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State Risk Management Practices in Washington Joint Legislative Audit & Review Committee June 23, 2011 Stacia Hollar, JLARC Staff Preliminary Report.

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Presentation on theme: "State Risk Management Practices in Washington Joint Legislative Audit & Review Committee June 23, 2011 Stacia Hollar, JLARC Staff Preliminary Report."— Presentation transcript:

1 State Risk Management Practices in Washington Joint Legislative Audit & Review Committee June 23, 2011 Stacia Hollar, JLARC Staff Preliminary Report

2 June 23, 2011 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 State Risk Management Practices in Washington2

3 June 23, 2011 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 2004–2010 State Risk Management Practices in Washington3 Report Pages 3-5

4 June 23, 2011 Three State Agencies Accounted for 75 Percent of the States Payouts State Risk Management Practices in Washington4 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

5 June 23, 2011 Risk Management Has Both Centralized and Decentralized Components State Risk Management Practices in Washington5 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 2002 Department of General Administration Since 2002 Office of Financial Management Starting 2011 Office of Enterprise Services Report Page 12

6 6 Washington and Other States Tort Liability Laws

7 June 23, 2011State Risk Management Practices in Washington7 Washingtons 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. Courts 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 states percentage 6. Fewer procedural protections Report Page 5-6

8 8 Other States Reviewed Lack Broad Liability Provisions Source: JLARC analysis of other states liability laws. OH DE CA MT IA NC NY MA CT AK HI NV ID AZ KS LA MO MI FL GA NJ MD OR OK CO NE MN ND ARNM KY IN IL MS NH ME 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 PA RI VT CA MT IA NC NY MA CT AK HI Reviewed(36 states)

9 June 23, 2011 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 dont result in lawsuits State Risk Management Practices in Washington9 Report Page 13

10 Risk Management Practices: Post-Incident Reviews by Office of Financial Management Dept of Transportation Dept of Corrections Dept of Social & Health Services 10

11 June 23, 2011 OFM and State Agencies Conduct Post-Incident Reviews State Risk Management Practices in Washington11 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

12 June 23, 2011 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 ( ) 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 State Risk Management Practices in Washington12 Report Pages 7-8

13 June 23, 2011 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. State Risk Management Practices in Washington13 Report Page 7

14 June 23, 2011 WSDOT Uses Post-Incident Reviews to Design Highway Projects State Risk Management Practices in Washington14 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 WSDOTs tort payouts and defense costs Other Highway Safety Program 68% 32% Over the past seven years Report Page 9 Source: OFM.

15 June 23, 2011 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 biennium were $4.5 million, which includes its entire safety program State Risk Management Practices in Washington15 Report Page 9

16 June 23, 2011 DOC Conducts Critical Incident Reviews within Community Corrections Division State Risk Management Practices in Washington16 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% DOCs tort payouts and defense costs Over the past seven years Report Pages 9-10 Source: OFM.

17 June 23, 2011 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 Biennium were $279,000 State Risk Management Practices in Washington17 Report Page 10

18 June 23, 2011 DSHS Conducts Reviews Based on Statute and Internal Policies State Risk Management Practices in Washington18 Childrens Administration conducts reviews As the result of internal policies Pursuant to the statutory requirement to conduct Child Fatality Reviews (CFR) Other Childrens Administration 72% 28% DSHSs tort payouts and defense costs Over the past seven years Report Pages Source: OFM.

19 June 23, 2011 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, Childrens 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 State Risk Management Practices in Washington19 Report Pages 10-11

20 June 23, 2011 Example of Action Resulting From DSHS Reviews Issue identified: not all complaints of bruises to infants being investigated Response: Childrens Administration revised its policy to ensure that all reports were being investigated DSHS estimated that the costs in the Biennium for performing CFRs were $538,000 State Risk Management Practices in Washington20 Report Page 11

21 21 Risk Management Best Practices: Enterprise Risk Management (ERM)

22 June 23, 2011 Enterprise Risk Management: A Continuous Process for Managing Risk State Risk Management Practices in Washington22 Identify Risk Review & Report Address Risk Prioritize Risk Analyze Risk Source: JLARC analysis of ERM process. Report Page 14

23 June 23, 2011 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 State Risk Management Practices in Washington23 Report Pages 14-15

24 June 23, 2011 WSDOT Applies All Five Principles in its Highway Safety Program State Risk Management Practices in Washington24 Report Page 16

25 June 23, 2011 DOC Needs to Strengthen Application of Review and Reporting Principles State Risk Management Practices in Washington25 Report Page 17

26 June 23, 2011 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. State Risk Management Practices in Washington26 Report Page 18

27 June 23, 2011 DSHS Should Strengthen Policies and Practices in Two Areas State Risk Management Practices in Washington27 Report Page 19

28 June 23, 2011 Recommendations to DSHS The Department of Social and Health Services should address the risks identified in the RSVP report regarding Childrens Protective Services investigations and report its results to the Legislature by December 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. State Risk Management Practices in Washington28 Report Page 20

29 June 23, 2011 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 State Risk Management Practices in Washington29

30 June 23, 2011State Risk Management Practices in Washington30 Next Steps and Contact Information Proposed Final Report: July 2011 Stacia E. Hollar


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