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HomeMy WebLinkAbout2016-01-26-minutes-hr-study-sessionCOMMISSIONERS' MINUTES KITTITAS COUNTY, WASHINGTON BOCC CONFERENCE ROOM REGULAR MEETING HR STUDY SESSION TUESDAY 10:00 AM JANUARY 26, 2016 Board members present: Obie O’Brien, Gary Berndt, Paul Jewell Others: Lisa Young, Greg Zempel 1) Call to Order – 10:00 AM 2) Executive Session – Litigation or potential litigation RCW 42.30.110(i) To discuss with legal counsel representing the agency matters relating to agency enforcement actions, or to discuss with legal counsel representing the agency litigation or potential litigation to which the agency, the governing body, or a member acting in an official capacity is, or is likely to become, a party, when public knowledge regarding the discussion is likely to result in an adverse legal or financial consequence to the agency. The Board entered Executive Session at 10:05 AM to discuss litigation or potential litigation with Prosecutor Zempel present. Anticipated length: 10 minutes; anticipated action: Consideration of Request for Amicus Curaie. The Board exited Executive Session at 10:15 AM. The Board considered the Request for Amicus Curaie in the matter involving the Washington Counties Risk Pool and Clark County. Commissioner Jewell moved to approve Board signature on the request. Commissioner Berndt seconded. The motion passed 3:0. Director Young will send the signed request to WSAC. 3) Executive Session – Union negotiations RCW 42.30.140 (4)(b) that portion of a meeting during which the governing body is planning or adopting the strategy or position to be taken by the governing body during the course of any collective bargaining, professional negotiations, or grievance or mediation proceedings, or reviewing the proposals made in the negotiations or proceedings while in progress. The Board entered Executive Session at 10:15 AM to discuss negotiation strategies. Anticipated length: 10 minutes; anticipated action: Direction to staff. The Board exited Executive Session at 10:25 AM with direction to proceed with negotiations. 4) Request Authorization to Obtain Chair Signature on OSHA 300A When Complete – HR Director Young requested Board approval to obtain the Chairman’s signature on the OSHA 300A once it is complete. It must be posted by February 1. Commissioner COMMISSIONERS' MINUTES KITTITAS COUNTY, WASHINGTON BOCC CONFERENCE ROOM REGULAR MEETING HR STUDY SESSION Jewell moved to approve that HR Director Young obtain Chairman signature on the OSHA 300A; Commissioner Berndt seconded. Motion passed 3:0. 5) HR Updates – No updates at this time. 6) Other Business – Director Young reported that there was discussion regarding a compensation committee that was formed and meeting without HR involvement. Commissioner Jewell said he and Director Young would be working on the wage project and would be meeting with each department. 7) Adjourn – 10:45 AM KITTITAS COUNTY COMMISSIONERS KITTITAS COUNTY, WASHINGTON Lisa Young Obie O’Brien, Chairman Kittitas County Human Resources 205 W 5`h Ave Suite 107 a Ellensburg, WA 98926 Phone: (509) 962-7082. Fax: (509)962-7083 Website: www.co.kittitas.wa.us • Email: hr@co.kittitas.wa.us January 26, 2016 Mr. Eric Johnson, Executive Director Washington State Association of Counties 206 Tenth Avenue SE Olympia, WA 98501 RE: WSAC AMICUS CURAIE BRIEF REQUEST FORM Dear Mr. Johnson, Enclosed please find the WSAC Amicus Curaie Brief Request Form executed by our Board of County Commissioners today, in the matter of Washington Counties Risk Pool v. Clark County, Supreme Court No. 91154-1. Kittitas County is a member of the Washington Counties Risk Pool. Please contact me if you have any questions. Sincerely, . ""4—( Lisa Young HR Director/Risk Manager WSAC Board of Director's Meeting February 3, 2016 Page 16 of 80 WSAC AMICUS CURAIE BRIEF REQUEST FORM 1. Case name and Supreme Court number. Washington Counties Risk Pool v. Clark County, Supreme Court No. 91154-1. 2. Case history and current status. This case is before the Supreme Court on direct discretionary review from Cowlitz County Superior Court. The petitioners are Clark County, its former detective Donald Slagle, and their assignees Larry Davis and Alan Northrop. The respondents are the Washington Counties Risk Pool, its reinsurer and excess insurer Lexington Insurance Co. and its parent, the American Insurance Group, and its reinsurer ACE American Insurance Company. The Washington Counties Risk Pool presently consists of 26 Washington counties who have exercised their statutory right to cooperatively self -insure under a statute that specifically excludes governmental joint self-insurance pools from the definition of an "insurer" under the Insurance Code. RCW 48.01.050. See RCW ch. 48.62.011 (statute intended to "grant local government entities maximum flexibility in self-insuring"). WCRP's foundational Interlocal Agreement between member counties specifically precludes a member county from assigning "any right, claim or interest it may have under this Agreement." Clark County approved the Interlocal Agreement and joined WCRP in 2002. In 2012, Clark County sought a defense and indemnity of claims of Davis and Northrop, who sued Clark County and former sheriff's detective Slagle for civil rights violations, claiming that they had been falsely arrested, convicted and imprisoned on charges of rape in 1993• WCRP denied the County's tender on the ground that Davis and Northrop's allegations of wrongful conduct in 1993 failed to allege an "occurrence" under WCRP's joint self-insurance policy after 2002, when Clark County first joined WCRP. Clark County and its detective then entered into a settlement with Davis and Northrop, stipulating to entry of a $34.5 million judgment, which was partially satisfied by Clark County's cash payment of $10.5 million, and an assignment that authorized Davis and Northrop to assert the County's and detective's purported claims as insureds against WCRP as an insurer. The trial court held that the Washington Counties Risk Pool is not subject to the liabilities, statutory and common law remedies applicable to commercial insurance companies, that WCRP had no duty to defend the claims because they all occurred in 1993, and that the assignment by the County and its former employee, who the County defended and indemnified under RCW 4.96.041, was void as expressly prohibited by the Interlocal Agreement. It certified its order under RAP 2.3(b)(4) and the Supreme Court accepted discretionary review=. WSAC Board of Director's Meeting February 3, 2016 Page 17 of 80 3. Briefing schedule. Petitioners Clark County, Slagle, Davis and Northrop have filed their opening briefs. Respondents — WCRP (`the Pool") and the excess and re -insurers — will file their respondents' briefs on January 15. Assuming reply briefs are not inordinately delayed, oral argument will likely be held in Spring term 2o16. 4. Give a concise and brief statement of the issues on which amicus argument: is desired. This case presents the issue of whether counties that cooperatively self -insure through a statutory joint governmental self-insurance pool are subject to the tort liability of commercial insurers or whether their obligations are based on statute and their intergovernmental agreement, in particular with respect to the good faith duty to defend under Washington insurance law and the related common lav that allows an insured to freely assign bad faith claims against a commercial insurer in settlement of a liability claim against the insured. Because of the enormous disparity of bargaining power, Washington law provides expansive statutory and tort remedies for an insured against commercial insurers. An insured may settle a claim by consenting to entry of judgment in excess of policy limits coupled with a covenant not to execute against the insured's personal assets in return for an assignment of the insured's claims against the insurer for breach of its good faith duty to defend, settle or indemnify its insured. An insurer that fails to act in good faith may be liable on such assigned claims without regard to its contractual policy limits and regardless whether the insurance policy prohibits assignment. Because of the public interest in insurance, an insurer breaching a duty of good faith is liable to the insured under the Consumer Protection Act and the Insurance Fair Conduct Act. Counties that are self-insured, either individually or cooperatively through joint governmental self-insurance pools, should not be held to these duties and subject to the liabilities of commercial insurers, which are extensively regulated by the Insurance Commissioner and owe quasi -fiduciary duties to their insureds. The Washington Counties Risk Pool is nothing more than a cooperative of member counties who jointly self -insure by determining the scope of liability coverage and exclusions, deciding whether a particular claim is covered, and who remain jointly liable for the Pool's obligations. 5. Give a brief statement as to whether and how the decision will broadly affect Washington counties. As joint governmental self-insurance pools are by statute, a form of self- insurance, subjecting them to the common law liabilities and remedies applicable to commercial insurers would dramatically expand the risks and liabilities faced by both counties that are members of joint governmental pools and counties that individually self -insure. Application of Washington's insurance bad faith law would subject the member counties of WCRP to liability far in excess of what the members agreed to in 2 WSAC Board of Director's Meeting February 3, 2016 Page 18 of 80 establishing their joint coverage. Here, WCRP provided liability coverage of $10 million to Clark County and other Pool members and, through its members, rejected Clark County's tender of claims that arose nine years before it joined the Pool. In addition to recouping the $10.5 million Clark County has paid to them, Davis and Northrop now seek to recover an additional $24 million from the Pool on the County's and Slagle's assigned claims. As the member counties in the Pool are ultimately liable (past members, even Clark County, may be included) for the Pool's obligations (including premiums charged by its reinsurers and excess insurers), they have a substantial interest in convincing the Court to adhere to the Legislature's exemption of WCRP and similarly situated pools from the duties and liabilities of an "insurer." Self-insured counties that are not members of a Pool are also interested in resisting the application of common law insurance principles to the settlement of claims against them and their employees. A self-insured county should not be held to the standards of a commercial insurer in deciding whether to defend and indemnify an employee. Self-insured counties would face substantial exposure were the Court to equate the statutory right to a defense and indemnity of county employees under RCW 4.96.041 to the right of an insured to a defense and indemnity under a commercial insurance policy. Counties have statutory procedures for determining whether a county employee is entitled to a defense and indemnity. Counties should be held to those statutory procedures and should not be liable to claimants who have taken assignments of claims from current or former employees alleging a breach of duties owed by an insurer to an insured. 6. State in particular how the results sought would be of benefit to counties. The member counties that comprise a joint self-insurance pool would know that their rights and liabilities are based on their contractual obligations under an intergovernmental agreement, a pool's bylaws and the terms of joint self-insurance that the counties themselves approve from year to year, rather than the open ended tort liability imposed upon commercial insurers who put their own interests above those of its policy holders. All counties, whether individually or jointly self-insured, would be able to rely on the statutory obligations of defense and indemnity of current and former employees, officers and agents in RCW 4.96.041 and the county's code, rather than the expansive common law insurance obligations and remedies applicable to commercial insurers. 7. Explain how a WSAC brief would add a new or different perspective to the issues or issues. The Court respects the point of view of the counties that would be primarily affected by the Court's decision regarding application of insurance principles in cases of governmental liability. 8. Give a brief summary of particular cases of interest, of which the applicant is aware with citations. WSAC Board of Director's Meeting February 3, 2016 Page 19 of 80 Washington appellate courts have never addressed the consequences of the Legislature's exemption of a risk pool from the definition of insurer in RCW 48.01.050, and have never addressed whether a joint governmental self-insurance pool under RCW ch. 48.62 has the liabilities and is subject to extra -contractual remedies of a commercial insurer. Washington courts have never addressed whether an employee, who has a statutory right of indemnification, may assign claims pertaining to defense and indemnification as an "insured" under a commercial liability policy. In Clark County v. WCRP, Cowlitz County No. 12-2-00557-6, the superior court held that WCRP is not an "insurer," is not subject to the obligations of a commercial insurer and had no duty to defend Clark County from a claim alleging civil rights violations for the wrongful conviction in 1985, 17 years before Clark County joined WCRP. Clark County did not appeal that decision. In a case involving WCRP and a member county, the Court of Appeals held that WCRP's obligation to defend and indemnify a county judge in disciplinary proceedings is "subject to and conditioned upon the provisions of RCW 4.96.041." Colby u. Yakima Cty., 133 Wn. App. 386, 393, 136 P,3d 131 (2006). Other cases that have been cited by petitioners involve the duties of commercial insurers that are excess to the coverage provided by a risk pool, e.g., PUD No. i of Klickitat County u. Int'1 Ins. Co., 124 W11.2d 890, 881 P.2d 1020 (1994) (assignments of rights under "excess coverage" policies); Transcontinental u. WPUDUS, 111 Wn.2d 452, 76o P.2d 337 (1988) (considering insured's rights under special excess liability policies"), or the terms of coverage under a policy issued by a public utility risk pool formed many years before the Legislature authorized joint governmental self-insurance pools in 1974. See WPUDUS v. PUD No. z of Clallam County, 112 Wn.2d 1, 10, 771 P.2d 701(1989). 9. Is there any county that is a party on the other side of the case? Yes. Clark County. 10. What resource will you make available to assist in the preparation of the amicus brief? Share all briefing filed to date and provide an electronic copy of the record. 11. Name of requester, representing BOARD OF COUNTY COMISSIONERS 11 WSAC Board of Director's Meeting February 3, 2016 Page 20 of 80