In its latest insurance policy with AIG Europe, a London, England based insurer, the State of Washington pays a $1.6 million annual premium for liability insurance .Until now, Washington had a $5 million deductible .That has now been raised to a $15 million deductible _ and for the DOC and the Department of Social and Health Services (DSHS) it is a $25 million deductible .Since the highest verdict to date has been for $22.4 million, and Washington law does not allow for punitive damages, insurers are counting on not having to pay any claims against those agencies .There is also a $45 million annual limit on payouts by the insurer .Washington has the distinction of having the highest deductibles of any state covered by insurance.
After a five-month search by a Seattle insurance broker, "Those were the most beneficial terms we could obtain," said Betsy Reed, the state's Risk Management Administrator .David Moody, a Seattle lawyer who has represented developmentally disabled adults in litigation against the DSHS, resulting in over $26 million in verdicts and settlements in two cases alone, said "That's unbelievable .It strikes me that the state is once again spending a quarter to save a dime."
A report by the News Tribune of Tacoma seems to bear this out .The News Tribune found that since 1992, when it first started buying insurance, the state of Washington has paid out $13.5 million in liability insurance premiums, while the carriers paid out a total of $5.2 million in claims .In the meantime, the state paid out $256.6 million in settlements and verdicts .In the biggest cases insurers paid nothing .In a $17.5 million verdict against the DSHS in 1999 involving three developmentally disabled adults who were abused in a group home, the state attorney general's office "forgot" to file a notice of appeal to the verdict, then the largest in state history .The insurance carriers refused to pay their $12.5 million part of the verdict, claiming the AG's office's incompetence led to the verdict and the missed appeal .The state sued the insurance companies and lost that case as well. Actuarial estimates for the state of Washington's current liability in pending cases already filed is $209 million and could rise to $500 million by 2005.
While the most obvious solution for these problems would be for DOC and DSHS employees to perform their jobs in a competent manner so that citizens are not killed or maimed due to state negligence, the predictable result has been towards "tort reform" to give the incompetent employees, and the state, immunity for their actions .As Washington faces budget shortfalls due to declining tax revenues and rising liability for the incompetence of its employees, the cost of doing "business as usual" may cause the reevaluation of parole programs such as "community placement" and "community supervision." Ostensibly to "save money" the Washington DOC has proposed to significantly curtail the number of people on"community supervision" status.
Sources: Tacoma News Tribune, Associated Press.
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