wa-law.org > bill > 2025-26 > HB 2706 > Original Bill
It is the intent of the legislature to establish a claims commission within the office of administrative hearings to address ballooning payments from the liability account, also known as the self-insurance liability account. The liability account is used to pay tort claims, judgments, and settlements arising from general liability when the state is found to be wholly or partially negligent. The legislature finds that there has been a steep increase in the number and payouts of tort claims in recent years following legislative changes and court rulings. As a result, the liability account has been in a continuous and growing cash deficit position.
The legislature finds that liability for the department of children, youth, and families has increased exponentially, primarily due to historical childhood abuse claims. In 2019, the state supreme court decided H.B.H. v. State, 192 Wn.2d 154, which defined the state's liability for childhood abuse claims. In fiscal year 2019, the year of the ruling, 157 claims were filed against the department of children, youth, and families. In fiscal year 2025, 1,455 claims were filed against the department of children, youth, and families, an increase of over 800 percent. Agency insurance premiums have not been raised quickly enough to capture this dramatic increase in cases. The liability account, the account used to pay the awards in these cases, is facing a $1,300,000,000 to $1,400,000,000 shortfall this fiscal biennium.
The legislature intends to amend this deficit by creating a claims commission designed to adjudicate historical claims against the department of children, youth, and families, which would create significant cost avoidance in the current fiscal biennium.
There is hereby created a claims commission within the office of administrative hearings. The commission has jurisdiction to adjudicate claims against the state, or against the state's officers, employees, or volunteers, acting in such capacity, for damages arising out of tortious conduct that occurred prior to 2020 and that is alleged against the department of children, youth, and families, and the department's officers, employees, and volunteers.
The state shall have sovereign immunity from all tort claims within the jurisdiction of the claims commission. Such claims must be brought to the claims commission for resolution.
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The claims commission shall receive and accept claims only upon compliance with all of the requirements in RCW 4.92.100. The office of risk management shall certify to the commission that all requirements have been met and shall provide all relevant documentation to the commission.
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The claims commission shall consist of an administrative law judge appointed under RCW 34.12.030(1), a medical or mental health professional with expertise in trauma, an attorney with experience representing plaintiffs with tort claims against the state as nominated by the Washington association for justice, a representative of the department of enterprise services, a representative of the defendant agency, a representative of the attorney general, and a representative of the office of financial management. Members of the commission shall be appointed by the governor.
The administrative law judge member of the claims commission shall serve as chair of the commission.
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After acceptance of a case by the claims commission, a party may conduct discovery as follows:
Request from the chair of the commission an examination under CR 35;
Request admissions from a party under CR 36; and
Take the deposition of another party.
A party may request additional discovery from the chair of the commission, including interrogatories, and the chair will allow additional discovery only as reasonably necessary.
A claimant who accepts the claim commission's award for damages may not seek review under subsection (6) of this section or file a court action on his or her claim.
An aggrieved party that is unsatisfied with a final decision of the claims commission may file for a trial de novo in superior court pursuant to chapter 7.06 RCW.
Before filing a claim with the claims commission, a claimant shall comply with the presentment and filing requirements outlined in RCW 4.92.100 and 4.92.110.
Following a hearing as prescribed by court rule or following a determination by the claims commission established in section 2 of this act, the arbitrator or chair of the commission shall file his or her decision and award with the clerk of the superior court, together with proof of service thereof on the parties. Within 20 days after such filing, any aggrieved party may file with the clerk a written notice of appeal and request for a trial de novo in the superior court on all issues of law and fact. The notice must be signed by the party. Such trial de novo shall thereupon be held, including a right to jury, if demanded.
Up to 30 days prior to the actual date of a trial de novo, a nonappealing party may serve upon the appealing party a written offer of compromise.
In any case in which an offer of compromise is not accepted by the appealing party within 10 calendar days after service thereof, for purposes of MAR 7.3, the amount of the offer of compromise shall replace the amount of the arbitrator's award for determining whether the party appealing the arbitrator's award has failed to improve that party's position on the trial de novo.
A postarbitration offer of compromise shall not be filed or communicated to the court or the trier of fact until after judgment on the trial de novo, at which time a copy of the offer of compromise shall be filed for purposes of determining whether the party who appealed the arbitrator's award has failed to improve that party's position on the trial de novo, pursuant to MAR 7.3.
If no appeal has been filed at the expiration of 20 days following filing of the arbitrator's or chair of the commission's decision and award, a judgment shall be entered and may be presented to the court by any party, on notice, which judgment when entered shall have the same force and effect as judgments in civil actions.
Except as provided in subsection (2) of this section, in the discretion of the agency head, the presiding officer in an administrative hearing shall be:
The agency head or one or more members of the agency head;
If the agency has statutory authority to do so, a person other than the agency head, a commission, or an administrative law judge designated by the agency head to make the final decision and enter the final order;
One or more administrative law judges assigned by the office of administrative hearings in accordance with chapter 34.12 RCW; or
A person or persons designated by the secretary of health pursuant to RCW 43.70.740.
An agency expressly exempted under RCW 34.12.020(4) or other statute from the provisions of chapter 34.12 RCW or an institution of higher education shall designate a presiding officer as provided by rules adopted by the agency.
Any individual serving or designated to serve alone or with others as presiding officer is subject to disqualification for bias, prejudice, interest, or any other cause provided in this chapter or for which a judge is disqualified.
Any party may petition for the disqualification of an individual promptly after receipt of notice indicating that the individual will preside or, if later, promptly upon discovering facts establishing grounds for disqualification.
The individual whose disqualification is requested shall determine whether to grant the petition, stating facts and reasons for the determination.
When the presiding officer is an administrative law judge, the provisions of this section regarding disqualification for cause are in addition to the motion of prejudice available under RCW 34.12.050.
If a substitute is required for an individual who becomes unavailable as a result of disqualification or any other reason, the substitute must be appointed by the appropriate appointing authority.
Any action taken by a duly appointed substitute for an unavailable individual is as effective as if taken by the unavailable individual.
Except pursuant to RCW 43.70.740 and section 2 of this act, whenever a state agency conducts a hearing which is not presided over by officials of the agency who are to render the final decision, the hearing shall be conducted by an administrative law judge assigned under this chapter. In assigning administrative law judges, the chief administrative law judge shall wherever practical (1) use personnel having expertise in the field or subject matter of the hearing, and (2) assign administrative law judges primarily to the hearings of particular agencies on a long-term basis.
No execution shall issue against the state on any judgment.
Whenever a final judgment against the state is obtained in an action on a claim arising out of tortious conduct, or whenever a final order awarding damages is obtained in an administrative proceeding under section 2 of this act, the claim shall be paid from the liability account.
Whenever a final judgment against the state shall have been obtained in any other action, the clerk of the court shall make and furnish to the office of risk management a duly certified copy of such judgment; the office of risk management shall thereupon audit the amount of damages and costs therein awarded, and the same shall be paid from appropriations specifically provided for such purposes by law.
Final judgments for which there are no provisions in state law for payment shall be transmitted by the office of risk management to the senate and house of representatives committees on ways and means as follows:
On the first day of each session of the legislature, the office of risk management shall transmit judgments received and audited since the adjournment of the previous session of the legislature.
During each session of legislature, the office of risk management shall transmit judgments immediately upon completion of audit.
All claims, other than judgments, made to the legislature against the state of Washington for money or property, shall be accompanied by a statement of the facts on which such claim is based and such evidence as the claimant intends to offer in support of the claim and shall be filed with the office of risk management, which shall retain the same as a record. All claims of two thousand dollars or less shall be approved or rejected by the office of risk management, and if approved shall be paid from appropriations specifically provided for such purpose by law. Such decision, if adverse to the claimant in whole or part, shall not preclude the claimant from seeking relief from the legislature. If the claimant accepts any part of his or her claim which is approved for payment by the office of risk management, such acceptance shall constitute a waiver and release of the state from any further claims relating to the damage or injury asserted in the claim so accepted. The office of risk management shall submit to the house and senate committees on ways and means, at the beginning of each regular session, a comprehensive list of all claims paid pursuant to this subsection during the preceding year. For all claims not approved by the office of risk management, the office of risk management shall recommend to the legislature whether such claims should be approved or rejected. Recommendations shall be submitted to the senate and house of representatives committees on ways and means not later than the thirtieth day of each regular session of the legislature. Claims which cannot be processed for timely submission of recommendations shall be held for submission during the following regular session of the legislature. The recommendations shall include, but not be limited to:
A summary of the facts alleged in the claim, and a statement as to whether these facts can be verified by the office of risk management;
An estimate by the office of risk management of the value of the loss or damage which was alleged to have occurred;
An analysis of the legal liability, if any, of the state for the alleged loss or damage; and
A summary of equitable or public policy arguments which might be helpful in resolving the claim.
The legislative committees to whom such claims are referred shall make a transcript, recording, or statement of the substance of the evidence given in support of such a claim. If the legislature approves a claim the same shall be paid from appropriations specifically provided for such purpose by law.
Subsections (3) through (6) of this section do not apply to judgments or claims against the state housing finance commission created under chapter 43.180 RCW.
When a state officer, employee, or volunteer has been represented by the attorney general pursuant to RCW 4.92.070, and the body presiding over the action or proceeding has found that the officer, employee, or volunteer was acting within the scope of his or her official duties, and a judgment or final order under section 2 of this act has been entered against the officer, employee, or volunteer pursuant to chapter 4.92 RCW or 42 U.S.C. Sec. 1981 et seq., thereafter the judgment creditor or claimant with a final order awarding damages under section 2 of this act shall seek satisfaction only from the state, and the judgment or final order awarding damages shall not become a lien upon any property of such officer, employee, or volunteer.
The state of Washington, whether acting in its governmental or proprietary capacity, shall be liable for damages arising out of its tortious conduct to the same extent as if it were a private person or corporation, except as expressly provided in this chapter.
No claim or action subject to the claim filing requirements of RCW 4.92.100 shall be commenced against the state, or against any state officer, employee, or volunteer, acting in such capacity, for damages arising out of tortious conduct until sixty calendar days have elapsed after the claim is presented to the office of risk management in the department of enterprise services. The applicable period of limitations within which an action must be commenced shall be tolled during the sixty calendar day period. For the purposes of the applicable period of limitations, an action commenced within five court days after the sixty calendar day period has elapsed is deemed to have been presented on the first day after the sixty calendar day period elapsed.
A liability account in the custody of the treasurer is hereby created as a nonappropriated account to be used solely and exclusively for the payment of liability settlements and judgments against the state under 42 U.S.C. Sec. 1981 et seq. or for the tortious conduct of its officers, employees, and volunteers and all related legal defense costs.
The purpose of the liability account is to: (a) Expeditiously pay legal liabilities and defense costs of the state resulting from tortious conduct; (b) promote risk control through a cost allocation system which recognizes agency loss experience, levels of self-retention, and levels of risk exposure; and (c) establish an actuarially sound system to pay incurred losses, within defined limits.
The liability account shall be used to pay claims for injury and property damages and legal defense costs exclusive of agency-retained expenses otherwise budgeted.
No money shall be paid from the liability account, except for defense costs, unless all proceeds available to the claimant from any valid and collectible liability insurance shall have been exhausted and unless:
The claims commission has made an award of damages that the claimant has accepted;
The claim shall have been reduced to final judgment in a court of competent jurisdiction; or
The claim has been approved for payment.
The liability account shall be financed through annual premiums assessed to state agencies, based on sound actuarial principles, and shall be for liability coverage in excess of agency-budgeted self-retention levels.
Annual premium levels shall be determined by the risk manager. An actuarial study shall be conducted by the office of the state actuary to make recommendations to the risk manager, office of financial management, and legislature on actions necessary to achieve and maintain solvency of the liability account.
Disbursements for claims from the liability account shall be made to the claimant, or to the clerk of the court for judgments, upon written request to the state treasurer from the risk manager.
The director may direct agencies to transfer moneys from other funds and accounts to the liability account if premiums are delinquent.
The liability account shall not exceed 50 percent of the actuarial value of the outstanding liability as determined annually by the office of risk management. If the account exceeds the maximum amount specified in this section, premiums may be adjusted by the office of risk management in order to maintain the account balance at the maximum limits. If, after adjustment of premiums, the account balance remains above the limits specified, the excess amount shall be prorated back to the appropriate funds.
After commencement of an action in a court of competent jurisdiction or an administrative proceeding in the claims commission upon a claim against the state, or any of its officers, employees, or volunteers arising out of tortious conduct or pursuant to 42 U.S.C. Sec. 1981 et seq., or against a foster parent that the attorney general is defending pursuant to RCW 4.92.070, or upon petition by the state, the attorney general, with the prior approval of the office of risk management and with the approval of the court, following such testimony as the court or claims commission may require, may compromise and settle the same and stipulate for judgment against the state, the affected officer, employee, volunteer, or foster parent.
Payment of claims and judgments arising out of tortious conduct or pursuant to 42 U.S.C. Sec. 1981 et seq. shall not be made by any agency or department of state government with the exception of the office of risk management, and that office shall authorize and direct the payment of moneys only from the liability account whenever:
The head or governing body of any agency or department of state or the designee of any such agency certifies to the office of risk management that a claim has been settled;
The claims commission has made and forwarded a certified copy of a final order and the attorney general certifies that the order is final and was entered in an administrative proceeding on a claim arising out of tortious conduct or under and pursuant to 42 U.S.C. Sec. 1981 et seq.; or
The clerk of court has made and forwarded a certified copy of a final judgment in a court of competent jurisdiction and the attorney general certifies that the judgment is final and was entered in an action on a claim arising out of tortious conduct or under and pursuant to 42 U.S.C. Sec. 1981 et seq. Payment of a judgment shall be made to the clerk of the court for the benefit of the judgment creditors. Upon receipt of payment, the clerk shall satisfy the judgment against the state.
All liability claims arising out of tortious conduct or under 42 U.S.C. Sec. 1981 et seq. that the state of Washington or any of its officers, employees, or volunteers would be liable for shall be filed with the office of risk management.
A centralized claim tracking system shall be maintained to provide agencies with accurate and timely data on the status of liability claims. Information in this claim file, other than the claim itself, shall be privileged and confidential.
Standardized procedures shall be established for filing, reporting, processing, and adjusting claims, which includes the use of qualified claims management personnel.
All claims shall be reviewed by the office of risk management to determine an initial valuation, to delegate to the appropriate office to investigate, negotiate, compromise, and settle the claim, or to retain that responsibility on behalf of and with the assistance of the affected state agency.
All claims that result in a lawsuit or an administrative proceeding shall be forwarded to the attorney general's office. Thereafter the attorney general and the office of risk management shall collaborate in the investigation, denial, or settlement of the claim.
Reserves shall be established for recognizing financial liability and monitoring effectiveness. The valuation of specific claims against the state shall be privileged and confidential.
All settlements shall be approved by the responsible agencies, or their designees, prior to settlement.
The risk management administration account is created in the custody of the state treasurer. All receipts from appropriations and assessments shall be deposited into the account. Only the director or the director's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.
The risk management administration account is to be used for the payment of costs related to:
The appropriated administration of liability, property, and vehicle claims, including investigation, claim processing, negotiation, and settlement, final orders awarding damages under section 2 of this act, and other expenses relating to settlements and judgments against the state not otherwise budgeted;
The nonappropriated pass-through cost associated with the purchase of liability and property insurance, including catastrophic insurance, subject to policy conditions and limitations determined by the risk manager; and
The administration of the prescribed fire claims fund pilot program under RCW 76.04.196.
The risk management administration account's appropriation for risk management shall be financed through a combination of direct appropriations and assessments to state agencies.
The risk management administration account is created in the custody of the state treasurer. All receipts from appropriations and assessments shall be deposited into the account. Only the director or the director's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.
The risk management administration account is to be used for the payment of costs related to:
The appropriated administration of liability, property, and vehicle claims, including investigation, claim processing, negotiation, and settlement, final orders awarding damages under section 2 of this act, and other expenses relating to settlements and judgments against the state not otherwise budgeted; and
The nonappropriated pass-through cost associated with the purchase of liability and property insurance, including catastrophic insurance, subject to policy conditions and limitations determined by the risk manager.
The risk management administration account's appropriation for risk management shall be financed through a combination of direct appropriations and assessments to state agencies.
The office of the state actuary shall have the following powers and duties:
Perform all actuarial services for the department of retirement systems, including all studies required by law.
Advise the legislature and the governor regarding pension benefit provisions, and funding policies and investment policies of the state investment board.
Consult with the legislature and the governor concerning determination of actuarial assumptions used by the department of retirement systems.
Prepare a report, to be known as the actuarial fiscal note, on each pension bill introduced in the legislature which briefly explains the financial impact of the bill. The actuarial fiscal note shall include: (a) The statutorily required contribution for the biennium and the following twenty-five years; (b) the biennial cost of the increased benefits if these exceed the required contribution; and (c) any change in the present value of the unfunded accrued benefits. An actuarial fiscal note shall also be prepared for all amendments which are offered in committee or on the floor of the house of representatives or the senate to any pension bill. However, a majority of the members present may suspend the requirement for an actuarial fiscal note for amendments offered on the floor of the house of representatives or the senate.
Provide such actuarial services to the legislature as may be requested from time to time.
Provide staff and assistance to the committee established under RCW 41.04.276.
Provide actuarial assistance to the law enforcement officers' and firefighters' plan 2 retirement board as provided in chapter 2, Laws of 2003. Reimbursement for services shall be made to the state actuary under RCW 39.34.130 and section 5(5), chapter 2, Laws of 2003.
Provide actuarial assistance to the committee on advanced tuition payment pursuant to chapter 28B.95 RCW, including recommending a tuition unit price to the committee on advanced tuition payment to be used in the ensuing enrollment period. Reimbursement for services shall be made to the state actuary under RCW 39.34.130.
Provide actuarial assistance to the long-term services and supports trust commission pursuant to chapter 50B.04 RCW. Reimbursement for services shall be made to the state actuary under RCW 39.34.130.
Provide actuarial assistance, as requested by the employment security department or the office of financial management, to the employment security department related to the family and medical leave program in Title 50A RCW.
Provide actuarial assistance to the department of enterprise services or the office of financial management pursuant to RCW 4.92.130. Reimbursement for services shall be made to the state actuary under RCW 39.34.130.
Section 14 of this act expires June 30, 2033.
Section 15 of this act takes effect June 30, 2033.