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Settlement and Judgment Processing Guidelines

FPP E.041

Settlement and Judgment Payment Guidelines

Settlements and judgments must first be paid from the agency’s budget, under GAA, Article IX. In certain instances, the balance of any unpaid portion of the settlement or judgment may be paid from the Comptroller’s Fiscal Programs appropriation.

Payment of Settlements and Judgments by Agencies

Agencies must pay settlements and judgments in compliance with GAA Article IX, Section 16.04. The payment of a settlement or judgment from an agency’s appropriation:

  • May not exceed $250,000.
    – and –
  • The payment of a settlement or judgment may not exceed one percent of the total amount of funds appropriated by this Act for expenditure by that agency for that fiscal year (not including federal funds).
    – and –
  • The payment of the settlement or judgment would not cause the total amount of settlement and judgment payments made by the payer agency for that fiscal year to exceed 10 percent of the total amount of funds available for expenditure by that agency for the fiscal year.
    – and –
  • The payment of a settlement or judgment may be made only with a complete release from all related claims and causes against the state. In the case of a judgment, the payment may be made only in full satisfaction of that judgment.
  • Any remaining unpaid balance may be eligible to be paid from the Comptroller’s Fiscal Programs appropriation for settlements and judgments, depending on the cause of action involved in the litigation and whether there are any remaining available funds for payment.

Appropriation Year Determination for Settlements and Judgments

GAA, Article IX, Section 16.04 sets the requirements for settlements and judgments. GAA, Article IX, Section 16.04 requires approval by the governor and the attorney general for payments of all judgments and settlements prosecuted by or defended by the attorney general.

An agency must charge a settlement or judgment to the current appropriation year unless the claim was finalized and approved by both the governor and the attorney general in the immediately preceding appropriation year. In this case, an agency may charge the settlement or judgment to the current appropriation year or the immediately preceding appropriation year. The Comptroller’s office uses the date of the transmittal letter received from the attorney general (or from the agency’s legal counsel if handled in-house as a pre-litigation settlement) as the final approval date.

Note: Pre-litigation settlements do not require approval by the governor or the attorney general.

In the event the settlement or judgment requires legislative approval, the Legislature will decide the appropriation year.

Payment of Settlements and Judgments by the Comptroller’s Fiscal Programs Appropriation

If the settlement or judgment exceeds the $250,000 and 10 percent limitations discussed above, the balance of any unpaid portion of the settlement or judgment may be paid from the Comptroller’s Fiscal Programs Article I, Strategy A.1.3, and riders 4-5 appropriation in the current GAA, provided there are sufficient funds in the agency 902 appropriation to make payment.

If all funds are lapsed or the claim does not qualify for payment by the Comptroller’s Fiscal Programs Article I appropriation, the Comptroller’s office will work with the attorney general to have the claim reviewed by the Legislature for possible funding. Submission of the claim to the Legislature does not guarantee approval and payment of the claim.

The types of litigation claims to be paid from the Comptroller’s Fiscal Programs Article I appropriation are limited to:

  • Settlements and judgments related to state liability for the conduct of public servants under Chapter 101 and Chapter 104, Civil Practice and Remedies Code, including indemnification for criminal prosecution under Section 104.0035, Civil Practice and Remedies Code.
    – or –
  • Federal court settlements and judgments.
    – or –
  • Eligible medical malpractice claims that conform with Chapter 59, Texas Education Code.

Note: Litigation claims paid from an agency’s budget under Article IX are not limited to the types of litigation claims listed in the Comptroller’s Fiscal Programs appropriation in Article I.

If the settlement or judgment exceeds the $250,000 and 10 percent limitations and is not the type of settlement or judgment that may be paid from the Comptroller’s Fiscal Programs appropriation, neither the Comptroller’s office nor the agency has the authority to make a payment (full or partial) and the claim will require legislative approval before payment can be made.

Note: “Judgment” means a judgment order rendered in a federal court or a court in this state for which an appeal, rehearing or application therefore is not pending and for which the time limitations for appeal or rehearing have expired.