Chapter 33
LAW ENFORCEMENT LIABILITY INSURANCE
William G. Beck, Ian Hale, Sarah E. Millin and Jennifer M. McAdam[*]
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Abstract
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Insurance law as it relates to most areas of law enforcement liability is developed enough to understand the risks that are covered under any given policy. This law developed in a very traditional sense, in the context of cases seeking a remedy for very specific and readily identifiable injuries arising from single or linear acts and events. Innocence cases break from the law enforcement liability paradigm, presenting themselves as a fusion of traditional tort claims and state and federal civil rights claims, often asserted against numerous defendants and alleging multiple injuries from discrete and successive acts occurring over decades.
Innocence cases thus resist traditional insurance analysis developed under Commercial General Liability (“CGL”) insurance policies purchased by the private sector, and bring to the fore the language and operation of the special-risk Law Enforcement Liability (”LEL”) and Public Official Liability (“POL”) policies issued to law enforcement.
Section 33.02 examines the ever-growing frequency of exonerations and subsequent innocence cases and recent studies estimating between 23,000 and 115,000 currently incarcerated people are innocent. This section also discusses the average length of time served by these people—12 to13 years—and awards handed out to these people in innocence cases—$1 million per year in compensatory damages alone. This section also notes the longstanding awareness of the possibility of these systemic failures in our system, and Insurers historic marketing and selling of LEL and POL policies to cover this exact risk without ever accounting for the technological developments such as DNA testing and the impact this might have on the calculus for the risks being written.
The types of policies that might be implicated in a typical innocence case are discussed in Section 33.03, as are the efforts that should be undertaken to locate all such historical policies in effect from the time of the first alleged misconduct through exoneration and the filing of the innocence case.
Section 33.04 and 33.05 examine the various language, provisions and operation of the most common of these special-risk policies, including both coverage and exclusionary language, and how they can differ from CGL policies. This includes a discussion of the few decisions interpreting LEL, POL and, where instructive, CGL policies.
In Section 33.06 the chapter introduces the various trigger of coverage theories, which courts sometimes employ to determine when a progressive or continuing injury will be deemed to occur for insurance purposes, as well as how these theories can effect coverage for claims under policies with injury-based, but not act-based, Insuring Agreements. Section 33.07 goes on to explore claims commonly asserted in innocence cases, and examines the existing insurance law on these claims under LEL, POL and CGL policies, as well as an examination of the elements of each of these claims and the impact those may have on coverage determinations.
Section 33.08 examines the various State Defense Acts, which typically provide defense of and some amount of capped indemnity for claims against State employees, and the ways these Acts can affect coverage. Section 33.09 reviews the unanimous rule that State tort caps will not apply to 42 U.S.C. section 1983 claims for civil rights violations, and the rationale underlying this rule.
The chapter concludes with a review of state law on insurance coverage for both punitive damages and attorney’s fees awarded to a successful section 1983 claimant. Section 33.10 also overviews the State and federal statutory Compensation Acts enacted to provide some monetary compensation to exonerees.
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Table of Contents
§ 33.01Introduction to Law Enforcement Liability
§ 33.02The “Innocence Revolution”
§ 33.03There Are Several Types of Insurance Policies Commonly Purchased By Law Enforcement
§ 33.04Law Enforcement Liability (“LEL”) Policies Were Created to Ensure Against the Specific Risks Faced By Law Enforcement Officers
[1]Coverage Provisions in LEL Policies Can Be Unique
[a]The Majority of LEL Policies Contain One of Two Types of Insuring Agreement
[i]True Act-Based Insuring Agreement Merely Requires an Act During the Policy Period to Invoke Coverage
[ii]True Injury-Based Insuring Agreements Merely Requires An Injury During the Policy Period to Invoke Coverage
[b]Some Outlier LEL Policies Contain Different Insuring Agreements that May Have Other Requirements to Invoke Coverage
[c]“Scope of Duty” Requirements Are Of Limited Application
[2]Most Exclusionary Provisions in LEL Policies Are the Same Exclusions that Typically Appear InCGL Policies, But May Be Interpreted More Narrowly
[a] When Coverage Provisions Conflict With Exclusionary Provisions, Conflicts Are Often Resolved in Favor of Coverage
[b]Criminal-Act Exclusions Are Generally of Limited Applicability
[i] When the Policy Remains Silent as to When the Criminal-Act Exclusion Will Apply, Courts Are Split
[ii]Majority View: Exclusion Applies Only If Convicted of a Crime For the Same Conduct
[iii]Minority View: Exclusion Applies If There Are Allegations that the Conduct Was Criminal
[iv]Courts May Find Ambiguity Created by Criminal-Act Exclusions in LEL Policies
[c]Fraud and Dishonesty Exclusions May Bar Coverage With or Without an Actual Finding That the Conduct Was Fraudulent or Dishonest
[d]Prior-Act Exclusions, Related-Act Exclusions, and Deemer Clauses Are Uncommon, But May Bar or Significantly Limit Coverage
[e]Intentional-Act and Expected/Intended-Injury Exclusions Are Unlikely to Appear in LEL Policies
§ 33.05Public Officer Liability (“POL”) Policies Were Created to Insure Against the Specific Risks Faced By Law Enforcement Officials
[1]Coverage Provisions in POL Can Contain Any of Several Different Types of Insuring Agreement, But Generally Apply to Only Claims Made or Claims Made and Reported During the Policy Period
[a]Overview
[b] A Claim Can Be Deemed “Made” Upon Receipt of an Oral Demand, an Intent-to-Sue Letter, or When Suit Is Filed or Served
[c] Relation-Back Provisions Are Capable of Affecting Coverage
[2]POL Policies “Operational and Law Enforcement” Exclusions May or May Not Bar Coverage for Monell and Similar-Type Claims, Depending on their Language
§ 33.06“Trigger of Coverage” Theories May Apply to Coverage Claims Under Policies With Injury-Based Insuring Agreements
§ 33.07Almost Every Decision Analyzing Coverage for Claims in Innocence Cases Involved Only CGL Policies, and Even Under CGL Policies There Are More Open Questions Than Answers
[1] Innocence Cases Can Contain Numerous Allegations Against Several Defendants for Acts and Injuries During Multiple Time Frames
[2]Common State Law Claims in Innocence Cases
[a]False Arrest and Malicious Prosecution Implicate Policies In Multiple Years, But Which and How Many Policies Remains Unclear
[b]No Court Has Yet Addressed Coverage for Tort Claims Based Upon Restatement (Second) of Torts Section 321(1) or Cases Like Limone v. United States
[3]Common Federal Civil Rights Claims in Innocence Cases
[a]Brady Claims
[b]Fabrication Claims
[c]Access to Court Claims
[d]Monell Claims
§ 33.08Defense Acts May Play a Role in Coverage Determination
§ 33.09State Tort Caps Are Not Applicable to Federal Civil Rights Claims
§ 33.10Additional Damages and Set-Offs
[1]Plaintiffs Bringing Successful Section 1983 Claims Are Entitled to Attorney Fees, Which May or May Not Be Insured
[2]Punitive Damages Awards Can Be Significant and May or May Not Be Insured
[3]Federal and State Statutory Compensation Acts May Provide an Additional Source of Recovery
[*]William G. Beck, Ian Hale, Sarah E. Millin and Jennifer M. McAdam practice in the insurance recovery group of Lathrop & Gage LLP and have significant experience in obtaining insurance recoveries for innocence and other civil rights cases.
The authors would like to thank Jordan Bergsten and Amanda Sisney for their contributions to this chapter, and would also like to thank the attorneys at Neufeld Scheck & Brustin LLP for their many contributions to the authors’ understanding of this fast-developing area of insurance law.