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Immunity or Not? Charitable Tort Liability Limits in Modern Times

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When may a nonprofit charity be held liable for personal injuries to others caused by its agents? In legal parlance, this is known as “tort” liability – i.e., a civil wrong arising from negligence or intentional wrongdoing of an organization or its agents. A charity’s “agents” may be its employees, directors, officers, and even other volunteers – that is, a person acting under the organization’s authority. Such potential tort liability is why nonprofits adopt safety standards and carry liability insurance, as they ought!

Historically, many states had charitable immunity laws shielding charitable organizations as a complete bar from any liability whatsoever. Such protection was grounded in the general trust law principle that charitable assets are held for the public good, not to satisfy any personal injury claims brought against nonprofit organizations.  Over time, however, state legislatures and courts dramatically reduced such protection. Charities today thus typically face potential liability – and therefore full legal accountability – just like any other organization. Some significant and surprising twists nevertheless exists under a handful of state laws that contain some vestiges of charitable immunity.

Points of Common Ground

Let’s start with some basic background. Broadly speaking, tort liability is generally a matter of state law claims. All state tort liability issues require the following elements: (a) the organization owed a duty of care; (b) the organization (itself or through its agents) breached such duty – that is, they did not do what they were supposed to do – either intentional or unintentionally; (c) such breach “proximately” (i.e., directly) caused harm to a person; and (d) the harmed person was injured or otherwise damaged. Common torts include medical malpractice claims, “slip and fall” negligence cases, car accidents where someone is at fault, defamation arising from false statements of fact (harming person’s reputation or similar personal interests, such as through a false employment reference), and assault.

For many nonprofits, torts may occur through their workers, both paid and volunteer. For example, an organization that provides transportation for a group of program participants may face liability if the vehicle is unsafe or if the driver is not sufficiently trained or otherwise not capable of operating the vehicle if an accident occurs, it is due to such problems, and people are actually injured from the accident. Or an organization that does not properly handle food may be held liable for food poisoning, to those who eat the tainted food. An organization may also be held liable for published information about others, if the information is false and actually harms them.  

Liability in these situations will rest with the responsible organization, regardless of whether the individual agents are paid or unpaid – so long as they are acting within their scope of authority from the organization. An act is within such scope whenever the worker’s activity is reasonably necessary to accomplish the purpose of the work and in furtherance of the organization’s business (e.g., delivering goods or caring for program participants). Consequently, in the case of a worker who goes outside the scope of authorized action, such as the commission of a crime, the organization should not be held liable. Keep in mind though that generally, a court will conduct a “facts and circumstances” inquiry to determine whether a worker was acting within the scope of authorization and therefore whether organizational liability may result.

Notably, nonprofit employees and volunteers may otherwise face individual liability. Typically, however, they are protected under state and federal “Volunteer Protection Acts” except in cases of “gross” negligence, intentional misconduct, or where a specific statute may otherwise impose personal liability. Such matters are beyond the scope of this article, which focuses on corporate nonprofit liability. The key point here is that organizations can be held liable for wrongs committed by their workers.

For this reason, insurance coverage is extremely important for nonprofits, and they are well advised to periodically check on the types and amounts of insurance coverage. A general commercial liability insurance policy should be carried by any nonprofit that opens its doors for program participants, whether young or old. Depending on a nonprofit’s specific activities, additional insurance coverage may be appropriate, such as “employment practices,” coverage for travel/vehicles, sexual misconduct issues, and defamation-related matters for organizations that provide news reporting or other publications. Check the insurance coverage amounts, and make sure that the insurance policy provides for legal defense costs in the event of any adverse claim.

Is There Any Charitable Immunity Left?

Generally speaking, charitable immunity is dead – or, as famously quipped by Miracle Max in The Princess Bride, mostly dead. Today, no state recognizes absolute immunity for charities or their agents. But certain states provide for some degree of limited charitable immunity, albeit in quite narrow and distinctive ways. This handful of states are Alabama, Arkansas, Georgia, Maine, Maryland, Massachusetts, New Jersey, Virginia, Utah, and Wyoming.  

For example, a few states limit monetary recovery in individual tort claims against charitable organizations, such as Massachusetts’ miserly $20,000 cap and South Carolina’s two-tiered monetary cap (so long as no “gross” negligence, reckless misconduct, or intentional misconduct is involved). Under South Carolina law, applicable limits are prescribed in the South Carolina Tort Claims Act. This Act is complex, but basically has a two-tier statutory cap on damages based on who allegedly committed the act. If the injury in question was caused by a physician employed by a charitable organization, the cap is $1.2 million per person and per occurrence. For injuries caused by non-physician employees, the cap is $300,000 per person and $600,000 per “occurrence,” regardless of the number of claimants. Another significant restriction is that a claimant may only recover actual damages, such as doctor bills, pain and suffering, and personal property damage, and no punitive damages whatsoever.

A few other states consider whether the charity has insurance or not. Still others make tort liability relief available only to a charity’s program beneficiaries, not members of the general public, and a few focus on whether the organization was negligent or not in selecting the workers who caused the harm. Massachusetts is unique in that it provides charitable immunity for charitable “sport and sailing programs.” Tennessee law also uniquely protects charity-owned property from financial recovery by a successful tort claimant, so long as such property is used “solely for charitable purposes.” Note too that such state protections may apply only to bona fide charities - that is, Section 501(c)(3) organizations - not other types of nonprofits or tax-exempt organizations (e.g., homeowners’ associations, social clubs, or trade associations).

These are all helpful limitations for charitable organizations, but – as evidenced by the South Carolina example – they are highly state-specific and nuanced in applicability. Case in point – one of the above states’ peculiarly limited immunity will apply only if such state law is found to apply in a particular case, such as if the charity operates in that state and the harm occurs there. Careful attention is thus warranted for any nonprofit organization seeking to take advantage of these limited areas of potential charitable immunity, as well as good insurance and high-quality safety protocols. 

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