T ORT & INSURANCE WORKSHOP

1. TORT & INSURANCE WORKSHOP • North Carolina State University April 2002 David Drooz, Associate General Counsel Jim Semple, Director, Insurance & Risk Management N.C. State University

2. TORT & INSURANCE WORKSHOP • I. Practical info • II. What is a tort? • III. Liability – limits and defenses • IV. Insurance coverage

3. I. PRACTICAL INFO • WHEN THERE IS AN ACCIDENT, INJURY , OR DAMAGE: • Get help • Make record of what happened • Report to supervisor • Report to NCSU Insurance & Risk Management • Report to Office of Legal Affairs

4. I. PRACTICAL INFO • Office of Insurance & Risk Management • 919 - 515 - 6124 • http://www2.acs.ncsu.edu/insurance/ • Office of Legal Affairs • 919 - 515 - 3071 • http://www.fis.ncsu.edu/ncsulegal/

5. II. WHAT IS A TORT? • A WRONG OR INJURY TO ANOTHER, • APART FROM BREACH OF CONTRACT, • WHICH A COURT CAN REMEDY BY AWARDING DAMAGES

6. II. WHAT IS A TORT? • 1. DEFENDANT MUST OWE A DUTY OF CARE TO THE PLAINTIFF • -- DUTY OF CARE IS IMPOSED BY LAW, NOT PRIVATE AGREEMENT • -- DUTY OF CARE IS THE ESSENTIAL INQUIRY IN ANY TORT CASE

7. II. WHAT IS A TORT? • 2. DEFENDANT MUST HAVE BREACHED THAT DUTY • 3. THE BREACH OF DUTY MUST BE THE PROXIMATE CAUSE OF HARM TO PLAINTIFF • 4. PLAINTIFF MUST HAVE SUFFERED ACTUAL DAMAGES

8. II. CATEGORIES OF TORTS • A. NEGLIGENCE • B. GROSS NEGLIGENCE • C. INTENTIONAL • D. STRICT LIABILITY

9. II. NEGLIGENCE TORTS • FAILURE TO USE REASONABLE CARE • measured by prudent person in similar circumstances • MOST MISTAKES AND ACCIDENTS ARE DUE TO “NEGLIGENCE”

10. II. NEGLIGENCE TORTS • Some university cases: • Slip and fall • Drowning • Motor vehicles • Negligent hiring • Infliction of emotional distress • Defamation

11. II. TORTS - CHILDREN • A child under 7 years of age is legally incapable of contributory negligence • Rebuttable presumption: child 7 to 14 years old is incapable of contributory negligence • Bottom line: Take extra care for safety of children

12. II. TORTS - PREMISES • For lawful visitors, you must make a reasonable effort to make premises safe. You are not an insurer of their safety. • In practical terms, you should “INSPECT & CORRECT” unsafe conditions where you can. If it’s not feasible to correct a danger, then give warning.

13. III. LIABILITY – LIMITS & DEFENSES • Tort Claim Act / sovereign immunity • Defense of State Employees Act • Workers’ Compensation • Contributory negligence • Assumption of risk • Liability waivers • Volunteer immunity • Public duty doctrine

14. III. SOVEREIGN IMMUNITY • Sovereign immunity = the State cannot be sued in tort without its consent • Only the General Assembly can give consent (it has done so in the Tort Claims Act) • Not a defense to federal claims (although 11th Amendment immunity may be a defense)

15. III. TORT CLAIMS ACT • NC General Statute 143-291 allows tort suits against the State - within limits: • FOR ORDINARY NEGLIGENCE • CAUSED BY STATE EMPLOYEE (OR AGENT) • ACTING WITHIN SCOPE OF AUTHORIZED SERVICE

16. III. TORT CLAIMS ACT VOLUNTEERS are “agents" if a State agency exercises sufficient control over them “AGENT” is a legal term, not the same as Extension agents, who are employees INDEPENDENT CONTRACTORS are not “agents”

17. III. TORT CLAIMS ACT • $500,000 limit on State’s liability for all claims of injury and damage to any one person arising out of one occurrence • First $150,000 is paid by employing agency. Remainder comes from a fund in the Office of State Management & Budget (but we contribute to that fund).

18. III. TORT CLAIMS ACT • Amount paid by State is reduced by any commercial liability insurance the State agency has • Cannot insure everything • Receipts-funded units will have to pay the full amount up to $500,000 per injured party. NCSU has pooled a fund for them.

19. III. DEFENSE OF STATE EMPLOYEES • N.C. General Statutes 143-300.3 et seq. • THE STATE MAY DEFEND EMPLOYEES AND AGENTS IN LAWSUITS BROUGHT AGAINST THEM PERSONALLY

20. III. DEFENSE OF STATE EMPLOYEES • "AGENTS" DEFINED THE SAME AS FOR TORT CLAIMS ACT • COVERS CIVIL AND CRIMINAL LIABILITY (NOT JUST TORTS) • FOR ACTS/OMISSIONS IN THE SCOPE AND COURSE OF AUTHORIZED SERVICE

21. III. DEFENSE OF STATE EMPLOYEES • DOES NOT COVER FRAUD, CORRUPTION, MALICE • DEFENSE ONLY IF ATTORNEY GENERAL DECIDES IT’S IN BEST INTEREST OF THE STATE • EMPLOYING AGENCY PAYS UP TO $150,000 IF EMPLOYEE/AGENT IS FOUND LIABLE; STATE PAYS NEXT INCREMENT UP TO $500,000

22. III. DEFENSE – WORKERS COMP • WORKERS’ COMPENSATION IS THE EXCLUSIVE REMEDY WHEN IT APPLIES • Exception: harm caused by intentional injury or gross negligence may give rise to tort suit • APPLIES TO EMPLOYEES WHO HAVE ACCIDENTAL INJURY, A TRAUMATIC INCIDENT, OR OCCUPATIONAL DISEASE FROM WORK-RELATED CAUSES

23. III. DEFENSE - CONTRIBUTORY NEGLIGENCE • WHERE BOTH PARTIES WERE NEGLIGENT, NC LAW BARS TORT CLAIM • Remember the exception for children

24. III. DEFENSE - ASSUMPTION OF RISK • NO TORT LIABILITY IF THE PARTIES HAD A CONTRACTUAL RELATIONSHIP AND PLAINTIFF VOLUNTARILY ACCEPTED RISKS • E.g., hit by ball in stadium • Will not apply if injured party did not understand the risks, lacked bargaining power, or for public policy reasons

25. III. DEFENSE - LIABILITY WAIVERS / RELEASES • A CONTRACT NOT TO SUE • Uses words like “HOLD HARMLESS,” “INDEMNIFY,” “RELEASE,” “WAIVE” • Courts often refuse to enforce liability waivers

26. III. LIABILITY WAIVERS • 1998 case of Fortson v. McClellan: • plaintiff signed liability waiver for college course on motorcycle safety • plaintiff was injured in the course due to motorcycle malfunction • the court ruled: public interest in motorcycle safety is enough to invalidate the liability waiver

27. III. VOLUNTEER IMMUNITY • Executive Order No. 48 (1980) and NCAC • Qualified Immunity for Volunteers Act - G.S. 1-539.10 (not for motor vehicle negligence) • First Aid Immunity - G.S. 90-21.14 and 21.15 • Hazardous Material Immunity - G.S. 143-215.104 • Car Accident Immunity - G.S. 20-166(d)

28. IV. Insurance and Risk Management

29. Identify Loss Exposures Select Technique to Treat Exposures Implement Technique Monitor, Evaluate, and Modify Techniques IV. Risk Management Process

30. Avoidance Insurance Contractual Transfer Separation of Exposure Units Loss Control/Safety IV. Risk Management Techniques

31. IV. INSURANCE COVERAGE • The State pays for • Excess liability insurance • Motor vehicle insurance • miscellaneous other policies • You must pay for other coverage

32. All departmental purchases of Property/ Casualty Insurance are arranged through NCSU-IRM Any special purchase of liability insurance must be approved by the North Carolina Dept of Insurance For general liability exposures, State agencies/ universities rely on the Tort Claims Act and its statutory limits of $ 500K per claimant /occurrence IV. Purchasing Insurance

33. IV. Employees Excess Liability Insurance Policy • Excess of the Defense of State Employees Act ($ 500K) • Only if Attorney General authorizes defense • Covers Employees and Volunteers in the course and scope of duty/service to the University • Coverage Limits of $ 11 million per person/occurrence

34. IV. EXCESS LIABILITY POLICY • EXCESS LIABILITY POLICY EXCLUSIONS INCLUDE: • Employee claims covered by Workers Compensation, Unemployment compensation, or disability benefits law • Pollution, asbestos, and other toxic, hazardous, and explosive materials

35. IV. EXCESS LIABILITY POLICY • EXCLUSIONS CONTINUED • Nuclear materials and nuclear facilities • Automobiles, planes, boats over 30 feet • Medical malpractice • Criminal acts • One insured suing another (except Equal Protection claims) • Sexual assault or battery

36. IV. INSURANCE COVERAGE • STATE MOTOR VEHICLE INSURANCE • Covers damages to OTHER PARTIES for accidents that: • involve use of a state-owned vehicle • driven by a state employee • on official business

37. IV. INSURANCE COVERAGE • State Motor Vehicle insurance DOES NOT COVER • agents or volunteers • employees driving a non-state car • But, NCSU may contribute up to $150,000 as provided in Defense of State Employees Act if personal insurance is exhausted.

38. Required by Statute on self-propelled vehicles Liability Limits of $ 500K per person per accident, $ 5 million aggregate in state Collision/ Comprehensive Coverage for temporary leased vehicles less than 30 days+ No CDW at rental agency Important Note- If driving personal vehicle on state/ University business, your personal auto insurance applies as primary coverage for liability , comprehensive and collision exposures IV. Motor Vehicle Liability Insurance

39. IV. Liability of Others to NC State • If a party damages University property, document facts of event • Report all accidents or malicious acts immediately to Police • If a result of construction project activity, notify Construction Management • Report such events to OLA and IRM for assistance if vendor-related

40. V. VEHICLE USE • State-owned passenger vehicles may be driven ONLY • by state employees • on official state business. • No side trips for personal purposes.

41. V. VEHICLE USE • Rules for passengers who are not state employees: • No hitchhikers • Driver may bring spouse, kids (no pets) • Others may ride IF • (a) they have an interest in the purpose of the trip, and • (b) their presence is related to state business.

42. V. VEHICLE USE • DRIVER IS RESPONSIBLE FOR: • Traffic fines, • parking fines, • towing costs for improper parking, • safe-keeping of car .

43. V. VEHICLE USE • Federal employees: • Must first request federal vehicle. • If no federal vehicle is available, they may use state vehicle IF they are under contract to do state business

44. V. VEHICLE USE • Must report all accidents to the police (rule for use of state-owned vehicles) • Dollar amount of damage does not matter.

45. MORE INFO ON THE WEB • The NCSU Legal Affairs web site has NC State policies and legal topics. • http://www.fis.ncsu.edu/ncsulegal

46. TORT & INSURANCE WORKSHOP • THE END