Public Bodies Battle to Limit Joint-and-Several Doctrine

Across the nation, public and private entities are urging their state legislators to abolish or limit the doctrine of joint-and-several liability, in which a plaintiff who wins a verdict against two or more defendants can collect the award from any party regardless of the degree of fault.

In New York, for instance, lobbyists for New York City hope to persuade state legislators this year to adopt a measure that would provide relief only for public bodies. Under the proposal, governments would be liable only for their share of fault. Plaintiffs also would have to prove that they had incurred $2,500 in medical expenses before they could collect damages for pain and suffering from public bodies.

The New York proposal is partly in response to a case in which a jury found the city 4% negligent for a 1970 gas explosion that killed 12 people and injured scores of others. The verdict exposed the city to millions of dollars in damages because the defendants most at fault had no money. The case was reversed on other grounds in 1983, but officials there said it nevertheless awakened them to what they perceive to be major inequities in the rule.

Consultant’s View

“We think public entities are distinguishable from other defendants because they’re looking out for the public welfare,” said Jay Biggins, consultant for New York City’s office of management and budget. “The indications are that other target defendants--doctors, hospitals and so forth--won’t go over to the trial lawyers’ side to fight this bill.”

Of the 14 states that have abandoned or altered the rule, however, none has provided for limited liability only for public entities, primarily because of lobbying efforts by private organizations that are often targets of such suits.

As an example of that lobbying, it was the Florida Medical Assn. that drafted a ballot initiative last year to abolish joint-and-several liability for all defendants. The state’s high court struck it from the ballot, however, because it improperly included other issues.

Besides California, Colorado, Florida and Michigan, will try this year to alter or abandon the joint-and-several liability rule, officials in those states said.

Michigan Situation

“It’s so bad in this state,” said Michigan state Sen. Alan Cropsey, “that most insurers aren’t writing policies anymore and our highway department is going to a self-insurance pool.”

In fact, the question for most insurance companies still in the field is becoming whether to provide any liability coverage for public entities.

In Orange County, a group of 12 cities in an insurance pool was given 60 days’ notice last fall that its carrier, which decided to stop writing such policies in California, would cancel coverage. The group signed with another insurer Dec. 13 for a new policy that hiked premium rates between 300% and 450% for each town and raised the $100,000 deductible to $250,000.

And the new premiums may double in three years, industry analysts say.

Statewide groups in Oklahoma, Georgia, Louisiana and Michigan, which represent nearly 500 cities collectively, were put on notice last fall that policies would be canceled. They are scrambling to find someone to make a bid but have found little interest.

Tough to Figure

“In recent years, municipalities have been targeted for lawsuits, as have their police and schools,” said Albert Abend of Hartford, Conn.-based Aetna Life & Casualty. “If we can’t figure the quantity and quality of the risk, we can’t put a price on it and we can’t sell it.”

“The entire casualty (insurance) market has gone to hell in a hand basket,” said Jack Floyd, executive vice president of the Tennessee Municipal League Risk Management Pool.

“It’s just going to get worse,” he said. “You’re not going to see any liability insurance available on the open market in the next few years.”

When faced with a similar situation in the mid-1970s, many cities in California and elsewhere banded together in risk management pools to obtain insurance more easily and cheaply.

About 3,000 governmental bodies in California banded together in more than 100 such insurance pools, and thousands of cities across the nation joined one of 150 to 160 insurance groups, according to the National League of Cities. Their are statewide groups in 22 states, the organization reports.

Interstate Movement

Statewide groups in Louisiana, Tennessee, Georgia, Oklahoma and North Carolina are considering forming the nation’s first interstate insurance-buying co-op, which they believe will be more attractive to insurance carriers.

City and county pools in California are considering forming a statewide group so large that it could cover $1 million per loss and attract “Lloyd’s of London or maybe the German (insurance) market” for additional coverage, said Greg Trout, general manager of the County Supervisors Assn. of California Excess Insurance Authority.

Trout’s group, which represents 20 of the state’s counties for liability coverage, is studying the plan, which Trout said could be implemented by May. The group’s policy expires in June and its carrier will likely withdraw coverage or increase premiums by “two to three times,” Trout said.