TORT & INSURANCE WORKSHOP

North Carolina State University April 2002

David Drooz, Associate General CounselJim Semple, Director, Insurance & Risk Management

N.C. State University

TORT & INSURANCE WORKSHOP

I. Practical info

II. What is a tort?

III. Liability – limits and defenses

IV. Insurance coverage

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

I. PRACTICAL INFO Office of Insurance & Risk

Management 919 - 515 - 6124 http://www2.acs.ncsu.edu/insurance/

Office of Legal Affairs919 - 515 - 3071 http://www.fis.ncsu.edu/ncsulegal/

II. WHAT IS A TORT?

A WRONG OR INJURY TO ANOTHER,

APART FROM BREACH OF CONTRACT,

WHICH A COURT CAN REMEDY BY AWARDING DAMAGES

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

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

II. CATEGORIES OF TORTS

A. NEGLIGENCE

B. GROSS NEGLIGENCE

C. INTENTIONAL

D. STRICT LIABILITY

II. NEGLIGENCE TORTS

FAILURE TO USE REASONABLE CARE measured by prudent person in

similar circumstances

MOST MISTAKES AND ACCIDENTS ARE DUE TO “NEGLIGENCE”

II. NEGLIGENCE TORTS

Some university cases: Slip and fall Drowning Motor vehicles Negligent hiring Infliction of emotional distress Defamation

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

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.

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

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)

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

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”

III. TORT CLAIMS ACT

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).

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.

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

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

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

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

III. DEFENSE - CONTRIBUTORY NEGLIGENCE

WHERE BOTH PARTIES WERE NEGLIGENT, NC LAW BARS TORT CLAIM

Remember the exception for children

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

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

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

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)

IV. Insurance and Risk Management

IV. Risk Management Process

Identify Loss Exposures

Select Technique to Treat Exposures

Implement Technique

Monitor, Evaluate, and Modify Techniques

IV. Risk Management Techniques

Avoidance Insurance Contractual

Transfer

Separation of Exposure Units

Loss Control/Safety

IV. INSURANCE COVERAGE

The State pays for

Excess liability insurance Motor vehicle insurance miscellaneous other policies

You must pay for other coverage

IV. Purchasing Insurance 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. 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

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

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

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

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.

IV. Motor Vehicle Liability Insurance 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. 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

V. VEHICLE USE

State-owned passenger vehicles may be driven ONLY

by state employees on official state business.

No side trips for personal purposes.

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.

V. VEHICLE USE

DRIVER IS RESPONSIBLE FOR:

Traffic fines, parking fines, towing costs for improper parking, safe-keeping of car .

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

V. VEHICLE USE

Must report all accidents to the police (rule for use of state-owned vehicles)

Dollar amount of damage does not matter.

MORE INFO ON THE WEB

The NCSU Legal Affairs web site has NC State policies and legal topics.

http://www.fis.ncsu.edu/ncsulegal

TORT & INSURANCE WORKSHOP

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