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Texas risk management: Charitable Immunity and Liability Act of 1987

By Higginbotham on December 27 , 2017

Texas charitable immunity act

The Charitable Immunity and Liability Act of 1987 (the Act) was passed to reduce the liability exposure and insurance costs of charitable organizations and their employees and volunteers in order to encourage volunteer services and maximize the resources devoted to delivering these services.

Definitions

Charitable Organization – (in summary) an organization exempt from federal income tax under Section 501(c)(3) or 501(c)(4) operated exclusively for charitable, religious, prevention of cruelty to children and animals, youth sports and youth recreational, neighborhood crime prevention and patrol, fire protection and prevention, emergency medical and hazardous material response services and educational purposes.

Volunteer – a person rendering services for, or on behalf of, a charitable organization who does not receive compensation in excess of reimbursement for expenses incurred. The term includes a person serving as a director, officer, trustee or direct service volunteer, including a volunteer health care provider.

Employee – any person, including an officer or director, who is in the paid service of a charitable organization, but not including an independent contractor.

Volunteer Health Care Provider – (in summary) an individual who voluntarily provides health care services without compensation or expectation of compensation and is licensed to practice medicine.

Hospital System – a system of hospitals and other health care providers located in Texas that are under the common governance or control of a corporate parent.

Person Responsible for the Patient – (in summary) a person with legal responsibility for the care of a patient.

Liability Under the Act

Exclusions (§ 84.007)

The Act does not apply to an act or omission that is intentional, willfully negligent or done with conscious indifference or reckless disregard for the safety of others. It is also unlikely that there will be insurance coverage for these types of acts or omissions.

The Act does not apply to a charitable organization that does not have liability insurance coverage in effect for the acts or omissions of the organization and its employees and volunteers. Coverage must be in the amount of at least $500,000 for each person, $1 million for each single occurrence for death or bodily injury and $100,000 for each single occurrence for injury to or destruction of property.

Protection for Nonhospital Charitable Organizations (§ 84.006)

The Act limits a nonhospital charitable organization’s liability for civil lawsuits, including a lawsuit that arises from the operation or use of motor-driven equipment, for damages based on an act or omission by the organization or its employees or volunteers. The maximum damages are $500,000 for each person, $1 million for each single occurrence of bodily injury or death and $100,000 for each single occurrence for injury to or destruction of property.

Please note, the organization is likely to be included in any claim for bodily injury, death or damage to property that results from an occurrence involving an employee or volunteer while conducting business for the organization. These claims should be covered by the organization’s commercial general liability or commercial auto liability policy, as appropriate.

The Act most directly affects commercial general liability and commercial auto liability; there are various types of liability that the Act does not apply to, for example: D&O liability, professional liability, employment practices liability and sexual abuse and molestation liability. 

Protection for Hospital Systems (Hospital Charitable Organizations) (§ 84.0065)

The Act limits a hospital system’s liability for civil lawsuits for damages based on an act or omission by the hospital or hospital system, or its employees, officers, directors or volunteers, to money damages in a maximum amount of $500,000 for an act or omission resulting in death, damage or injury to a patient. If the patient is a minor, or is otherwise legally incompetent, the person responsible for the patient must sign a written statement that acknowledges:

  1. that the hospital is providing care that is not administered for or in expectation of compensation; and
  2. the limitations on the recovery of damages from the hospital in exchange for receiving the health care services.

This limitation of money damages applies even if:

  • the patient is incapacitated due to illness or injury and cannot sign the acknowledgment statement required by that subsection; or
  • the patient is a minor, or is otherwise legally incompetent, and the person responsible for the patient is not reasonably available to sign the acknowledgment statement required by that subsection.

Protection for Employees (§ 84.005)

Employers are responsible for damages based on acts or omissions by its employees in the course and scope of their employment, and standard commercial insurance policies will provide coverage for these claims. 

The Act limits the liability of employees of a charitable organization for civil lawsuits, including a lawsuit that arises from the operation or use of motor-driven equipment, for damages from an act or omission by employees in the course and scope of their employment based on the type of organization (i.e. nonhospital or hospital).

Protection for Volunteers (§ 84.004(a))

Except for death, damage or injury to a person or property arising from the operation or use of motor-driven equipment (see below), a volunteer of a charitable organization is immune from civil liability for an act or omission resulting in death, damage or injury if the volunteer was acting in the course and scope of the volunteer's duties or functions, including as an officer, director or trustee within the organization.

Protection for Volunteer Health Care Providers (§ 84.004(c))

Except for death, damage or injury to a person or property arising from the operation or use of motor-driven equipment (see below), a volunteer health care provider who is serving as a direct service volunteer of a charitable organization is immune from civil liability for an act or omission resulting in death, damage or injury to a patient if:

  1. the volunteer commits the act or omission in the course of providing health care services to the patient;
  2. the services provided are within the scope of the license of the volunteer; and
  3. before the volunteer provides health care services, the patient or, if the patient is a minor or is otherwise legally incompetent, the person responsible for the patient signs a written statement that acknowledges:
    1. that the volunteer is providing care that is not administered for or in expectation of compensation; and
    2. the limitations on the recovery of damages from the volunteer in exchange for receiving the health care services.

Exceptions for Motor-Driven Equipment (§ 84.004(d))

A volunteer, including a volunteer health care provider, of a charitable organization is liable to a person for death, damage or injury to a person or property proximately caused by an act or omission arising from the operation or use of motor-driven equipment, including an airplane, to the extent insurance coverage is required by law, and to the extent of existing insurance coverage applicable to the act or omission.

In Texas, an owner or operator of a motor vehicle must maintain vehicle liability insurance in the amount of at least $30,000 for bodily injury or death for each person, $60,000 for each accident for bodily injury or death and $25,000 for each accident for damage to or destruction of others’ property.

Summary

Although the Charitable Immunity and Liability Act provides limited immunity to nonprofit organizations, there are many loopholes and exceptions. When you partner with Higginbotham for your business insurance, we provide you with the tools you need to make smart decisions about managing your risks, including your contractual exposures. Learn more about our Texas risk management services and contact our team.

 

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