state risk management practices in washington joint legislative audit & review committee june...
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State Risk Management Practices in Washington
Joint Legislative Audit & Review Committee
June 23, 2011
Stacia Hollar, JLARC Staff
Preliminary Report
June 23, 2011State Risk Management Practices in Washington 2
The Study Addressed Three Major Areas
1. Washington has broader tort liability than other states
2. The Office of Financial Management and the agencies we reviewed (WSDOT, DOC and DSHS) are conducting post-incident reviews
3. WSDOT, DOC and DSHS are employing risk management best practices, but DOC and DSHS should strengthen some practices
June 23, 2011State Risk Management Practices in Washington 3
JLARC Directed to Review the Effect of Risk Management Practices on Tort Payouts
• A tort is a legal action brought to recover damages for bodily injury, death, or property loss
• Prior to 1961, the state could not be sued for torts because of sovereign immunity Legislature waived immunity, providing the state
can be sued to the same extent as other persons
Example: sue WSDOT for crash on highway• $399 million in tort payouts and defense costs
during fiscal years 2004–2010Report Pages 3-5
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Three State Agencies Accounted for 75 Percent of the State’s Payouts
Source: Office of Financial Management.
35%
22%18%
All Other Agencies
$98 M 25%DSHS
$141 M
WSDOT$87 M
DOC$73 M
Total: $399 M
2004 – 2010
Report Page 4
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Risk Management Has Both Centralized and Decentralized Components
• The Office of Financial Management provides statewide risk management guidance
• The three state agencies we reviewed also engage in risk management activities
Risk management
responsibilities
Before 2002Department of
General Administration
Since 2002Office of Financial
Management
Starting 2011Office of
Enterprise Services
Report Page 12
6
Washington and Other States’ Tort Liability Laws
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Washington’s Tort Liability Differs From That of Other States in Six General Categories
1. Broad waiver of “Sovereign Immunity”
2. Lack of “Discretionary Immunity” defense
3. Court’s determination of a duty to protect the general public from supervised offenders
4. No damage caps
5. Has “Joint and Several Liability” in which state may pay whole award not just the state’s percentage
6. Fewer procedural protections
Report Page 5-6
Other States Reviewed Lack Broad Liability Provisions
Source: JLARC analysis of other states’ liability laws.
OHDE
CA
MT
IA
NC
NY MA
CT
AK
HI
NV
ID
AZ
KS
LA
MO
MI
FL
GA
NJ
MD
OR
OK
CO
NE
MNND
ARNM
KY
INIL
MS
NHME
WA
0 categories
(14 states)1 category
(11 states)2 categories
(9 states)3 categories
(2 states)
# of categories in common with WA
WY
UT
SD
TX
WV
WI
SC
AL
TN
VA
PARI
VT
CA
MT
IA
NC
NY MA
CT
AK
HI
Reviewed
(36 states)
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Tort Payouts Are Not the Best Measure of Risk Management Practices
• Some liability categories such as damage caps do not relate to management practices
• A consistently small number of events result in majority of tort payouts Example: Five or fewer DOC incidents per
year cause total payout• Does not include information to be gained
from incidents that don’t result in lawsuits
Report Page 13
Risk Management Practices: Post-Incident Reviews by
Office of Financial Management
Dept of Transportation
Dept of Corrections
Dept of Social & Health Services
10
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OFM and State Agencies Conduct Post-Incident Reviews
• OFM required by law to conduct post-incident reviews through the use of independent Loss Prevention Review Teams (LPRT)
• Agencies conduct other reviews under internal policies
Incident occurs
Post-incident review
performed
Future incidents avoided or reduced
Report Page 7
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OFM is Conducting Fewer Post-Incident Reviews Than Expected
• Fiscal note related to the enacting bill anticipated 12 LPRT reviews per year, but over seven years (2003-2009) OFM has completed a total of 10 reviews
• Law allows OFM discretion to decide when to investigate
• OFM states the most frequent reasons for not conducting LPRT review: Agency had addressed the risk Already reviewed by agency or outside group
Report Pages 7-8
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State Law Limits the Use of LPRT Reviews in Litigation
• The LPRT report is not admissible as evidence in either court or administrative proceedings Report is available to the public
• Members of the LPRT may not be questioned in a proceeding regarding the work of the team; the incident under review, or the statements of anyone providing
information to the team.
Report Page 7
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WSDOT Uses Post-Incident Reviews to Design Highway Projects
• WSDOT maintains databases regarding frequency, location, and contributing causes of crashes
• Data is used to determine patterns and contributing factors in order to design effective engineering approaches
WSDOT’s tort payouts and defense costs
OtherHighway Safety
Program 68%
32%
Over the past seven years
Report Page 9
Source: OFM.
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Examples of Actions Resulting From WSDOT Reviews
• Installation of highway cable median barriers
• Actions to mitigate rock slides
• Placement of rumble strips
• WSDOT estimated that its costs for the 2009-11 biennium were $4.5 million, which includes its entire safety program
Report Page 9
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DOC Conducts Critical Incident Reviews within Community Corrections Division
• Critical Incident Reviews are conducted by Community Corrections Division staff Reviews include written action plans Agency policy requires the Assistant
Secretary to review and identify trends, and ensure issues are addressed
Other
Supervision of Offenders
57%43%
DOC’s tort payouts and defense costsOver the past seven years
Report Pages 9-10
Source: OFM.
June 23, 2011State Risk Management Practices in Washington 17
Example of Action Resulting From DOC Reviews
• Issue identified: Possible coverage gaps when community corrections officers are on leave
• Response: Modification of policy to ensure coverage of supervised offenders
• DOC estimated that costs for the Community Corrections Division to perform post-incident reviews for the 2009-11 Biennium were $279,000
Report Page 10
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DSHS Conducts Reviews Based on Statute and Internal Policies
• Children’s Administration conducts reviews As the result of internal policies Pursuant to the statutory requirement to
conduct Child Fatality Reviews (CFR)
Other
Children’s Administration 72%
28%DSHS’s tort payouts and defense costsOver the past seven years
Report Pages 10-11
Source: OFM.
June 23, 2011State Risk Management Practices in Washington 19
Requirements for Child Fatality Reviews Changed During the 2011 Session
• State law required that DSHS conduct CFRs on unexpected deaths of children who had been in the care of, or received services from, Children’s Administration in the past 12 months
• New law requires CFRs only where the death was suspected to be the result of abuse or neglect
• Law also contains restrictions on litigation use of reports and witnesses similar to LPRT
Report Pages 10-11
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Example of Action Resulting From DSHS Reviews
• Issue identified: not all complaints of bruises to infants being investigated
• Response: Children’s Administration revised its policy to ensure that all reports were being investigated
• DSHS estimated that the costs in the 2009-11 Biennium for performing CFRs were $538,000
Report Page 11
Risk Management Best Practices: Enterprise Risk Management (ERM)
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Enterprise Risk Management: A Continuous Process for Managing Risk
Identify Risk
Review & Report
Address Risk
Prioritize Risk
Analyze Risk
Source: JLARC analysis of ERM process.
Report Page 14
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Enterprise Risk Management is a Best Practice
• Used in private business as well as other governmental entities
• Looks broadly at risks and provides a framework for managing them
• OFM began implementation in Washington in 2006
• JLARC used the five Enterprise Risk Management principles to evaluate practices of WSDOT, DOC and DSHS
Report Pages 14-15
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WSDOT Applies All Five Principles in its Highway Safety Program
Report Page 16
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DOC Needs to Strengthen Application of Review and Reporting Principles
Report Page 17
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Recommendation to DOC
• The Department of Corrections should develop and implement a policy for the consistent review of, and reporting on, the effects of actions taken in the Community Corrections Division to address risks.
Report Page 18
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DSHS Should Strengthen Policies and Practices in Two Areas
Report Page 19
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Recommendations to DSHS
• The Department of Social and Health Services should address the risks identified in the RSVP report regarding Children’s Protective Services investigations and report its results to the Legislature by December 2011.
• The Department of Social and Health Services should develop a method for reviewing and reporting on the effect of actions taken in the Children's Administration to address risks.
Report Page 20
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The Study Addressed Three Major Areas
1. Washington has broader tort liability than other states
2. The Office of Financial Management and the agencies we reviewed (WSDOT, DOC and DSHS) and are conducting post-incident reviews
3. WSDOT, DOC and DSHS are employing risk management best practices, but DOC and DSHS should strengthen some practices
June 23, 2011State Risk Management Practices in Washington 30
Next Steps and Contact Information
Proposed Final Report: July 2011
Stacia E. Hollar360-786-5191
www.jlarc.leg.wa.gov