To:

To: Senator Andrew McDonald

Representative Michael P. Lawlor

CoChairs, Judiciary Committee

From: David L. Hemond

Date: January 6, 2003

Re: Law Revision Commission report concerning claims against the state

Pursuant to a letter of request from the Judiciary Committee dated April 24, 2002, the Law Revision Commission has reviewed the Connecticut process for resolution of claims against the state, finds that system to be functional, has identified discrete weaknesses and anomalies, and recommends changes with respect to four matters:

Raise the threshold for automatic legislative review to $50,000
Enhance information gathering and accountability
Create a lost property board
Grant the Claims Commissioner discretion to refer matters to human rights referees

The Commission report follows:

Although Connecticut enjoys the right to sovereign immunity from suit, the state has established a set of judicial and quasi-judicial procedures to provide for the review and payment of just claims. The legislature has statutorily granted a right to sue with respect to several substantial classes of claims including automobile accidents, under section 52-556; highway-related claims under section 13a-144; certain claims against the Commissioners of Public Health and Mental Retardation, under section 19a-24; certain patient’s bill of rights claims, under section 17a-550; and privacy violations, under section 4-197. Medical malpractice claims may be brought to the Superior Court pursuant to section 52-190a after filing of a certificate of good faith with the Claims Commissioner. Claims related to certain construction contracts are governed by section 4-61, which sets out a statutory arbitration process. A residual set of claims, where no express statutory authorization to sue has been set out, must first be brought to the Claims Commissioner. With respect to those claims, the Claims Commissioner acts primarily as a gate-keeper, reviewing claims for indicia of state liability. As a matter of practice, the Claims Commissioner denies claims lacking a sufficient showing of state liability, grants awards with respect to the less complex claims, and forwards complex litigation to the Superior Court by granting of a permission to sue.

The state’s interest in the handling of these awards is largely overseen by the Attorney General (see sections 3-125, 4-149, and 4-160) and by the State Insurance and Risk Management Board, which is charged by statute (section 4a-20) with review of the state’s risk and loss management through insurance and other programs. (Several reports by the Office of Legislative Research, a staff research report of this office, and several law review articles set out the details and history of Connecticut’s claims process in substantial detail and are available on request. See, in particular, OLR Research Reports 2001-R-0475, 2002-R-0182, and 2002-R-0183 by George Coppolo, Chief Attorney; The Conscience of the State: History, Procedure and Precedents of the Office of the Claims Commissioner, Douglas W. Hammond, Connecticut Bar Journal, Volume 72, page 409 (1998); and memorandum of Benna Lehrer to David Hemond, dated 10 June 2002, concerning Claims Commission Process in Connecticut.)

The Law Revision Commission recommends legislation to address the following weaknesses in the current processes:

Legislative review of claims over $7,500

The current mandatory review by the General Assembly of decisions of the Claims Commissioner with respect to claims over seven thousand five hundred dollars should be revised to provide for review by the General Assembly only when the decision is appealed by the claimant or the Attorney General or when the award of the Claims Commissioner is in excess of fifty thousand dollars. A review process for Commissioner awards serves a purpose as an appropriate avenue of appeal for an aggrieved party but provides little useful legislative oversight of state liability for claims. The Law Revision Commission recommends limiting automatic review to only those substantive cases where the Claims Commission has entered a substantial award, over fifty thousand dollars.

Section 4-159 currently requires that all recommendations of the Claims Commissioner for payment or rejection of amounts exceeding seven thousand five hundred dollars be submitted for review by the General Assembly. Presumably, this review requirement is intended to provide the legislature with oversight of the claims awarded against the state and to provide claimants with protection against arbitrary denial of claims. However, the Law Revision Commission finds that the review requirement is inappropriately structured for both those purposes.

Most significant claims resulting in awards against the state are handled by the Attorney General or through the State Insurance and Risk Management Board and are resolved before the Superior Court, rather than the Claims Commissioner, after either direct suit or pursuant to a permission to sue. In cases resolved before the Superior Court, there is no Claims Commissioner award or denial, no referral to the legislature, and no legislative oversight. Thus, the statutory requirement that decisions of the Claims Commissioner be referred to the General Assembly for review only provides legislative oversight for a fraction of claims actually awarded. In 2001, the claims before the Commissioner subject to legislative review resulted in awards totaling $432,624. On the other hand, the Commissioner gave permission to sue in the Superior Court for 110 claims and claims expenditures from the Comptroller’s adjudicated claims account, largely for payment of claims not reviewed by the legislature, totaled $10,385,250. (See Office of Fiscal Analysis Report of Michael Murphy and Kerry Kelley dated April 19, 2002, and Memorandum of Rick Taff concerning 2002 Claims Statistics, dated August 23, 2002.) The current legislative oversight of claims is therefore ineffective in light of the payment of claims as a whole.

While the legislative review requirement does not provide effective oversight, the requirement does create a substantial administrative burden for legislators and legislative staff. As the process is now structured, legislators and legislative staff must review all significant claim denials by the Claims Commissioner even in those cases where the claimant has no interest in pursuing his claim. For example, in the last legislative session, of 148 claims referred, only eight or so claimants appeared at the legislature’s public hearing on claims held on March 22, 2002. (See Memorandum of Rick Taff concerning 2002 Claims Statistics, dated August 23, 2002.)

This mandatory legislative review of claims is therefore anomalous in two specific ways. First, the review process does not provide the legislature with a meaningful oversight over the actual processing of state claims in general. The legislature’s authorization of direct suit for many classes of cases is, in fact, inconsistent with a legislative interest in a review process that provides legislative control in individual cases. The legislature’s interest in reviewing individual cases is, for example, reflected in the $2,500,000 cap set by statute on the Attorney General’s authority to settle without legislative approval under section 3-125a. Even if the legislature did wish to review all such claims against the state, no legislative infrastructure exists to conduct the sort of comprehensive claims review that would be required to evaluate all such claims dispositions. The recommendation of the Law Revision Commission is that legislative automatic oversight of Commissioner claims should be limited to that small class in which the Claims Commissioner entered substantial awards in excess of fifty thousand dollars. In the broader picture, oversight of state liability should be performed by better collecting and evaluating data concerning claims dispositions, rather than through a mandatory oversight process and review of numerous smaller claims.

With respect to that class of smaller claims, between seven thousand five hundred dollars and fifty thousand dollars, the legislative review of Claims Commissioner decisions provides a procedural safety valve to ensure that the state meets its obligations with respect to just claims that the Claims Commissioner might have arbitrarily denied. However, the Law Revision Commission recommends that this review be limited to cases in which the claimant, or the Attorney General, feels sufficiently aggrieved by the Claims Commissioner’s denial of a claim or an award to expressly request a legislative review. Limiting the review to cases in which a request is made will relieve legislators and legislative staff of the significant administrative burden of reviewing all cases while protecting the claimant’s right to review where the right is pursued. The Law Revision Commission therefore recommends that the statutory claims process be revised to provide for a right to request a review by the legislature of denials and awards by the Claims Commissioner of claims over $7,500. That review process should include sufficient provisions to ensure notice to the claimant of his right to request that review.

Information gathering and accountability

Because the disposition of claims occurs in several different venues, there is currently no comprehensive reporting system to oversee the fiscal impact of claims awards. Some claims, for example, are resolved through the State Insurance and Risk Management Board or through firms delegated by the Board to handle those claims, other claims are handled directly by the Attorney General’s Office, while yet others are directly resolved before the Claims Commissioner with agency input. No agency is charged with systematically evaluating the ongoing status and payment of all claims. The legislature, itself, may, therefore, act on matters affecting possible state liability without comprehensive information to provide the fiscal context for risk evaluation. Moreover, while the State Insurance and Risk Management Board is developing risk management programs, no current system ensures that all agencies are held accountable, and are kept properly aware of adverse awards, with respect to agency actions that result in state liability.

The Law Revision Commission recommends that the legislature work in conjunction with the Attorney General and the State Insurance and Risk Management Board to increase access to comprehensive information on the nature and scope of ongoing state liabilities. The Commission further recommends strengthening the role of the State Insurance and Risk Management Board in analyzing available information and in developing risk management programs and agency accountability for decisions affecting state liability. The proposed language of the Commission draft strengthens the reporting requirements with respect to claims for both the Attorney General and the State Insurance and Risk Management Board.

Inmate claims

More than one half of claims brought to the legislature through the Claims Commissioner are claims by inmates of the Department of Corrections. (See Memorandum of Rick Taff concerning 2002 Claims Statistics, dated August 23, 2002, listing 83 inmate and 62 noninmate claims.) The resolution of inmate claims constitutes a significant burden on the limited resources of the office of the Claims Commissioner. Because the Claims Commissioner performs an important gate-keeping role for liability claims in general and because the burden of inmate claims reduces the resources available for the Commissioner in that more general role, the legislature should give consideration to devising an alternative administrative process to reduce inmate claims from that claims process.

The Law Revision Commission recommends consideration of two additional processes to remove the bulk of inmate claims from the process before the Claims Commissioner.

First, the Law Revision Commission recommends creation of a lost property board in the Department of Corrections as an administrative small claims process to handle the smaller property claims up to three thousand five hundred dollars, the current jurisdictional amount for small claims court. A similar proposal was previously considered by the legislature in 1994 pursuant to House Bill 5581, An Act Concerning Claims Against the State by Inmates of Correctional Facilities. Such a lost property board would relieve the Claims Commissioner of the burden of the less important claims and would allow the Department of Corrections to internally handle the necessary inmate logistics. As proposed, the inmate would retain the right to petition the Claims Commissioner in the event that the claim is denied.

The Law Revision Commission further recommends giving the Claims Commissioner discretion to refer those inmate claims that are brought before him for a hearing before a human rights referee. Human rights referees currently sit on rights deprivation matters brought before the Commission on Human Rights and Opportunities. Allowing referral of claims to those referees would provide the Claims Commissioner with access to additional resources, referees with hearing experience, to control the burden of inmate claims

A proposed bill to implement the Law Revision Commission’s recommendations concerning appeal of claims decisions, reporting and accountability, and inmate claims is attached.