Interior Under Siege: Employees fleeing case, buying personal liability insurance

That is the number of former and current government employees facing possible contempt charges in the contentious case over the government's handling of Native American trust funds.

The scope of the controversy is unprecedented. The Interior Department, home to a large portion of the accused employees, is an agency under siege.

Interior officials are saying that Cobell v. Norton is hampering their ability to fix the trust and is taking a toll on the work force. Deputy Secretary J. Steven Griles recently told Congress that some employees have refused to work on the trust anymore -- and that those still working on the case have taken out insurance policies to protect against potential judicial sanctions.

"Some of the most knowledgeable people we have are alleged to have been in contempt," Griles said in a House hearing March 14. "I have asked the judge to please release them."

So far, Interior has at least one friend in Rep. Norman Dicks, D-Wash., who suggested at the hearing that the government pay the full cost of insurance for any government employee working on the trust.

"To task [employees] to do this and then to make them financially liable is ridiculous," Rep. Dicks said. "The department should pay for complete liability insurance."

The list of those in jeopardy reaches to the top. Interior Secretary Gale Norton and Assistant Secretary for Indian Affairs Neal McCaleb are waiting for U.S. District Judge Royce Lamberth of the District of Columbia to rule on their contempt charges. The other 38 facing possible sanctions are current and former government lawyers, information officers, and deputy and assistant secretaries.

Complaints about a rattled department and jittery employees generate no sympathy from the plaintiffs, who say that the federal government squandered millions of dollars that should have gone to Native Americans.

"If they hadn't destroyed documents or violated the law, they wouldn't have anything to worry about," says Dennis Gingold, the lead attorney for the plaintiffs. "There isn't a single person given blanket immunity to violate the law. Government officials are public servants. They have a duty to follow the law."

The most important question is whether Interior's complaints will inspire scorn or sympathy from Judge Lamberth. The day after Griles testified about the agency's difficulties, Lamberth addressed the issue in a court hearing.

"Mr. Griles indicated that progress was being thwarted because I had not acted on the 39 motions for individual contempt and that he had asked me to act on those and I had not yet acted," Judge Lamberth said at the March 15 hearing. He then told Gingold to start drafting memos laying out the specific charges and evidence against each of the 39 people their side wants him to hold in contempt. (The plaintiffs filed an additional contempt demand the week after the hearing.)

"I'll let each of those 39 respond," Lamberth said, "and I will address Mr. Griles' desire that I move quickly on that."

The class action, now nearly six years old, alleges that the government mismanaged the trust money of hundreds of thousands of Native Americans. The fund, administered by the Bureau of Indian Affairs, is supposed to pay as many as 500,000 Native Americans their share of the royalties for grazing, oil extraction, and other uses of their land.

If successful, the lawsuit could result in a huge financial loss for the federal government. The plaintiffs estimate that the federal government owes more than $10 billion to trust holders. They are demanding that the government provide an accounting of the trust money.

But what has really distinguished Cobell has been the unusually personal nature of the litigation: The plaintiffs have not just attacked the government and its policies, but have gone after individual employees.

Judge Lamberth found two Cabinet secretaries, then-Interior Secretary Bruce Babbitt and then-Treasury Secretary Robert Rubin, in contempt in 1999. The government paid fines of more than $600,000 as a result.

The agencies say it is affecting work. Some of the government attorneys have recused themselves from working on Indian trust issues in the future, according to their lawyers.

But to the Native Americans fighting the government over the case, complaints about contempt charges and employees avoiding working on trust reform don't carry much weight.

"I think we have to pause for a moment -- if that is the way these individuals think about this matter, that if they are going to be held accountable then they don't want to work on it, fine, begone then, and let's get some other people in there," says Keith Harper, a lawyer with the Native American Rights Fund and co-counsel for the plaintiffs' side.

At the Justice Department, Cobell has had a rotating lineup of lawyers. The case was first handled by the Environment and Natural Resources Division, but was moved to the Civil Division in 2001. Now, a number of the attorneys who worked on the matter are facing contempt.

At the Interior Department, some attorneys in the solicitor's office have taken themselves off the case, or have been taken off. Solicitor William Myers, himself facing a contempt citation, removed two of his office's lawyers from Cobell because they had been accused of wrongdoing in the case.

But higher-level appointees like Myers are forced to stay. If Myers recused himself, "he wouldn't be able to do the job he was brought in to do," says Myers' lawyer, E. Lawrence Barcella Jr. of Paul, Hastings, Janofsky & Walker.

For a number of superiors, political appointees, and department heads, recusal is not possible.

When Rep. Dicks discussed the issue at the oversight hearing, he asked the lineup of more than half a dozen higher-level Interior Department employees how they were coping. Personal liability insurance was the answer.

"Is that what you all did?" Dicks asked. "You bought your own? You are paying for it out of your own salary?"

Every single head in the lineup of officials -- which included Interior Deputy Secretary Griles, Director of the Office of Indian Trust Transition Ross Swimmer, Special Trustee for American Indians Thomas Slonaker, and Director of the Office of Historical Trust Accounting Bert Edwards -- nodded emphatically.

To be sure, these are not the only government officials buying private liability insurance. It's a common practice for many Justice Department lawyers and law enforcement agents.

The insurance offers protections in two areas. The first is from private civil suits from citizens, such as cases against postal workers for an accident with a government vehicle or a suit against an FBI agent for a shooting. Such policies typically cover up to $500,000 or $1 million in liability. The insurance also may pay up to $100,000 for legal expenses of employees involved in disciplinary actions, criminal proceedings, or judicial sanctions.

In many cases, the Justice Department will defend a federal employee. But the department can also decline, finding that the alleged misdeeds were not part of the employee's official capacity. The insurance is meant to cover gaps left by the Justice Department's legal defense.

Insurers will not cover legal costs after an individual has pleaded or been found guilty. And policies maintain the right to approve counsel, which means insurers are not obligated to pay for the lawyer the employee wants.

Policies cost about $300 a year, and the government reimburses managers and law enforcement personnel for half the cost. One local company that offers the policy, Wright & Co., insures about 26,000 federal employees.

In Cobell, the Justice Department is defending employees charged in their official capacities and is paying for outside counsel to defend the employees in their individual capacities. Some of the accused employees have insurance, while others do not. But the insurance is not making much of an impact. The Justice Department is paying for everyone's private lawyer in this case, at the rate of $125 an hour. Most lawyers say the insurance policies are not paying for any legal coverage.

The case is far from over, and further contempt charges could loom. Secretary Norton, to fix problems in the trust management identified by the lawsuit, wants to create a new division at Interior. But officials fear they will have trouble attracting staff as long as the litigation is pending.

"Some very good people have had contempt charges filed against them," Griles said at the House hearing.

And the Native Americans battling the government don't want to see employees facing contempt for alleged neglect or mismanagement working on the trusts.

"I think they are correct [that] people are fearful," says Harper. "But people who are used to being able to break the rules, people who are transgressors, are often fearful of any authority that makes them accountable."

There should not be any liability at this point--the reason for the contempt motions is that employees of the Department refused to do what the Judge told them to do and turn over documents. In my view, they ought to be liable if they don't.

The legal issue is here because the government does not respond to a lawsuit that claims the government has stolen a bunch of money from individual Native Americans.

The problem here is that the government in fact has appropriated vast sums of money that really belongs to individual NA's. The government ought to give it back. Sure us taxpayers are unhappy about writing the check--but how do we suppose the individual NA's who had their money stolen feel?

I would argue that the origin of most of this problem is under a Dem administration. Facts are that most of the individuals who have been involved in administration of NA affairs have been liberals in both Republican and Dem administrations. The problem is really the result of the government's underlying policy that it can manage the money that belongs to the individual NA's better than the individuals. Like every other racist policy, the NA's (and the blacks) are intellectually incapable of managing their own affairs.

Just plain wrong--like most Liberal and Dem policy.

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