Civil Rights Act leading to higher insurance premiums, officials say [The Santa Fe New Mexican]

Jul. 31—A.J. Forte appeared to have lots of questions and no answers as he pored over a pile of papers on his desk at the New Mexico Municipal League's office in Santa Fe.

Among the documents were a number of legal claims and notices — and one bona fide court case — that may fall under the state's new Civil Rights Act.

One involves claims against a Raton police officer based on an incident in November — nearly eight months before the law went into effect — while another centers on the suspension of a business license in Santa Rosa, also in the fall of '21.

Still another is based on a dispute over moving a business from one location to another in Los Alamos, with 24 plaintiffs and allegations that include abuse of process and power, false representation, illegal searches and violation of civil rights and trespass.

"Not all of them say New Mexico Civil Rights Act," said Forte, the municipal league's executive director. "So how do we know [which are]?"

Adjustments are never easy, and more than a year after Gov. Michelle Lujan Grisham signed the Civil Rights Act into law, some state and local governments find themselves on edge. Not only are they unsure of which cases might fall under the act, but many are bracing for insurance cost increases they say are coming to cover potential litigation.

The new law allows New Mexicans to file civil complaints against government agencies in state District Court if they believe their civil rights have been violated — in essence, eliminating "qualified immunity" as a legal defense in such complaints.

The provision for years has shielded government workers, including law enforcement, from personal liability when they are accused of violating people's constitutional rights.

Forte said the new law is shaping up to be a problem for local governments. Though the Civil Rights Act does not allow plaintiffs to file lawsuits against individual government employees and caps a payout for each claim at $2 million, agencies in New Mexico that pay into self-insurance pools expect higher fees as a result of the law.

Where will the money come from? Forte said potential sources include "pay raises, quality-of-life programs, basic services. Our municipalities are going to have to make some hard choices."

He added insurance coverage increases are already coming in anticipation of actual lawsuits.

Beyond that, there are questions of just what the Civil Rights Act covers, critics said. The league is reviewing more than 90 cases as it tries to determine what will fall under the new law's provisions. The courts ultimately will decide, Forte said — which he says will take time and money.

The argument is familiar: Time and money were two of the key factors some pointed to in arguing against the passage of the Civil Rights Act in 2021, when they argued its provisions would place an unfair burden on already-strapped local governments — particularly in cases involving claims against police departments and sheriff's offices.

The bill's journey through the 2021 legislative session came amid the high-profile trial of former Minneapolis police Officer Derek Chauvin, who was charged in the May 2020 death of George Floyd, an unarmed Black man.

The debate on the bill was intense, with supporters saying it would hold government agencies accountable and critics contending it would raise costs for taxpayers while doing nothing to prevent such offenses.

Displaying two reinsurance contracts between his organization and NLC Mutual Insurance Co., Forte pointed out the yearly difference in insurance premiums between July 2021 and July 2022 — a jump of about $700,000, from $1.1 million to $1.8 million.

The Municipal League's deal seems better than the one offered to the New Mexico Association of Counties, which represents most of the 33 counties in the state.

The Association of Counties' insurance carrier, Berkley Public Entity, sent a coverage exclusion to the organization, indicating its reinsurance policy "would not apply to any liability, loss, costs or expenses for any claim made or suit brought pursuant to the New Mexico Civil Rights Act."

Association of Counties attorney Grace Phillips said the nonprofit, which helps counties self-govern, has seen 80 claims that fall under the Civil Rights Act. All but 10 involve law enforcement cases.

Forte and Phillips said they are not against the law's intent, but they said they believe lawmakers did not take into account the reaction by insurance providers, who are hiking fees in advance of litigation.

"Advocates for the bill said, 'There isn't going to be a cost if you do things right,' but the problem is that's not how insurance works," Phillips said. "There's underwriting, there's anticipation, there's, 'How much risk is going to come with this?' "

Sen. Joe Cervantes, D-Las Cruces, one of the bill's sponsors, said lawmakers should watch for unintended consequences when it comes to counties' ability to pay higher insurance rates.

But he added those concerned about such hikes are not taking into account the fact that many government agencies are already paying out "legal fees and settlements which far exceed what those insurance fees might be."

"Looking at insurance rates in isolation is an inaccurate understanding of what is facing cities and counties today with lawsuits," Cervantes said. "Many of them reach into their own pockets to pay their own settlements, and some of them reach pretty deep."

House Speaker Brian Egolf, D-Santa Fe, the main sponsor of the bill, was out of town and could not be reached for comment.

On the state level, Thom Cole, spokesman for the state General Services Department, wrote in an email the state has not adjusted insurance fees at all in anticipation of potential legislation under the Civil Rights Act.

To date, he wrote "we have had no judgments or settlements for actions brought under the new act."

Civil rights attorney Laura Schauer Ives said insurance increases likely will be short term as government agencies respond by providing "improved training, improved policies and fewer defense attorney fees litigating the qualified immunity question."

"I really think this will save the taxpayer in the long run," she said.

Ives said such organizations as the Association of Counties and New Mexico Municipal League can step in and ensure government agencies are providing proper training for their employees, including police officers, to ensure they do not violate a resident's civil rights.

"If training improves, if accountability improves, if the amount of money we all as taxpayers have spent on defense costs for qualified immunity arguments instead put that into making the qualify of law enforcement better, we will save money," she said.

More important, she added, "Fewer tragedies will happen."

But Phillips said the initial signs of insurance premium increases are "worrisome" for individual governments and the taxpayers who fund them.

"We live in a world with finite dollars, and if you put them all in the claims bucket, there's fewer dollars for providing services to the community as a whole," she said.

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