Bill Text: SC H4048 | 2021-2022 | 124th General Assembly | Amended
Bill Title: Duty to defend and indemnify
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2022-05-31 - Act No. 161 [H4048 Detail]
Download: South_Carolina-2021-H4048-Amended.html
AMENDED
April 6, 2022
H. 4048
S. Printed 4/6/22--H.
Read the first time March 9, 2021.
Explanation of Fiscal Impact
Amended by House Ways and Means on March 31, 2022
State Expenditure
This bill establishes the State's duty, by and through the IRF, within SFAA, to defend and indemnify all state agencies, departments, and other such entities and employees. This bill also repeals the separate indemnity clauses for DOR and SFAA. This repeal eliminates the redundancy of coverage as both agencies will be granted defense and indemnity as state agencies under this bill.
Currently, the IRF operates as a governmental insurance operation with the mission to provide insurance specifically designed to meet the needs of governmental entities. The IRF is authorized by statute to provide tort liability insurance, automobile liability insurance, and insure public buildings and content, among other insurance coverage.
SFAA indicates this bill will increase the scope of responsibility for the IRF beyond the current scope of insurance coverage to include the duty to defend and indemnify a state agency even if the claim arises under a cause of action that is not covered within the IRF's current insurance coverage. SFAA is unable to estimate the number or size of claims and lawsuits that will become the IRF's responsibility to defend and indemnify due to this bill. Therefore, this bill may have an undetermined expenditure impact for SFAA, depending upon the number and size of claims and lawsuits that fall outside of the scope of current insurance coverage. Additionally, RFA anticipates this may result in an increase in premiums for state agencies to cover the cost of these responsibilities.
Frank A. Rainwater, Executive Director
Revenue and Fiscal Affairs Office
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 1-11-445 SO AS PROVIDE THAT THE STATE OF SOUTH CAROLINA MUST PROVIDE A LEGAL DEFENSE FOR AND INDEMNIFICATION TO A STATE AGENCY, DEPARTMENT, OR INSTRUMENTALITY AGAINST A CLAIM OR SUIT THAT ARISES OUT OF OR BY VIRTUE OF THE PERFORMANCE OF OFFICIAL DUTIES ON BEHALF OF A STATE AGENCY, DEPARTMENT, OR INSTRUMENTALITY, AND TO PROVIDE A SIMILAR DEFENSE AND INDEMNIFICATION TO BOARD MEMBERS AND EMPLOYEES, AND OFFICERS OF THE ENTITY; TO REPEAL SECTION 1-11-440 RELATING TO LEGAL DEFENSES AND INDEMNIFICATIONS PROVIDED TO MEMBERS OF THE FISCAL ACCOUNTABILITY AUTHORITY AND ITS DIRECTOR; AND TO REPEAL SECTION 12-4-325 RELATING TO LEGAL DEFENSES AND INDEMNIFICATION PROVIDED TO OFFICERS AND EMPLOYEES OF THE DEPARTMENT OF REVENUE.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 11, Title 1 of the 1976 Code is amended by adding:
"Section 1-11-445 (A) The State of South Carolina, by and through its agencies, departments, and instrumentalities, must defend the state agency, department, or instrumentality, and the members of a governing board of the state agency, department, or instrumentality, as applicable, against an uninsured claim or suit that arises out of or by virtue of the performance of official duties on behalf of the state agency, department, or instrumentality and must indemnify them for an uninsured loss or judgment incurred by them as a result of the claim or suit, without regard to whether the claim or suit is brought against them in their individual or official capacities, or both. The State also must defend officers and management employees of the entity, and legislative employees performing duties for the entity, against an uninsured claim or suit that arises out of or by virtue of the performance of official duties unless the officer, management employee, or legislative employee was acting in bad faith including, but not limited to, acting outside the scope of their official duties or that the actions constituted actual fraud, actual malice, intent to harm, or a crime involving moral turpitude. The State shall indemnify these officers, management employees, and legislative employees for a loss or judgment incurred by them as a result of such uninsured claim or suit, without regard to whether the claim or suit is brought against them in their individual or official capacities, or both. This commitment to defend and indemnify extends to members of the entity, the entity's officers and management employees, the entity's director and officers and management employees, and legislative employees after they have left their employment with the entity, the General Assembly, or the entity, as applicable, if the uninsured claim or suit arises out of or by virtue of their performance of official duties on behalf of their employer.
(B) The term 'instrumentality' as used in this section includes an entity where a specific duty or function is imposed on the entity by law and includes any function where the entity must exercise a portion of the state's sovereignty. Entities to which this provision applies includes, but is not limited to, the State Fiscal Accountability Authority, the Joint Legislative Merit Selection Commission, the Public Utilities Review Commission, the Retirement Systems Investment Panel, and all joint special legislative committees.
(C) The provisions of subsection (A) also apply to employees and officers while acting within the scope of their employment when administering any South Carolina statute which has not been held to be unconstitutional or unlawful by a final decision of a court of competent jurisdiction. For purposes of this section, a final decision is the decision of a court declaring the South Carolina statute unconstitutional or otherwise unlawful and from which the appropriate officials of this State may not or do not take an appeal or request a rehearing."
SECTION 2. Sections 1-11-440 and 12-4-325 are repealed on the effective date of this act.
SECTION 3. This act takes effect upon approval by the Governor.
