.
Additionally, DES asked for $8.1 million to add “staff capacity in the Torts Division in the Attorney General’s Office” and pay for “contract attorneys while this inhouse capacity is developed.” A memo from the Attorney General’s Office notes, “The State’s tort liability exposure and the work required to defend that exposure have both increased significantly during the past biennium.” According to the memo, of the $8.1 million, $5.9 million would be for initial staffing increases and $2.2 million would be for another litigation team to reduce reliance on contract attorneys. Gov. Inslee’s budget proposal would fund the $5.9 million, from the liability account.
The data in the charts below are from DES’s FY 2021 Tort Claim Indemnity Payout Analysis. From FY 2014 to FY 2021, claim filings decreased by 19.4%, payouts increased by 106.1%, and defense costs increased by 44.1%.Categories: Budget , Categories.