Tuesday, April 27, 2004
C.A.: Self-Insurance Pool May Cover Contract School Bus Drivers
By a MetNews Staff Writer
A self-insurance pool may cover a school district’s contract bus drivers without becoming an insurer under state law, this district’s Court of Appeal has ruled.
In an opinion filed March 25 and certified for publication yesterday, Presiding Justice Candace Cooper rejected the contention of Westchester Fire Insurance Company that by extending coverage beyond district employees, the William S. Hart Union High School District and the Schools Excess Liability Fund subjected that coverage to the “other insurance” provisions of Hart’s excess liability policy with Westchester.
Government Code Sec. 990.8 provides that public entity self-insurance pools “shall not be considered insurance.”
The Westchester policy required that “other insurance” pay before coverage under it was triggered. The district was sued after a student passenger fell out of his wheelchair in 1994.
Westchester and SELF each contributed $2.1 million to settling the student’s lawsuit, reserving coverage issues.
Writing for Div. Eight, Cooper said the district and SELF were entitled to include coverage for Santa Barbara Transportation, the district’s contractor, under the pool arrangement without forfeiting the protections provided by Sec. 990.8.
“To the extent that the additional covered party, such as SBT, is performing operations by or on behalf of the member district we see no distinction in the pool’s decision to consider that party’s conduct as part of the shared risk,” she declared. “The risk of exposure is no different than if the District’s own employees had done the driving, and in these times of grave fiscal problems for school districts there may be financial advantages for a district to use contract drivers such as SBT rather than its own drivers.”
She noted that a number of joint powers authorities filed amicus briefs in support of SELF’s position, arguing that adopting the insurer’s point of view would increase costs for public entities, leading to either higher taxes or decreased services.
But Cooper said a Los Angeles Superior Court judge erred in rejecting, on summary judgment, the argument advanced by Westchester and the district that the Westchester policy was never intended to cover SBT’s operations.
The contention that language covering the contractor’s activities was included by mistake, and that the policy should be reformed to reflect their intent to exclude liability arising out of the operation of “non-owned” vehicles, could not be decided without resolving disputed questions of fact, Cooper explained. Though the adverse consequences for SELF of allowing reformation, and the fact that the district and the insurer were seeking reformation only after those consequences became apparent, should be considered in ruling on the reformation request, they were only two among many factors that the court would have to weigh, the justice said.
Dana K. Anderson, Lawrence R. Ramsey and Jeffrey Swedo of Bowman and Brooke in Torrance appeared on behalf of SELF. Century City attorneys Gary L. Green of Harris & Green and Gregory M Heuser appeared for Westchester.
J. Kenneth Brown of Brown Winfield & Canzoneri in Los Angeles was among the attorneys representing amici.
The case is Schools Excess Liability Fund v. Westchester Fire Insurance Company, B161761.
Copyright 2004, Metropolitan News Company