Posts Tagged ‘catastrophes’

Chemical Safety Board Issues Report on West Fertilizer Company Explosion

Wednesday, January 27th, 2016

Two days after the 2013 Boston Marathon bombing, a giant explosion rocked the small town of West TX. Twelve emergency responders who rushed to the initial fire at the scene were killed in the subsequent blast, as were three civilians. More than 260 were injured and treated at hospitals; 150 buildings were damaged.

Initially, local authorities feared the blast was a terrorist event, but the cause of the blast was the storage of 270 tons of fertilizer grade ammonium nitrate (FGAN). To give some perspective to this, in the 1995 Oklahoma City bombing of the Alfred P. Murrah Building, Timothy McVeigh used 2 tons of ammonium nitrate.

Earlier this week, the U.S. Chemical Safety Board (CSB) issued a draft version of its 265-page Investigation Report into the April 2013 Fire and Explosion at West Fertilizer Company for public preview. The CSB’s January 28 public meeting to release its West Investigation Report will be available via live webcast at 6 pm CST

The report is dedicated to the 12 emergency responders and 3 members of the public who lost their lives. It represents one of the most destructive incidents ever investigated by the CSB.

“The CSB’s analysis includes findings on the technical causes of the fire and explosion; regulatory changes that could have resulted in safety enhancements to the facility; the failure of the insurer to conduct safety inspections or provide an adequate level of coverage; shortcomings in emergency response, including pre-incident planning or response training of the volunteer fire fighters; and deficiencies in land use planning that permitted the City of West to encroach upon the WFC over the years.”

The CSB directed recommendations to the Environmental Protection Agency (EPA), Occupational Safety and Health Administration (OSHA), U.S. Department of Labor, the Federal Emergency Management Agency (FEMA), U.S. Department of Homeland Security, the Texas Department of Insurance, the Texas Commission on Fire Protection, and other regional entities.

CSB estimated that total insurance-related losses were around $230 million, but the WFC was only insured for $1 million. One part of the report looks at related policies and regulations, including ” … the failure of the insurer to identify the risks posed by FGAN. A few years prior to the incident, WFC was dropped by one insurer for failing to address safety concerns identified in loss control surveys. The company that insured WFC at the time of the incident did not appear to have conducted its own safety inspections of the facility.”

The CSB’s analysis also pointed to:

  • A lack of training in hazardous materials response and pre-incident planning on the part of the West Volunteer Fire Department.
  • Shortcomings in federal and state regulations and standards that could reduce the risk of another incident of this type.
  • The location of the WFC relative to the surrounding community, which exacerbated offsite consequences.

In terms of the location, the risk to the public continues:

“CSB’s analysis shows that the risk to the public from a catastrophic incident exists at least within the state of Texas, if not more broadly. For example, 19 other Texas facilities storing more than 10,000 pounds of FGAN are located within 0.5 miles of a school, hospital, or nursing home, raising concerns that an incident with offsite consequences of this magnitude could happen again.”

Related coverage:

Dallas News: Federal investigators: Texans still face risk of West-like blast

The Waco Tribune: Report: Public still not safe from West-style industrial blasts

There are many ongoing related lawsuits. In October, The Waco Tribune reported: 1st West explosion trial gets settled

Earlier coverage

Interactive: West plant before and after – before & after aerial photos show scope of destruction

Ellis County remembers West fertilizer plant explosion – “The day a fertilizer plant exploded in West, Texas, Ellis County community members went to Facebook and Twitter to share their reactions. Here’s a look back at not only how the explosion that killed 15 people and destroyed most of the town unfolded, but reactions from the terrible tragedy.”

West blast survivors share their stories

Special Report: Poor planning left Texas firefighters unprepared

An excellent Reuters report by M.B. Pell, Ryan McNeill and Janet Roberts was issued in May of 2013.

“The lack of preparedness endangers not only firefighters and emergency medical technicians, but also people nationwide living near chemical stockpiles similar to those that exploded in West.

At least 800,000 people in the United States live within a mile of 440 sites that store potentially explosive ammonium nitrate, which investigators say was the source of the explosion in West, according to a Reuters analysis of hazardous-chemical storage data maintained by 29 states.”

Another section of this report indicates how adequate preparation and training might have saved lives:

“Firefighters who have battled ammonium nitrate fires elsewhere – without death or injury to first responders – say having the Tier II information was critical to their success. They knew what they were facing going in, and responded accordingly.
Called to a fire at a similar fertilizer facility in 2009 in Bryan, Texas, firefighters opted not to fight the blaze. Although the circumstances were somewhat different – firefighters knew going in that ammonium nitrate already had ignited – the first responders decided to keep a safe distance and evacuate nearby residents. No one was injured, and the fire burned itself out.

Key to the response, said Chief Joe Ondrasek of the Brazos County Fire Department Precinct 4, was having the fertilizer company’s Tier II report in hand. Firefighters were unable to contact the plant manager immediately, he said, and therefore relied on the report to inform their response.

A federally funded program intended to grant fire departments online access to the Tier II reports was not being used in West. Although some firefighters in Texas said they know about and use the system, known as E-Plan, others said they didn’t know of its existence or how to access it.

Federal funding for the E-Plan system was eliminated last October, which could hurt efforts to keep it up and running.”

Re: Re-Insurance

Monday, May 23rd, 2011

With yesterday’s catastrophic tornadoes in Joplin, Missouri, the most recent in a long line of 2011 disasters, the cost of re-insurance is going up. Prior to yesterday, the reinsurance bill for 2011 stood in the vicinity of $50 billion, leaving virtually no room for additional losses through the end of the year. Alas, we now have Missouri, and the year is not even half over, with hurricane season yet to begin.
Risk & Insurance magazine highlights the problems facing reinsurers:

Yvette Essen, an analyst for A.M. Best, said that the catastrophic first quarter means that many reinsurers will struggle to record any full-year underwriting profit for 2011.
“The industry faces further challenges in achieving profitability as the hurricane season approaches and investment yields remain low,” she commented.
“While reinsurers continue to maintain sound capital positions, the excess capacity that existed at the prior year-end has clearly been diminished,” he said.

Richard Ward, CEO Of Lloyd’s of London, warns that the relatively inexpensive cost of insurance is really an illusion: “Prices are dangerously low at present,” he told an industry conference. “Clients may think they are getting a bargain. But the fact is that they are buying security. The insurers who write unprofitable business are inevitably the first to collapse when disaster strikes.”
Beyond Risk Transfer
It appears we are entering a period of steadily increasing instability in nature. Ferocious storms and floods in the US, the Japan earthquake and tsunami, the volcano in Iceland, the fires in Australia – all flitter across our computer screens and raise the specter of inconceivable loss. Insurance – where it’s available – merely provides capital for rebuilding. Much of what is lost cannot be insured and even where there is insurance, what is lost on a personal, family-to-family level cannot be replaced. Yet we see selfless efforts to help survivors, most of whom will demonstrate a remarkable ability to endure. So much of what is precious to these people has been lost, but they will move on. That’s human nature at its best.
Meanwhile, the reinsurance market, long in the soft-market doldrums, will finally begin to harden. We will all pay a little more for insurance – and we will complain about it. That, too, is human nature, not at its best, perhaps, but a reflection of these tumultuous times.

The heroes of Fukushima; insurance issues related to Japan’s catastrophe

Tuesday, March 22nd, 2011

We are now a week and a half into the Japanese disaster, which encompassed a terrible trio of catastrophic events: an earthquake, a tsunami, and a near-nuclear meltdown that looked to be vying for a top spot in the record books. The death toll tops 9,000, with another 13,000 still missing. And today at the Fukushima Nuclear Plant, although a large scale meltdown looks to have been narrowly averted, the extent of the radiation leaks and the related damage are still yet to be fully assessed.
The heroes of the past week, those credited with keeping events at the nuclear plant from spiraling irretrievably out of control, are being hailed as “the Fukushima 50.” In actual numbers, they are more like 200 courageous souls, taking turns in 50-person shifts while the world watched from outside the 20 kilometer evacuation zone.
When the full extent of the crisis at the Fukushima plant became apparent in the wee hours of March 15, TEPCO wanted to remove all staff. Prime Minister Kan summoned TEPCO President Masataka Shimizu to his Office and told him that leaving was was not an option. “This is not a matter of TEPCO going under; it’s about what will become of Japan,” he said.
ABC news sheds a bit more light on the team who struggled to restore order to the crippled plant. The crews are though to be hands-on workers, technicians, rather than managers.

“The crews are not necessarily made up of strong young men. Emergency nuclear scenarios suggest asking older retirees to volunteer, not because they’re more expendable, or even because they’re more skilled, but because even if they’re exposed to massive amounts of radiation, history has shown they would die of old age before they die of radiation induced cancers, which can take decades to develop.”

And what’s the extent of the health risks they are facing? The Power company reports that at least 25 workers and 5 members of Japan’s Self Defense Force had were exposed to unsafe levels of radiation. There are other injuries and two workers remain missing. As for “the fifty,” ABC says that not all experts believe that the radiation levels the workers are exposed to will be fatal.

“While radiation-induced cancers are a serious worry for those exposed to high doses of radiation, they usually take at least a few years to set in.
“You may see an incidence of cancer 30 years down the road. Cataracts can set in in 30 to 40 years,” said Jenkins. “Leukemia showed up within a few years in the atomic bomb survivors, but solid cancers did not appear until 10 years and continue [to show up] to this day,” said Hall.”

Wikipedia’s page on the Fukushima 50 offers more detail about the radiation exposure these workers faced in comparison to that of other nuclear workers.

“The international limit for radiation exposure for nuclear workers is 20 millisievert (20 mSv) per year, averaged over five years, with a limit of 50 mSv in any one year, however for workers performing emergency services EPA guidance on dose limits is 100 mSv when “protecting valuable property” and 250 mSv when the activity is “life saving or protection of large populations.”
Prior to the accident, the maximum permissible dose for Japanese nuclear workers was 100 mSv in any one year, but on 15 March 2011, the Japanese Health and Labor Ministry enforced the permitted 250 mSv limit, in light of the situation at the Fukushima Nuclear Power Plant.”

For additional perspective on the numbers, see this excellent radiation dose chart.

Revisiting Chernobyl
As we approach the 25 year anniversary of the world’s worst nuclear disaster, the inevtiable comparisons have been made. But Japan’s a markedly different scenario than the one faced by the workers at Chernobyl, where 29 firefighters, rescuers and nuclear plant workers died in the two months following the nuclear disaster. At least 19 other workers have died since 1987, and others have reportedly died from leukemia and other illnesses. You can read the gruesome story of deceased Fireman Vasily Ignatenko, as told by his wife Lyudmilla Ignatenko.

Subsequent clean-up teams were called The Liquidators of Chernobyl. These were folks tasked with the cleanup. Of this cleanup. Wikipedia says:

Between 1986 and 1992, it is thought between 600,000 and one million people participated in works around Chernobyl and their health was endangered due to radiation. Because of the dissolution of the USSR in the 1990s, evaluations about liquidators’ health are difficult, since they come from various countries (mostly Ukraine, Belarus and Russia, but also other former Soviet republics). Furthermore, the government of Russia has never been keen on giving the true figures for the disaster, or even on making serious estimates. However, according to a study by Belarusian physicians, rate of cancers among this population is about four times greater than the rest of the population. (Wikipedia notes that “All the figures quoted by various agencies are controversial.”)

Insurance issues related to Japan’s disaster
According to the Insurance Information Institute, Japan’s earthquake could cost $15 billion to $35 billion, one of the costliest ever. This would be a tough enough kick in the shins for the insurance industry, but III notes that, “… four of the five costliest earthquakes and tsunamis in the past 30 years have occurred within the past 13 months.”
See more from III at their excellent resource page on the Japan earthquake and Pacific Tsunamis
Here are some other insurance-related articles that shed light on one or another aspect of this mammoth event.
We aren’t up our international compensation law, but our Googling turned up this overview of Workers Accident Compensation in Japan.
Joanne Wojcik tackled the nuclear topic in Business Insurance in her article Coverage restrictions expected to limit nuclear claims (subscription required). We offer this excerpt:

Under Japan’s 1961 Law on Compensation for Nuclear Damage, which was amended in 2010,
power plant operators’ liability for accidents such as those after the earthquake and tsunami is limited to 120 billion yen (about $1.5 billion), with the Japanese government assuming responsibility for any third-party damage or bodily injury claims beyond that amount.
To meet the requirements of the law, Japanese nuclear power plant operators buy property and liability insurance from the Japan Atomic Energy Insurance Pool. JAEIP provides nuclear property, nuclear liability, general liability and terrorism coverage to nuclear power plant operators. However, JAEIP does not sell the utilities coverage for earthquake damage, tsunami damage or business interruption, leaving the Japanese government responsible for those costs.
If a nuclear incident similar to that occurring in Japan were to happen in the United States, the U.S. Price-Anderson Act limits liability for nuclear power plant operators to $12.6 billion.

At Risk Management Monitor, Emily Holbrooke looks at the issue of business interruption and its effects on global corporations. Many think the real story is one of good engineering saving thousands of lives – Jared Wade discusses this in his posting about how Japan’s bulding codes prevented casualties.
Also in Business Insurance, Judy Greenwwald looks at the complicated claims process ahead:

Corporate policyholders that do business with companies in Japan face a complicated process when they attempt to tap their contingent business interruption coverage because of the intertwining nature of the disasters that have struck the nation, observers say.
“This is going to be one of the most complicated catastrophes that I’ve seen,” said William Okelson, Chicago-based director of property claims for Lockton Cos. L.L.C. There are “so many variables,” including the original quake, the tsunami, resulting fires, nuclear power plant dangers and the government rationing of electricity.

At LexisNexis, Julius Young examines a “what if ” scenario: What If? Workers’ Comp and Earthquakes. Jon Gelman puts the events in some historical context relative to other large-scale disasters and nuclear events: A Nuclear Workers’ Compensation Disaster.

Disaster in Japan

Friday, March 11th, 2011

Our thoughts and prayers are with the people in Asia who are suffering through a disaster of unprecedented scale. The digital age allows us to watch the apocalyptic images: entire neighborhoods being swept to sea; burning houses borne upon the dark tide of water and debris; hundreds of vehicles swept along as if they were rudderless boats; the boats themselves powerless against the sheer force of the waters. We engineer our buildings, our infrastructure, our vehicles, our very lives on the assumption that the odds are always with us, that destructive forces of this magnitude are very unlikely to rise up from the depths of the ocean. And yet, on occasion, arise they do.
It will take months to sort out the damages. Indeed, the damage has not even run its brutal and indifferent course. But we cannot allow this horrific moment to pass without at least a glance at the implications for the subject of this blog, the insurance industry. Insurance is all about risk and risk transfer. Individuals and most businesses are too small to absorb the risk of loss that surrounds us. We purchase insurance as a hedge against disaster: loss of life, property, assets, physical ability, etc. The law of large numbers works in favor of the insurer: sell enough policies, expand your markets far and wide, and the risk of loss is spread out over an immense area. A catastrophe in one place is absorbed by the absence of losses elsewhere.
In the scale of what is happening in Japan, there is no elsewhere. No actuarial calculation can take into account the implications of losses on this scale. And even if the actuaries could come up with a number, the cost of the insurance would preclude anyone from buying it.
Here’s one relatively minor insurance issue emerging from the rubble in Japan: the quake hit at 2:30 in the afternoon. Many of the people being swept away by the surging waters were working. Their deaths will be compensable under whatever form of workers comp exists in Japan.
Our modern lifestyles do not recognize risk and disruption on this scale. We somehow think ourselves immune from disaster. It brings to mind a poem by Percy Bysshe Shelley about another powerful and confident civilization that could not foresee an end to its dominion:
Ozymandias
I met a traveler from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed;
And on the pedestal these words appear:
“My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!”
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.
A century of horrific wars and occasional natural disasters have taught us that our arrogance and presumed mastery of the world are illusions. The lesson is clear: Ozymandias and his ilk (Muammar Gaddafi comes to mind) rule with arrogance and contempt. By contrast, our actions must be as full of generosity and compassion as possible. The risks that lurk in our lives may be beyond calculation, but what truly matters is our ability to embrace the time given to us and help those whose lives have been devastated by chance.

Cavalcade of Risk & workers comp news briefs

Wednesday, January 12th, 2011

It’s Cavalcade of Risk week and issue #122 is hosted by our friend David Williams at Health Business Blog – check it out!
Industry pulse – Good news. Robert Hartwig of the Insurance Information Institute takes the pulse of the property casualty industry and sees signs of life: Insurance Industry On The Mend. “Mr. Hartwig said in comparison to all of 2009, the industry’s 2010 third-quarter results are close to all of the prior years. While the industry is not back to where it was prior to the economic downturn in 2007 when it reported property and casualty net income of $62.5 billion, it is performing significantly better than the worst of the downturn in 2008 when p&c income came in at slightly more than $3 billion.”
That’s good news, but it’s not time to break out the champagne yet. A.M. Best forecasts downward rating pressure for the commercial market and two new reports indicate that reinsurance prices should remain soft in 2011.
Physician dispensed drugs – If you are an employer or an insurer and this topic isn’t yet on your radar, it needs to be. Joe Paduda posts about recent NCCI report on physician-dispensed drugs in workers comp, a significant growth area that NCCI says is putting upward pressure on WC costs. California took steps to regulate the practice a few years ago after learning that repackaged costs were two to twelve times higher than the fee schedule.
Labor – The New York Times reports that cash-strapped states are looking to curb labor unions. Expect a flurry of legislative initiatives to limit the power of labor unions representing government employees. While both parties are wrestling with ways to keep state budgets in line, the article notes:
“But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.”
Prevention works – A concerted campaign to reduce textile service worker injuries is working, according to the recently released annual TRSA Textile Services Industry Safety Report. Recordable injuries and illnesses dropped by 17 percent from 2008 to the 2009, and have dropped by 50% since 2005. Sandy Smith reports on SafeTRSA, an industry-wide safety initiative to improve worker safety through awareness, education and training.
Breast cancer & comp – At Comp Time, Roberto Ceniceros discusses City of Las Vegas v. Lawson. The Nevada Supreme Court ruled that a firefighter is entitled to a presumption that her breast cancer arose from her on-the-job exposure to benzene. His post also discusses male breast cancer.
Dramatic Australia flood footage – Office workers catch footage of a modest creek turning into a raging torrent sweeping cars away. More news and dramatic videos of the cataclysmic Australian flooding is available on MSNBC. At least 16 people are reported dead and more than 90 missing in what has been likened to an inland tsunami. Brisbane is under siege. You can follow breaking news on Twitter at #Brisbane.

Volcanoes and insurance issues

Tuesday, April 20th, 2010


Because of their rarity, volcanic eruptions are a pretty interesting insurance topic, so on the “thigh bone’s connected to the hip bone” principle, we thought we’d stray a bit afield today. Mother nature has reminded us who’s boss in a truly spectacular display of muscle flexing that’s brought travel and commerce to an unprecedented standstill for a huge part of the globe.
As an insurance event, it may not prove to be as costly as one might think, given the havoc that it is wreaking on business and travel – estimated at $2 billion and counting. Most airlines will be absorbing the cost of the delays since there is not actual physical damage to the fleet, and a volcano would be considered an ‘act of God.’ This prompts Vladimir Guevarra of the Wall St, Journal to ask if we might see volcano-related insurance as a new product for the airline industry.
European insurers don’t expect a big hit, largely because business interruption claims are considered unlikely – claims would need to be triggered by actual physical damage. The property and casualty damage from volcanic ash is not expected to be extensive.
For at least one segment of the industry, this is being deemed a significant claims event: Insurance companies that provide trip coverage are being inundated with calls, and they expect to pay out millions in trip claims. For travelers who were insured before April 13, coverage is likely, depending on exclusions, but after April 13, travelers should not expect ash coverage.
Future scenarios
In the great scheme of things, as far as volcanic eruptions go, this is a modest affair. However, there are two scenarios that could raise the stakes. The first is what the effects would be if volcano disruption lasts weeks, months – many are speculating about how the European crisis could play out
The second rather troubling scenario would be if this is a dress rehearsal, which it could well be if history is any guide.

“Eyjafjallajokull has blown three times in the past thousand years,” Dr McGarvie told The Times, “in 920AD, in 1612 and between 1821 and 1823. Each time it set off Katla.” The likelihood of Katla blowing could become clear “in a few weeks or a few months”, he said.

The 1783 eruption was devastating and had a global impact:

A quarter of the island’s population died in the resulting famine and it transformed the world, creating Britain’s notorious “sand summer”, casting a toxic cloud over Prague, playing havoc with harvests in France — sometimes seen as a contributory factor in the French Revolution — and changing the climate so dramatically that New Jersey recorded its largest snowfall and Egypt one of its most enduring droughts.

Despite that sobering thought, Iceland’s glaciers do not pose the most serious risk, according to the Willis Research Network. According to their research, an eruption of Mt. Vesuvias could be devastating, with 21,000 casualties and an economic toll of $24 billion. For some interesting risk-related reading, check out the Willis Research Network report on Insurance Risks from Volcanic Eruptions in Europe.
More volcano resources
Lists of the most deadly and the most costly eruptions
Volcano World
Aerial photo gallery of the Iceland volcano
Another gallery of stunning images
How to pronounce Eyjafjallajokull (video)

Haiti

Thursday, January 14th, 2010

As the world watches in horror and hopelessness, the people of Haiti are trying to extricate themselves from one of the great natural disasters of our lifetime. As I write, thousands of people are still alive, trapped beneath the rubble of what was once Port-Au-Prince. Very soon, most of these people will die, along with scores of the relatively unscathed who have no food, no water and no shelter. Faced with formidable logistical obstacles, the rescuers will not be able to reach most of the trapped people in time and the trickle of essential supplies may be too late for many others.
Our thoughts are with everyone who is suffering in this unimaginable disaster.
As the roads are cleared and supplies finally make their way into what is left of Haiti’s capital, rescuers will face enormous hazards. Unstable buildings may collapse at any moment. Further aftershocks are likely. Everyone in the devastated landscape is breathing air contaminated with toxins. There is even a danger of mob violence, as victims become increasingly frustrated by the lack of effective response.
Among the many issues that need confronting at this time, workers comp coverage for the rescuers is probably at the bottom of the list. Yet we know from the World Trade Center experience that many first responders will be exposed to life-threatening injury and illness in the coming days and weeks. Given the magnitude of human suffering in front of them, these responders are not about to raise the issue of their own disability coverage. But the day will come when the extent and nature of that protection is paramount, when the as-yet undiscussed benefits will be an absolute necessity for individual rescuers and their families.
We blogged recently about the personal risk management in which we all engage on a daily basis. We make our choices, moment to moment, in the expectation that nothing really bad will happen. If our luck holds, we live to face the micro challenges of another day.
For the poor people of Haiti and the brave souls trying desperately to help them, the time for micro management is over. The challenge of a lifetime confronts them with savage force. May all who suffer find peace and may all who are trying to alleviate the suffering return home safely.
Postscript
See a post at HR Web Cafe on Haiti earthquake resources, which includes links for:

  • Finding missing loved ones
  • Ways that you can help
  • Avoiding scams
  • News resources
  • Twitter feeds

A Note at Year’s End

Friday, December 31st, 2004

There is an image from this past week that has troubled my sleep: a huge wave, some 20 feet high, barrels toward a coastline. People stand in the shallow waters of the shore, paralyzed by what they see coming. The tsunami roars across the beach and a way of life comes to an end.
Those of us involved in insurance-related businesses are well versed in the intricacies of risk transfer. Businesses purchase insurance because they have to and because they do not want to shoulder the entire burden of their losses. But nowhere in our schemes, in the careful calculations of our actuaries, is there room for the scale of the catastrophe that took place this past week. Over 100,000 people are gone and many more are at risk. Entire communities have disappeared into the murky waters. Nature’s awesome indifference has swept away everything, from indigenous populations to the tourists escaping the cold winds of North America and Europe. All have disappeared in a fierce rush of water that receded almost as quickly as it appeared.
I was scheduled to write about experience rating, the mechanism that aligns a company’s workers compensation losses with its costs. And I will do this, but at this point it can certainly wait until next year. For the moment, as we all pause to look back on the year that is ending and look forward to the one that is beginning, I want to express the hope that mankind will truly come together in a generous and non-partisan manner to ease the burdens of the survivors and begin a rebuilding project of unprecedented scale.
Best wishes to all our readers for a peaceful and prosperous New Year!

Workers’ Comp and the Station Nightclub

Thursday, December 11th, 2003

This is a cautionary tale for America’s small employers.

One hundred people died in the Station Nightclub fire, one of the worst tragedies in American history.

Yesterday, the brothers, Jeffrey A. Derderian and Michael A. Derderian, who owned the Station Nightclub in West Warwick, Rhode Island, and Daniel M. Biechele, the tour manager for the band, Great White, were each charged with 200 counts of involuntary manslaughter, two for each death. Each count carries a possible penalty of up to 30 years in prison.

The Derderians have owned the club since the year 2000. Overwhelmed by the enormity of the catastrophe, lost in the proverbial shuffle, actually, is the fact that in all that time they never purchased a workers’ compensation insurance policy, a statutory requirement.

There were 16 Station Night Club employees working the night of the fire. Four of them died. If there had been workers’ compensation insurance, the families of the dead employees would have been eligible for a meager $5,000 burial benefit. A surviving spouse would have been eligible to receive two-thirds of the deceased’s average weekly wage until death or remarriage.

Absent the insurance, the state stepped in and paid the benefits from a special fund created for such an event and funded by all employers in the state, all employers who purchase workers’ compensation, that is. The state then fined the brothers a little more than $1 million.

Asked why the Derderians never had the insurance, their attorney, Jeff Pine said, “Sometimes these things happen. A lot of businesses and other entities don’t have it.”

I find it interesting that right after the fine was announced, workers’ compensation applications in Rhode Island increased dramatically. Fancy that.

We’ll have a lot more on this in subsequent postings. Stay tuned.