Bypassing State Tort Claims Act Protections
Author: Alliant
Because of factors discussed in other articles included in this issue of Trends, Topics, and Views such as historic inflation, Covid-19, climate change weather-related catastrophic events, and nuclear verdicts and settlements, insurance carriers are taking actions to protect themselves. They are doing so by limiting the amount of risk they are willing to take, by tightening terms and conditions of coverage for certain types of risky liabilities and in some cases, by declining coverage all together. This purposeful hardening of the property and casualty insurance markets has impacted all insureds but none more than public entities. For them, insurance costs are but one budget line item among many others. When costs increase, there are limited funds with which to cover them.
Another trend negatively impacting the risk of insuring public entities today is the increasingly popular strategy by plaintiffs’ attorneys of bypassing state court venues and initiating cases against public entities in the federal courts. This strategy is designed to circumvent legal protections for public entities under most state laws and to garner more lucrative verdicts.
Because public entities carry out such a broad array of functions, they are particularly vulnerable to being sued and to tort damage exposure. The state law system of protecting public agencies from tort liability recognizes this vulnerability and is a statement of public policy that government must function and cannot do so in the face of unlimited exposures. Though they vary from state to state, generally tort claims acts protect against any public entity liability for conduct in the performance of certain types of government functions unless there is evidence of particularly egregious behavior such as intentional misconduct or gross negligence.i In most states, statutes provide for caps on the amount of damages that may be assessed against a public entity even when it can be held legally liable.ii While a minority of states iii do not place monetary caps on the amount of damages, most do and several statesiv have elected to legislatively place conservative caps on these amounts both for per person and per occurrence incidents. These protections against tort liability available in state legal systems have meant that in most cases, public entities have been immune from “nuclear verdicts” in state court tort litigation and, consequently, have not needed to purchase liability insurance with extraordinarily high limits of liability.
More and more, however, plaintiffs’ attorneys have begun crafting factual scenarios and legal theories that allow their claims to be heard in federal courts as constitutional violations under one or more federal laws granting access to the federal judicial system where state tort claims act protections are unavailable to public entity defendants.
The case of Thompson vs. Clarkv, spotlighted in the October 2022 issue of Trends, Topics, and Views, is an example of the growing success of plaintiffs’ attorneys in creating new legal arguments to persuade courts to recognize certain behavior by public entities and their employees as violations of the U.S. Constitution and thus, to create federal jurisdiction for litigating these claims in the federal court system.
In the Thompson case, the United States Supreme Court recognized that conduct of a public employee giving rise to an allegation of the tort of malicious prosecution constituted a violation of the 4th Amendment’s unlawful seizure clause and that it could properly be brought in federal court under Section 1983.vi Further, the Court held that a long-established principle that a plaintiff had to prove that his prosecution had ended in his acquittal was no longer necessary to prevail in such an action in federal court; rather that a dismissal of the charges against him would suffice to meet the burden of proof.vii If filed in state court, this claim could have been subject to tort claims act protections, Such protections do not apply under Section 1983. In federal civil rights cases such as these, in addition to there being no tort claims act restriction on liability or caps on damages, prevailing plaintiffs are also entitled to recover awards of attorney’s fees.viii which can often be very costly as cases in federal courts are traditionally more expensive to litigate
With the advent of social inflation (changing public and judicial attitudes more sympathetic to plaintiffs’ claims against public entities) discussed thoroughly elsewhere in this issue of Trends, Topics, and Views addressing “Nuclear Verdicts,” this strategy is gaining steam.
Bypassing state court venues for federal courts is another in a growing series of recent trends negatively impacting public entity exposure and placing greater limitations on and increasing the costs of liability insurance for governments.
[i] An example of a typical state tort claims act is found in Mississippi; https://law.justia.com/codes/mississippi/2020/title-11/chapter-46/.
[ii] See chart complied by law firm in 2022 containing every state’s tort claims law particulars in these respects, https://www.mwl-law.com/wp-content/uploads/2018/02/STATE-SOVEREIGN-IMMUNITY-AND-TORT-LIABILITY-CHART.pdf.
[iii] These include states such as Arizona, Alaska, California, Connecticut, Hawaii, Illinois, Michigan, Virginia, Washington, and New York.
[iv] These include states such as Alabama, Colorado, Texas, and Florida.
[v] https://www.supremecourt.gov/opinions/21pdf/20-659_3ea4.pdf.
[vii] https://www.supremecourt.gov/opinions/21pdf/20-659_3ea4.pdf.
[viii] 42 U.S.C. Section 1988(b); https://codes.findlaw.com/us/title-42-the-public-health-and-welfare/42-usc-sect-1988.html.