Liable to be Liable

No professional liability insurance? With personnel reforms under way, more federal supervisors might feel the need to purchase a policy.

Michael Styles, president of the Federal Managers Association, a nonprofit advocacy group, said he's traveling the country, telling his members to protect themselves before the new systems are in place.

"Everywhere I go, I tell my folks that it would be in their best interest to get liability insurance," Styles said.

What is Liability Insurance?

Professional liability insurance covers the cost of legal fees and monetary penalties incurred as a result of your duties as a federal employee. Often, if the incident in question occurred on the job, the Justice Department will represent you at no charge. But it's not obliged to do that in every case. Justice only has to step in when it is determined to be in the government's interest to defend you.

Liability insurance can cover the cost of hiring an attorney to defend those managers who are put under internal investigation or have an Equal Employment Opportunity Commission complaint brought against them, for example.

In 2000, Congress passed a law that requires agencies to reimburse managers for up to 50 percent of the cost of professional liability insurance.

Increased Responsibility

With pay-for-performance systems in the works at the Defense and Homeland Security departments and under consideration for the rest of government, managers are likely to see heightened responsibilities-and, possibly, liabilities.

"The department will use a multilevel system that makes distinctions in levels of employee performance," reads the text of the final regulations for the Defense Department's National Security Personnel System. "The system will link employee achievements, contributions, knowledge and skills to organizational results."

Managers will have to determine pay raises for their subordinates based on those qualifications and will be expected to make "meaningful distinctions" (that's the catch-phrase being used by government officials) among employees -- meaningful distinctions that may leave some employees disgruntled about their place in the pecking order.

With money now at stake, and a new, complex system to master, managers have more room to make mistakes, and employees may have more reasons to bring a complaint.

Styles said FMA is pushing for agencies with pay-for-performance systems to fully cover supervisors' liability insurance premium.

Where to Get It

The government doesn't recommend any single insurance company or negotiate for lower insurance rates, like it does with its health plan.

Wright and Co. offers liability insurance designed specifically for federal employees, and offers two options. The $292 annual premium buys you $1 million of "coverage for judgments arising from acts, errors or omissions committed by you while acting within the scope of your employment." The $229 option gets you $500,000 of coverage. Both plans cover administrative fees for legal counsel -- up to $200,000. With a 50 percent agency reimbursement, it's a yearly investment of $146 or $114.50.

Mass Benefits Consultants Inc. offers a plan that costs $266 annually for $1 million of coverage. There is no deductible for either of these companies' plans.

To receive the 50 percent reimbursement, contact the human resources office in your agency; it is not a centralized system.

Is This Necessary?

Michael Styles obviously thinks so. But as the Commerce Department's talking points on the subject put it, the "decision to purchase the insurance is one which each employee must make based on [his or her] individual circumstances."

Wright president Patty Keefe said her company has about 28,000 federal employee policies, and an average of 550 claims are made each year.

In 1998, OPM published a study that found that in the previous five years, only 14 federal employees were actually found professionally liable in lawsuits. In addition, it found that of 7,000 requests to the Justice Department for representation in that time, Justice only rejected 150.