IGAs: Did We Really Agree To Do That?

1. IGAs: Did We Really Agree To Do That? Insurance/Indemnity Issue and Intergovernmental Agreements Scott Barber HR Director, Town of Florence President, AMRRP Board of Trustees Bill Sims SIMS MURAY, LTD.

2. Arizona Municipal Risk Retention Pool • 77 members • 74 covered for property/liability • 72 members covered for workers’ compensation

3. We know we’re a Pool and not an insurance company because . . . (a short bit of promotion, if you please)

4. City of Prescott – Yarnell Hill Fire AMRRP Response • City of Prescott AMRRP policy bound June 1st - Yarnell Hill fire tragedy June 30th. • Four days prior to file, loss control visited to discuss hot shot crews and training potential.

5. Immediate Response/Presence • Within 20 minutes from notice (via news media), conference call arranged to pull AMRRP team together (loss control, claims, administrative support resources). • Within 12 hours from notice, onsite team arrived at fire ground command center to establish staff work post. • Within 24 hours, reached out for advice from pools involved in tragic events (Newtown shootings, West Texas chemical explosion, Colorado South Canyon fire).

6. Communication • Continuous AMRRP onsite presence for 6 weeks. • Immediate support provided to Human Resources and Public Information Officer. • Retained professional communications consultant to assist in press conferences and messaging in advance of State Forester and ADOSH reports.

7. Communication • Face to face meetings with widows and family members to explain workmen’s comp benefits and accelerate hand delivery of the initial checks. • Regular meetings and conference call with reinsurer to provide notice and updates. • Coordination with family liaisons (family, friends, union representatives, fellow firefighters).

8. Proactive Direction • Retained nationally recognized crisis intervention expert to ID potential PTSD claims among other with direct contact with tragedy. • Retained workers’ compensation and tort liability counsel to protect the City’s interest in anticipation of litigation. • Assistance locating needed documents for claims and reporting.

9. Additional Support • Coffee, lunch and listening for beleaguered City staff. • Continued support after tragedy for things not related to claims/potential claims. • Support to assist community and public relationships and resource allocation.

10. What do we (together) insure?

11. We know we insure: • Buildings • Equipment • Etc. • Cars and trucks • Employees • ????? It is in the best interest of all members to know what we together are insuring (risk identification).

12. What About MPCs and CFDs? Coverage question raised in 2009. Surveyed members, discussed legal implications, determined AMRRP was likely already covering these entities so we needed to get them “scheduled.”

13. Leased Employees (smartworks, ESI) Member raised question of coverage and loss of coverage under immunity statutes in 2009. Discussed and identified need for a legislative fix. Ran the bill in the 2010 legislative session and it passed. Big “thanks” from the schools pool.

14. What About IGAs and Other Contracts? • Do you even know the risks your community is assuming through these agreements? • Mutual/automatic aid • Task force participation • Hazmat response agreements • Facility leases • Street light/traffic signal maintenance • Sports leagues • Etc.

15. Don’t you just love “fine print”?

16. Vidal Sassoon Hairdryer: Never use while sleeping

17. America’s Fishing Lures: Harmful if swallowed

18. Duraflame Warning: Risk of fire

19. THE DIFFERENCE? IN IGAs THE “FINE PRINT” ISN’T IN FINE PRINT! IT IS IN PLAIN SIGHT!

20. Reality = Many of us couldn’t do what we do without the benefit of mutual/automatic aid agreements & IGAs. Reality = “The Golden Rule” “He who has the gold makes the rules.”

21. Policy Calls: • Sending a fire captain to Louisiana to assist with Hurricane Katrina. • Sending employee to New Mexico wild-land fire to help with administrative tasks. • Airport tenant agreements. • Aquatic center rental for private parties. • Before and after school programs (at school facilities).

22. Is it better to be lucky than good?

23. Three Steps of the Risk Management Process • Risk identification and assessment • Manage risk (elimination and mitigation) • Risk transfer (via contract or insurance) AMRRP Board discussing IGA issue for some time, but especially during the past year. We are seeking ways to positively impact all 3 steps listed above.

24. One possibility is an IGA Assistance Lifeline Program. Members would be able to access specialized legal review of IGAs. It would likely be a narrow review of indemnification and insurance provisions. We have already begun a pilot program to collect member IGAs for public safety (police and fire) and transportation. Notice has been received by city/town contact persons.

25. Another . . . minimize attorney fees when defendant entities are Pool members and no conflicts of interest by coordinating defense and, if need be, apportioning liability (through binding arbitration or other means).

26. Tools We Already Have • Mandate (internal) review of all contracts and agreements; index them for ready access; and pay attention to certificates of insurance. • Don’t use the other guy’s forms/templates (see “Golden Rule”). • Increase awareness of issues with managers, department directors and elected officials. • Each other.

27. Mutual Aid Agreements

28. Yarnell • AZ Republic headline “New Yarnell Records Depict Non-Stop Chaos.” • Mutual aid agreement included indemnity. • Prescott required to indemnify State for Prescott’s negligence. • If indemnity had been a general indemnity, Prescott might have had to indemnify State for passive negligence. • Risk of losing immunity under workers’ compensation statutes if indemnity not written correctly.

29. Two Recent Rural City Lawsuits • City sponsors event on county right-of-way. • City agrees to indemnify county for liability arising out of event. • Participant injured due to latent defect in street. • City required to indemnify county.

30. Swat Team • Three risk pool members and county participate in SWAT team. • County is directing the team. • SWAT team injures target of operation as a result of negligent discharge of firearms. • All agree to indemnify the others. • The three risk pool members each have their own attorney. • Attorneys obligated to shift liability to other defendants. • Risk pool pays nearly as much in defense costs as it does for indemnity obligation.

31. Upstream IGAs • ADOT • Department of Homeland Security • Border Patrol • Department of Motor Vehicles • County

32. Imbalance of Consideration • Six armored vests in return for broad indemnity of Department of Motor Vehicles by city. • Indemnify Department of Homeland Security in return for funds to provide ambulance to support Katrina response.

33. Imbalance of Negotiating Leverage • ADOT pass-through of federal funds. • ADOT gives cities and towns a “take it or leave it” proposition: • To receive federal funds, city must indemnify ADOT for ADOT’s negligence. • Possible contractual fixes: • Non-appropriation clause. • Get indemnity from state contractors. • Legislation may be best alternative.

34. Other Examples • County dive team with municipal team members. • County directs and supervises all operations. • Even though the municipal team members must follow the county’s direction, the city must indemnify the county for damages resulting from the county direction.

35. Tools Available to Cities and Towns • Better indemnity. • “Just say no.” • Joint representation for liability defense with binding arbitration for allocation of damages.

36. What it Means to Indemnify To save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss; to make good; to compensate; to make reimbursement to one of a loss already incurred by him.

37. Indemnity Language • Indemnifying for negligence of Indemnitor and for negligence of Indemnitee • Indemnifying for negligence of Indemnitor and silent about negligence of Indemnitee • Indemnity for negligence of Indemnitor in whole or in part • Each indemnify the other for vicarious /derivative liability. • Specific indemnity – worst outcome • General indemnity – must indemnify for passive negligence of Indemnitor • Must indemnify for negligence of Indemnitee • Best outcome

38. Just Say No • Educate fire chiefs and police chiefs. • Audit all agreements with other governments. • Avoid claim of reliance damages on apparent authority of fire chief or police chief.

39. Joint Representation • Only works when all defendants are defended by same insurer. • One attorney would represent all defendants. • Once damages are determined, the allocation among the defendants would be allocated pursuant to binding arbitration. • All parties would have to agree at outset. • Must address coverage and limit issue.

40. Joint Power Entity • Not covered by coverage provided member city or town. • Need separate, independent coverage. • If require members to name the joint power entity as a named insured: • Could have too much coverage. • Could have exposure for actions that a member does not control. • Naming a joint power entity as a named insured is not a good idea if you don’t control.

41. INDEMNITY CITY MUTUAL AIDAGREEMENT COUNTY WORKERS ’ NO WORKERS ’ COMPENSATION COMPENSATION IMMUNITY I MMUNITY EMPLOYEE Preserving Workers’ Comp Immunity

42. Workers’ Comp Indemnity Provision For purposes of workers’ compensation, an employee of a party to this Agreement, who works under the jurisdiction or control of, or who works within the jurisdictional boundaries of another party pursuant to this specific intergovernmental agreement, is deemed to be an employee of both the party who is his primary employer and the party under whose jurisdiction or control or within whose jurisdictional boundaries he is then working, as provided in A.R.S. § 23-1022(D). The primary employer party of such employee shall be solely liable for payment of workers’ compensation benefits for the purposes of this section. Each party herein shall comply with the provisions of A.R.S. § 23-1022(E) by posting the public notice required.

43. Mutual Aid Agreements • Put one party in charge. • That entity provides insurance for all participants. • The participants contribute to the cost of insurance. • Joint defense agreement. • Once damages determined, the allocation of damages determined by binding arbitration.

44. What Does This Mean to You? • Regional issues are common and impact multiple jurisdictions. • Fire suppression • Joint law enforcement events • Emergency responses • Public transit • Regional parks • Regional libraries • IGAs govern these relationships. • Indemnities allocate risks. • Don’t overlook the indemnity provision just because its at the end of the IGA. • The Yarnell IGA might have been drafted differently, exposing Prescott to significant liability. • Don’t stumble into liability. • Audit all your IGAs.