BILL ANALYSIS
SB 1046
Page 1
Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 1046 (Cogdill) - As Amended: April 7, 2010
SENATE VOTE : 30-0
SUBJECT: Government Tort Claims: California State University
KEY ISSUE : Should the California State University system be
exempted FROM the Victim Compensation and Government Claims
Board, like the University of California, and allowed to
process its own claims pursuant to the Government Tort Claims
Act?
FISCAL EFFECT : As currently in print this bill is keyed
fiscal.
SYNOPSIS
This bill, sponsored by the California State University (CSU),
removes the CSU from the jurisdiction of the Victim Compensation
and Government Claims Board (VCGCB) and allows the CSU to
process its own claims pursuant to the Government Tort Claims
Act. The CSU asserts that this bill is necessary to avoid
delayed claims processing that has occurred with the additional
bureaucratic layer of the VCGCB, reduce costs (including the 15
percent surcharge assessed on claims by VCGCB), and align CSU
with the University of California and the community colleges
which are exempt from the VCGCB. The VCGCB opposes the bill,
arguing that it could erode its ability to fund its operations
and would deny claimants a neutral third-party to administer
their claims.
SUMMARY : Exempts CSU from the VCGCB and allows it to process
its own claims. Specifically, this bill :
1)Designates the California State University as a "public
entity" for the purposes of the Tort Claims Act.
2)Provides that all claims against the CSU for money or damages
based upon an express contract or for an injury for which CSU
is liable must be presented in accordance with the Tort Claims
Act.
SB 1046
Page 2
3)Requires the Trustees of the CSU to act on a claim against the
CSU in accordance with the procedure that the Trustees provide
by rule.
4)Provides that the CSU is not authorized to adopt any rule that
is inconsistent with the Government Tort Claims Act (TCA).
5)Provides that if a claim for money or damages against the CSU
is mistakenly presented to the VCGCB, the board shall
immediately notify the claimant of the error and shall include
information on proper filing of the claim.
6)Specifies that claims and actions shall be presented by
delivering or mailing the claim to, or serving the action on,
the Office of Risk Management at the Chancellor's Office of
the CSU.
EXISTING LAW :
1)Establishes, pursuant to the Donahoe Higher Education Act
(Act), the California State University System. The Act
authorizes the Board of Trustees to set policy and adopt its
own rules and procedures for the operation of that public
system. (Education Code Section 66000.)
2)Provides that CSU is not a state agency and is exempt from
such treatment, unless a statute explicitly provides that it
applies to the CSU. (Government Code Section 11000.)
3)Clarifies legislative intent that (a) before legislation may
be applied to CSU, the legislation should be compatible with
the mission and functions of CSU, and (b) CSU is not governed
by any statute enacted after January 1, 1997, that does not
amend the previously applicable act and that applies generally
to the state or state agencies, departments, or boards, unless
the statute expressly provides that the CSU is to be governed
by that statute. (Education Code Section 66606.2.)
4)Establishes, under the TCA, the procedures for filing a claim
against a state public agency. (Government Code Section 810
et seq.)
5)The TCA specifies that a claim against the state must be filed
with the VCGCB, unless the claim is against a judicial branch
SB 1046
Page 3
or a judge, in which case the claim is filed with the Judicial
Council. The VCGCB is authorized to charge a fee equal to 15
percent of the total for any claim it approves for settlement.
(Government Code Section 905.2 (f).) The University of
California is exempt from the TCA. (Gov. Code Sec. 905.6.)
COMMENTS : The CSU was enacted by the Donahoe Higher Education
Act, which authorized the Board of Trustees to set policy, and
adopt its own rules and procedures for the operation of the
public university system. The Act declares the Board of
Trustees to be an independent entity that, while bound to follow
all of the laws pertaining to its mandate to provide higher
education to Californians, may in all cases be exempt from being
treated like a state agency.
The Government Tort Claims Act specifies that a claim against
the state must be filed with the VCGCB, unless the claim is
against a judicial branch or a judge, in which case the claim is
filed with the Judicial Council. The University of California
is exempt from the Tort Claims Act. The primary functions of
the VCGCB include: (1) compensate victims of violent crime and
eligible family members for certain crime-related financial
losses; (2) consider and settle all civil claims against the
state; and (3) respond to bid protests against the state
alleging improper or unfair acts of agencies in the procurement
of supplies and equipment. In addition, the VCGCB is authorized
to charge a fee equal to 15 percent of the total for any claim
it approves for settlement.
This bill, sponsored by the CSU, removes the CSU from the
jurisdiction of the VCGCB and allows the CSU to process its own
claims pursuant to the Government Tort Claims Act.
This bill was approved by the Assembly Higher Education
Committee on June 22, 2010 by a vote of 9-0.
In support of the bill, the author states:
Under current law the VCGCB is the entity that
performs the administrative function of collecting
fees for tort claims filed against state agencies
including the CSU, but does not perform any
investigation, only the ministerial function of
assigning a claim number and referring the claim to
the CSU for resolution.
SB 1046
Page 4
Despite this minimal function, CSU must often wait
weeks to receive their claims. Frequently, the delay
with the VCGCB results in the expiration of the legal
20 day window in giving notice to the claimant of the
claim's "insufficiency" or lack of timeliness.
Failure to provide a notice of insufficiency or late
notice within 20 days of receipt of the insufficient
claim requires the claim to be "accepted". There is a
45 day window in which CSU must respond to a claimant.
In cases where the 45 days has been passed, by law,
the claim is deemed as having been rejected and the
claimant can proceed with litigation.
This Bill Authorizes the CSU to Process its Own Claims Pursuant
to the TCA, Thus Avoiding Possible Processing Delays and
Additional Costs : The Tort Claims Act provides for the filing
of claims against public entities for harm caused to any person,
and establishes liability and immunity of the public entity for
those acts. The timeline and procedures for presentation of the
claim and the public entity's action on that claim are specified
in the TCA. The purpose of the statutory requirements for
presenting claims is to give the entity notice and provide an
opportunity for investigating, and possibly settling the claim,
without need of costly litigation. If the entity decides not to
settle, or if the claimant is not satisfied with the settlement
offered, then the claimant may initiate a lawsuit to recover
damages.
Pursuant to the TCA, claims against local public entities are
filed with the entity's governing body, while claims against the
state are filed with the VCGCB. The VCGCB was created to take
over the functions of the former victims' compensation board.
SB 1102 (Committee on Budget and Fiscal Review), Chap. 227,
Stats. 2004, authorized the VCGCB to assess a charge of up to 15
percent of the total approved claim for handling a tort claim.
The CSU was captured in these provisions and thus considered a
"state agency" under the TCA. Accordingly, all claims against
the CSU must first formally be filed with the VCGCB. The CSU is
also subject to the 15 percent surcharge assessed by the VCGCB.
CSU has historically investigated and handled claims through its
own Risk Management Department. Although the claim must be
formally filed with the VCGCB, that board then transmits the
SB 1046
Page 5
claim to the CSU Risk Management Department for an investigation
and a determination on whether to settle the claim or face a
lawsuit. The VCGCB must ultimately approve CSU's recommended
determination. According to the CSU, the additional
administrative layer which results from being subject to the
VCGCB's jurisdiction has caused significant delays in the
resolution of claims. In a few instances, the claims were
reportedly not processed by the VCGCB to the CSU Claims
Administrator for over a year. These delays have been to the
detriment of both the claimants and the CSU - claimants are not
getting their claims resolved in a timely manner and the CSU
cannot always act within the prescribed statute of limitations.
The state's ongoing budget crisis has also led to reduction in
the VCGCB's staff, which has exacerbated the delays in
processing.
This bill removes the CSU from the jurisdiction of the VCGCB and
allows the CSU to process its own claims pursuant to the
Government Tort Claims Act. By allowing the CSU to process its
own claims, this bill should help ensure that the TCA has its
intended effect of facilitating the resolution of claims without
litigation. The CSU would still be bound by the parameters of
the TCA, but would be authorized to receive claims directly, and
thus resolve them more expeditiously. This bill also more
closely aligns the CSU with the University of California and
Community College Districts, who are exempt from the VCGCB
claims process.
Bill Ensures that Claims Process is Protective of Claimants : To
ensure that the CSU cannot adopt claims processing rules that
run afoul of, or are less protective of claimants than, the Tort
Claims Act, this bill specifically provides that the CSU may not
adopt a rule that is inconsistent with the TCA. Furthermore,
this bill provides that if a claim for money or damages against
the CSU is mistakenly provided to the VCGCB, the board shall
immediately notify the claimant of the error and provide the
claimant with information on proper filing of the claim. This
will ensure that claimants are informed of the proper procedure
for CSU claims so that they are not lost in error.
Prior Legislation : SB 1724 (Runner), Chap. 453, Stats. 2005,
originally included various changes requested by the CSU
including similar changes as provided in SB 1046. However,
prior to final passage of SB 1724, the provisions related to the
torts claims were amended out of the measure.
SB 1046
Page 6
AB 2321 (Hertzberg), Chap. 1007, Stats. 2002, provided that the
Judicial Council, rather than the VCGCB, would act on any claims
against the courts, judges, or agencies within the judicial
branch.
ARGUMENTS IN SUPPORT : In support of the bill, the CSU writes:
Over the past several years, CSU and its third-party
administrator, Alliant Insurance, have struggled with
the handling of claims against CSU. The additional
layer that is the result of being under VCGCB's
jurisdiction has created several issues including
failed transmission of claims in a timely manner.
These delays have sometimes resulted in CSU losing the
claim because the statute of limitations had expired
and therefore did not act within the deadlines
established by law. Another complicating factor is
that the Office of the Attorney General recently
decided to give legal opinions or recommendations on
late-claim applications because it cannot charge back
to the university for that work, and this task has now
fallen to the CSU's internal General Counsel. In
light of the recent state budget cuts to higher
education and the increased costs of these
settlements, CSU would like to modify the existing
procedures in order to retain some cost savings and at
the same time simplify the process for tort claims.
These modifications would also align the CSU with the
University of California, the community colleges and
other public entities who already work under this same
claim-filing independence.
ARGUMENTS IN OPPOSITION : In opposition to the bill, the VCGCB
writes that it provides a neutral, third-party process for
claims against the state without an appropriation: "This bill
denies claimants that neutral party and forces them to file a
claim directly with the entity that is the subject of the claim.
Furthermore, this bill may set a precedent for other state
entities seeking to independently administer their own claims.
This could cause a decentralization of the claims process and a
dilution of the benefits of third-party administration. It may
also erode the [VCGCB]'s ability to self-fund its administration
of claims process."
SB 1046
Page 7
However, it is important to note that while the VCGCB may not
require a direct legislative appropriation, it is nonetheless
funded with state funds through its 15 percent surcharge
assessed by the VCGCB on the state entities whose claims it
administers.
REGISTERED SUPPORT / OPPOSITION :
Support
California State University (sponsor)
Opposition
Victim Compensation and Government Claims Board
Analysis Prepared by : Leora Gershenzon / JUD. / (916)
319-2334