BILL REQ. #:  H-3399.1 

Read first time 01/12/12.   Referred to Committee on State Government & Tribal Affairs.

     AN ACT Relating to improving state agency risk management practices; amending RCW 43.19.760 and 43.19.781; adding a new section to chapter 4.92 RCW; and adding a new section to chapter 43.10 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 43.19.760 and 1985 c 188 s 2 are each amended to read as follows:
     It is the policy of the state for the management of risks to which it is exposed to apply the following principles consistently in a state program of risk management:
     (1) To identify those liability and property risks which may have a significant economic impact on the state;
     (2) To identify trends and developments in individual agencies' risks and liabilities in order to minimize the state's fiscal exposure;
     (3) To evaluate risk in terms of the state's ability to fund potential loss rather than the ability of an individual agency to fund potential loss;
     (((3))) (4) To eliminate or improve conditions and practices which contribute to loss whenever practical;
     (((4))) (5) To assume risks to the maximum extent practical;
     (((5))) (6) To provide flexibility within the state program to meet the unique requirements of any state agency for insurance coverage or service;
     (((6))) (7) To purchase commercial insurance:
     (a) When the size and nature of the potential loss make it in the best interest of the state to purchase commercial insurance; or
     (b) When the fiduciary of encumbered property insists on commercial insurance; or
     (c) When the interest protected is not a state interest and an insurance company is desirable as an intermediary; or
     (d) When services provided by an insurance company are considered necessary; or
     (e) When services or coverages provided by an insurance company are cost-effective; or
     (f) When otherwise required by statute; and
     (((7))) (8) To develop plans for the management and protection of the revenues and assets of the state.

NEW SECTION.  Sec. 2   A new section is added to chapter 4.92 RCW to read as follows:
     (1) The risk management review process is established. The purpose of the risk management review process is to evaluate claims information of state agencies with relatively high claim payments in order to identify claim trends and patterns, and opportunities for corrective action.
     (2) If in any fiscal year payments from the liability account under RCW 4.92.130 attributable to any single state agency exceed one million dollars, exclusive of defense costs, then by December 31st of the following fiscal year a risk management review team shall conduct a risk management review of that agency and prepare a report as required by this section. For purposes of this section, "state agency" means "state agency" as defined in RCW 43.19.763.
     (3) The risk management review team for an agency consists of:
     (a) The agency head, or his or her designee;
     (b) The agency risk manager;
     (c) The director of the office of financial management's risk management division, or his or her designee; and
     (d) An assistant attorney general designated by the office of the attorney general.
     (4) In conducting the risk management review, the risk management team must analyze factors that resulted in indemnity payments attributable to the agency. The analysis must include, but is not limited to:
     (a) A review of data on agency claims and payments from the liability account as prepared by the risk management division and the agency;
     (b) Identification of patterns and trends in the claims that resulted in indemnity payments attributable to the agency;
     (c) Analysis of the extent to which the actions of third parties resulted in indemnity payments attributable to the agency;
     (d) Analysis of the role of agency rules and policies in the agency's liability, and determining whether these rules and policies, or the absence thereof, affects risks that resulted in indemnity payments;
     (e) Evaluation of the role of statutory and common law in establishing the risks that resulted in indemnity payments;
     (f) Where certain activities are identified as posing particular risks, evaluation of the benefit of providing the service to the public in light of the risk posed to state resources and to the public; and
     (g) Identification of a risk management action plan. The action plan must identify (i) tangible, discrete actions to be taken to reduce liability resulting from the identified risks; and (ii) any barriers to these actions. The plan must include actions that may be taken within the agency's existing resources and statutory authority, and it may include actions that require additional resources or changes to statutory authority.
     (5) The risk management review team shall prepare a report summarizing the risk team's analyses and risk management action plan as required in subsection (4) of this section, along with any other relevant information, analysis, or recommendations. The report must be filed with the office of financial management's risk management division, the attorney general, and the appropriate policy and fiscal committees of the legislature by the following March 1st.
     (6) Documents prepared during the course of a risk management review are subject to the same restrictions on disclosure and admissibility as are final reports of a loss prevention review team under RCW 43.41.380.

Sec. 3   RCW 43.19.781 and 1989 c 419 s 6 are each amended to read as follows:
     (1) The office of risk management shall establish a coordinated safety and loss control program to reduce liability exposure, safeguard state assets, and reduce costs associated with state liability and property losses.
     (2) State agencies shall provide top management support and commitment to safety and loss control, and develop awareness through education, training, and information sharing.
     (3) The office of risk management shall develop and maintain centralized loss history information for the purpose of identifying and analyzing risk exposures. Loss history information shall be privileged and confidential and reported only to appropriate agencies.
     (4) The office of risk management shall develop methods of statistically monitoring agency and statewide effectiveness in controlling losses.
     (5) The office of risk management will routinely review agency loss control programs as appropriate to suggest improvements, and observe and recognize successful safety policies and procedures.
     (6) The office of risk management shall provide direct assistance to smaller state agencies in technical aspects of proper safety and loss control procedures, upon request.
     (7) The office of risk management shall participate in and provide data and administrative support for risk management reviews conducted by risk management review teams as provided in section 2 of this act.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.10 RCW to read as follows:
     The office of the attorney general shall designate assistant attorneys general to participate in risk management reviews as provided in section 2 of this act.