86.1080. Purchase of insurance policies permitted--indemnification--expenses of court proceedings may be paid, when.
Purchase of insurance policies permitted--indemnification--expensesof court proceedings may be paid, when.
86.1080. 1. The retirement board may purchase with retirement systemassets from one or more insurers licensed to do business in this state oneor more insurance policies that provide for reimbursement of the retirementsystem and any trustee, member of the retirement board, officer, oremployee of the retirement system for liability imposed or damages becauseof an alleged act, error, or omission committed in the trustee's, boardmember's, officer's, or employee's capacity as a fiduciary, officer, oremployee of the retirement system and for costs and expenses, includingattorney fees, incurred as a trustee, board member, officer, or employee indefense of a claim for an alleged act, error, or omission, as long as theinsurance policy does not provide for reimbursement of a trustee, boardmember, officer, or employee for liability imposed or expenses incurredbecause of the trustee's, board member's, officer's, or employee's personaldishonesty, fraud, lack of good faith, or intentional failure to actprudently.
2. If the insurance coverage described in subsection 1 of thissection is insufficient or is not in effect, the retirement board mayindemnify any person who was or is a party or is threatened to be made aparty to any threatened, pending or completed action, suit, or proceeding,whether civil, criminal, administrative, or investigative, by reason of thefact that the person is or was a member of the retirement board, or is orwas serving at the request of the retirement board in the capacity whichcaused the person's relationship to such action, suit, or proceeding,against expenses, including attorneys' fees, judgments, fines, and amountspaid in settlement actually and reasonably incurred by the person inconnection with such action, suit, or proceeding, if the person acted ingood faith and without willful malfeasance, and, with respect to anycriminal action or proceeding, had reasonable cause to believe the relevantconduct was lawful. The termination of any action, suit, or proceeding byjudgment, order, settlement, conviction, or upon a plea of nolo contendereor its equivalent shall not, of itself, create a presumption that theperson did not act in good faith, or, with respect to any criminal actionor proceeding, that the person did not have reasonable cause to believethat the relevant conduct was lawful.
3. To the extent that a member of the retirement board has beensuccessful on the merits or otherwise in defense of any action, suit, orproceeding referred to in subsections 1 and 2 of this section, or indefense of any claim, issue, or matter therein, the person shall beindemnified against expenses, including attorneys' fees, actually andreasonably incurred in connection with the action, suit, or proceeding thatare not covered by the insurance described in subsection 1 of this section.
4. Any indemnification under this section, unless ordered by a court,shall be made by the retirement board only as authorized in each specificcase upon a determination that indemnification of any person potentiallyentitled to indemnification hereunder is proper in the circumstancesbecause the person has met the applicable standard of conduct set forth inthis section. The determination shall be made by the retirement board by amajority vote of a quorum consisting of members of the retirement board whoare not parties to the action, suit, or proceeding, or if such a quorum isnot obtainable, or even if obtainable and a quorum of disinterested membersof the retirement board so directs, by independent legal counsel in awritten opinion. Such legal counsel may but need not be counsel to theretirement system.
5. Expenses incurred in defending a civil or criminal action, suit,or proceeding may be paid by the retirement board in advance of the finaldisposition of the action, suit, or proceeding as authorized by theretirement board in the specific case upon receipt of an undertaking by oron behalf of the person potentially entitled to indemnification hereunderto repay such amount unless it shall ultimately be determined that theperson is entitled to be indemnified by the retirement board as authorizedin this section.
(L. 2005 H.B. 323)