Disciplined in Sophisticated Defense and Insurance Litigation

October 10, 2016 | Publication| Who, What, When, and How Much? Key Questions to Ask When Faced With a Potential Sovereign Immunity Defense

Jessica M. Skarin

This article was originally published in the Subrogator, a publication by the National Association of Subrogation Professionals, 2016. © Copyright 2016 by NASP. All rights reserved. Republished by Butler with permission from NASP.

With each new claim we navigate a myriad of potential obstacles to recovery.  As subrogation professionals, we work to quickly identity these issues and evaluate the best recovery strategy.  In doing so, some obstacles may first appear insurmountable, but later give way to the ever diligent subrogation professional.  One such obstacle is the concept of sovereign immunity. 

While sovereign immunity does at times prevent recovery, it does not automatically bar all claims against government entities and agencies.  As a general rule government entities and agencies enjoy the benefit of sovereign immunity and cannot be sued absent consent.  Immunity is sometimes waived by contract.  Additionally most governments have, to some extent, waived immunity by statute and have agreed to be held liable for certain claims.  Understanding the scope of any such waiver is critical to evaluating recovery potential.  Always remember to ask these four key questions: Who, What, When, and How Much?

WHO IS SUBJECT TO THE WAIVER?

Like most issues, the scope of a waiver of sovereign immunity differs by jurisdiction.  Some jurisdictions have chosen to permit claims against all sovereigns and all levels of government operation, while others draw a distinction between the type of sovereign being sued.  For example, in Georgia, a state entity can be held liable for creating nuisances, while Georgia counties enjoy immunity for the same claim.[1]  This is because the waiver of immunity in Georgia’s State Tort Claims Act does not apply to counties or municipalities.[2]  Thus, when reviewing a statutory waiver of immunity, it is important to first review any accompanying definition section or case law further defining the scope of the statute.  Do not be led astray by the fact that the term “state” may be defined differently in different jurisdictions.   

WHAT TYPE OF CLAIMS ARE SUBJECT TO THE WAIVER?

Waivers of immunity also differ in scope with regard to what types of claims are permitted.  With regard to claims against the federal government, the Federal Tort Claims Act waives immunity for claims “caused by the negligent or wrongful act or omission of any employee of the Government.”[3]  This seemingly broad waiver allows nearly all types of negligence claims, but is limited by a subsequent section of the Act that lists thirteen exceptions to the waiver.[4]  The most litigated of those exceptions is the exclusion of claims involving discretionary functions.  That is, the federal government cannot be sued for claims involving policy decisions.  Most states have adopted the “discretionary function” exception in some fashion, and have limited the waiver of immunity to only those claims involving operational decisions.[5]  For example, a claim alleging the failure to erect a stop sign is not likely to succeed, because the government maintains immunity for discretionary decisions.  On the other hand, a claim for negligently erecting the stop sign may be permitted, because the process by which the sign is installed is operational in nature.  Understanding the difference, and being able to frame a claim as “operational negligence” will improve the likelihood of recovery.

In lieu of a broad waiver and accompanying list of exceptions, some jurisdictions have instead set forth waivers of immunity that are claim specific.  In Texas, the waiver of sovereign immunity applies only to torts arising from publicly owned vehicles, premises defects, and injuries related to the use of public property.[6]  These claim specific waivers may also exist in addition to other waiver statutes.  For example, some jurisdictions have specifically waived immunity for collisions with public vehicles.[7]  Other jurisdictions waive immunity to the extent the government entity procured insurance for the specific risk at issue.[8]  Thus, if the general tort claim act in your jurisdiction does now allow for recovery, be sure to keep looking for another waiver of immunity that may nonetheless be applicable to your claim.

WHEN DO CLAIMS NEED TO BE FILED TO TAKE ADVANTAGE OF WAIVER?

In addition to reviewing the substantive scope of a waiver, most tort claim acts that waive immunity also statutorily alter the deadlines for filing claims.  The normal statute of limitations period is often shortened to require prompt action by the claimant.  Under federal law, claims must be submitted within two years of the loss, or within six months of the claim being formally denied, whichever period is shorter.[9]  Additionally, the Federal Tort Claims Act requires that claims be submitted to the appropriate government agency for review before a lawsuit can be initiated.  Thus, claims involving government entities often require immediate attention so that agency review can be completed prior to the running of any time limitation.  Failure to adhere to notice and filing requirements could result in a complete bar of the claim.    

HOW MUCH OF YOUR CLAIM DOES THE WAIVER EXTEND TO?

Assuming there is an applicable waiver of immunity and the deadline for filing has not yet passed, the claim for damages may still be limited.  Many jurisdictions impose a cap on all claims against government entities.  In Florida, claims are capped at $200,000 per person and $300,000 per incident.[10]  Payments in excess of the statutory cap can only be made with approval of the legislature.[11]  Additionally, the waiver of immunity in most jurisdictions does not apply to pre-judgment interest or punitive damages.[12]  It is important to keep these limitations in mind when assessing claim value and authorizing investigative costs. 

In sum, four simple questions can focus the evaluation of claims involving government entities.  These questions will inform any decision to forgo recovery efforts if sovereign immunity truly bars a claim.  More importantly, by asking “Who, What, When, and How Much?” a diligent subrogation professional can minimize lost opportunities and maximize recovery.

 

[1] Duffield v. DeKalb County, 249 S.E.2d 235, 237 (Ga. 1978).

[2] O.C.G.A. § 50-21-22(5).

[3] 28 U.S.C. § 1346(b)(1).

[4] 28 U.S.C. § 2680.

[5] See e.g., Ind. Code § 34-13-3-3; Kan. Stat. Ann. § 75-6104; Miss. Code Ann. § 11-46-9; 51 Okla. Stat. Ann. § 155; S.C. Code Ann. § 15-78-60.

[6] Tex. Civ. Prac. & Rem. Code § 101.021.

[7] See e.g., 42 Pa. Stat. & Cons. Stat. Ann. § 8522(b)(1).

[8] See S.D. Codified Laws § 21-32A-1; but see Langley v. Curators of Univ. of Mo., 73 S.W.3d 808, 811 (Mo. Ct. App. 2002) (holding there is no waiver if the insurance policy procured expressly states it is not intended to be a waiver of sovereign immunity).

[9] 28 U.S.C. § 2401(b).

[10] Fla. Stat. § 768.28(5).

[11] Id.; see also Neb. Rev. Stat. Ann. § 81-8,224; N.D. Cent. Code Ann. § 32-12.2-02.

[12] See e.g., 28 U.S.C. § 2674; Ala. Code § 6-11-26; Mo. Ann. Stat. § 537.610.

Jessica M. Skarin

A Senior Associate at Butler, Jessica's subrogation practice involves large losses of all types, including claims for product liability, fire spread, construction defects, and indemnity, as well as negligent hiring and supervision.

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As subrogation professionals, it is sometimes easy to overly focus on the liability issues in each case, leaving a thorough damages analysis for another day. However, it is a better practice to perform a complete evaluation of the legally recoverable damages early during the subrogation investigation, so that the true value of the claim can be ascertained and relayed to the subrogating insurer. This is especially so in cases where the business interruption portion of the loss is significant, since an error in proper quantification of the recoverable portion of the business interruption loss could dramatically change the overall valuation of a case -- both for settlement and trial purposes.

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July 01, 2013 PublicationSeventh Circuit Holds that an "Amorphous Litany of Complaints about a Myriad of Workplace Decisions" Is Insufficient to Establish Discrimination under the Direct Method of Proof

If you would like to discuss this topic further, please contact Geoffrey Waguespack or directly 312-462-9157.

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May 01, 2013 PublicationAvoiding The Economic Loss Rule In Construction Claims

The Economic Loss Rule  was initially developed in the products liability context....

However, over the years, courts have used the product liability concepts created in the early cases interpreting the Rule to expand the Rule's application to include construction claims, which has created problems in applying the Rule in non-product liability claims. "[T]the troublesome cases discussing the dreaded economic loss rule have usually arisen in the field of construction."

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May 01, 2013 PublicationStuck Between a Collapsed Wall and a Hard Place: The Failure to Establish the "Standard of Care" in a Negligence Claim

Generally, "to establish a claim for negligence, a plaintiff must show: (1) the defendant had a legal duty to conform to a certain standard of conduct; (2) the defendant breached that duty; and (3) the plaintiff sustained damage that was proximately caused by the defendant's breach.

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May 01, 2013 PublicationExamination Under Oath: A Vital Tool in Examining Potentially Fraudulent Claims

SIU Manager, Ryan West, was used to the smell. You know the smell. It is scorched. It is bitter. It is the seemingly everlasting and sticky odor of smoke.  He's at the fire scene to take a recorded statement of Belinda Peters. Her house burned last night. Burned as she started frying some chicken for dinner.  Her attention was diverted from the stove while she took a call from her aunt in the Netherlands. Her story, to the fire department, is that she left the stove unwatched, unattended, for a mere minute.

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April 01, 2012 PublicationWhat Nearly Two Decades as a Subrogation Attorney Has Taught Me about Product Safety

The other day when I was asked to write an article about "product safety" I pondered how to best approach this.  As we all know, what is or is not a "safe product" is often in the eye of the beholder (or which side of the "v" you are on!).  Is any product that fails even once an "unsafe product?"  If 1,000,000 items have been manufactured and "only" 73 of them have failed, is that an "unsafe product?"  What about 133 of them?  If a product fails when it was being used improperly, but it was not a stretch for the manufacturer to have anticipated this "alleged misuse", is that an "unsafe product?"  If a product has been tested by agencies and groups with an international reputation for such testing, and the product has passed, can that product be an "unsafe product?" 

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April 01, 2012 PublicationMade-Whole Interpretations Leave Insurers Feeling Empty

There is a growing trend among state courts to interpret the made-whole doctrine in ways that have the potential to make it very difficult for insurers to effectively exercise their subrogation rights.  In recent years, state courts’ decisions have increasingly created hurdles for insurers to overcome before they are able to actively pursue recovery for payments made to their insured.  These requirements could have a potentially chilling effect on the field of insurance subrogation.

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February 14, 2012 Publication"Freedom to Contract" Gives Rise to Big Recovery Opportunities from Policyholders for Self-Insured Retentions, Deductible Reimbursements, Retrospective Premiums and Loss Adjustment Expenses

Insurance policies often include language that allows insurers to recover amounts they have advanced for the insured's benefit. For instance, if the insured's policy has a SIR, the policy may contain a provision similar to the following:

We shall have the right but no obligation, in all cases,  to assume charge of the defens and/or settlement of any claim, and, upon our written request, you shall tender such portion of the SIR as we may deem necessary to complete the settlement of such claim.
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October 29, 2009 PublicationThe Daubert Tango: "Recent Developments In Fire and Explosion Litigation"

In 1923, the Court of Appeals for the District of Columbia, affirming the exclusion of an expert witness at trial, stated:

Just when a scientific principle or discovery crosses the line between the experimental and demonstrable stages is difficult to define. Somewhere in this twilight zone the evidential force of the principle must be recognized, and while courts will go a long way in admitting expert testimony deduced from a well recognized scientific principle or discovery, the thing from which the deduction is made must be sufficiently established to have gained general acceptance in the particular field in which it belongs.

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October 07, 2008 PublicationLanding the Knockout Punch: Contacting Another Party's Current And Former Employees Within the Ropes

Winning litigation requires that you and your counsel land the devastating uppercuts at the key moments in the fight. Big opportunities for critical testimony and evidence exist by pursuing permissible ex parte contacts with another party's current and former employees. The ethical ropes and practical tips for effectively contacting and interviewing such witnesses are discussed below.

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December 03, 2007 PublicationDrowning in Black Water: Water Restoration Contractors' Deviations from Industry Good Practices & Standards of Care Trigger Potential Mold Liabilities

Entry of errant water into a building or other structure can lead to serious mold problems, physical damages and substantial property and business interruption losses. This  article provides a roadmap on developing viable recovery claims against restorative drying contractors who were involved in improper and careless restoration and remediation of water  damaged property. As in any garden-variety tort claim, it is imperative that your counsel appreciate the critical importance of identifying the target contractor's vulnerable liability exposures.

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December 05, 2006 PublicationUnderwriters Laboratories—The Forgotten Island In The Litigation Seas—"Full Of Fruit"—For Bolstering Or Undercutting Product Integrity

Underwriters Laboratories Inc. ("UL") is a nonprofit organization conducting product safety evaluations. UL Marks are on 19 billion products ( www.ul.com ). As of 2005, there are more than 71,000 manufacturers producing UL-certified products and 97 countries where UL customers are located. UL publishes hundreds of safety standards and disseminates safety information globally.

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August 01, 2006 PublicationThe Big Daubert Hurdles in Fire & Explosion Litigation

Over a decade has passed since the U.S. Supreme Court's ruling in Daubert v. Merrell Dow Pharmaceuticals, Inc ., 509 U.S. 579 (1993), and it is time to evaluate where we've been, where we are, and where we are headed on the admissibility of expert opinion testimony in fire and explosion cases.

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June 05, 2006 PublicationA Product Supplier's Liability Exposure for Noncompliance With its Obligation Under the Consumer Product Safety Act and Related alternative Statutory Authorities

Manufacturers, importers, distributors and retailers have the obligation to place only those products that are safe for use into the stream of commerce. In addition to those obvious duties, these entities also face significant duties under the Consumer Product Safety Act (CPSA) ' and other legislation and regulations enforced by the Consumer Product Safety Commission (CPSC).

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May 09, 2006 Publication"Top-Dog" Depositions The Hurdles to Overcome

High-level executives are frequently sought to be deposed because of their unique corporate roles for, inter alia, policy making, corporate governance and implementing policy compliance and corrective actions. On a tactical basis, the executive deposition is pursued so that your adversary's "figurehead" directly feels the "hot buttons" of your case, real-time, without layers of filtering and spin. "Top-dog" depositions, commonly called "apex depositions," cover a wide range of executives, including CEOs, presidents and other senior management positions.

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May 09, 2006 PublicationTaking A Closer Look For Deep Pockets

A CORPORATION is a legal entity created by filing certain documents with the state. It offers many benefits that are found in other entities, such as limited liability, centralized management, transferability of ownership, continuity, and taxation. On the other hand, some of these benefits pose problems for securing legal liability when the corporation is used as a shield to avoid liability or to perpetuate a fraud. In these cases, a victim may be left without any avenue of relief. Fortunately, all hope is not lost!

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May 01, 2006 PublicationAlternative Ways To Use Evidence Of "Other Conduct" That Would Otherwise Not Be Admitted

In developing your case, as plaintiff or defendant, it is important to appreciate the various alternative ways for opening the door to "other conduct" evidence to prove relevant facts at issue. Below is a synopsis of strategic methods and insights for proffering evidence of character for a non-propensity purpose, habit, subsequent remedial measures and prior occurrences/failures.

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January 03, 2006 PublicationGetting the Winning Edge: Appreciating the Permissible Boundaries, in Qui Tam and Other Litigation Contexts, for Contactiong Your Adversary's Current & Former Employees

To say the least, litigation is frequently competitive, hard-fought and fraught with many hurdles. Developing a winning case requires that you seek the edge at every step in the journey. Big opportunities for marshalling critical testimony and evidence exist by pursuing permissible ex parte contacts with your adversary's current and former employees. Below is a general discussion of the ethical boundaries and practical tips for effectively contacting and interviewing such witnesses

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October 05, 2005 PublicationCourageous Whistleblowers are not "Left Out In The Cold": Legitimate Justifications Exist for Collecting Evidence of False Claims Act Violations

It is the courage of whistleblowers, standing up in the face of great adversity and overwhelming pressure to "look the other way;' that enables the False Claims Act ("FCA") to fulfill its primary purpose of combating fraud on the U.S. Treasury. By marshalling evidence and collecting company documents, the whistleblower provides the necessary proof to shed light on fraudulent and illegal FCA activities.

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May 03, 2005 PublicationHow "What We Learned in Little League" Paves the Way for Winning Litigation!"

As in baseball, whether being the batter, pitcher, or outfielder, successful litigation requires a strong belief and conviction that one has the power to shape reality. Certainly, without the batter's confidence that he or she will hit the ball, irrespective of its speed, twists or turns, few home runs would be made, let alone "singles or doubles"

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April 01, 2005 PublicationLive . . . From The House Of Subrogation!

 The Hilton Hotel in Austin, Texas will truly be "The House of Subrogation" from November 13 through 16, when over 1,200 subrogation professionals from around the globe assemble for the NASP Annual Conference. And this year's conference is expected to be even bigger, better and more alive than ever before!

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January 06, 2004 PublicationGoing Toe-to-Toe With Your Opposing Expert

Experts oftentimes make or break cases.  As knowledge and science have grown, so has the range of experts that parties call upon to advocate their cause.  Not only must a party always look to bolster one's own expert case, a party must simultaneously be mindful of the need to undercut your adversary's expert.  As the client, you want to ensure that your assigned counsel appreciates the following practical ways for tackling the opposing expert during the discovery process

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PublicationUnraveling The Complexities Of Contractual Disputes

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationDeveloping A Claim Of Successor Liability—A Practical Guide To Recovery When Your Primary Target Defendant Has No Seizable Assets

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationProtective Orders- Not Everything Can Be Swept Under The Rug!

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationSix Critical Steps For Achieving A Successful Mediation

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationAll Is Not Lost Simply Because A Target Defendant Has No Assets—Pull Out The Magnifier And Investigate The Corporate Connections Of Your Target For Alternative Deep Pockets!

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationContracting Outside The Four Corners Of The United States—A Closer Look At The United Nations Convention On Contracts For The International Sales Of Goods

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationThe Top 100 Ways To Build A Winning Recovery Case: Effective Claims Management Of Subrogation Cases

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationMCS90 Endorsements Provide Significant Subrogation Recovery Opportunities

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationSubrogating The Spill: What Are An Insurer's Options For Recovering Claims Paid As A Result Of The Gulf Oil Spill?

If you would like to discuss this topic further, please contact Dean Rauchwerger at drauchwerger@butler.legal  or directly (312) 462-9147

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PublicationSignificant Recovery Opportunities Where An Insured Breaches Its Reimbursement Policy Obligations For Advanced Deductible, Self-Insured

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationBig Daubert Hurdles In Fire & Explosion Litigation—Revisiting The Importance Of Testing An Expert's Theories

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationMass Confusion in Transactional Business: Boilerplate Forms and Competing Contractual Terms Often Lead to a "Battle of the Forms"—Practical Considerations for Minimizing Litigation

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationUnited States' Liability For Negligent Disaster Response Under The Federal Tort Claims Act

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationUndue Delay In Pursuing Subrogation May Result In Missing The Recovery Boat

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationFederal Tort Claims Act: Pursuing Uncle Sam's Deep Pockets By Unlocking The Right Doors

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationRailroad Subrogation And Third Party Recoveries—"Getting Back On Track"

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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PublicationWhen Businesses Compete Fiercely, Crossing Certain Boundaries May Give Rise To Tortious Interference Claims

If you would like to discuss this topic further, please contact Dean Rauchwerger or directly (312) 462-9147.

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