Welcome to 2012 Liability Legislation: Indemnification Agreements

1. Welcome to 2012 Liability Legislation: Indemnification Agreements The webinar will begin promptly at 10:00 a.m. For best audio quality, we suggest you call in to the teleconference phone number provided when you logged in rather than listen through your computer speakers. If you are having technical difficulties and need assistance, please contact WebEx Customer Service at 1-866-229-3239, then press 1. The presenters encourage you to type questions during the presentation; you will see a Q&A text box on the right hand of your screen when we begin. They will also take questions over the phone at the end of their presentation. A link to download the PowerPoint file will be emailed to you at the conclusion of the webinar.

2. 2012 Liability Legislation:Indemnification Agreements Presented by Michael Shaw WSAC Contact: Brian Enslow (360) 489 8121- or benslow@wacounties.org

3. Background Prior to 6/7/2012 Indemnification Agreements: Could require one party to pay the other Party for any damages, losses, or expenses relating to the performance of a contract. Allowed you to impose a duty to defend in any action related to performance under the contract. Were enforceable and interpreted in accordance with the same rules for the enforcement and interpretation of contracts. Had limited enforcement relating to construction, maintenance, or other work on any structure, project, development, or improvement attached to real estate, or in motor carrier transportation contracts.

4. HB 1559 What are the Major Provisions of HB 1559: Extends the restriction on the enforceability of indemnification agreements to include design professional services. Specifies that indemnification includes the duty and cost to defend. Makes indemnification against liability for damages resulting from the sole negligence of the indemnitee unenforceable. Clarifies that a clause that indemnifies against liability for damages resulting from the concurrent negligence of the indemnitee and indemnitor is enforceable only to the extent of the indemnitor's negligence and only if specifically and expressly provided for in the agreement.

5. What Prompted 1559 • Design Professionals Expressed Concerns that: • They were being forced to pay for damages related to third party negligence. • Indemnification agreements are uninsurable. • Indemnification agreements are only in the contract because professionals are unable to adequately bargain with public agencies.

6. Major Concerns We Expressed to the Legislature that HB 1559: Limits how agencies negotiate contracts with private entities. Creates uncertainty regarding the Duty to Defend. Potentially results in pointing fingers at each other, rather than working as a team to defend and settle the suit.

7. Questions to Consider Questions to consider: What is the duty for which indemnification is sought? HB 1559 only pertains to standards of care. Indemnification is merely risk assignment. What liability must be built into the project estimate? Can the liability concern be addressed through insurance procurement?

8. What can we Do Given the changes, here are some suggestions: Include all possible litigation costs as indemnification costs. Determine whether standard of care can be a breach of contract issue. Additional insurance language.

9. Other 2012 Bills HB 2240: Concerning public improvement contracts involving federally funded transit facility projects Exempts public improvement contracts for transit facilities that are funded in whole or in part by federal transportation funds from the contract retainage requirement. SB 6187: Concerning claims against the state and governmental entities arising out of tortuous conduct. Stipulates that all claims against the state, including claims involving injuries from health care must be presented to the risk management division of the Department of Enterprise Services

10. Contact Info Washington State Association of Counties 206 Tenth Avenue SE Olympia, WA 98501 (360) 489-8121 www.wacounties.org/wsac