1 2 3 4 5 6 7 KERR COUNTY COMMISSIONERS COURT 8 Special Session 9 Monday, December 31, 2001 10 9:00 a.m. 11 Commissioners' Courtroom 12 Kerr County Courthouse 13 Kerrville, Texas 14 15 16 17 18 Law Enforcement Insurance Coverage for 2002 19 20 21 22 23 PRESENT: FREDERICK L. HENNEKE, Kerr County Judge H. A. "BUSTER" BALDWIN, Commissioner Pct. 1 24 WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 25 LARRY GRIFFIN, Commissioner Pct. 4 2 1 On Monday, December 31, 2001, at 9:00 a.m., a special 2 meeting of the Kerr County Commissioners Court was held in 3 the Commissioners' Courtroom, Kerr County Courthouse, 4 Kerrville, Texas, and the following proceedings were had in 5 open court: 6 P R O C E E D I N G S 7 JUDGE HENNEKE: Good morning, everybody. 8 It's 9 o'clock on Friday, December 31st, Year 2001. We've 9 gathered together one more time. 10 COMMISSIONER WILLIAMS: Monday, the 31st. 11 JUDGE HENNEKE: On Monday, the 31st, okay. 12 Only item of business today is consider and discuss contract 13 for law enforcement liability insurance for 2002. Tommy? 14 COMMISSIONER BALDWIN: Judge, before we get 15 into that, I have an announcement I'd like to make. Did you 16 -- were you going to say something too? 17 (Commissioner Griffin nodded.) 18 COMMISSIONER BALDWIN: Mine is simply that 19 Major Applewhite found Bin Ladin, and he's cured cancer. 20 (Laughter.) 21 COMMISSIONER WILLIAMS: Same evening? 22 COMMISSIONER BALDWIN: Same day. 23 MR. TOMLINSON: I heard that they found Bin 24 Ladin. He's working in a convenience store in Miami. 25 (Laughter.) 3 1 COMMISSIONER GRIFFIN: Mine's a little more 2 serious. I was going to say we've got these precinct maps 3 -- voting maps are available now in a digital form, and I'll 4 get with Shaun as soon as I can and see about getting those 5 on the web site. We'll probably have to put them on as 6 individual pages for each voting precinct, to have the scale 7 large enough to see anything. But, we need to get that word 8 out as quick as we can, because, obviously, tomorrow they're 9 effective and people are going to start asking questions, 10 and rightly so. We'll get that up as soon as we can. Thank 11 you. That means as well as however else we publicize it. 12 COMMISSIONER LETZ: Want to make sure that 13 before they publicize this, that it's on the web page. 14 COMMISSIONER GRIFFIN: Yeah, that might be a 15 good idea. 16 MS. LAVENDER: I'm just going to say soon. 17 COMMISSIONER GRIFFIN: Soon, yeah. Okay, 18 that's it. 19 JUDGE HENNEKE: I'd also remind everyone of 20 the evaluations that we'd like to have in today, if 21 possible. 22 COMMISSIONER LETZ: You're looking at me. 23 How about -- how about Wednesday? 24 COMMISSIONER BALDWIN: And back to the maps, 25 I have a copy of the -- hard copy, and who wants it next? 4 1 It's for to us pass around, just go on down the line. 2 COMMISSIONER WILLIAMS: Any chance we can all 3 get a copy? It's expensive? 4 COMMISSIONER BALDWIN: Pretty good size 5 document. I'll pass it to you, then you figure out what you 6 want to do with it. 7 (Discussion off the record.) 8 SHERIFF HIERHOLZER: While they're doing 9 that, I have one change coming to y'all with our monthly 10 report I'd like to mention to you. You know how the 11 Sheriff's Office, their reports have always been two or 12 three months behind, I guess, a lot of times. The -- now 13 that we're using the computer system more and more, it does 14 monthly reports, lets you know exactly how many people we've 15 packed in the jail, how many have been released from jail, 16 what our civil accounts are like -- I mean civil papers 17 received and served and money from that, commissary account, 18 shows exactly what's been spent and inventoried, and current 19 balances and everything. So, we're going to start going to 20 that. How many calls the Department's had during the month, 21 and then we can even do an end-of-the-year one. The only 22 problem I have with that, your monthly report will be 23 several hundred pages long, at least a hundred pages, 24 because of the way that prints out, and I do not want to 25 have to make -- how many copies? If we make one main copy 5 1 that will be bound for the Commissioners Court, I think it 2 will be ten times more accurate, probably, than anything -- 3 anything that the Sheriff's Department's ever done, and 4 actually shows you in real terms what's going on out there. 5 And we're going to start that January 1. 6 JUDGE HENNEKE: What's your population today? 7 SHERIFF HIERHOLZER: I didn't run one first 8 thing this morning. I know this weekend, Saturday -- this 9 Saturday night, they booked in 16. Friday night, they 10 booked in 11. I don't know how many of those actually got 11 back out, but I'm sure it's over 150. And if we stay within 12 the 80 percent, that's 153. So, we've been running that. 13 COMMISSIONER LETZ: Can you put together, 14 like, a summary sheet of some of the -- look maybe at the 15 new format and then put, like, a one-page summary of some of 16 the key -- I mean, I think -- 17 SHERIFF HIERHOLZER: You don't want to look 18 at my report? 19 COMMISSIONER LETZ: I don't want to look at a 20 hundred pages of report. 21 SHERIFF HIERHOLZER: There's a bottom on each 22 section, and it will be divided into sections. The last 23 paper on each section is a summary sheet on it. It also -- 24 we have the capability of printing out statistics for the 25 year, what our crime rates have been, what offenses have 6 1 gone up and down and things like that, so we'll be doing 2 that, and then a total end-of-the-year report. This is not 3 new stuff that we're buying in the computer. It's just the 4 more and more we get computerized out there and get people 5 trained to use it, and it actually compiles it all. 6 COMMISSIONER GRIFFIN: I would suggest that 7 perhaps we can look at the first report, and then we may be 8 able to come up with some -- maybe even Shaun could do it, 9 to rearrange some of the formatting to come up with -- 10 COMMISSIONER LETZ: One- or two-page summary 11 of -- 12 COMMISSIONER GRIFFIN: It would just be on 13 the top of it. File one big report and have a couple pages 14 summary, maybe, on the top. 15 SHERIFF HIERHOLZER: I think you'll find it a 16 lot more informative than what y'all have gotten in the 17 past. One thing it does not show is mileage driven, because 18 there's just not a format in there, unless we go to the 19 fleet management part of that computer system, which we 20 don't have right now. But one of those things I'd like to 21 mention is, just looking last week, our main transport 22 officer, Carl Schultz, in transports alone for the year 23 2001, he drove 72,000 miles, just hauling prisoners back and 24 forth. So, things have been extremely busy out there, going 25 back over it, but I'll get that to y'all starting the 1st. 7 1 JUDGE HENNEKE: Okay. Thank you, Sheriff. 2 Tommy, you ready? 3 MR. TOMLINSON: Yeah, I'm ready. 4 JUDGE HENNEKE: Okay. 5 MR. TOMLINSON: I want to go ahead and let 6 Jack Furman come up and address the Court about -- about the 7 quotes he has of the law enforcement liability for the jail, 8 as well as -- as the detention facility. First off, the -- 9 you know, we've gone through the differences in -- in the 10 types of -- in the types of coverage or types of policies. 11 The quote we got from Texas Association of Counties is for 12 claims made, and that -- that quote was $49,114. 13 JUDGE HENNEKE: That was for both the 14 facilities? 15 MR. TOMLINSON: That's for both, yes. Jack's 16 going to tell you what he has now for -- for changing -- 17 either staying with the occurrence policy for both, or 18 changing to a claims made policy, which would be the same 19 as -- as what TAC proposed. 20 (Discussion off the record.) 21 COMMISSIONER BALDWIN: Would that be former 22 mayor Jack? 23 MR. FURMAN: Heavy on the "former." I don't 24 know the protocol. Am I supposed to give my name and 25 address and stuff? I'm Jack Furman, 141 Saint Andrews Loop, 8 1 Kerrville. This is hot off the presses, and so I'm usually 2 a little more polished than I'll be, and I apologize for the 3 lack of polish. The claims made coverage we can talk about, 4 if you'd like to, as opposed to the occurrence coverage. In 5 my opinion, occurrence is -- is a safety net always to have, 6 but it always costs more. On the first year, because on the 7 first year, really not much is being covered under a claims 8 made policy, usually on a claims made policy there's a 9 retroactive date, which is the inception date of the policy, 10 and in order for a claim to be covered, the claim has to be 11 made during that policy period. 12 And, what happens with the kind of things 13 that -- that Rusty's privileged to get in the way of claims, 14 is they have fairly long tails, and so the things that are 15 pending now, and even things that were reported during the 16 past year, didn't occur during the past year, but in the 17 previous year. So, what happens with claims made policies 18 is that the first year, there may be claims, but it's pretty 19 rare. The second year, there's a greater likelihood, and 20 the third and fourth year, it's gotten mature. Most 21 companies -- I don't know how TAC does it, but most -- most 22 companies rate claims made policies by using a percentage of 23 the occurrence, or a percentage of the mature premium, so 24 most companies will use 65 or 70 percent the first year of a 25 mature premium, or an occurrence premium. 9 1 With that, let me give you the premiums. The 2 occurrence premium for -- and fees for the Sheriff's Office, 3 for the law enforcement liability of the Sheriff's Office, 4 would be $53,819. For the juvenile facility, $10,974. If 5 you elect to go to a claims made form, the claims made form 6 for the Sheriff's Office, bottom line would be $38,453, and 7 for the juvenile facility, $8,005. 8 COMMISSIONER WILLIAMS: What was that first 9 number, Jack? 10 MR. FURMAN: The first number on the claims 11 made? 12 COMMISSIONER WILLIAMS: Of the two you just 13 gave, yes. 14 MR. FURMAN: $38,453. 15 COMMISSIONER WILLIAMS: Thank you. 16 MR. FURMAN: And on the juvenile facility, 17 $8,005. That would be a total of $46,458. And I think that 18 pretty well illustrates the difference between claims made 19 and occurrence. 20 COMMISSIONER GRIFFIN: Now, you're saying 21 that, like, out somewhere around the third year or so, the 22 premium for the claims made would be about the same as this 23 occurrence being quoted today? 24 MR. FURMAN: Yes, sir. 25 SHERIFF HIERHOLZER: Then there's a 10 1 difficulty going back to the occurrence from a claims made, 2 isn't there? 3 MR. FURMAN: Well, the -- the present policy, 4 the County had claims made policies because that was all 5 that was available for a number of years, and the current 6 policy has a retroactive date -- let me back off of that. 7 The current policy is an occurrence policy, the one that's 8 expiring at midnight tonight. When it changed -- when that 9 form changed from the claims made form to an occurrence 10 form, we were concerned about things that may have happened 11 back in the claims made time, so we had them attach an 12 endorsement, which is still there, which covers claims that 13 are -- that occurred back to that retroactive date, which I 14 believe is in 1986. So, it has quite a long -- that would 15 be perpetuated under the -- under the occurrence form, so 16 that has a long tail on it, that -- that cover claims. 17 Should you go to a claims made policy, that means that if it 18 didn't occur in the last three or so years that we've had 19 the occurrence form, that there wouldn't be any coverage. 20 If I've totally confused you, I apologize. 21 COMMISSIONER BALDWIN: We now have the 22 occurrence form of insurance? 23 MR. FURMAN: That's correct. 24 COMMISSIONER BALDWIN: And if we changed over 25 to the claims made program, and the claims made program came 11 1 into effect midnight tonight, then some kind of occurrence 2 that Rusty deals with daily that happened last year would 3 not be covered? 4 MR. FURMAN: No, last year it would be 5 covered, because there was an occurrence form. 6 COMMISSIONER BALDWIN: Okay. What about the 7 year before? 8 MR. FURMAN: I -- 9 COMMISSIONER BALDWIN: I don't know if they 10 drag out two or three years. 11 MR. FURMAN: Commissioner Baldwin, I 12 apologize, but I don't -- I apologize for not being as 13 prepared as I could be, but this is -- I got this at 14 14 minutes before the hour, so I didn't have time to put much 15 together. I can't remember if the occurrence form has been 16 going for three or four years. 17 COMMISSIONER BALDWIN: I'm just trying to 18 see -- 19 MR. TOMLINSON: I think it's three, Jack. I 20 think this will be the beginning of the fourth year. 21 MR. FURMAN: Okay. The current form, then, 22 has been in force for three years, so 2001, 2000, and 1999. 23 So, anything -- if a claim were reported in January, let's 24 say, that happened in 1998 -- 25 COMMISSIONER GRIFFIN: Wouldn't be covered. 12 1 MR. FURMAN: -- it wouldn't be covered under 2 a claims made form. If you perpetuate the occurrence form, 3 it would be, because they're holding that retroactive date 4 of '86. 5 COMMISSIONER BALDWIN: Yeah. 6 COMMISSIONER WILLIAMS: But if you switch 7 from occurrence to claims made, there is a potential for a 8 gap in coverage; is that correct? 9 MR. FURMAN: Yeah. And -- and, Commissioner 10 Williams, what it would really amount to, in my opinion -- 11 and I'm not -- I'm not in the business of legal opinions. 12 Maybe the Judge is, but it would amount to a statute of 13 limitations. I know there's some ways around it, because 14 we've experienced that in our own business, but that's all I 15 know. The statute of limitations, I believe, is normally 16 two years. Is that right, Judge? 17 JUDGE HENNEKE: Depends on what the -- what 18 the claim would be. 19 MR. FURMAN: Well, if you've got a juvenile, 20 it's -- yes, it does sometimes depend on what the claim is. 21 JUDGE HENNEKE: And I know the statute runs 22 from the time when the person knows or should have known, as 23 a reasonable man, about the claim. 24 MR. FURMAN: Yeah. So, in my opinion, your 25 decision is, do we want to stay with the claims made -- I 13 1 mean, do we want to start a claims made or do we want to 2 stay with the occurrence form, which protects you back to 3 '86? 4 COMMISSIONER GRIFFIN: It's like all 5 insurance, I would think. That, you know, if -- you could 6 go the lower rate and go to claims made, but you're taking a 7 risk that -- and one claim can break the bank. I mean, 8 it's -- that's the dilemma. 9 JUDGE HENNEKE: Sheriff? 10 SHERIFF HIERHOLZER: As far as the claims 11 that I currently know about, the question I have, one of 12 those has already been thrown out by federal court, but it 13 was a '98 claim, I believe, and there was a Notice of Appeal 14 on the federal court decision. Now, would that one be 15 covered? 16 MR. FURMAN: Yes, I think it -- yes. Yes, it 17 would, because that is an ongoing claim, and until it's -- 18 until it's finally adjudicated, yes, it would. 19 SHERIFF HIERHOLZER: The other question I 20 have -- and maybe Tommy can answer this -- with the TAC 21 coverage, is -- and this is just rumor I heard, is that the 22 TAC coverage does not necessarily cover attorney expenses. 23 It covers the claims, but not necessarily the attorney. 24 MR. TOMLINSON: Well, that's -- that's 25 optional with the coverage. 14 1 SHERIFF HIERHOLZER: And then my last 2 question, I know the representation the County's had over 3 the last several years, and the -- the normal attorney or 4 law firm that the insurance company uses has represented 5 this County extremely well. In fact, I have a meeting with 6 the attorneys on Thursday over another claim that occurred 7 back in 1999 that is still pending. Now, I would hate to 8 see us go to a less expensive policy, but at the same time 9 jeopardize the excellent representation that the County's 10 gotten in these lawsuits, 'cause they all start out, of 11 course, with millions of dollars, and we've got an attorney 12 that -- or a law firm that specializes in law enforcement 13 and takes care of that claim extremely well. The last one 14 we had, like I said the other day, went all the way to 15 federal court, started a jury trial a few months ago, and 16 when they broke for lunch, the federal judge threw it out. 17 And I credit that with the attorney and the law firm that 18 represented the County. And I would hate to -- to go to an 19 unknown right now in what kind of representation we're going 20 to get, when we know what kind we're having now. 21 COMMISSIONER LETZ: Well, I mean, but either 22 way, Jack's cheaper. I mean, it's not the issue, I don't -- 23 'cause your claim is cheaper than TAC's claim. 24 MR. FURMAN: Yes, it is a little bit. 25 COMMISSIONER LETZ: I don't think that would 15 1 be as much of an issue as representation, so I -- the 2 question I do have, Jack, is this issue, the claims made 3 would be $46,458. Next year it's going to likely go up? 4 MR. FURMAN: Next year -- no, its not going 5 to "likely" go up. 6 COMMISSIONER LETZ: It is going up. 7 MR. FURMAN: And there's more than one thing 8 at work there. 9 COMMISSIONER LETZ: Right. But in two years, 10 it's going to be the same amount as the $63,000-plus? 11 MR. FURMAN: Probably -- well -- 12 COMMISSIONER LETZ: So, it's basically -- 13 MR. FURMAN: On a relative scale, probably, 14 yes. 15 COMMISSIONER LETZ: So, its basically -- 16 we're looking at a -- a one- to maybe a two-year savings, 17 and then the premium's going to be the same anyway, and for 18 that difference we're getting the risk from some old 19 lawsuits, basically. I mean -- 20 COMMISSIONER GRIFFIN: Right. And that's -- 21 COMMISSIONER LETZ: The savings isn't that 22 good. I mean, it's not as good when you start -- it's not 23 really savings; it's a very temporary savings. 24 MR. FURMAN: It's a bird in the hand that may 25 fly out of the bush a little bit later. 16 1 COMMISSIONER WILLIAMS: It could be a 2 penny-wise, pound-foolish situation. Potential for it. 3 MR. TOMLINSON: But, as far as the budget 4 issue, the Detention Center part of it can be handled, of 5 course, directly by -- by the Detention Center revenue, so 6 that part of it's not an issue with -- with the budget, as 7 far as General Fund goes. It is -- it is slightly more 8 than -- than we have in the budget, but that may be true 9 with -- with any kind of -- of our insurance premium that we 10 may pay this year, because -- just because of the market. 11 COMMISSIONER WILLIAMS: How much did you lay 12 in the budget for this item? 13 MR. TOMLINSON: I think it's $48,000. 14 MR. FURMAN: I think it's probably a little 15 more than that, if you -- if you did last year's. 16 MR. TOMLINSON: Well, I don't -- that's just 17 from my memory, but that's close. 18 MR. FURMAN: There's one other thing, in 19 fairness, I need to mention that I have not -- I'm not sure 20 how much Rusty knows, but both of these things include 21 National Sheriff's Association fee. In other words, the 22 Sheriff's Department joins the National Sheriff's 23 Association, and there are benefits involved in that to the 24 Sheriff's Department, and also to the Sheriff and to the 25 deputies. There's an accidental death benefit, for example, 17 1 and I'm not sure what all the benefits are, but there are 2 some benefits involved. 3 COMMISSIONER GRIFFIN: That's in both? 4 MR. FURMAN: Yes. That's in both, yes. 5 COMMISSIONER WILLIAMS: Rusty, I'm a little 6 bit confused by your question about legal coverage -- legal 7 services under our existing coverage. Are you suggesting we 8 don't have the legal services under the existing coverage? 9 SHERIFF HIERHOLZER: Under the existing 10 coverage, I'm saying that we have excellent representation. 11 COMMISSIONER WILLIAMS: Okay. 12 SHERIFF HIERHOLZER: Okay? If we change that 13 coverage, you know, to TAC or something, I'm just concerned 14 about the representation that we have. I don't -- and I 15 don't know who TAC would use for law firms and that. I just 16 know the current one that we have that end up with anything 17 major are -- primarily represent law enforcement agencies. 18 They know exactly what they're doing. They do an excellent 19 job. They come up -- the attorney and his assistant come 20 up, spend time with us going over the case, going over all 21 the documentation, and spend a lot of time on it. I know 22 what type we're getting now, and I have no complaints about 23 what we're getting now. 24 COMMISSIONER WILLIAMS: Okay. So, you're 25 talking about, you know, the level of service, but you're 18 1 not suggesting if a change is made, that there wouldn't be 2 attorney service, because somebody has to defend the 3 insurance company. It's not going to be us. 4 SHERIFF HIERHOLZER: I just don't have an 5 idea if they would use the same pool of law firms or not, or 6 what. I'm just kind of concerned on that part. 7 COMMISSIONER WILLIAMS: Okay. 8 SHERIFF HIERHOLZER: I know what we have now. 9 COMMISSIONER LETZ: I've heard enough, in my 10 opinion. I'll make a motion that we go with the occurrence 11 -- continue with an occurrence policy through Jack Furman's 12 agency. 13 COMMISSIONER GRIFFIN: Second. 14 COMMISSIONER BALDWIN: Third. 15 JUDGE HENNEKE: Motion by Commissioner Letz, 16 second by Commissioner Griffin, that the Commissioners Court 17 renew the occurrence law enforcement liability insurance 18 policy offered through Jack Furman's insurance agency. 19 What's the carrier, Jack? 20 MR. FURMAN: Beg pardon? 21 JUDGE HENNEKE: What's the carrier? 22 MR. FURMAN: The carrier is C.N.A. 23 JUDGE HENNEKE: Offered by C.N.A. insurance 24 carrier. Any further questions or comments? If not, all in 25 favor, raise your right hand. 19 1 (The motion carried by unanimous vote.) 2 JUDGE HENNEKE: Opposed, same sign. 3 (No response.) 4 JUDGE HENNEKE: Motion carries. 5 MR. FURMAN: Thank you, gentlemen. 6 JUDGE HENNEKE: Thank you, Jack. 7 MR. FURMAN: I'm going to go back and get you 8 a binder. 9 JUDGE HENNEKE: Anything else? Go for it. 10 Happy New Year. We're adjourned. 11 (Commissioners Court adjourned at 9:25 a.m.) 12 - - - - - - - - - - 13 STATE OF TEXAS | 14 COUNTY OF KERR | 15 The above and foregoing is a true and complete 16 transcription of my stenotype notes taken in my capacity as 17 County Clerk of the Commissioners Court of Kerr County, 18 Texas, at the time and place heretofore set forth. 19 DATED at Kerrville, Texas, this 31st day of December, 20 2001. 21 22 23 JANNETT PIEPER, Kerr County Clerk 24 BY: _________________________________ Kathy Banik, Deputy County Clerk 25 Certified Shorthand Reporter