Virginia Law

Article 3. Insurance and Legal Defense.

A. Any locality may provide group life, accident, and health insurance programs for its officers and employees; employees of boards, commissions, agencies, or authorities created by or controlled by such locality; employees of boards, commissions, agencies, or authorities that are political subdivisions of the Commonwealth and work in close cooperation with such locality; or employees of a public school foundation as defined in subsection A of § 22.1-212.2:2 that provides support exclusively for such locality. In addition, any locality that provides such a health insurance program may allow eligible members of approved volunteer fire or rescue companies, as determined by the locality, to participate in such a health insurance program. Such programs may be through a program of self-insurance, purchased insurance, or partial self-insurance and purchased insurance, whichever is determined to be the most cost effective. The total cost of such policies or protection may be paid entirely by the locality or shared with the employee. The governing body of any locality may provide for its retired officers and retired employees, including retired employees of boards, commissions, agencies, or authorities that are political subdivisions of the Commonwealth and work in close cooperation with such locality, to be eligible for such group life, accident, and health insurance programs. The cost of such insurance for retired officers and retired employees may be paid in whole or in part by the locality. The governing body of any locality may permit members of approved volunteer fire or rescue companies to participate in its group health insurance programs, subject to the eligibility criteria established by the locality. The cost of a volunteer's participation in such a health insurance program shall be paid for in full by the participating volunteer. Any locality may fund the cost of a volunteer's participation in a mental health treatment and counseling program that is offered to individual members of approved volunteer fire or rescue companies and is comparable to an employee assistance program offered to paid employees of the locality.

Any locality may allow participation in its group health insurance program by any non-benefitted employee, including members of governing bodies, if such non-benefitted employee or governing body member is not otherwise entitled to participate, provided that such non-benefitted employees reimburse the locality for the full cost of their participation. For purposes of this subsection, reimbursement may include forgoing all or a part of a local government salary.

B. In the event a county or city elects to provide one or more of such programs for its officers and employees, it shall provide such programs to the constitutional officers and their employees on the same basis as provided to other officers and employees, unless the constitutional officers and employees are covered under a state program, and the cost of such local program shall be borne entirely by the locality or shared with the employee.

C. 1. Except as otherwise provided herein, in the event the governing body of any locality elects to provide group accident and health insurance for its officers and employees, including constitutional officers and their employees, such programs shall require that upon retirement, or upon the effective date of this provision for those who have previously retired, any such individual with (i) at least 15 years of continuous employment with the locality or (ii) less than 15 years of continuous employment who has retired due to line-of-duty injuries may choose to continue his coverage with the insurer at the retiree's expense until such individual attains 65 years of age at the insurer's customary premium rate applicable (a) to such policies, (b) to the class of risk to which the person then belongs, and (c) to his age.

2. The governing body, when providing this coverage, may further provide that the retiree be rated separately from the active employees covered under the group plan offered by such governing body.

3. Any locality that has not offered the opportunity to continue group health coverage provided by the locality as required by subdivision 1 to its retirees who had retired on or before June 30, 1993, and who meet the criteria for such coverage as set forth in subdivision 1, shall do so by July 1, 2000. Any retiree from the service of a locality who had retired on or before June 30, 1993, and who meets the criteria to continue his group health coverage from the locality under subdivision 1 who has not yet elected to continue his group health coverage from the locality shall elect whether to do so by July 1, 2000.

4. Nothing herein shall prohibit a locality from providing group accident and health coverage or benefits for its retirees in addition to the coverage required under this section.

5. Notwithstanding any contrary provision of law, general or special, a locality may include in group life, accident, and health insurance programs any person to whom coverage could be extended pursuant to § 38.2-3525.

D. Any locality that offers group health plans to its employees and the employees of constitutional officers and its retirees, as provided by this section or otherwise, may provide in the plan providing such coverage that any retiree who is participating in a group health plan provided by the locality who subsequently terminates his participation in such plan may not thereafter rejoin a group health plan provided by the locality.

1981, c. 332, § 15.1-7.3; 1984, c. 712; 1987, cc. 435, 564; 1992, c. 750; 1993, c. 782; 1997, c. 587; 1999, c. 797; 2003, c. 409; 2007, c. 150; 2012, cc. 191, 515; 2016, cc. 207, 417; 2020, cc. 424, 425; 2022, cc. 105, 106; 2024, cc. 481, 541.

A. As used in this section:

"Benefits consortium" means a nonstock corporation formed pursuant to subsection B.

"Benefits plan" means a plan adopted by the board of directors of a benefits consortium to provide health and welfare benefits to employees of localities that are members of the benefits consortium and their dependents.

"Employee welfare benefit plan" has the meaning set forth in § 3(1) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(1).

"Locality" means any city or county or the school board with authority over public schools within the boundaries of a city or county.

B. Notwithstanding any provision of law to the contrary, the governing bodies of three or more localities that as of December 31, 2014, comprised the membership of a multiple employer welfare arrangement may form a not-for-profit benefits consortium for the purpose of establishing a self-funded employee welfare benefits plan by acting as incorporators of a nonstock corporation pursuant to the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.). In addition to provisions required or permitted by the Virginia Nonstock Corporation Act, the organizational documents of the benefits consortium shall:

1. Limit membership in the benefits consortium to localities;

2. Set forth the name and address of each of the initial members of the corporation;

3. Set forth requirements for the admission of additional localities to the corporation;

4. Set forth the procedure for admission of additional localities to the corporation;

5. Require that each initial member of the corporation and each additional locality admitted to membership agree to remain a member of the benefits consortium for a period of at least five years from the date the consortium begins operations or the date of the additional locality's admission to membership, as the case may be;

6. Provide that the number of directors of the corporation shall be equal to the number of members;

7. Provide that the board of directors shall have exclusive fiscal control over and be responsible for the operation of the benefits plan and shall govern the benefits consortium in accordance with applicable law;

8. Vest in the board of directors the power to make and collect special assessments against members and, if any assessment is not timely paid, to enforce collection of same in the name of the corporation;

9. State the purposes of the benefits consortium, including the types of risks to be shared by its members;

10. Provide that each member shall be contractually liable for its allocated share of the liabilities of the benefits consortium as determined by the board of directors;

11. Require that the benefits consortium purchase and maintain (i) a bond that satisfies the requirements of applicable law, (ii) fiduciary liability insurance, and (iii) a policy or policies of excess insurance with a retention level determined in accordance with sound actuarial principles from an insurer licensed to transact the business of insurance in the Commonwealth;

12. Require that the benefits consortium be audited annually by an independent certified public accountant engaged by the board of directors; and

13. Not include in the name of the corporation the words "insurance," "insurer," "underwriter," "mutual," or any other word or term or combination of words or terms that is uniquely descriptive of an insurance company or insurance business unless the context of the remaining words or terms clearly indicates that the corporation is not an insurance company and is not carrying on the business of insurance.

C. A benefits consortium shall establish and maintain reserves determined in accordance with sound actuarial principles. Capital may be maintained in the form of an irrevocable letter of credit issued to the benefits consortium by a state or national bank authorized to engage in the banking business in the Commonwealth.

D. A benefits consortium may create a self-funded trust through which the members provide for their employees and their dependents any benefit that a member that is a locality is authorized to provide under an accident and health insurance program authorized by § 15.2-1517.

E. Except to the extent specifically provided in this section, a benefits consortium organized under and operated in conformity with this section, so long as it remains in good standing under the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.) and otherwise meets the requirements set forth in this section, shall be exempt from all state taxation, and shall not otherwise be subject to the provisions of Title 38.2, including regulation as a multiple employer welfare arrangement.

2015, c. 136.

Any locality and any political subdivision thereof may provide liability insurance or self-insurance for its fire department operational medical director, police department operational medical director, operational medical director, physician course director for any licensed emergency medical services agency or emergency medical services training program located therein endorsed by the Office of Emergency Medical Services and for its officers, employees and volunteers, including any commission or board, and employees and members thereof, of any authority created or controlled by the local governing body, or any local agency or public service corporation owned, operated or controlled by such local governing body and constitutional officers and their employees.

The insurance or self-insurance may cover the costs and expenses incident to liability, including those for settlement, suit, or satisfaction of judgment arising from the conduct of such operational medical directors, physician course directors, officers, employees, members or volunteers in the discharge of their official duties.

For the purposes of this section, "physician course director" or "PCD" means an EMS physician who is responsible for the clinical aspects of emergency medical care training programs, including the clinical and field actions of enrolled students.

1987, c. 496, § 15.1-7.3:1; 1988, c. 432; 1997, c. 587; 1999, c. 151; 2004, c. 648; 2008, c. 118.

Notwithstanding the provisions of § 15.2-1518, the state Department of Social Services is authorized to obtain liability insurance for officers and employees of local departments and boards of welfare or social services. The attorney for the Commonwealth, city attorney, or county attorney, as appropriate, shall provide whatever legal services are required for any such officers or employees sued as a result of their conduct in the discharge of their official duties.

1974, c. 658, § 15.1-506.2; 1997, c. 587.

Notwithstanding any provision of law to the contrary, general or special, a locality, or political subdivision of such locality may employ the county, city or town attorney, or the attorney for the Commonwealth, if there be no county, city or town attorney, or other counsel approved by the governing body to defend it, or any member thereof, or any officer of the locality, or political subdivision or employee thereof, or any trustee or member of any board or commission appointed by the governing body in any legal proceeding to which the governing body, or any member thereof, or any of the foregoing named persons may be a defendant, when such proceeding is instituted against it, or them by virtue of any actions in furtherance of their duties in serving the locality or political subdivision as its governing body or as members thereof or the duties or service of any officer or employee of the locality or political subdivision or any trustee or any member of any board or commission appointed by the governing body.

All costs and expenses of such proceedings so defended shall be charged against the treasury of the locality, or political subdivision and shall be paid out of funds provided therefor by the governing body thereof. Further, in the event any settlement is agreed upon or judgment is rendered against any of the foregoing persons or governing body, the governing body may, in its discretion, pay such settlement or judgment from public funds or other funds or in connection with all of the foregoing may expend public or other funds for insurance or to establish and maintain a self-insurance program to cover such risks or liability.

1968, c. 23, § 15.1-19.2; 1976, c. 544; 1977, c. 47; 1978, c. 442; 1997, c. 587.

If any officer or employee of any locality is investigated, arrested or indicted or otherwise prosecuted on any criminal charge arising out of any act committed in the discharge of his official duties, and no charges are brought, or the charge is subsequently dismissed, or upon trial he is found not guilty, the governing body of the locality may reimburse the officer or employee for reasonable legal fees and expenses incurred by him in defense of the investigation or charge, the reimbursement to be paid from the treasury of the locality.

1984, c. 394, § 15.1-19.2:1; 1997, c. 587.