Managers rarely found liable in lawsuits

Federal managers are rarely found personally liable in lawsuits filed against them, according to a new report.

Over the past five years, only 14 federal employees were found personally liable in lawsuits brought against them in relation to their government duties, agencies told the Office of Personnel Management in a recent survey. In 11 of the 14 cases, agencies indemnified the employees. In one other case, the employee paid nominal damages of $1. In another, the employee's automobile insurance company paid the damages. In only one reported case did an employee pay damages.

"In most cases where the Justice Department makes a determination that the employee acted within the scope of the employee's duties and it is in the interest of the government to provide representation, employees are not liable for legal expenses or damages," OPM said in a report to the House Appropriations Committee. The committee required OPM to submit a report on federal officials' need for professional liability insurance this month. OPM surveyed agencies and compiled their responses into the report.

The Justice Department has received about 7,000 requests for representation from federal employees in the past five years. Justice rejected 150 of those requests, or two percent, the department told OPM.

In the fiscal 1997 Treasury, Postal and General Government Appropriations Act, Congress authorized federal agencies to reimburse managers and law enforcement officials for half the annual cost of professional liability insurance. So far, most agencies have decided not to offer reimbursement.

Some agencies, like the Defense Department, say they don't have the money to cover the reimbursement benefit. Others argue there is simply not a need for it.

"Since DoJ provides representation in most civil cases brought against federal employees in their individual capacity, and because there are relatively few instances in which judgment is against the employee, there appears to be no reason for the government to pay any portion of the cost of professional liability insurance for any employee," the Housing and Urban Development Department told OPM.

Fifteen agencies do reimburse managers and law enforcement officials for half of their professional liability insurance costs. They are the Agriculture, Education, Energy, Health and Human Services and Labor departments, Education's inspector general office, the Social Security Administration, the Federal Communications Commission, the Federal Emergency Management Agency, the Merit Systems Protection Board, NASA, the National Science Foundation, the Nuclear Regulatory Commission, the Office of Government Ethics and the Small Business Administration.

In fiscal 1997, just 141 managers and officials received the reimbursement, agencies reported to OPM. About 47,313 managers and officials were eligible to get it.

Agencies that offer the reimbursement say it only costs them about $130 a year to cover half of the typical premium, and that doing so improves morale.

The Nuclear Regulatory Commission said it "chose to reimburse qualified employees because in a highly complex and litigious environment, such employees who perceive a risk of being sued personally should be supported by the agency to help them reduce stress and perform their duties more effectively."

Wright & Co., a Washington insurance broker, offers federal officials a $1 million liability coverage and $100,000 administrative legal defense coverage package for a $266 annual premium. There is no deductible for the package. The Washington law firm Shaw, Bransford & O'Rourke represents managers and officials under the program.

G. Jerry Shaw, a partner in the firm and general counsel for the Senior Executives Association, is lobbying Congress to expand the liability insurance reimbursement program. At least 500 members of the Senior Executives Association carry professional liability insurance, according to Wright & Co. figures.

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