Claims
Against the University UPPS No. 01.04.01
Issue
No. 6
Effective
Date: 10/22/2010
Review:
August 1 E4Y
01. POLICY
STATEMENT
01.01 This UPPS
describes the university’s policy regarding the payment of claims against the university.
It also explains the procedure for filing a claim against the university.
02. LEGAL
AUTHORITY
02.01 The Texas Tort
Claims Act (Civil Practice and Remedies Code, Chapter 101) provides that
individuals may hold the state liable for property damage, personal injury, or
death when caused by the negligence or wrongful act or omission of state
employees acting within the scope of their employment, arising from motor
vehicle or motor-driven equipment operation or from a condition or use of
tangible property.
a. The state's
liability under this Act is limited to $250,000.00 per person and $500,000.00
for any single occurrence for bodily injury or death, and $100,000.00 for any
single occurrence for injury to or destruction of property.
b. Except when the
university, its agents or employees have received active notice that death has
occurred or the claimant received an injury or property damage, any person
making a claim under the Tort Claims Act must give notice to the university
within six months from the date of the incident.
02.02 Section 104.001
of the Civil Practice and Remedies Code provides that the State of Texas is
liable for and will pay damages, court costs, and attorney fees adjudged
against state employees where the damages are based on an act or omission by
the employee in the course of his or her employment with the state.
02.03 The state may not expend funds appropriated by
the General Appropriations Act (GAA), including those made in GAA Article X,
for payment of a judgment or settlement prosecuted or defended by the attorney general
and obtained against the state or a state agency except in certain cases
described in GAA Article IX, Sections 16.02 and 16.03.
02.04
The law requires the university to
report any employment-related judgments or settlements that the Internal Revenue
Service (IRS) defines as wages to the IRS and the Social Security Administration
(SSA).
02.05
The university must follow the
fiscal management policies of The Texas Comptroller of Public Accounts
regarding plaintiffs' awards from settlements and judgments, attorney's fees,
payments of a plaintiff's back wages, interest and damages, punitive,
compensatory or liquidated. The Texas comptroller
requires that all agencies and institutions of higher education verify and
report information to the IRS or SSA, and review all settlement and
judgment payments to insure the university reported them in accordance with
current IRS instructions for information returns (Texas Comptroller FM 02-28,
dated December 17, 2001).
03. OPERATING
PROCEDURES
03.01 University faculty
members and staff employees often supervise students and other employees who
engage in potentially dangerous activities or use potentially dangerous
equipment. In such instances, such supervisors must give instruction and
training in proper safety procedures to be followed.
03.02 In such
instances, faculty members and employees must have each person who participates
in hazardous activities, such as university-sponsored foreign travel or field
trips, or uses dangerous equipment, sign a release, relieving the university
from liability. Employees should consult the university attorney for
preparation of these releases.
03.03 No university
faculty member, administrator or other employee, other than the president of
the university, has authority to make an admission of liability or bind the university
to any settlement when another person suffers injury to his or her person or
damage to his or her property.
03.04 Persons with
knowledge of injuries to persons or damages to
property that might result in university liability should report to the
university attorney, who will convey such information to the director of Human
Resources, the appropriate vice president, the safety officer, and through the vice
president for Finance and Support Services, to the president of the university.
03.05 Since university
employees are eligible for Worker's Compensation, (whether or not loss of work
time or medical expenses are involved), persons with knowledge should report all work-related injuries to the
appropriate administrative head. UPPS No. 04.04.43,
Workers’ Compensation Injuries, Illnesses, and Claims, contains specific
details.
04. PROCEDURES
FOR FILING A CLAIM FOR MONETARY DAMAGES AGAINST THE UNIVERSITY
04.01 One who seeks
monetary damages against the university should take the following steps, in
sequence, to present that claim for payment:
a. Claimants may
obtain claim forms from the University Attorney's Office or on its Web site at:
http://www.txstate.edu/universityattorney/forms.html.
b. The claimant
should complete the form and attach sufficient documents to support the amount
of and the justification for this claim. Examples of supporting documents are
written estimates of damages to property made by qualified experts, medical
bills, police reports, and statements of witnesses describing the incident
giving rise to the claim. The claimant
should return the form to the university attorney.
c. The university attorney
will investigate the claim and recommend to the vice president for Finance and
Support Services whether the university should pay the claim. The vice president
will notify the university attorney of his or her decision as to whether to pay
or reject the claim. The university attorney will notify the claimant of the university's
decision.
d. The University
Attorney’s Office will notify claimants if it requires additional information
or if it requires the claimant to surrender the damaged property at the time
the university pays the claim.
04.02 If the university
determines that the claim is valid, the university may pay from local sources; ordinarily, from the account most
directly linked with the activity that caused the claim.
04.03 The university
requires that the claimant sign a release prepared or approved by the
university attorney if the claim is paid.
05. CLASSIFYING
THE CHARACTER OF JUDGMENT OR SETTLEMENT PAYMENTS
05.01 Employment Tax
Regulations provide that any payments made by an employer to an employee,
on account of involuntary separation from the service of the employer,
constitute wages for income tax withholding purposes regardless of whether the
employer is legally bound by contract, statute, or otherwise, to make such
payments.
05.02 Severance pay is a payment made by
an employer to an employee upon the involuntary termination of employment.
Dismissal pay, severance pay, or other payments for involuntary termination of
employment are wages for employment tax purposes, and
for FICA and income tax withholding purposes.
05.03 Back pay is compensation paid to an
individual for remuneration due at the time of settlement or court award and
relates to a period when the individual performed no services for the employer.
Back pay is wages for FICA and income tax withholding
purposes, except when received on account of a personal physical injury or
physical sickness. Back pay is allocated to periods in which the individual should
have received wages for social security benefit purposes only, not the
computation of FICA tax.
05.04
Front pay is paid to an individual to compensate for
remuneration the individual would have received after the settlement date or
court award. Front pay is wages for employment tax purposes. Back pay and front
pay paid to individuals who are not hired as employees because of violation of
workers’ rights or civil rights statutes are wages for employment tax purposes.
05.05
Compensatory or consequential
damages:
Compensatory damages include compensation for personal
physical injuries, physical sickness and medical care related to emotional
distress resulting from bodily injury. Consequential damages are compensation
for damage, loss, or injury that are consequences or results of negligent act. Compensatory
or consequential damages related to personal physical injury or sickness are
not considered taxable income. Compensatory damages may include taxable awards
not related to physical injury, sickness or employment-related disputes.
05.06 Attorney Fees: The IRS’s position is
that, generally, fees awarded to prevailing plaintiffs under federal and state
statutes belong to the plaintiff and not the attorney; therefore attorney fees
constitute an item of gross income to the client.
06. TAXABILITY OF
JUDGMENT OR SETTLEMENT
06.01 The university attorney
and the office of Payroll and Tax Compliance (i.e., director and tax specialist)
must determine the correct treatment of employment-related judgment and
settlement payments using the four step process outlined in IRS published guidance:
06.02
Responsibility of University Attorney: A judgment or
settlement payment may consist of wage and non-wage elements. The university attorney is responsible for allocating the
elements of the payment in the settlement agreement. The settlement agreement must address and
document tax issues. The university attorney is
responsible for notifying the Office of Payroll and Tax Compliance before an
employment-related settlement or judgment payment is paid to a claimant in
order to determine whether or not the payment should be paid through the payroll
process.
06.03
The Office of
Payroll and Tax Compliance is responsible
for properly paying employment-related settlement or judgment payments that are
defined as wages by the IRS to the claimant through the payroll process,
deducting and paying appropriate taxes, issuing tax reports according to
federal regulations to the claimant using a W-2, and to the attorney using a
1099-MISC if applicable.
06.04
Accounts
Payable may disburse payments not defined
as wages by the IRS. The tax specialist in the Office of Payroll and Tax
Compliance is responsible for reporting settlement or judgment payments on a
1099-MISC statement to the claimant and the attorney if applicable.
07. REVIEWERS
OF THIS UPPS
07.01 Reviewers of
this UPPS include the following:
Position Date
University Attorney August
1 E4Y
Vice President for Finance and August 1 E4Y
Support Services
Director, Payroll and Tax Compliance August 1 E4Y
08. CERTIFICATION
STATEMENT
This
UPPS has been approved by the following individuals in their official
capacities and represents Texas State policy and procedure from the date of
this document until superseded.
University
Attorney; senior reviewer of this UPPS
Special
Assistant to the President
President