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The People vs. the Commonwealth of Puerto Rico
Lawsuits against the government in both state and federal courts add up to $7.8 billion in damages
BY MARIELLA PEREZ SERRANO of Caribbean Business
June 17, 2005
The Commonwealth of Puerto Rico is a defendant in numerous legal proceedings pertaining to matters incidental to the performance of routine governmental operations. The 4,272 total cases pending, of which 1,444 were filed in fiscal 2004 (July 1, 2003, to June 30, 2004) alone, illustrate the constancy of lawsuits against the Commonwealth. Sources from the Department of Justice, however, stated the list of claims to the government arent exhaustive and neither are the sum to which these suits can amount.
Under specific law provisions approved by the Legislature in Law No. 104 of June 1955, the Commonwealth of Puerto Rico can be sued.
According to a Puerto Rico Infrastructure Financing Authority (AFI by its Spanish acronym) report, there are $7.8 billion in state and federal claims reported against the government as of fiscal 2004.
However, according to the auxiliary secretary to the General Litigation Division of the Department of Justice, attorney Arlene M. Gardón Rivera, "the ultimate liability cant be presently determined."
Claims for damages, medical malpractice, breach of contract, actions to recover real or personal property, and civil actions based on any Puerto Rico law are among the most common suits against the government. The vast majority of cases "are those involving damages caused by a culpable or negligent act of an official, agent, or employee of the Commonwealth," revealed Gardón Rivera.
A Department of Justice report for fiscal 2004 showed 2,536 tort cases reaching $1.7 billion in claimed sums. Tort cases are for acts or omissions involving negligence or direct actions that resulted in injury to another person, their property, or reputation for which the injured party is entitled to seek compensation. There are also 514 labor cases and 253 medical malpractice cases, all of which still are waiting adjudication in court.
"In damages to a person or property, the government can be sued up to $75,000 and, if the action or omission causes injury to more than one person or when a person is entitled to several damages, the sum cant exceed $150,000," explained Gardón Rivera.
Although the Commonwealth only responds to a maximum of $150,000, there is no limit to the amount of the judgment that may be paid to private parties. "The court can increase the sum depending on how many other private plaintiffs are being sued," she added.
State claims and suits against the government generally are sent before the Court of First Instance of Puerto Rico.
According to the AFI report, the Commonwealth has stated the claims are excessive and exaggerated. "Still, no provision for any liability that may result upon adjudication of these lawsuits has been recognized by the Commonwealth. Defendants tend to increase the sum they claim, to the point of asking for more than they are entitled to," Gardón Rivera said. The government believes the ultimate liability in excess of amounts provided, if any, wouldnt be significant.
Under certain circumstances, the Commonwealth may provide its officers and employees, including directors of public corporations and government agencies as well as municipal mayors, with legal representation. In addition, the government may assume the payment of any judgment that may be entered against them.
"The Department of Justice State General Litigation Department has approximately 45 attorneys," said Gardón Rivera. "Outsourcing to private firms is an almost paralyzed practice mainly because we are looking to increase [the number of] our staff attorneys," she said. She explained turnover in the department has been a problem in the past, but the attorneys in the federal and state litigation division are looking to increase its numbers from eight staff attorneys to approximately 16 in the next few months.
Currently, several cases pending against the central government. For example, the Commonwealth is a defendant in a lawsuit filed by an association of primary healthcare centers seeking to recover from the government $120 million in Medicaid funds that have been retained by the Department of Health since 1997.
In June 2004, the First Circuit Court of San Juan determined the Commonwealth should return these funds. The government, however, appealed this decision.
The Commonwealth is also a defendant in two lawsuits filed in local and federal district court by an association of insurance companies seeking to recover approximately $74 million in compulsory motor vehicle-insurance premiums allegedly belonging to the insurance companies or their policyholders, which were transferred by the secretary of the Treasury to the general fund.
In addition, the Commonwealth is a defendant in two other lawsuits filed in local court by the municipality of Ponce seeking to recover approximately $40 million for capital improvements promised to it. The Commonwealth settled these claims out of court with a $5 million cash payment and a $20 million increase to the municipalitys existing line of credit for capital improvements.
There still is more than $7 billion left in unsettled disputes against the government. Yet, as of June 30, 2004, the Commonwealth has an estimated $219 million in reported liabilities awarded and in anticipated unfavorable judgments.
This Caribbean Business article appears courtesy of Casiano Communications.