RESPONSIBLE AGENCY: City Attorney’s Office, Risk Management
KEYWORDS: settlement, claim, funding, legal advice, defendant, representation, indemnification
1. General
1.1 Salt Lake City receives hundreds of claims every year for monetary and non-monetary damages arising from a wide variety of City operations. Generally, the City “self-insures” against the financial losses resulting from such claims. Most of those claims are successfully resolved without litigation, while others do go to litigation. The purpose of this policy is to set forth procedures for the efficient resolution of those claims with review at the appropriate level of executive responsibility. This Policy does not apply to claims covered by an insurance policy held by the City because the insurance carrier will assume the defense of the claim and any resulting financial liability. This Policy also does not apply to employee and dependent or designee health insurance claims handled by the City’s third party administrator. This policy does apply to Worker’s Compensation Claims as discussed in paragraph 2.4 below.
2. Settlement Authority
2.0 Availability of Budgeted Funds
2.0.1 No settlement offer capable of acceptance shall be made and no settlement agreement shall be entered into unless funds are available under a city budget. See Salt Lake City Code Section 3.25.010B(3).
2.0.2 For settlements that would be paid from the City’s Government Immunity Fund, the Risk Manager or the Risk Manager’s designee shall confirm that budgeted funds are available in the Government Immunity fund. For settlements that would be paid from any other City budget, the Head of the City Department concerned (or the designee of the Head of the City Department concerned) shall confirm that budgeted funds are available and shall specify the particular budget.
2.0.3 In certain circumstances, it may be beneficial for the City to pursue settlement even though budgeted funds are not available. In such instances, it must be made clear to the offeree that the offer is contingent on funds becoming available. Such a contingent offer must be approved in accordance with paragraphs 2.1.1 through 2.1.4 and shall not be made unless there is a good faith belief that funding will in fact be approved.
2.1 Authority to settle monetary claims against the City.
2.1.1 Most monetary claims against the City are initiated by filing a “Notice of Claim” and can be effectively resolved by Risk Management without litigation. The following procedures are intended to achieve that benefit.
Authority for Risk Management to settle monetary claims against the City for which a notice of claim has been filed, but a lawsuit has not yet been filed, shall be as follows (subject to availability of funds under paragraph 2.0):
A. Settlement of all monetary claims involving civil rights, must be approved by a litigation Senior Attorney (or the City Attorney or Deputy City Attorney).
B. Settlement of no-fault claims within the amount specified by City ordinance need not be approved by an attorney unless (1) there are multiple claims arising from the same event, or (2) the Risk Manager believes the settlement has implications for the City beyond the claims.
C. Settlement of all monetary claims where the claimant is represented by an attorney shall be approved by a litigation Senior Attorney (or the City Attorney or Deputy City Attorney).
D. Subject to the foregoing, settlements of $5,000 or less need not be approved by an attorney, and may be approved by the Risk Manager with the approval of the City Department concerned.
2.1.2 Authority for the Attorneys to Settle Monetary Claims Against the City shall be as follows (subject to availability of funds under paragraph 2.0):
A. For amounts of $50,000 or less, including bodily injury or civil rights claims, settlements of claims may be approved by the Chief Counsel for the Department involved, or if in litigation by the attorney primarily responsible for the matter. In either case, the agreement of the Head of the Department involved (or the designee of the Department Head) is required.
B. For all personnel-related matters (other than worker’s compensation), the head of the Human Resources Division shall be consulted as well as the Department Head
2.1.3 For amounts in excess of $50,000, but not more than $100,000, the Head of the Department involved and the City Attorney may approve the settlement (subject to availability of funds under paragraph 2.0).
2.1.4 For amounts above $100,000, approval of the Mayor is required (subject to availability of funds under paragraph 2.0).
2.2 Authority to Settle Non-Monetary Claims Against the City (other than employment related claims)
2.2.1 Any agreement by the City to equitable or other non-monetary relief requires the approval of the Head(s) of the Department(s) involved and the Chief Counsel(s) for the department(s). Settlement of a class action for which a class has been certified requires the approval of the Mayor.
2.3 Authority to Settle Employment – Related Non-Monetary Claims Against the City
2.3.1 Prior to filing of a lawsuit in federal or state court, employment-related non-monetary claims may be settled by the City Attorney’s Office and the appropriate level supervisor in the Department concerned. After a lawsuit has been filed, the claim may be settled on the recommendation of the City Attorney’s Office and the Head of the Department concerned. Settlement of a class action for which a class has been certified requires the approval of the Mayor.
2.4 Authority to Settle Worker’s Compensation Claims Against the City
2.4.1 The foregoing provisions of paragraphs 2.0 through 2.3 apply to Worker’s Compensation claims subject to the additional provisions provided in this paragraph 2.4.
Worker’s Compensation claims against the City initially involve a determination of compensability under the Worker’s Compensation statute i.e. that the injury occurred in the course and scope of employment.
Determinations of Compensability are made by the City’s Third Party Administrator. For any claim for which the Third Party Administrator would establish a reserve in excess of $10,000, the Third Party Administrator shall notify the City’s Risk Manager before making a determination of compensability.
The city shall not approve or agree to a determination of compensability without complying with the requirements of paragraphs 2.0 through 2.3.
Once a determination that an injury is compensable has been made, the City’s Third Party Administrator shall pay indemnity (primarily lost wages) and medical expenses pursuant to the Worker’s Compensation statute. The Third Party Administrator shall consult with the City’s risk Manager with respect to appropriate service providers to the extent permitted by law.
For purposes of determining the amount involved, the City’s Third Party Administrator shall make a good faith estimate in writing of the upper bound of the City’s total exposure over time and shall state that in writing if in excess of $10,000.
3. Alternate Dispute Resolution
3.1 An increasing variety of alternate dispute resolution techniques is becoming available, in both the traditional “mediation” and “arbitration” contexts. The City will pursue appropriate alternate dispute resolution mechanisms when they are likely to lead to effective resolution of claims against the City, subject to other applicable City policies and agreements such as the memoranda of understanding between the City and the associations representing City employees.
4. Funding Source
4.1 Enterprise Funds. All monetary settlements of potential liability against an "enterprise fund" operation will be charged 100% to the enterprise fund, unless otherwise decided by the Mayor consistent with applicable law. This is to prevent subsidization of the enterprise fund by the general fund. If a claim is asserted against both an enterprise fund operation and a general fund operation, the cost of settlement shall be apportioned on the basis of relative causation of the injury.
4.2 Government Immunity Fund. Except with respect to claims against enterprise fund operations as discussed in 4.1 above and with respect to contract claims discussed in 4.3 below, all settlements of claims against the City (and/or its employees pursuant to indemnification requests) shall be charged against the government immunity fund, unless decided otherwise by the Mayor consistent with applicable law. This includes federal civil rights claims or other claims that may not be subject to the government immunity provisions of the Utah Code.
4.3 Contract Claims. The funding source for settlement of contract claims will be decided on an individual case basis. This is because existing funding for the performance of the contract may be sufficient to cover the contract liability involved.
5. Legal Advice on Settling Claims in Litigation
5.1 In presenting a settlement offer for internal consideration, the City Attorney's Office may provide the following and shall provide the following in writing if requested by the Mayor, the City Council, or the Head of the Department involved:
A. the likelihood that the City will prevail on the claim and an explanation why;
B. a quantification of the monetary and/or non-monetary damages to which the City would be subject if it lost;
C. identification of other relevant considerations, such as the award of attorney's fees and costs to successful plaintiffs in civil rights cases; and
D. identification of possible alternative courses of action considering factors (1) through (3) as well.
5.2 Any such written assessments shall bear the caption “Privileged & Confidential – Legal Advice of Counsel/Attorney Work Product.”
5.3 Assessment of the likelihood of success and potential damages can be extremely difficult and precise quantification is usually not possible, particularly on likelihood of success. Nonetheless, the City is entitled to the lawyer's best judgment on both points expressed in a range that is professionally responsible.
5.4 Because of the uncertainties inherent in litigation, it should be expected that a high probability of success will be rare in controversial matters. Similarly, when significant financial exposure is identified, and the appropriate city officials decide not to settle, lawyers should not be viewed as guarantors that that risk will not in fact be incurred.
6. Representing City Employees and Officials
6.1 City employees or officials are frequently named as individual defendants in addition to the City (or as sole defendants). They may be named in their “official” capacity and/or their “individual” or “personal” capacity.
6.2 Prior to the time for defendants to answer, move or otherwise respond to the Complaint, the attorney assigned to the case shall advise any present or past City employees or officials named as defendants of the pendency of the action and shall review with such individual(s) the City’s Representation Agreement and Request for Indemnification letter.
CURRENT REFERENCES: None.
EFFECTIVE DATE: October 14, 2008
EFFECTIVE DATE of Previous Revision: December 1, 2008
EFFECTIVE DATE of Current Revision (Date signed by Mayor): November 9, 2012