The New Attack on Law Enforcement — Personal Liability Insurance

By David E. Mastagni and Josh Olander
Mastagni Holstedt, APC

On December 18, David E. Mastagni testified before the California Assembly Select Committee on Police Reform to advocate for sensible reform and to oppose the ill-informed proposals to require law enforcement officers to purchase individual professional liability insurance. These proposals are no more than an end-around attack in support of the “defund the police” movement.

During the hearing, Deborah Ramirez, a professor at the Northeastern University School of Law, advocated for severely limiting collective bargaining rights and civil service protections for peace officers to eliminate merit-based hiring, promotion and due process protections, which have historically prevented discriminatory or politically motivated employment practices. Saving the most ill-advised for last, she also advocated for mandating professional liability insurance for peace officers and prohibiting local governments from reimbursing the cost in order to price peace officers out of the profession based on insurance costs.

Mandating professional liability insurance for peace officers and prohibiting local governments from reimbursing the cost is an unconstitutional interference with municipal affairs and violates the Home Rule of the California Constitution. California has deeply rooted public policies mandating employers indemnify both private- and public-sector employees for liability incurred in the performance of their duties so long as they are within the course and scope of employment. Insurance rating is inherently discriminatory and based upon statistical predictions that fail to take into account the appropriateness of an officer’s actions, but rather consider only factors that increase the likelihood of a lawsuit. The rating system is predicated on algorithms that have historically been exploited as a justification for discriminatory practices in lending, housing and employment. Personal liability is incompatible with the unique functions associated with the law enforcement profession and will inherently price men and women out of the profession who accept assignments likely to result in increased complaints, critical incidents or lawsuits, regardless of the merits.

Denying indemnification rights to officers would constitute discrimination against officers by denying them of a right afforded to every other public- and private-sector employee in California. Unlike some other states, protection of workers and unions is a deeply rooted California value. As our Supreme Court noted, “California has a strong public policy that favors the indemnification (and defense) of employees by their employers for claims and liabilities resulting from the employees’ acts within the course and scope of their employment” (Edwards v. Arthur Anderson, LLP [2008] 44 Cal.4th 937, 952). Singling out the men and women we ask to place themselves in harm’s way to protect us by denying them indemnification is not a California value and runs afoul of this public policy.

The Legislature has already enacted a statewide requirement that all “employer(s) shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties” (Labor Code § 2802). This statute requires an employer to indemnify an employee who is sued by third persons for conduct in the course and scope of their employment, including paying any judgment, attorney fees and costs incurred in defending the action (Cassady v. Morgan, Lewis & Bockius LLP [2006] 145 Cal.App.4th 220). Moreover, if the employee is acting within the course and scope of their employment, the right to indemnity is not dependent upon a finding that the underlying action was unfounded (Id.).

Although the indemnification requirements of Labor Code Section 2802 are applicable to all California employees, including public-sector employees, the Government Code has additional requirements for the defense and indemnification of public employees.  The statutes are rooted in strong public policy protecting the tax payers, because a requirement to the contrary would create conflicts between employees and their employers with respect to litigation decisions. Because an employer is jointly and severely liable for the course and scope liability of their employees, the defense and ultimate resolution of civil litigation is inherently intertwined. 

Government Code Section 995 provides that a public entity shall provide for the defense of any civil action or proceeding brought against a public employee, in his or her official or individual capacity or both, on account of an act or omission in the scope of his or her employment as an employee of the public entity. Government Code Section 825 provides that where any claim or action against an employee arises out of an act or omission occurring within the scope of their employment, the public entity shall pay any judgment based thereon or any compromise or settlement of the claim or action.

One of the key flaws in mandating personal liability insurance is that liability algorithms and actuarial assumptions are not based on an objective analysis of an officer’s conduct, but rather predicted assumptions of potential future liability. The objective factors that insurance companies use are not well suited for a core government function like public safety because the risk factors will be primarily based on circumstances beyond an officer’s control.

According to professor Ramirez’s public comments and published papers, the insurance premiums would be based on the occurrence of incidents associated with increased liability risks, without regard to subjective determinations as to whether or not the officer’s conduct was appropriate. The proposed policy would price individual insurance premiums upon the number of complaints made against the officer, the number of force incidents involving the officer, the number of critical incidents where the officer was present (even if the officer did not use force themselves), the number of times the officer is named in a lawsuit, the number of lawsuits settled and the existence of any criminal convictions or restraining orders. This insurance model does not — because it would be impossible — consider the merits of the accusations against the officer or the nuances of the individual circumstances triggering an increased liability risk factor. 

These factors are a better predictor of active officers who work dangerous jurisdictions, beats or assignments, as opposed to a reliable means of identifying bad officers.  However, applying these factors is against public policy because the officers likely to register as “high risk” are often those involved in the most vital and dangerous calls where a member of the public’s life is on the line and the officer must use force. Even a completely justified use of force will increase their liability risk because in California the use of force or deadly force will almost certainly lead to litigation, regardless of the merits. The subsequent lawsuit will only further exacerbate the liability rating and cost imposed on the officer. These insurance algorithms are fundamentally flawed because they do not account for individual circumstances, nuances of the situations or the ultimate merit-based outcome. 

In fact, the assignment of the officer will likely be the largest driver of the liability rating, rather than the performance of their duties. Consider, for example, an officer assigned to a SWAT team. By nature of their assignment, the officer is going to be sent repeatedly to calls involving the threat of deadly force against a member of the public, wherein that officer may be called upon to use deadly force to stop that threat. Even if that officer performs flawlessly, he or she will be uninsurable because the nature of that assignment will subject the officer to a disproportionate number of lawsuits. The same is true for an officer assigned to a warrant unit, who will be executing search warrants and arresting violent felons. That officer is much more likely to have to use force to defend him or herself and to receive internal affairs complaints. There is a reason most automobile insurance policies exclude on-duty driving of peace officers — the inherent risk of responding to unpredictable calls or situations renders the profession essentially uninsurable.

The real cost of an insurance mandate would be the deterrence effect on law enforcement. If faced with the potential of being priced out of their chosen profession for simply doing their job, officers will likely be deterred from rushing to the sound of a gun.  Law enforcement employment is unlike other professions because the public interest often mandates that officers place themselves in situations where liability risk will be heightened, and they do not have the luxury of choosing their clients or refusing to take action when lives are on the line. The Mastagni Law Firm will continue to fight against these unconstitutional and discriminatory attacks on law enforcement.

David E. Mastagni’s testimony may be viewed on the Mastagni Law Firm Public Safety Blog or on YouTube.

David E. Mastagni is a partner at Mastagni Holstedt, APC and can often be found at the Capitol advocating on behalf of law enforcement officers.

Josh Olander manages the criminal defense practice group at Mastagni Holstedt, APC and is committed to the vigorous defense of peace officers in criminal and administrative forums.

Mastagni Holstedt, APC is the general counsel for LAAPOA. The firm provides legal services in the following areas for our members: workers’ compensation, personal injury, criminal defense, civil litigation defense and retirement law.