For the past two decades, I have earned my living teaching labor and employee relations seminars for Federal supervisors, managers and union officials. On many occasions participants have asked if they should purchase insurance that would cover the costs of defending themselves from lawsuits brought against them—either by another agency employee (an unhappy subordinate) or by members of the public. I tell them that I’m not in the business of providing advice regarding insurance. Please bear that in mind if you read what follows.
Insuring against disaster
The question of such policies arose in my mind over the past few months as my wife and I have been shopping for earthquake insurance—something the recent disaster in Haiti brings into clear focus. I live in Seattle and am aware that the earth below us shifts from time to time.
I became particularly familiar with natural disasters, when hurricane Hugo—a Category 5 storm left my house with half a roof, floors pickled in salt water (I lived 2 blocks from the ocean), and lots of related damage. My homeowner’s policy (as residents along the Gulf Coast were later to learn after Katrina) covered none of the extensive damage.
Weeks after the storm, my insurance agent stopped by as I was clearing mountains of debris to present a “courtesy check” for $500. We both knew it was all I would see from my homeowner policy. Fortunately, I was carrying two insurance policies in addition to my homeowner’s coverage. One was for damage due to wind/hail and the other from flooding. I was able to rebuild. Then I moved to Seattle—an earthquake zone. Go figure.
The eyes of the beholder
As FedSmith readers know, insurance has everything to do with a person’s perception of risk. So it is with Feds who worry about lawsuits filed against them—whether for firing a subordinate or for making a decision that affects members of the public. Feds work for agencies as diverse as the Patent and Trademark Office, Environmental Protection Agency, and Federal Aviation Administration. Their decisions may adversely affect others…and those folks may sue you. If you’re a supervisor or manager, the perception of risk may be even greater.
To address this fear, tort liability insurance for Feds was invented. Over the years, several groups and associations have come to recommend and offer such policies for their members and Federal agencies often pay half of the premium costs for their law enforcement and management staff members who opt for coverage.
What’s past is prologue
All of the above has led me (a non-attorney) to do some cursory research into the Federal Tort Claims and the Westfall Acts. The former dates back to 1946, while the latter is more formally known as the Employees Liability Reform and Tort Compensation Act of 1988. The Westfall Act is codified in 28 USCA 2679 and came about in response to the Supreme Court’s decision in Westfall v Ervin (484 U.S. 292). It attempts to answer the question: When can a lawsuit against a civil servant proceed into the court system (when liability insurance would prove worth years of premiums), and when is such a suit actually against the agency that Fed serves in an official capacity?
The Act reads, in part:
“Upon certification by the Attorney General that the defendant employee was acting within the scope of his office or employment at the time of the incident out of which the claim arose, any civil action or proceeding commenced upon such claim in a United States district court shall be deemed an action against the United States under the provisions of this title and all references thereto, and the United States shall be substituted as the party defendant.”
The Act goes on to require that civil law suits filed against Feds in state courts will, upon such certification by the Department of Justice, be removed to Federal District Court. The United States will become the defendant and personal liability for your actions as a Fed is no longer an issue.
The Westfall Act was tested in an interesting and rather complicated case (Martinez v Lamagno) that began in 1993 with the US District Court for the Eastern District of Virginia, went all the way to the Supreme Court (515 U.S. 417) only to be remanded. In Lamagno, a DEA agent was operating a government-leased vehicle in Colombia when he hit another car and injured the foreign nationals in that vehicle. They sued him personally and, after years of litigation, were told that the Attorney General had correctly substituted the United States as defendant.
Heads I win, tails you lose
In examining one of the liability policies being marketed to Federal employees (and I believe that all offerings are similar) it states that coverage is for actions “…which are committed or arise out of the ‘course and scope of employment’ of the “Insured Member’…” That phrase, “course and scope of employment” [my italics] is actually put inside quotation marks by the underwriter. Is it only coincidental that the exact same phrase is used in the Westfall Act—the law that immunizes civil servants from personal lawsuits?
If this private insurance coverage is actually tied to an Attorney General decision, which required by the Westfall Act, it effectively means that you are covered only for those cases where you won’t need coverage! Perhaps more importantly, when you do need coverage (when the Justice Department doesn’t certify that you were acting within the scope of your employment) it’s not at all clear whether the policy will pick up the pieces and help you. After all, if the AG rejects you, you must have acted outside “the course and scope of your employment”. Sorry.
All of this will prove confusing for some readers. Insurance policies often are. Absent a careful reading and understanding of the fine print, many of my South Carolina neighbors thought their homeowner policy would cover hurricane damage. It didn’t. I have no personal experience with Federal employee liability coverage. I’m just wondering if it’s a misleading business if it only covers you when you don’t need coverage.
What’s left to cover?
After receiving an unsolicited e-mail from one of these vendors, I’m also aware that such liability coverage commonly extends to administrative hearings and investigations. The e-mail stated:
Federal executives and managers are most at risk for administrative and disciplinary matters. This can be in the form of:
- an EEO complaint;
- a management investigation;
- an OIG or OSC investigation/complaint;
- a whistleblower or ethics complaint;
- a complaint from the public; or
- any allegation of wrongdoing.
Access to an attorney would:
The “Weingarten Right”, familiar to many readers, is reserved for union representation when answers to questions might result in disciplinary action.
In my experience, non-unionized Feds (by law, supervisors and managers cannot not be unionized) may not have a right to representation in some of these settings. I have known cases where managers were questioned, they requested a representative assist them and were told “No”. Having an insurance policy is unlikely to change that answer. Of course, each of the above-listed settings is quite different from the others. Again, read the fine print and ask the relevant questions.
Finally, I kept wondering why government agencies subsidize such policies for their employees. If a manager is accused of embezzlement, investigated and fired—should that same agency be underwriting the manager’s defense before the Merit Systems Protection Board? How about one who has physically assaulted a coworker or a member of the public? Are the taxpayers are funding the lawyers on both sides?