Does a state Consumer Protection Board employee serving as the Board's representative on an advisory board to the Targeted Accessibility Fund get state defense and indemnification, or does the Board need to buy private insurance?

Plain-English summary

The Public Service Commission, in Commission Opinion No. 98-10, ordered creation of the Targeted Accessibility Fund (TAF) to finance universal-telephone-service programs such as Lifeline, E-911, and Telecommunications Relay Service for the hearing-impaired. The TAF would be administered by the New York Intrastate Access Settlement Pool, subject to PSC oversight, with a ten-member Advisory Board representing telecommunications industry and consumer groups. One Advisory Board seat was reserved for the State Consumer Protection Board (CPB). The CPB designated one of its employees to fill that seat permanently. CPB's counsel asked the AG whether the CPB or that employee needed liability insurance for actions taken on the Advisory Board.

The AG analyzed two questions separately.

The employee's defense and indemnification. Public Officers Law § 17 provides for defense and indemnification of State "employees," defined as "any person holding a position by election, appointment or employment in the service of the state" (§ 17(1)(a)). A CPB employee serving as the CPB's representative on the TAF Advisory Board is carrying out CPB job duties, so the employee is in the service of the State. On compliance with § 17's procedural requirements, the State must defend or reimburse defense costs in any civil action arising out of acts or omissions within the scope of public employment (§ 17(2)(a)), with a parallel indemnification provision (§ 17(3)(a)).

The AG cited its earlier Op Atty Gen No. 87-F10, which reached the same conclusion for State Department of Labor employees serving on private industry councils under the federal Job Training Partnership Act. The federal statute required public-employment-service representation; the Department considered such service part of its employees' job duties. The analysis here was identical: the PSC's Procedural Manual governing TAF requires CPB representation, and serving on the Advisory Board falls within the CPB employee's job duties.

So if the employee was comfortable having the Office of the Attorney General provide his defense under § 17, no private insurance was required for defense costs. An appropriation of general funds is available to pay any judgment or settlement.

Liability of the CPB itself. The CPB is part of State government (Executive Law § 550). For lawsuits seeking money damages against the State (including the CPB), the Court of Claims is almost always the forum. The Attorney General defends the State there, and a State appropriation pays any judgment.

The opinion noted exceptions. Some federal-court suits (injunctive relief with a monetary component, or money damages where Congress has validly abrogated Eleventh Amendment immunity) and rare out-of-state-court suits do not run through the Court of Claims. Division of the Budget Bulletin B-1129 (October 27, 1992) directs that judgments not covered by the Court of Claims or § 17 appropriations come from agency appropriations, with examples including backpay awards, monetary awards in courts other than the Court of Claims, and Equal Access to Justice Act fees (CPLR Article 86). The AG observed that the CPB and its representative were unlikely to face liability in any of those exceptional situations, so insurance was a discretionary consideration rather than a necessity.

The bottom line for CPB's counsel: § 17 covers the employee, the State Court of Claims and general appropriations cover the agency, and insurance is at most a tail-risk supplement, not a structural necessity.

Currency note

This opinion was issued in 1998. 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.

Common questions

What does Public Officers Law § 17 do?

Section 17 provides State defense and indemnification of State employees for civil actions arising out of their public employment. The State picks up defense costs and pays any judgment or settlement, on the employee's compliance with procedural requirements (timely notice to the AG, cooperation with the defense).

Why does the Court of Claims matter?

The Court of Claims is where money claims against the State are heard. Sovereign immunity bars most such suits in regular trial courts. The State has consented to suit in the Court of Claims under the Court of Claims Act (§ 8), and judgments from that court are paid from a State appropriation. For most plaintiffs suing State agencies for money, the Court of Claims is the exclusive forum.

When do § 17 and Court of Claims appropriations not cover something?

The Division of the Budget Bulletin B-1129 (October 27, 1992) carves out: backpay awards in any court against the State or the agency; monetary awards in courts other than the Court of Claims; and EAJA fee awards under CPLR Article 86 against the State, the agency, or officials acting in their official capacities. Those payments come out of agency appropriations rather than the general Court-of-Claims or § 17 appropriations.

Does Eleventh Amendment immunity affect this?

Yes, in federal court. The Eleventh Amendment generally bars federal-court suits for money damages against States. Congress can validly abrogate that immunity in some statutes (civil rights statutes, certain federal benefits programs), and a State agency sued in federal court under a valid abrogation is a rare exception to the Court-of-Claims-only rule.

Could the CPB still want insurance?

For the rare federal-court or out-of-state-court suit, yes. The AG specifically left that as a discretionary call: "To the extent that the CPB is concerned about liability in those exceptional situations, it could consider the possibility of insurance at reasonable cost." Most State agencies do not carry such insurance because the rare-case exposure is small.

Background and statutory framework

Public Officers Law § 17 is the main statutory engine for State defense and indemnification. It was enacted to provide State employees with assurance that they would not bear personal financial risk for acts done within the scope of public employment. The "in the service of the state" formulation in § 17(1)(a) is broad and reaches employees deputized to serve on boards or panels as part of their State job.

The Court of Claims structure dates to the early twentieth century. Court of Claims Act § 8 codifies the State's waiver of sovereign immunity for suits in the Court of Claims, on the condition that other-court suits against the State are barred. The result is a centralized forum where the State is consistently represented by the Attorney General and judgments are paid from general appropriations.

Executive Law § 550 places the CPB within State government. That's the predicate for the rest of the analysis: as a State entity, the CPB benefits from the Court-of-Claims structure and the State-employee protections of § 17.

The Federal Job Training Partnership Act analogy in Op Atty Gen No. 87-F10 was useful precedent. The general principle from that opinion is that when a State employee is statutorily directed to serve in an outside body as part of his State duties, the outside-body service stays inside § 17's coverage.

Citations

• Civil Practice Law and Rules, Article 86 (Equal Access to Justice Act fee provisions).
• Court of Claims Act § 8 (State's consent to suit in Court of Claims).
• Executive Law § 550 (Consumer Protection Board placement in State government).
• Public Officers Law § 17 (State defense and indemnification scheme).
• Public Officers Law § 17(1)(a) (definition of "employee").
• Public Officers Law § 17(2)(a) (defense or reimbursement of defense costs).
• Public Officers Law § 17(3)(a) (indemnification provision).
• Op Atty Gen No. 87-F10 (Labor Department employees on JTPA private industry councils covered by § 17).
• Division of the Budget Bulletin B-1129 (October 27, 1992) (agency-appropriation payment categories).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/98-F11_pw.pdf

Original opinion text

CIVIL PRACTICE LAW AND RULES, ART 86; COURT OF CLAIMS ACT § 8;
EXECUTIVE LAW § 550; PUBLIC OFFICERS LAW § 17.
An employee of the Consumer Protection Board when serving as
the Board's representative on the Advisory Board to the Targeted
Accessibility Fund is an employee in the service of the State who
is covered by the provisions of Public Officers Law § 17. In
virtually all cases, a suit against the Consumer Protection Board
for monetary damages must be brought against the State in the
New York State Court of Claims where the Office of the Attorney
General defends the State and an appropriation is available to
pay any judgment or settlement.
December 4, 1998
Hon. Timothy S. Carey
Chairman and Executive Director
State Consumer Protection Board
5 Empire State Plaza, Suite 2101
Albany, NY 12223-1556

Formal Opinion
No. 98-F11

Dear Chairman Carey:
Your counsel has asked whether the Consumer Protection Board
("CPB") or its employee representative on the Advisory Board of
the newly created Targeted Accessibility Fund needs insurance
protection from potential liability associated with any official
actions the Advisory Board may take. Your counsel has advised us
that the Public Service Commission recently ordered creation of
the Targeted Accessibility Fund ("TAF") to finance certain
universal telephone service programs such as Lifeline, E-911 and
Telecommunications Relay Service for the hearing impaired.
Commission Opinion No. 98-10.
The Public Service Commission ordered the TAF to be
administered by the New York Intrastate Access Settlement Pool,
subject to the Commission's oversight. A ten-member Advisory
Board also will oversee TAF operations, in compliance with the
Commission order and a Procedural Manual approved by the
Commission. That Manual provides that the Advisory Board is to
be comprised of telecommunications industry and consumer group
representatives, including one representative from the CPB.
Your counsel has advised us that you have designated a CPB
employee to serve as the permanent representative on the Advisory
Board. Counsel has asked whether insurance is required to shield
the CPB and the designated employee from liability associated
with any official actions the Advisory Board may take.

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Section 17 of the Public Officers Law provides for defense
and indemnification of State "employees." An "employee" is
defined as "any person holding a position by election,
appointment or employment in the service of the state . . .."
Public Officers Law § 17(1)(a). In our view, a CPB employee who
serves as the CPB representative on the TAF Advisory Board is
carrying out CPB job duties and therefore is an "employee . . .
in the service of the state." Upon compliance by the employee
with section 17's procedural requirements, the State is required
to defend the employee or reimburse defense costs "in any civil
action or proceeding in any state or federal court arising out of
any alleged act or omission which occurred or is alleged in the
complaint to have occurred while the employee was acting within
the scope of his public employment or duties . . .." Id.,
§ 17(2)(a). A parallel provision provides for indemnification.
Id., § 17(3)(a).
We reached a similar conclusion in a prior opinion, finding
that section 17 covered employees of the State Department of
Labor who served as members of private industry councils
established under the provisions of the United States Job
Training Partnership Act. Op Atty Gen No. 87-F10. In that
opinion we noted that the governing statute required that
councils include representatives of the public employment
service. We also noted that the Department of Labor considered
service on the councils to be part of the employees' job duties
for the Department. The same rationale applies here. The Public
Service Commission has provided in the Procedural Manual
governing TAF operations that the TAF Advisory Board is to
include a representative from the CPB. Service on the Advisory
Board thus falls within the scope of duties of the CPB employee
and, provided section 17 procedural requirements are met, he or
she is entitled to the protections of section 17.
Thus, if the CPB's employee representative on the TAF
Advisory Board is content to have the Office of the Attorney
General ("OAG") provide his defense pursuant to Public Officers
Law § 17, then he does not need insurance to pay for the cost of
his defense. Provided he complies with the conditions of Public
Officers Law § 17, he would be defended at State expense. In
most cases, an appropriation of general funds is available to pay
any judgment or settlement.
Counsel also has asked whether the CPB should acquire
insurance to protect it from liability for actions of the
Advisory Board. The CPB is part of State government. Executive
Law § 550. Therefore, in virtually all cases, a suit for

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monetary damages against the CPB must be brought as a claim
against the State in the New York State Court of Claims where the
OAG defends the State and an appropriation of general funds is
available to pay any judgment or settlement. The most common
exceptions would be (a) a suit against the CPB in federal court
(i) for injunctive relief with a monetary component or (ii) for
monetary damages under a provision of law where Congress has
validly abrogated the State's Eleventh Amendment immunity; or (b)
the rare suit against the CPB in an out-of-state court.
Division of the Budget Bulletin B-1129 dated October 27,
1992 provides that payments for judgments or settlements not
covered by either of the two above-described general
appropriations (for liabilities against the State in the Court of
Claims or for liabilities against State employees pursuant to
Public Officers Law § 17) and some that are so covered, must be
made from agency appropriations. Examples of payments to be made
from agency appropriations include the following:
1.

Backpay awards in any court against the State or
the CPB;

2.

Monetary awards in any court, other than the Court
of Claims, against the State or the CPB; and

3.

Counsel fees and other litigation expenses awarded
under the Equal Access to Justice Act (CPLR,
Article 86) against the State, the CPB, or its
officials acting in their official capacities.

Other examples are listed in the Bulletin.
It seems unlikely that the CPB or its employee
representative on the TAF Advisory Board would be subjected to
liability in any of those exceptional situations. To the extent
that the CPB is concerned about liability in those exceptional
situations, it could consider the possibility of insurance at
reasonable cost.
We conclude that an employee of the Consumer Protection
Board in serving as the representative on the Advisory Board to
the Targeted Accessibility Fund is an employee in the service of
the State who is covered by the provisions of Public Officers Law
§ 17. In virtually all cases, a suit against the Consumer
Protection Board for monetary damages must be brought against the
State in the New York State Court of Claims where the Office of
the Attorney General defends the State and an appropriation is
available to pay any judgment or settlement. In most cases, an

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appropriation of general funds is available to pay any judgment
or settlement.
Very truly yours,

DENNIS C. VACCO
Attorney General