TORT LIABILITY PAYMENT PROCEDURE - 8712-JUN-2016
This section describes procedures related to tort liability arising from other than motor vehicles. Procedures related to motor vehicle insurance, accidents, and suits are described in SAM sections 2440 through 2464.
Chapter 1681, Statutes of 1963, added Division 3.6-Claims and Actions Against Public Entities and Public Employees- to the Government Code. This law provides broad guidelines by which the state shall administer and pay tort liability claims.
In general, as the law pertains to the State of California, claims are presented to the Department of General Services (DGS) and, if approved, are paid by the Department of Justice (DOJ). If a claim is not approved, the claimant may bring court action against the state department involved or its officers or employees to obtain settlement. If such action is brought, the head of the state department concerned, upon recommendation of the Attorney General or other attorney authorized to represent the state, may settle, adjust, or compromise the claim under provisions of Government Code section 948. The claim will then be paid by DOJ. Similarly, tort liability judgments against the state are also paid by DOJ.
Each year, the Budget Act includes support for the administration, investigation, adjustment, defense, and payment of tort liability claims, settlements, compromises, and judgments against the state, its officers and employees or for the purchase of insurance protecting the state, its officers, and employees against such tort liability claims. Judgments and/or costs of suits are not to be paid out of feeder funds. A specific amount is appropriated from the General Fund to be available to DOJ for departments supported from that fund. Unspecified amounts are also appropriated to each special fund sufficient for departments supported from those funds.
The appropriation is made to the Department of Finance (Finance) for expenditure or allocation at its discretion. Accordingly, it has established the following concerning tort liability payments:
General Fund
DOJ pays claims approved by DGS, and pursuant to Government Code section 948, DOJ also pays claims that have been denied by DGS but have been settled by the Attorney General and approved by the department. DOJ is authorized to pay claims and judgments up to $35,000 in principal amounts without Finance approval.
Finance approval is required for all claims that exceed $35,000 in principal amount which have been approved by DGS, claims settled pursuant to Government Code section 948, or judgments awarded by the courts. The $35,000 limitation applies to the principal only. Court awarded interest and court costs, if any, are additional. Each approved settlement or judgment whose principal exceeds $70,000 shall be paid from special appropriation legislation.
Special Funds
DOJ shall pay claims and judgments under the following conditions for all special fund departments, except the Department of Transportation.
- Up to $35,000 in principal amount for settlements made by DGS. Advance approval is given by Finance.
- Settlements under Government Code section 948 up to $35,000 in principal amount. Advance approval is given by Finance.
- Finance approval will be required for each settlement in excess of $35,000 in principal amount. Prior to Finance approval, DOJ will have obtained assurance from the department that funds are available.
- Each approved settlement or judgment whose principal exceeds $70,000 shall be paid from special appropriation legislation.
Each special fund department shall forward to DOJ written authorization to pay tort liability claims. These authorizations shall be effective until revoked. They should be submitted in duplicate and should be in the following format:
AUTHORIZATION TO PAY TORT LIABILITY CLAIMS AGAINST SPECIAL FUND
The (Department, Board or Commission) hereby authorizes the Attorney General to file a claim schedule with the State Controller requesting payment of all claims approved by the Department of General Services arising under Chapter 1681,Statutes of 1963 and of all settlements, adjustments, compromises of any pending actions concluded pursuant to Government Code section 948, or judgments pertaining to the activities of said department and payable from the __________________ Fund; provided that prior to the filing of claims schedules the (Department, Board or Commission) will certify that funds are available.
(Department Head) (Date)
The Department of Justice (DOJ) will retain one copy of the authorization and forward the second to the State Controller.
DOJ shall forward the claim schedule to the State Controller and retain an extra copy in a holding file. Upon receipt of the Notice of Claim Paid, DOJ will forward a copy of the claim schedule, along with a copy of the Notice of Claim Paid, to the department involved as notification that a claim has been filed and paid.
Upon receipt of the claim schedule and Notice of Claim Paid, the department will record the claim as if the department had filed it and account for the payment of the claim. This accounting entry will be a consolidation of Standard Entries 4 and 6 (Debit 9000 Appropriation Expenditure and Credit 1140 Cash in State Treasury or 5570 Fund Balance–Clearing Account).
An account titled -Tort Liability Claim Expenditures- will be established in the subsidiary Allotment-Expenditure Ledger at the same time the above entry is made. Since no specific appropriation was made to the department, no entries will be made in the allotment, unliquidated encumbrances, or unencumbered balances. The expenditure will be entered as an expenditure to keep the Allotment-Expenditure Ledger in balance with the General Ledger account.
Tort Liability Claim Expenditures will be shown as a separate item at the end of a department’s budget reports. Totals of all columns will precede this item and will be followed by a grand total in the expenditure column.