Insuring Indian country
Indian tribes are no longer merely casino entrepreneurs or cigarette wholesalers. In conjunction with America’s largest corporations, Indians are now engaged in real estate development, banking and finance, telecommunications, wholesale and retail trade, tourism — and consequently, insurance.
Consider the following:
•Most of Fortune 500’s top 20 companies now do business in Indian country, including Wal-Mart, Exxon, G.M. and Ford (#1-4), Verizon, AT&T, Home Depot, Target and Bank of America.
•Tribes occupy more than 55 million acres of land in 30 states.
•Gaming tribes contributed $32 billion in revenue, $12.4 billion in wages and 490,000 jobs to the U.S. economy in 2001.
•Indian gaming generated nearly $20 billion in revenues in 2005.
The increased interaction of tribes and nontribal parties that seek business, employment or recreation on Indian reservations is the cause of and effect of the dramatic rise in Indian economic development. Indian tribes and non-Indians are executing billions of dollars in commercial transactions and frequently litigating those deals.
The extremely complicated body of tribal, state and federal law known as “Indian law” is the foundation for every transaction in Indian country. Indian law now intersects virtually every arena of commercial practice: tax, finance, merger and acquisition, antitrust, debt collection, real estate, environmental, land use, employment, litigation and tort and insurance law. Moreover, well-established federal Indian legal and jurisdictional principles are increasingly colliding with general tort and insurance defense and coverage issues.
It is vital that everyone in the industry — brokers, carriers, adjustors or defense counsel — understands fundamental Indian law. Most importantly, insurance decision-makers must retain defense counsel that is experienced with tribal litigation and understands the significant political and social implications of any tort lawsuit against a tribal sovereign.
Tribal governments are different
Indian tribes are “distinct, independent political communities, retaining their original natural rights” in matters of local self-government. Although no longer “possessed of the full attributes of sovereignty,” tribes remain a “separate people, with the power of regulating their internal and social relations.” In short, Indians possess “the right … to make their own laws and be ruled by them.” Tribes are also looked upon as “domestic dependent nations,” rather than as foreign nations. It is well settled that the federal government has a unique legal trust responsibility to protect tribal interests. Those long-standing federal common-law principles underlie any tribal tort or insurance matter.
The Federal Tort Claims Act
The Federal Tort Claims Act (FTCA) operates as a limited waiver of the United States’ sovereign immunity, allowing a person injured by a federal employee to seek tort damages against the federal government. A claimant’s remedy against the federal government under the FTCA is “exclusive of any other civil action or proceeding for money damages,” including any tort lawsuit against tribal governments and tribal employees covered by the FTCA.
Under federal-tribal agreements authorized by the Indian Self-Determination and Education Assistance Act (ISDEAA), the United States supplies funding to qualifying tribal governments, allowing them to conduct programs that the federal government would otherwise provide the tribes in fulfillment of its trust responsibility. A 1990 amendment to the ISDEAA provides, in pertinent part:
With respect to claims resulting from the performance of functions … under a contract, grant agreement, or cooperative agreement, authorized by the Indian Self-Determination and Education Assistance Act … an Indian tribe, tribal organization or Indian contractor is deemed hereafter to be part of the [federal government] while carrying out any such contract or agreement and its employees are deemed [federal] employees … while acting within the scope of their employment in carrying out the contract or agreement … [and thus] any civil action or proceeding involving such claims brought hereafter against any tribe, tribal organization, Indian contractor or tribal employee covered by this provision shall be deemed to be an action against the United States and will be defended by the Attorney General and be afforded the full protection and coverage of the Federal Tort Claims Act.
Taken together, the ISDEAA and the FTCA provide coverage for claims resulting from negligent or wrongful, perhaps even intentional, acts or omissions arising from a tribal employee’s performance of functions pursuant to a “self-governance” contract. Federal courts have affirmed the applicability of the FTCA to tortious acts arising out of the following tribal self-governance programs: health care clinics and human service programs, including alcohol and drug abuse prevention; schools and early learning centers; law enforcement; and general contractor construction work. That case law and statistics demonstrate the breadth of the FTCA’s protection for torts arising from tribal self-governmental activities. Essentially, the FTCA provides self-governance tribes primary tort liability coverage for certain garden-variety personal injury claims.
Sovereign immunity
A tribe’s purchase of liability insurance, without more, does not constitute a clear and unequivocal waiver of its sovereign immunity. Indian tribes are generally immune from suit, whether in tribal, state or federal court. A tribe’s inherent immunity generally extends to its casinos and other business enterprises. Tribal immunity also protects tribal officials and employees, which includes casino management and personnel, when acting in their official capacity and within the scope of their employment.
For an action to be brought against a tribe, the tribe or Congress must have clearly or unequivocally waived tribal immunity. The defense of sovereign immunity implicates the subject matter jurisdiction of a tribal, state, or federal court and requires, as a threshold matter, dismissal of any claims against the tribe, with prejudice, if the court cannot find clear or unequivocal waver of immunity.
State and federal courts have ruled that a tribe’s procurement of general liability insurance is not enough, without more, to constitute a clear and unequivocal immunity waiver. Similarly, Congress’s enactment of federal legislation requiring tribes to carry liability insurance in certain business contexts does not constitute an unequivocal immunity waiver. An insurance policy that includes a provision waiving tribal immunity could, if clear, allow suit against the tribe, but an insurance policy, by itself, simply does not waive a tribe’s immunity.
Can an insurer waive immunity?
Unless the policy provides otherwise, an insurer is not authorized or empowered to waive or otherwise limit the tribe’s sovereign immunity. Likewise, the insurer cannot assert the immunity defense absent consent of the tribal sovereign. Many tribal policies make clear that, in the event of a claim or suit against the tribe or tribal officers, employees or agents, the insurer cannot and shall not assert or waive the tribe’s immunity, absent written authorization from the tribe allowing to insurer to do so.
An insurance policy that includes a clear tribal immunity waiver could allow suit against the tribal insured. In addition, some tribal insureds have passed tribal law that authorizes the recovery of monetary damages as long as any judgment or award against the tribe would be paid from its insurance. For example, the Navajo Nation Sovereign Immunity Act includes a provision that permits suit against the nation where any money damages would be covered by insurance. The Navajo Nation Superior Court has held that the Act’s insurance exception constitutes a waiver of immunity, and a federal court would likewise rule that the provision constitutes a clear waiver of the nation’s immunity.
Moreover, it is widely recognized that a tribe can consent to be sued. Typically, a tribe consents to suit through a resolution or ordinance passed by a tribal council that expressly waives sovereign immunity. While a tribal code may provide that a waiver is only valid if clearly expressed in a tribal resolution or ordinance, a tribe may clearly manifest consent to suit through its conduct. Thus, short of a policy provision or tribal law that clearly waives immunity for insurance purposes, a tribal insured can consent to the resolution or adjudication of a claim against the tribe.
Consider this description of a situation where the tribal council for the Mashantucket Pequot Tribe of Connecticut was forced to choose between asserting immunity, thus leaving an injured plaintiff remediless, or compensating her with insurance proceeds:
When a woman was injured by a slip-and-fall in a bingo hall operated by the Mashantucket Pequots in 1988, tribal representatives claimed that the tribe always wanted to compensate her but that [the tribe] was “blocked by its insurer, which refused to pay because it believed she caused her own injury.” A trial court dismissed the woman’s suit on sovereign immunity grounds, but “ensuing negative publicity” and the tribe’s recognition that “it was unfair for people to be injured and have no recourse” prompted the tribal enterprise to affect a limited waiver of immunity.
In the event an injured person files a claim or suit against the tribal insured, policy considerations may warrant the tribe’s consent to the resolution or adjudication of the matter, such that the person can be “made whole” through the use of insurance proceeds.
If the tribe decides it cannot or should not pay any excess liability costs, the tribe can affect a limited, written waiver providing that, with respect to the subject claim, the tribe does not waive or otherwise limit its sovereign immunity beyond coverage and limits available under the policy. A series of state court rulings pertaining to municipal government liability supports this conclusion.
The insurer in tribal court
Generally speaking, a tribal insurer is obligated to defend a claim or suit brought against the tribal insured when the alleged facts could, if proven, impose liability upon the insured within the policy’s coverage. A tribal court likely possesses subject matter jurisdiction over any dispute about the tribal policy’s coverage. Tribal jurisdiction over a reservation-based insurance contract dispute is founded in the U.S. Supreme Court’s landmark decision in Montana v. United States, which confers subject matter jurisdiction to tribal courts for matters arising from “consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements.”
If sued in tribal court, the tribal insurer could challenge the assertion of tribal jurisdiction in federal court. Ordinarily, however, “a federal court should stay its hand ‘until after the tribal court has had a full opportunity to determine its own jurisdiction.'” There are, however, several exceptions to the requirement that a federal court should stay its hand.
This brief discussion highlights a few of the federal Indian legal and jurisdictional issues that increasingly arise out of Indian Country in the tort and insurance realms.
Tribal governments and businesses, insurance professionals, and their respective lawyers should pause to understand such highly nuanced Indian legal concepts, preferably when insurance policies are being written — not when they are about to be litigated.
Gabriel S. Galanda is an attorney in Seattle with Williams, Kastner & Gibbs PLLC. He represents tribes, Indian businesses, and tribal insureds in tribal, state and federal court proceedings, as well as insurers, brokers and adjustors doing business in Indian country. Galanda is a descendant of the Nomlaki and Concow tribes, and an enrolled member of the Round Valley Indian Confederation. E-mail: ggalanda@wkg.com.