Fiscal Note - SB 0271 - Changes to Sovereign Immunity Law
L.R. NO. 1119-02
BILL NO. Perfected SS for SB 271
SUBJECT: Courts: Sovereign Immunity
TYPE: Original
DATE: February 28, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue* (Unknown) (Unknown) (Unknown)
State Road Fund (Exceeds (Exceeds (Exceeds
$1,837,788) $1,848,663) $1,859,810)
DNR Dedicated
Funds (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All (Exceeds (Exceeds (Exceeds
State Funds $1,837,788) $1,848,663) $1,859,810)
* Unknown fiscal impact (cost) -- expected to exceed $200,000 in any
given year.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
DNR Federal Fund (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
Federal Funds (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government Exceeds Exceeds Exceeds
($1,000,000) ($1,000,000) ($1,000,000)
FISCAL ANALYSIS
ASSUMPTION
Officials from the Missouri Department of Transportation (MoDOT) assume the
proposed legislation would have a substantial negative fiscal impact on the
State Road Fund. MoDOT assumes the actual impact would depend on the number
of additional claims filed against MoDOT, the total amount of the medical
expenses incurred by the litigants, and the size of the verdicts entered in
those cases. MoDOT further assumes that the medical expenses would not be
subject to a limit. Based on the claims rendered in FY 1996, this proposal
would cost MoDOT over $1,837,788 annually. For example, there were three
judgments against MoDOT in FY 1996 which would have resulted in an additional
$435,000 in general damages and an additional $1,402,788 in medical damages
under this proposal. Therefore, the total increase in payments based upon
these three judgments alone would have resulted in a fiscal impact in excess
of $1,837,788. MoDOT assumes it is impossible to predict the number of cases
which would exceed the cap each year, therefore, they have based their
calculations for this proposal on FY 1996 figures. The figures for general
damages would be adjusted in subsequent years to reflect the price index
provision in Section 537.610.5. Additionally, based on the fact that the
claimants could expect larger jury verdicts, MoDOT assumes this proposal
would likely result in an increase in the number of cases filed against
MoDOT. Overall, MoDOT assumes the fiscal impact resulting from this proposal
would exceed $1,837,788 annually.
Officials from the Office of Administration - Division of Risk Management
(COA) assume the proposal would likely cause at least one judgment annually
against the state to exceed $100,000 and has estimated the additional cost to
be at least $200,000 annually.
Officials from the Office of the Attorney General (AGO) assume the proposal
could have a significant fiscal impact on their agency, as it could result in
more lawsuits being filed due to the increased liability limits. AGO has
stated that the amount of the costs are unknown, as they will be dependent on
the amount of increased litigation resulting from this proposal.
Officials from the Department of Natural Resources (DNR) assume the proposal
could result in significant unknown costs to the State Parks Fund and other
DNR Dedicated Funds, as well as Federal Funds allocated to DNR. DNR assumes
that the Office of Administration, Division of Risk Management, has
calculated and reported the risks for these types of cases. In addition, DNR
assumes that the Attorney General's Office would continue to litigate these
cases for DNR.
Officials from the Department of Elementary and Secondary Education (DES)
assume the proposal could have an unknown fiscal impact on their agency. DES
officials further assume the Office of Administration, Division of Risk
Management, has calculated and reported the risks associated with this
proposal. Additionally, DES assumes there could be a fiscal impact on school
districts, as this proposal would cause an increase in insurance costs by
raising the liability limits for state agencies and political subdivisions.
Officials from the Office of the Secretary of State (SOS) assume the proposal
would require the SOS to publish the current value of the limitation on
awards for non- economic damages once per year in the Missouri Register. SOS
stated that the publication of this information would only require one page
of space in the Missouri Register. SOS based their assumption on the fact
that their office currently publishes the limitation on non-economic damages
in tort actions based on improper health care. SOS assumes their agency
could absorb the cost for publication of one additional page in the Missouri
Register.
Officials from the Missouri Department of Insurance (MDI) assume the proposal
would result in an increase in expenditures which would be paid from the
Insurance Dedicated Fund. This fund is financed by license fees established
by statute. The fees are not indexed for inflation, therefore, an increase
in expenditures would reduce the fund balance. However, MDI assumes that any
reduction in the fund balance would be minimal and most likely would not have
a significant fiscal impact on their agency.
Officials from the Department of Mental Health and the Missouri Department of
Conservation assume the proposal could have an unknown fiscal impact on their
agencies.
In response to a similar proposal, officials from the University of
Missouri-Columbia (UMC) assumed there would be a fiscal impact on their
budget, as the amount that could be recovered in suits against UMC would be
increased from $100,000 to $300,000. UMC further assumed the fiscal impact
would be difficult to estimate but could exceed $100,000 annually.
In response to a similar proposal, officials from the City of Kansas City
assumed there would be a significant fiscal impact on their budget. Kansas
City is self-insured; therefore, all judgments obtained against the city
(including claims and lawsuits) are paid entirely by the city out of its
General Revenue Fund. Kansas City averages two to three new wrongful death
lawsuits per year and approximately ten new tort lawsuits not involving a
death, but involving damages which may reach the liability cap limitations.
Projecting increased liability under the proposal based on current lawsuits,
officials from Kansas City estimated an increase in liability for Kansas City
in the approximate amount of $2,700,000 annually.
Officials from the City of St. Louis - Budget Division assume there would be
an increase in the liability limits of judgments rendered against their city
in some instances. The City of St. Louis is self-insured and therefore
assumes this proposal would result in increased costs in excess of $1,000,000
annually. The City of St. Louis currently settles approximately four or five
cases annually for $100,000 each. This proposal would increase the liability
limit to $300,000 each plus unlimited medical expenses, thereby possibly
increasing each settlement by $200,000 or more. Additionally, the City of
St. Louis assumes the increase of liability limits in accordance with the
Implicit Price Deflator for Personal Consumption Expenditures could increase
liability limits significantly. For example, the reported figures for
medical malpractice cases were increased by 43% in nine years.
Oversight assumes the proposal would have a significant fiscal impact on many
political subdivisions, as it would increase the limits of liability for
activities which are afforded protection based on sovereign immunity. Many
political subdivisions which currently participate in insurance pools would
likely experience rate increases as a result of this proposal. It is
apparent that self-insured political subdivisions would be significantly
impacted. Overall, Oversight assumes that the fiscal impact on local
governmental funds would likely exceed $1,000,000 annually.
Officials from the Department of Public Safety, the Department of Health, the
Department of Revenue, the Department of Corrections, the Department of Labor
and Industrial Relations, the Coordinating Board for Higher Education, the
Department of Social Services, the Department of Economic Development, the
Missouri Veterans Commission, the State Tax Commission, the Department of
Agriculture, the Office of the State Auditor, the Office of the State Public
Defender, the Office of Prosecution Services, the Office of State Courts
Administrator, the Office of the Governor, the Office of the Lieutenant
Governor, the Missouri Gaming Commission, the Missouri Senate, the Missouri
House of Representatives, Missouri Western State College, Central Missouri
State College, Harris-Stowe State College, and Truman State University assume
the proposal would have no direct fiscal impact on their agencies.
Officials from Lincoln University, Missouri Southern State College, Northwest
Missouri State University, Southeast Missouri State University, and Southwest
Missouri State University did not respond to our fiscal note request.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE FUND
Costs - Office of Attorney General (AGO)
Total fiscal impact is unknown.
Costs - Department of Natural Resources (DNR)
Total fiscal impact is unknown.
Costs - Office of Administration (COA)
Total fiscal impact is unknown, but costs are expected to be at least
$200,000 annually.
STATE ROAD FUND
Costs - Department of Transportation (MoDOT)
Total fiscal impact is unknown, but costs would exceed $1,837,788
annually.
DNR DEDICATED FUNDS
Costs - Department of Natural Resources (DNR)
Total fiscal impact on the State Parks Fund and other DNR Dedicated
Funds would be unknown.
FISCAL IMPACT - Federal Government FY 1998 FY 1999 FY 2000
(10 Mo.)
FEDERAL FUNDS
Costs - DNR Federal Fund
Total fiscal impact is unknown, but costs could exceed $100,000
annually.
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
LOCAL GOVERNMENTAL ENTITIES
Total fiscal impact is expected to exceed $1,000,000 annually. This
would be entirely dependent on the number of claims filed, the total medical
expenses incurred by the litigants, and the resulting judgments.
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of
this proposal.
DESCRIPTION
The proposal would increase the maximum liability for state agencies and
political subdivisions from $100,000 to $300,000 plus reasonable and
necessary medical expenses for a single tort claimant. There would be no
limit on the amount of the medical expenses. Additionally, it would increase
the total maximum liability for a single occurrence from $1,000,000 to
$2,000,000. The proposal would also establish that limitations on awards for
non- economic damages would be determined annually and would be based on
increases or decreases in accordance with certain federal government
indicators.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Missouri Department of Transportation
Office of Administration - Division of Risk Management
Office of the Attorney General
Department of Natural Resources
Department of Elementary and Secondary Education
Office of the Secretary of State
Missouri Department of Insurance
Department of Mental Health
Missouri Department of Conservation
University of Missouri-Columbia
Department of Public Safety
Department of Health
Department of Revenue
Department of Corrections
Department of Labor and Industrial Relations
Coordinating Board for Higher Education
Department of Social Services
Department of Economic Development
Missouri Veterans Commission
State Tax Commission
Department of Agriculture
Office of the State Auditor
Office of the State Public Defender
Office of Prosecution Services
Office of State Courts Administrator
Office of the Governor
Office of the Lieutenant Governor
Missouri Gaming Commission
Missouri Senate
Missouri House of Representatives
Missouri Western State College
Central Missouri State College
Harris-Stowe State College
Truman State University
City of St. Louis
NOT RESPONDING: City of Kansas City, Lincoln University, Missouri Southern
State College, Northwest Missouri State University, Southeast Missouri State
University, and Southwest Missouri State University.
This Fiscal Note is not an official copy and should not be quoted or cited.