Editors’ note: Indian Country Today presents a three-part series that provides practical tips for Indian decision-makers to ensure that the insurance they purchase not only maximizes the protection that should be afforded to tribal assets, but does not waive Indian sovereignty, jurisdiction and immunity.
Indian country must continue to aggressively exercise economic sovereignty, by exerting governmental power and influence over reservation (and off-reservation) business opportunities and dealings. Tribal economic development and diversification efforts must reflect Indian values – from the four corners of the contract to the brick and mortar of any construction. The same must hold true for tribal insurance purchasing and handling.
Insurance, by design, transfers the risk of a potential financial loss from an insured, such as a tribal government or business, to an insurer. Insurance is a means to safeguard the tribal treasury from future attack so Indian governments can continue providing essential services. But in paying exorbitant premiums to insurers in order to shift such risk, tribes must be careful that they do not also shift to insurers certain sovereign prerogatives and rights.
Tribal business leaders and staff lawyers must modify boilerplate insurance contracts to ensure they honor and reflect Indian values. Tribes must not only insist upon the contractual right to select Indian legal advisers they trust when faced with a claim or lawsuit that threatens sovereignty, as we discussed in our first column. Tribes must also ensure that their policies do not waive sacred rights like tribal jurisdiction and immunity, and that those contracts expressly retain tribal governmental authority to determine such complicated legal, political and social issues.
Expressly retaining or waiving sovereign immunity in the policy
Numerous courts have ruled that tribal liability insurance procurement is not enough to constitute a clear immunity waiver. While a policy including a clear provision waiving immunity could allow suit against the tribe, a policy by itself would not. For public policy reasons, some tribes have purchased insurance for certain business activities and passed tort claims laws that waive immunity, but only to the extent of a policy’s available coverage and limits. Still, if a tribe does not wish to broadly waive immunity by purchasing insurance – as is the case for most tribes – its policy should provide that nothing therein shall waive immunity or confer jurisdiction to any court.
Unless the policy provides otherwise, an insurer is not authorized to waive or otherwise limit a tribal insured’s immunity. Put more bluntly, an insurer has absolutely no business asserting immunity as a defense to suit unless they have received the express consent of the tribal sovereign. Notwithstanding, there have been situations where insurers and claims adjusters have asserted sovereign immunity without tribal permission – surely a bad-faith practice. Many, but not all, tribal policies make clear that in the event of a claim or suit against a covered tribal defendant, the insurer shall not assert or waive immunity absent tribal written authorization. All tribal policies should make clear that only the tribal sovereign shall decide whether to assert its immunity, and that the insurer shall honor whatever decision the tribe makes.
Not allowing the policy to waive tribal jurisdiction
Due to the aggressive exercise of tribal economic sovereignty, there are more significant insurable Indian assets than ever before. As a result, there are an increasing number of disputes between tribes and their insurers about whether the carriers should cover and/or defend claims against a tribal policy. In that instance, the very same insurer that commands an exorbitant premium and promises to “protect and defend” vehemently objects to the tribe’s assertion of civil jurisdiction over the insurer. That is essentially how a reservation auto injury lawsuit ended up before the U.S. Supreme Court, in National Farmers Union Insurance Co. v. Crow Tribe of Indians (1985). Thankfully, that case yielded a win for Indian country – a decision mandating that nontribal courts not intercede in litigation involving questions of tribal authority so Indian courts can initially determine such cases.
A tribal court should, as a matter of self-governance, be allowed to assert jurisdiction over any dispute about a tribal insurance policy’s coverage. If insurers can accept Indian money, shouldn’t they also accept Indian justice systems? Under the Supreme Court’s landmark decision in Montana v. United States (1981), insurers that enter into “consensual relationships with the tribe or its members” should be subject to tribal jurisdiction in disputes arising out of such a contract. But that presumes the subject policy does not waive tribal jurisdiction. Consider another arbitration endorsement advanced by one tribal insurance underwriter, providing that:
“If we and the [tribal] insured do not agree whether coverage is provided under this Coverage Part for a claim made against the insured, then either party may make a written demand for arbitration. … [A]rbitration will take place in the county or parish in which the address is shown in the Declarations is located. Local rules of law as to procedure and evidence will apply.”
Arguably, this language divests an Indian court from jurisdiction to entertain a tribal coverage dispute and vests that authority with a nontribal arbitration tribunal. The endorsement could also disallow the application of tribal law, in favor of state law.
What’s more, the provision would likely be read to waive the tribal insured’s immunity from any suit or countersuit the insurer may advance, as a result of C & L Enterprises Inc. v. Citizen Band Potawatomi Indian Tribe of Oklahoma (2001). In that case, the Supreme Court ruled that the inclusion of an arbitration clause in a form contract constitutes “clear” manifestation of intent to waive immunity. As a result, the tribe could be preliminarily subject to state or federal court jurisdiction in an action by the insurer to compel arbitration in a nontribal forum.
A tribal insured may very well decide that an arbitration panel should adjudicate any coverage dispute with its insurer, and that it wishes to waive immunity relative to any such dispute. But those vital legal/political decisions and exercises of sovereignty must be made by tribal leadership as they would in a complex, commercial transaction; not inadvertently by rubber-stamping a bulky contract package that the tribe mistakenly trusts will protect their sovereignty.
Gabriel Galanda and Debora Juarez are attorneys with Williams, Kastner and Gibbs PLLC’s tribal practice group in Seattle. Galanda is a descendant of the Nomlaki and Concow tribes and enrolled with the Round Valley Indian Confederation. Juarez is an enrolled member of the Blackfeet Nation.