Opinion ID: 2460196
Heading Depth: 1
Heading Rank: 7

Heading: Self-Insurance Fund

Text: Participation in a self-insurance fund pursuant to an inter-local cooperation act does not give rise to an implied waiver of sovereign immunity. As noted earlier, this Court has held in a series of cases including Dunlap, Kestler v. Transit Authority of Northern Kentucky, Ky., 758 S.W.2d 38 (1988) and Green River Health Dept. v. Wigginton, Ky., 764 S.W.2d 475 (1989), that the enactment of statutes permitting the purchase of liability insurance constitutes an implied waiver of sovereign immunity. The General Assembly subsequently adopted legislation limiting such a waiver to situations where it was specifically authorized by statute. KRS 44.072 and KRS 44.073(14). Withers stated that the legislature had abrogated the decision of Dunlap. The Court of Appeals erroneously held that KRS 44.070 et seq. has no application to counties. This Court announced in Cullinan that a county is a political subdivision of the Commonwealth and as such is an arm of state government protected by the same sovereign immunity as the state. Franklin County does not have what is generally considered to be commercial insurance. The county participates in a trust, the Kentucky All Lines Fund, sponsored by the Kentucky Association of Counties. Counties have associated to self-insure pursuant to KRS 65.150(3) under the authority of KRS 65.210 et seq., the Inter-local Cooperation Act. There is clearly a difference between a fund of money contributed to by local governments and held in trust for the indemnification of the participating members, officers and employees from the purchase of commercial liability insurance coverage. It could be argued that when a local government pays a premium to a commercial insurance company, that public funds have been expended. It may be appropriate to exempt commercial insurance companies from the protection of sovereign immunity and require such companies to pay a proper claim. However, in a self-insurance group, the funds have not been expended until a claim is made and such funds could be used to reduce contributions or make refunds in the following years. In regard to commercial insurance, any loss sustained is the loss of the insurance carrier. We agree with the Supreme Court of Maine which distinguished participation in state-sponsored self-insurance funds from the purchase of commercial insurance and determined that the participation in a self-insurance fund did not constitute a waiver of sovereign immunity. Maynard v. Com'r of Corrections, 681 A.2d 19 (Me.1996).