Is the State of NC protected from large medical malpractice judgments, and if so, why does NC still buy liability insurance for some agencies?

Plain-English summary

Marvin K. Dorman, Jr. at the NC Office of State Budget and Management was trying to reconcile two seemingly contradictory facts about state liability. First, NC enjoys sovereign immunity from suit, which (he understood) ought to protect the State from medical malpractice judgments. Second, NC was authorizing the purchase of medical liability insurance for certain agencies, which seemed inconsistent with full immunity. He asked the AG to explain.

Senior Deputy AG Ann Reed and Special Deputy AG Elisha H. Bunting, Jr. laid out the two-track structure that explains the apparent contradiction.

Track 1: The State itself is largely immune. Under a line of cases (Guthrie v. State Ports Authority, Smith v. State, Orange County v. Heath, Truesdale v. UNC), the State's sovereign immunity in tort is absolute except where waived. The only relevant waiver is the State Tort Claims Act (G.S. § 143-291 et seq.), which allows tort claims (including medical malpractice claims) against State departments, agencies, and institutions to be brought in the NC Industrial Commission, with the State's liability capped at $100,000 per claim. Above that cap, the State is protected.

Track 2: State employees themselves can be sued personally. This is where insurance becomes necessary. NC case law (Reid v. Roberts, Coleman v. Cooper) distinguishes between "public officers" (immune from personal liability for mere negligence) and "public employees" (not immune; personally liable for negligence). A state-employed nurse, physician, or dentist is a public employee, not a public officer. A negligence judgment against that employee personally is not subject to the State's $100,000 cap and could easily run higher in a serious malpractice case.

NC built layered protections to address that exposure:

The Defense of State Employees Act (G.S. § 143-300.2 et seq.). The State can defend any civil or criminal action against an officer, agent, or employee on account of acts done in the scope and course of employment, and pay settlements or judgments up to the Tort Claims Act limit ($100,000 per claim). This is statutory protection, not insurance.

Excess professional liability insurance (G.S. §§ 58-31-25, 58-32-15). The Public Officers and Employees' Liability Insurance Commission can place insurance for excess coverage above the $100,000 limit. As of the opinion, however, the excess coverage in force excluded medical, nursing, and dental malpractice claims.

1993 specific medical/dental coverage (1993 Sess. Laws ch. 321, § 214). This is the operative provision for medical malpractice insurance. The General Assembly authorized the Secretaries of DHR, DEHNR, and DOC to provide medical liability coverage up to $1,000,000 for employees licensed to practice medicine or dentistry providing services in the course of state employment or training. This authority traces back to 1989 (ch. 752, § 129), continued through 1991 (ch. 689, § 114), and was modified in 1992 (ch. 900, § 131).

UNC hospitals (G.S. § 116-219 et seq.). The UNC system has its own statutory authority to purchase insurance or create self-insurance trusts for individual health-care practitioners.

Community colleges (G.S. §§ 115D-58.12, 115D-24). Community college trustees can buy liability insurance for agents and employees, including for potential medical negligence claims.

So the State is largely immune above $100,000, but the State buys insurance to indemnify and defend its own employees who do not share that immunity. The insurance is not about protecting the State; it is about protecting the people the State employs (and, secondarily, the people they treat).

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Tort Claims Act per-claim cap has been raised in subsequent NC legislation (the current cap is significantly higher than $100,000). The agency reorganizations referenced (DHR became Department of Health and Human Services; DEHNR became DENR then DEQ/DHHS) have shifted the named statutes' application. NC sovereign immunity doctrine has been further developed in many cases since 1994.

Background and statutory framework

Sovereign immunity in NC. Sovereign immunity is the rule that the State cannot be sued without its consent. NC's version is absolute and unqualified absent statutory waiver. The State Tort Claims Act is the relevant waiver for negligence actions.

The $100,000 Tort Claims Act cap (at the time of the opinion). The Industrial Commission was the exclusive forum for tort claims against the State. The cap created predictability for budget planning and a hard ceiling on State exposure. The cap has since been raised in subsequent legislation.

Public officer / public employee distinction. "Public officers" exercise sovereign discretion (judges, elected officials, certain commission members). They enjoy personal immunity from negligence liability for ordinary errors of judgment. "Public employees" carry out duties without sovereign discretion (most state workers, including most clinical staff). They can be sued personally for negligence. Reid v. Roberts (1993) and Coleman v. Cooper (1991) are the leading NC cases on the distinction.

Defense of State Employees Act. This is statutory protection: the State pays for defense and indemnification up to the Tort Claims Act limit. It is not insurance; it is a state-funded indemnity program.

The medical-malpractice-specific coverage. Because excess insurance excluded medical malpractice, the General Assembly enacted standalone authority for DHR/DEHNR/DOC to buy or self-insure for $1M of medical liability coverage. This filled the gap.

Why does NC buy insurance for individual employees? Three reasons named in the opinion: (1) sovereign immunity does not protect the employee personally, (2) the State Tort Claims Act may not adequately compensate a victim of negligent treatment, (3) lack of malpractice coverage was creating problems recruiting and training qualified medical personnel.

Common questions

Q: If I am injured by a state-employed doctor, can I sue?

A: Generally, yes. You can sue the State in the Industrial Commission under the State Tort Claims Act (subject to the per-claim cap). You can also sue the individual doctor personally; the doctor is not protected by the State's sovereign immunity.

Q: Can I get more than $100,000 from the State?

A: At the time of this opinion, no. The Tort Claims Act capped the State's liability. The cap has been raised since 1994; check current law.

Q: Are county-employed health workers in the same position?

A: Counties have their own immunity framework (governmental vs. proprietary functions, the Local Government Tort Claims Act). The analysis differs from State employees and is not addressed in this opinion.

Q: Does this opinion apply to non-medical state employee negligence?

A: The general framework applies broadly, though the specific 1993 $1M medical/dental coverage statute is malpractice-specific. The Defense of State Employees Act covers all employees regardless of profession.

Q: What does "scope and course of employment" mean for indemnification?

A: It generally means the employee was performing assigned duties. Off-duty conduct, intentional misconduct, and conduct outside assigned duties may fall outside the protection.

Q: Are public officers liable for gross negligence?

A: The "mere negligence" immunity for public officers does not extend to gross negligence, willful misconduct, or constitutional violations. Each category has separate doctrines.

Citations from the opinion

• N.C. Gen. Stat. §§ 58-31-25; 58-32-15; 115D-24; 115D-58.12; 116-219 et seq.; 143-291 et seq.; 143-300.2 et seq.
• 1989 Sess. Laws ch. 752, § 129; 1991 Sess. Laws ch. 689, § 114; 1992 Sess. Laws ch. 900, § 131; 1993 Sess. Laws ch. 321, § 214
• Guthrie v. State Ports Authority, 307 N.C. 522, 299 S.E.2d 618 (1983)
• Smith v. State, 289 N.C. 303, 222 S.E.2d 412 (1976)
• Orange County v. Heath, 282 N.C. 292, 192 S.E.2d 308 (1972)
• Truesdale v. University of North Carolina, 91 N.C. App. 186, 371 S.E.2d 503 (1988)
• Zimmer v. N.C. Department of Transportation, 87 N.C. App. 132, 360 S.E.2d 115 (1987)
• Reid v. Roberts, 112 N.C. App. 222, 435 S.E.2d 116 (1993)
• Coleman v. Cooper, 102 N.C. App. 650, 403 S.E.2d 577 (1991)

Source

• Landing page: https://ncdoj.gov/opinions/application-of-sovereign-immunity-to-medical-malpractice-liability-claims/

Original opinion text

By letter dated 29 April 1994 you requested an opinion of this office as to (1) whether the legal principle of sovereign immunity protects the State of North Carolina against medical malpractice/liability claims above the limits set forth in the State Tort Claims Act, and, (2) if so, why does the State currently authorize the purchase and possession of medical liability insurance for certain agencies.

It has long and consistently been held that an action cannot be maintained against the State of North Carolina or a department or agency thereof unless it consents to be sued or upon its waiver of immunity, and that this immunity is absolute and unqualified. Guthrie v. State Ports Authority, 307 N.C. 522, 299 S.Ed.2 618 (1983); Smith v. State, 289 N.C. 303, 222 S.Ed.2d 412 (1976); Orange County v. Health, 282 N.C. 292, 192 S.Ed.2d 308 (1972); Truesdale v. University of North Carolina, 91 N.C. App. 186, 371 S.Ed.2d 503 (1988). The State has maintained its sovereign immunity in tort actions and has waived that immunity only through its Tort Claims Act, G.S. § 143-291, et seq., allowing actions to be brought in the North Carolina Industrial Commission against departments, agencies and institutions of the State caused by negligence of an employee, officer, agent or involuntary servant of the State. Guthrie v. State Ports Authority, supra.; Zimmer v. N.C. Department of Transportation, 87 N.C. App. 132, 360 S.Ed.2d 115 (1987).

This immunity and waiver of immunity for claims based on negligence includes claims based on medical malpractice against state agencies. The State has liability for such claims to a maximum award of $100,000 per claim as provided in the State Tort Claims Act, G.S. § 143-291. There is no liability for amounts in excess of that limit, and, therefore, the State is protected against excessive judgments.

With regard to the second part of your question, we know of no authorization that presently exists for the purchase and possession of medical liability insurance covering state agencies. There is, however, statutory authority for state agencies to purchase and possess medical liability insurance covering state employees.

This is significant because of the potential personal liability of state employees for injuries caused by their negligence in the performance of their duties. "Public officers" are immune from personal liability for "mere negligence" but individual "public employees" are not immune and may be held personally liable for their negligence. Reid v. Roberts, 112 N.C. App. 222, 435 S.E.2d 116 (1993); Coleman v. Cooper, 102 N.C. App. 650, 403 S.Ed.2d 577 (1991).

The reasons for authorizing state agencies to purchase medical liability insurance for state employees vary according to the particular concerns of all parties involved. Sovereign immunity protects the State but does not always adequately compensate a victim of negligent medical treatment or protect and limit the personal liability of the state employee who provides medical treatment, which has led in the past to problems in recruiting and training qualified medical personnel at state institutions.

Authority to purchase insurance is found in several different statutes. The Defense of State Employees, Medical Contractors and Local Sanitarians Act, G.S. § 143-300.2, et seq., provides that the State may provide for the defense of any civil or criminal action brought against an officer, agent or employee of the State on account of an act done or omission made in the scope and course of his office, agency or employment, and to pay settlements or judgments not to exceed the amount allowed in the State Tort Claims Act ($100,000 per claim). This is obviously not insurance but is protection applicable to all state employees and includes claims alleging medical malpractice. This Act also relates to authorized insurance coverage.

G.S. § 58-31-25 and § 58-32-15 authorize the purchase of excess professional liability insurance covering officers and employees of any state department, institution or agency. This insurance is for coverage in excess of that provided by the State Tort Claims and Defense of State Employees Act (presently $100,000 per claim). The insurance is placed through the Public Officers and Employees' Liability Insurance Commission, and premiums are paid by the employing agency.

These statutes authorize the purchase of excess medical liability insurance coverage. However, the excess insurance coverage now in effect for state employees excludes claims for medical, nursing and dental malpractice.

In the 1993 Session laws, Chapter 321, Section 214, the General Assembly authorized the Secretaries of the Departments of Human Resources, Environmental Health and Natural Resources and Correction to provide medical liability coverage not to exceed $1,000,000.00 on behalf of employees licensed to practice medicine or dentistry who are providing such services pursuant to their state employment or training. The coverage allowed may include commercial liability insurance or self-insurance. This coverage is not "excess coverage" and has nothing to do with the Defense of State Employees Act. This authority was first granted by the General Assembly in the 1989 Session Laws, Chapter 752, Section 129, continued in the 1991 Session Laws, Chapter 689, Section 114, and modified slightly in the 1992 Session Laws, Chapter 900, Section 131.

The University of North Carolina (and UNC Hospitals) is authorized pursuant to G.S. § 116-219, et seq., to purchase insurance or create self-insurance trusts to provide coverage "for personal tort liability to individual health-care practitioners who are employees, agents or officers of the University institutions or affiliated health-care entity." Again, this coverage is for individuals.

Community colleges are not state institutions but are included in the provisions of the State Tort Claims Act and Defense of State Employees Act. G.S. § 115D-58.12 and § 115D-24 authorize boards of trustees of community colleges to purchase liability insurance to cover damages caused by the negligence of agents and employees of such boards and institutions. This authority includes potential coverage for medical negligence or malpractice.

We hope this satisfactorily answers your questions. If you have additional questions or wish to discuss this issue further, please contact us.

Ann Reed, Senior Deputy Attorney General

Elisha H. Bunting, Jr., Special Deputy Attorney General