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F I S C A L I M P A C T R E P O R T

SPONSOR Robinson

DATE TYPED 3/1/05

HB

SHORT TITLE Tort Claims Permissible Damage Awards

SB 912

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

Significant $0.1

Relates to SB 860

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Administrative Office of the District Attorneys (AODA)

Attorney General’s Office (AGO)

Corrections Department (CD)

Department of Transportation (DOT)

Energy, Minerals & Natural Resources (EMNRD)

SUMMARY

Synopsis of Bill

Senate Bill 912

SB amends section 41-4-12 NMSA 1978 to waive sovereign immunity for

claims against public entities and all of their employees, not just law enforcement officers, for

liability for personal injury, bodily injury, wrongful death or property damage resulting from as-

sault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel,

slander, defamation of character, violation of property rights or deprivation, privileges or immu-

nities secured by the United States or New Mexico's constitutions and laws when those employ-

ees are acting within the scope of their duties.

This bill also allows plaintiffs to be awarded attorney fees, expenses, costs, exemplary and puni-

tive damages and interest prior to judgment for claims brought under the United States or New

Mexico constitutions.

Significant Issues

Senate Bill 912 -- Page 2

By expanding the waiver of sovereign immunity for tort claims to include all public employees

and not just law enforcement officers, this bill will increase the number of claims that can be

filed against public entities and the agencies that employ them. This will increase the number of

claims that the Risk Management Division (RMD) of the General Services Department (GSD)

will have to defend against as well as the number of claims that other local government entities

not insured by RMD will have to defend. This will increase not only the cost of defending

against tort claims brought against public entities and their employees, but potentially the num-

ber and amount of claims paid as well. Agencies will have to increase their premium payments

to the RMD.

While non-law enforcement officers will not be arresting individuals within the scope of their

employment, this still leaves numerous other tort claims that will be brought against those em-

ployees. For example, the EMNRD is responsible for regulating oil and gas development, min-

ing activities, and commercial timber harvesting. All of these involve the issuance of permits.

Individuals could claim that denial of a permit or enforcement of regulations deprived them of a

property right or other right under the New Mexico or United States constitution or laws.

The AODA states this bill will

increase the number and impact of law suits brought against the

state due to actions of public employees. It will further chill the district attorneys’ offices ability

to hire and retain prosecutors, given that their actions within their duties might be challenged un-

der the extremely broad umbrella of prohibited activities named in this case. It will exponen-

tially increase the case load and budget of the RMD as well as that of public agencies including

district attorneys, as public employees must be defended and put on leave while issues are re-

solved in the civil action.

CD claims this bill could result in a high increase in insurance premiums and potential civil dam-

ages awards to them because it will permit aggrieved parties to recover under tort claims that are

now precluded by the Tort Claims Act’s grant of immunity employees. Moreover, it creates a

high exposure to liability because the CD could be required to pay large punitive damages

awards to injured party. The bill could also result in a high increase for other state agencies for

the same reasons

FISCAL IMPLICATIONS

This bill will subvert traditional prosecutorial immunity and leave open the potential for enor-

mous financial impact on the State, as it covers acts committed by public employees while acting

within the scope of their duties.

This bill will allow for recovery of unlimited awards, in certain cases, against the State of New

Mexico, thereby impacting insurance rates and the general fund.

.

EMNRD states the number of claims against public entities will increase because of the ex-

panded waiver of sovereign immunity, the state and other public entities will spend more money

on defending against and resolving claims. This is likely to be a substantial increase.

The DOT believes the fiscal implications to the State could be significant if this bill becomes

law. As mentioned above, punitive damages and prejudgment interest cannot be awarded against

the State under existing law. If this bill is passed, prevailing plaintiffs in cases brought under the

Senate Bill 912 -- Page 3

New Mexico Tort Claims Act and under the United States and New Mexico constitutions could

be awarded punitive damages, prejudgment interest, attorney fees and costs and the State will be

liable for paying these additional expenses as if it were a private person.

The AGO states that the provisions of this bill will expose a governmental entity to endure

enormous increases in insurance premiums and lawsuits.

ADMINISTRATIVE IMPLICATIONS

Under the existing Tort Claims Act, immunity does not apply to liability for personal injury,

bodily injury, wrongful death or property damage resulting from assault, battery, false impris-

onment and other enumerated acts caused by law enforcement officers acting within the scope of

their duties. If this bill becomes law, immunity will be waived for the same acts committed by

all public employees acting within the scope of their duties.

The amendment will increase the number of claims that RMD will have to manage, therefore in-

creasing its workload. When the number of claims from all state agencies increases because the

amendment waives immunity for all public employees and not just law enforcement employees,

agencies will spend increased time providing required documents and information relating to

such claims to RMD.

RELATIONSHIP

This bill is related to SB 860 which provides that all punitive damages awards be paid to the

state’s general fund rather than the injured party. Because this bill amends the Tort Claims Act

to permit the award of punitive damages against the state, the CD points out the state will be pay-

ing itself if such an award is granted.

OTHER SUBSTANTIVE ISSUES

The AGO has provided a history of the public policy of limited state immunity as outlined in

common law and statute as follows:

The statute defines sovereign immunity as the legislature recognizing that while a private

party may readily be held liable for his torts within the chosen ambit of his activity, the

area within which the government has the power to act for public good is almost without

limit, and therefore the government should not have the duty to do everything that might

be done.

Following the abolition of sovereign immunity the New Mexico Legislature responded

by enacting the Tort Claims Act (TCA), which reinstated governmental immunity except

in eight specific classes of activities.. In addition to declaring the States’ public policy

that governmental entities and public employees are only liable within the limitations of

the act, the New Mexico legislature announced that governmental entities and public em-

ployees acting in the scope of their duties shall be immune from liability from any tort

except as waived in the act. In construing the TCA, New Mexico courts have ruled that a

cause of action does not exist unless immunity for that cause of action has been specifi-

cally waived.

Senate Bill 912 -- Page 4

The TCA provides governmental entities and public employees acting in their official ca-

pacities with immunity from tort suits unless the act sets out a specific waiver of that im-

munity. Thus, under the TCA the court must first determine whether immunity has been

waived for the claims against the governmental entities and public employees acting

within the scope of their employment. Consent to be sued under the TCA must be spe-

cifically found in one of the exceptions under the act.

If law enforcement officers are replaced with public employees then any public employee

working for any governmental employee could be exposed to suit for anything, and the

above-cited case law will no longer be relevant, thus the concept of State immunity will

be entirely done away with.

DW/lg