News Releases
Office of Governor Gary Locke
FOR IMMEDIATE RELEASE - June 30, 2004
Contact:  Governor's Communications Office, 360-902-4136
Alt Contact:  Fred Olson, Attorney General’s Office, 360-664-9081; Hal Spencer, Office of Financial Management, 360-902-0525

Gov. Gary Locke, Attorney General Gregoire Highlight State’s Success in Managing Lawsuit Risk

Gov. Gary Locke and Attorney General Christine Gregoire today announced that the three-year drive to reduce Washington State government’s exposure to lawsuits is showing positive results.

Joining Locke and Gregoire at a news conference highlighting the state’s success was Sue Donaldson, a senior lecturer at the Evans School at the University of Washington and former Seattle City Council president. Gregoire and Donaldson co-chaired the state’s Risk Management Task Force.

Locke said steps recommended in 2001 by the Risk Management Task Force have led to a growing trend of measurable improvements in the way state government manages liability risk.

“We’re turning the tide of rising liability costs,” Locke said. “We are making great progress despite being one of only a handful of states without immunity from damage suits. And we are successfully dealing with the impacts of decisions by courts in our state that have greatly expanded state liability.”

Gregoire said, “The bottom line is that risks inherent in the operation of state government are down, citizens are better protected and we are saving tax dollars as a result.”

Donaldson said, “The progress so far is encouraging. We created a solid framework to get the kind of results we're seeing today.”

Results so far include:
· Increasing confidence from the insurance industry that Washington is reducing exposure to tort liability. The state’s insurance deductible – the amount the state pays before excess liability coverage kicks in – will drop significantly on July 1 without an increase in the $3.7 million insurance premium. The deductible for the departments of Social and Health Services and Corrections will decrease by 20 percent to $20 million. The deductible for other agencies will go down 16.7 percent to $12.5 million, and the deductible for auto coverage at DSHS and DOC will be cut in half to $12.5 million.
· Greater success in defending against tort lawsuits by the Office of the Attorney General. The state won 15 of the 19 liability lawsuits that went to trial last year and resolved in the state’s favor 33 of 36 appeals. In addition, 54 percent of tort lawsuits – those that went to trial and those that did not – were resolved with no claims payout. Meanwhile, tort payouts for fiscal year 2003-2004 are estimated to be $26 million below last year’s estimate.
· Improving independent forecasts of current and future liability claim costs. Independent consultant Pricewaterhouse Coopers informed the state Tuesday that its actuarial estimate of current and future liability claims as of today is down by $24 million from a year ago, and will fall by more than $55 million by 2007.

Locke, Gregoire and Donaldson also highlighted three important risk-management improvements, which they credit with providing the structure to reduce exposure to liability claims.

“These improvements are embedded into state government operations, and because of them, we will continue to make progress in reducing liability risk,” Gregoire said.

They include:
· Elevating risk management to the highest policy levels of state government. Locke issued an Executive Order in 2001 mandating that state agencies prioritize loss prevention and adopt practices designed to reduce losses and significant claims. In 2002, the Division of Risk Management was placed under the direct control of the Office of Financial Management (OFM). “Risk management is now highly visible and is always on the table along with other policy issues,” OFM Director Marty Brown said.
· Learning from and fixing past mistakes. When an agency experiences a serious incident, a “post-incident review team” from outside the agency is formed. The team examines the incident, the circumstances around it, policies and procedures, and any other factor that may have contributed to the incident. The team recommends improvements. OFM works with the agency to ensure that the recommendations are put in place. Among agencies where review teams have been formed or are at work include the departments of Social and Health Services, Corrections, Natural Resources and Parks and Recreation, as well as the Division of Juvenile Rehabilitation.
· Making risk management a visible part of priority based budgeting. Beginning at the agency level, budgets written since 2003 must show risk management and risk financing as distinct line items to improve oversight of loss trends and provide a basis to reduce future losses. In addition, agencies with a history of liability issues are required to prepare and carry out strategies for reducing liability.



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