GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

H	1 

HOUSE BILL 186*

Short Title:  Duty to Defend State Employees.	(Public)

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Sponsors: Representatives Culpepper, Culp and Nye (Co-Sponsors); Ives.

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Referred to:  Judiciary I.

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February 15, 1995

A BILL TO BE ENTITLED
AN ACT TO AMEND THE LAWS PROVIDING FOR THE DEFENSE OF STATE EMPLOYEES FROM TORT CLAIMS ARISING IN THE SCOPE OR COURSE OF THEIR EMPLOYMENT.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 143-300.3 reads as rewritten:
"§ 143-300.3.  Defense of State employees.
Except as otherwise provided in G.S. 143-300.4, upon request of an employee or former employee, the State shall provide for the defense of any civil action or proceeding, and may provide for the defense of any criminal action or proceeding, brought against the employee in the employee's official or individual capacity, or both, on account of an act done or omission made in the scope and course of the employee's employment as a State employee."
Sec. 2.  G.S. 143-300.4 reads as rewritten:
"§ 143-300.4.  Grounds for refusal of defense.
(a)	The State shall refuse to provide for the defense of a civil or criminal action or proceeding brought against an employee or former employee if the State determines that:
(1)	The act or omission was not within the scope and course of the employee's employment as a State employee; or 
(2)	The employee or former employee acted or failed to act because of gross negligence, wanton conduct, or intentional wrongdoing on the employee's part.
		(b)	The determinations required by subsection (a) of this section shall be made by the Attorney General. Approval of the request by an employee or former employee for provision of defense shall raise a  presumption that the determination required by this section had been made and that no grounds for refusal to defend were discovered."
Sec. 3. Article 31A of Chapter 143 is amended by adding a new section to read:
"§ 143-300.4A.  Conflict of interest.
Whenever the Attorney General determines that the defense of an action or a proceeding by the State would create a conflict of interest between the State and the employee or former employee, and that a defense is otherwise required under G.S. 143-300.3 and G.S. 143-300.4, the Attorney General shall request the Governor to authorize employment of other counsel as set forth in G.S. 143-300.5.  In that event, the Governor shall appoint other counsel."
Sec. 4. G.S. 143-300.6 reads as rewritten:
"§ 143-300.6.  Payments of judgments; compromise and settlement of claims.
(a)	Payment of Judgments and Settlements.  In an action to which this Article applies, including an action in which the State provides the defense of the employee, or former employee, by employing other counsel pursuant to G.S. 143-300.4A, the State shall pay (i) a final judgment awarded in a court of competent jurisdiction against a State employee or (ii) the amount due under a settlement of the action under this section.  The unit of State government by which the employee was employed shall make the payment up to the amount payable under the Tort Claims Act, and any additional payment due shall be paid from the coverage provided under G.S. 58-32-15.  The amount due under a settlement of an action under this section in which the State employee is defended by counsel other than the Attorney General must be reviewed and approved by the Commissioner of Insurance before the settlement becomes binding on the State.  This section does not waive the sovereign immunity of the State with respect to any claim.  Except as otherwise limited, a payment of a judgment or settlement of a claim against a State employee or several State employees as joint tort-feasors may not exceed the amount of one million dollars ($1,000,000) cumulatively to all claimants on account of injury and damages to any one person, including any amount paid under the Tort Claims Act.  Payment of a judgment or settlement of a claim against a State employee or several State employees as joint tort-feasors shall be limited for recovery under this Article to the amount payable for one claim under the Tort Claims Act for claims arising out of the following incidences:
(1)	Operation of a motor vehicle, watercraft, or aircraft.
(2)	Medical malpractice by a physician, surgeon, dentist, or X-ray technician, or by medical personnel or nonmedical personnel when services or treatment is rendered at a hospital.
(3)	Nuclear liability.
(4)	Circumstances for which the State would be liable for workers' compensation, unemployment compensation, or disability compensation.
(5)	Any governmental direction or request to test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize pollutants.
(6)	Exposure to asbestos.
(7)	Sexual harassment.
(8)	Operations conducted by University of North Carolina Hospitals at Chapel Hill.
(9)	An action by one State employee against another State employee except for claims arising out of employment-related activities, discriminatory practices, or equal protection claims.
(10)	Losses arising out of operations conducted by any department, board, college, university, or other agency of the State for which other liability protection coverage applies.
This provision does not otherwise limit the rights of recovery under any other provision of law.
(b)	Settlement of Claims.  The Attorney General may compromise and settle any claim covered by this section to the extent he finds the claim valid.  A settlement in excess of the limit provided in subsection (a) must be approved by the employee.  In an action in which the Attorney General has stated in writing that private counsel should be provided the employee because of a conflict of interest between the employee and the State, a settlement in excess of the limit provided in subsection (a) must be approved by the private counsel.
(c)	Other Insurance.  The coverage afforded employees and former employees under this Article shall be excess coverage over any commercial liability insurance, other than insurance written under G.S. 58-32-15, up to the limit provided in subsection (a)."
Sec. 5.  This act becomes effective October 1, 1995, and applies to actions arising on or after that date.