Calling all claims: Managing liabilities in law enforcement

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By Michael L. DeMattei | 01 August 2007

Originally printed in the August issue of Public Risk magazine. Reprinted with permission from the Public Risk Management Association. © 2007

Law enforcement is a complicated process, as is the task of managing the associated liabilities.

Lawsuits against police departments are headline news across the country, and often result in hefty settlement payments. In April, the city of Newark, N.J., agreed to pay a settlement of $3.6 million in a lawsuit filed by pedestrians injured during a police chase. Also this year, the city of Chicago paid $5.2 million to settle a wrongful shooting lawsuit against its police department.

However, from a claims perspective, the liability environment for law enforcement in California—which may be a microcosm for trends nationwide—is improving, continuing a positive trend that began in the late 1990s. Claims statistics such as frequency, severity and report lags have all improved since their peak in the mid-1990s.

That said, the liability exposures facing police departments are always evolving, and the constant change keeps risk managers busy. For example, multilingual officers are now essential, as an inability to communicate complicates the split-second decision making that is critical in arrest and pursuit situations. Similarly, the mishandling of computer evidence can open the door to new liability risks.

Meanwhile, the demographics in many cities are shifting, and many law enforcement organizations are having a hard time keeping up. Not coincidentally, false arrest and pursuit claims are still the two most pressing law enforcement liability issues facing risk managers in addition to those endemic to all public entity exposures—joint and several liability, venue shopping and jury bias.

Contributing to the changes facing risk managers are case rulings such as the recent United States Supreme Court decision in which a pursuing officer was deemed to have used “reasonable force.” The high court’s decision has clarified an area of liability long in need of a definitive ruling. Less-aggressive pursuit policies are leading to fewer auto-related claims, but more claims can be expected due to federal grants that fund the hiring of additional motorcycle officers.

As with all types of liability, the best way to manage risk is to minimize the number of events that might lead to claims. Awareness and safety training are more important than ever, as they keep officers cognizant of the risks they face. This article will look at recent claims experience, nationwide police liability issues, and the ever-evolving task of managing law enforcement risks.

Stopping problems before they start

The best way to reduce law enforcement liability costs is to prevent problematic incidents from occurring in the first place. As with any industry, training can help achieve this goal but, despite everyone’s best efforts, claims are still going to arise each year.

The following chart shows a reported claim frequency (counts per officer) index for 10 occurrence years, based on claims data from California municipalities. To smooth out the year-to-year volatility, a two-year moving average frequency was used to create the graph (e.g., 1997 is the average of the frequencies for 1996 and 1997).

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In this chart, 1996 is set at a frequency index of 100. Thus, index amounts above 100 indicate an increase; amounts below, a decrease. As the chart shows, from 1999 to 2003, reported claim levels remained near the 1996 level. Accident year 2005 shows a significant decrease, but this may be due to its relative immaturity at this point. (Liability claims have the potential to be reported years after incidents occur.)

Nuisance claims and incident reports can distort reported claim data, and different municipalities may have different recording procedures. Therefore, the following table only includes claims that closed with payment (indemnity and/or defense costs). As with the first chart, this is based on a two-year moving average.

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This data indicates that claims frequency is improving (2005 was omitted due to the amount of claims still open at this point). Because only closed claims are included and settlements can take years, it is likely that the 2002-2004 frequency will increase over time. However, with this in mind, the data still points to decreased frequency of claims, as 1999 and subsequent years are all below an index of 100. Besides any improvements due to increased awareness of liability issues and the ongoing evolution of police training, changes in claims reporting as discussed in the next section may be contributing to this decrease.

Life and characteristics of claims

After an incident occurs, the average report lag in the municipality data is about three to four months. This has been fairly constant, although the lag in recent years is below the peak in the mid-1990s. Shorter reporting lags are better for risk management because they allow for a more thorough gathering of facts, prompt treatment of injuries and early offers of services.

A general rule of thumb is that the longer a claim is open, the more it ultimately costs. Obviously, more serious cases will take longer to settle, but there are also legal and administrative costs associated with maintaining open claims of any kind. Average settlement time for all police liability claims is about a year. For claims that close with a payment, the average increases to 15 to 18 months. Recent data indicates a reduction in the amount of time the average claim is open. Most likely this is due to risk managers settling claims sooner in the hope of gaining some cost savings.

For all closed claims, about one-third will have indemnity payments and the remaining two-thirds will have only legal (and other defense) costs. This average has been relatively constant for the past 20 years although, as with other statistics, the more recent years indicate a slight decrease in the percentage of claims with indemnity payments. Within the paid claims, roughly eight out of 10 had indemnity payments, and this average has also been relatively constant over time.

For claims closed with payments, severity has been decreasing since the mid-1990s, corresponding with the same era when report and settlement lags were longer. Increased awareness and faster reporting of incidents has enabled municipalities to be more proactive in the handling and defense of claims. Often, savings are associated with a more vigorous defense against claims; however, average expenses per claim do not appear to be increasing. Thus, the claims savings do not appear to be the result of more aggressive claims-handling strategies alone. Most likely, improvements in many aspects of law enforcement, as well as in risk management and handling of claims, have all contributed to the decreases in claim costs.

Auto claims

A quarter of all reported claims relate to auto accidents, but there are some signs that such claims are on the decline. If so, the decrease is likely due to changes in police departments’ policies on pursuits. Most, if not all, departments have specific policies about when to chase a subject and when to back off, but there are no national statistics on how jurisdictions handle such situations. In general, though, departments have become less aggressive during pursuits, including being more selective as to when to continue high-speed chases. For example, in the less critical situations, a suspect can sometimes be followed covertly via helicopter, thereby eliminating the motivation for the suspect to drive at increased speeds.

Federal grants to provide for more traffic officers may counteract some of the decline in auto liability claims. Each department is offered funds to add one new motorcycle officer, and this in turn increases auto exposures. Any increase in exposure is expected to add some auto liability claims each year.

Challenges remain

Despite recent positive signs, risk managers continue to face complex issues. Law enforcement liability case law evolves on a daily basis. Today’s most challenging problem is the changing demographics of the population and the language barriers this sometimes creates. Communication is crucial in law enforcement. Bilingual civilian staff can help with gathering evidence, but not in dealing with armed suspects in emergency situations. Even departments equipped with Spanish-speaking personnel may find situations where Russian, Chinese, or other language proficiency is necessary.

Traditionally, immigrant groups settled in clusters in major cities but, increasingly, they are arriving in smaller towns and suburbs. Thus, the demographics issue may be affecting smaller departments even more, as the mix of citizens in these areas is changing more rapidly than police have the resources to handle.

An emerging issue with respect to law enforcement and liability is in the gathering of computer evidence. The best source of evidence in many cases has now moved from paper to electronic format. However, seizure of computers creates new issues with respect to business interruption, the Privacy Protection Act, and the Electronic Communication Privacy Act. Removal of computers from a business will most likely affect a company’s income, and the loss of any information while under law enforcement control would add to any potential civil suit. In a few states, even agencies that damage equipment through no fault of their own can be required to compensate third parties. As with any other issue, the key to minimizing liability risk is thorough training and, specifically in this case, the ability to demonstrate adherence to generally-accepted forensic computer science procedures.

Of course, the perpetual threats of false arrest and excessive force claims continue to exist for officers and departments. A false arrest accusation always brings the added possibility of a federal civil rights claim, and use of force, by its very nature, is a thorny issue. Under the “deliberate indifference” standard, departments and municipalities could face federal civil rights claims for failure to train, supervise, or discipline police officers. Moreover, these types of claims do not have sovereign immunity caps and they also provide for the award of attorney’s fees, which is not provided in state litigation.

Police training in use of force frequently includes some kind of linear progression of guidelines in the escalation/de-escalation of tactics. Known as “force continuums,” they first arose in law enforcement training in the late 1960s as a result of increased awareness regarding constitutional limits on the use of force. The underlying philosophy is that officers should begin at the lowest levels of force necessary to complete an arrest and methodically escalate/de-escalate the levels in an orderly progression as the situation requires. Thus, in effect, the officer is performing experiments with levels of force in what can be a rapidly changing environment. Slight changes in the suspect’s behavior can require immediate escalation or de-escalation of force according to the continuum, and therefore the officer’s actions can be an easy target for the “Monday morning quarterbacking” of plaintiffs’ attorneys. In the real world, situations are rarely linear and seldom progress in an orderly manner. Thus, even the most well-trained and disciplined officers become vulnerable to hindsight questioning in depositions.

Police pursuits are by far the highest-profile force issue today. A Supreme Court ruling in the recent Scott v. Harris case—in which the justices determined that a police officer used “reasonable force” when he rammed the plaintiff’s car in an effort to end a high-speed car chase—gives departments valuable guidance on police pursuit policies and protection from lawsuits when acting within reason. It was the first time the high court heard a case specific to this issue. Previously, federal appeals court rulings were not clear. Now, as with other situations, actions taken by officers during pursuits will be covered by the Supreme Court’s precedents on deadly force; that is, an officer must show that the suspect poses a “significant threat of death or serious physical injury to the officers or others.”

The decision will enable departments to have better-defined policies, and should also help reduce claims and liabilities related to police pursuits. However, pursuits will remain a significant issue for risk managers because of the implications of officers’ critical split-second decisions at crime scenes. An interesting aspect of the Scott case, and a key factor in the Supreme Court’s ruling, was the video captured by the on-dash camera. Thus, it is very possible that video evidence will play a key role in defense of these types of cases in the future.


Recent statistics show positive signs with respect to the frequency and severity of law enforcement liability claims. These developments provide reason to believe that police forces have put the higher claims volume years of the mid-1990s behind them. Risk managers may be winning the game, but the ever-changing rules mean there is never time to rest.

MICHEAL DEMATTEI, FCAS, MAAA, is a principal and consulting actuary with Milliman.