Posts Tagged ‘exclusive remedy’

IBM cancer lawsuit – exclusive remedy, workplace illnesses, and technology industry exposures

Sunday, February 29th, 2004

Last week a jury found in favor of IBM by denying damages in a suit filed by two retired workers. The workers alleged that exposure to chemicals and toxins at an IBM plant led to cancer. This case points to several issues that should be of interest to employers and to those of us who work in the field of workers compensation.

First, there is the tort issue. Normally, any compensability for work-related injuries or illnesses would be determined by the state workers compensation system. In that these illnesses arose out of and in the course of employment, why wouldn’t they fall under the prevailing jurisdiction’s exclusive remedy clause of workers compensation?

The answer to this question lies in the fact that almost every state has exceptions to the exclusive remedy doctrine that allow for workers to file tort actions. One common exception is willful intent on the part of the employer. That was essentially the basis of this particular lawsuit: the employees were trying to establish that IBM knew the potential hazard these chemicals represented, that IBM willfully disregarded that danger, and – very important to the California exception – that IBM neglected to inform the employees about that danger. Courts typically impose fairly high standards of proof in cases involving willful intent.

A second issue this case highlights is the difficulty in proving the work-relatedness of an illness. Injuries are generally easier to determine – they often entail observable events, such as a fall, a cut, or a burn. Illnesses may take years to develop. It may also be difficult to separate work-related factors that led to an illness from non-work factors. In the case of chemical exposures, a direct medical link between chemical exposure levels and an illness can be years in determination; even then, chemical agents may be in widespread use, making it difficult to isolate whether the workplace is the proximate cause of the illness.

The judgment in this case may well be a pyrrhic victory for IBM and for the chip industry. A series of 200 related suits from former workers about cancer and chemical poisening are still in the docket, as are about 40 suits involving birth defects in children of workers. The first birth defect suit against IBM will begin in New York next week.
We’ve been talking laws here, but at the heart of the matter is worker safety. The toxins involved in the chip making industry have been coming under scrutiny for several years now, and although there have been some industry efforts at self-policing and enhancing safety, hazards still exist that risk managers, health & safety practitioners, and the industry itself must still address. The fact that IBM has “won” this round does nothing to lift the moral mandate that every employer has to provide a safe and healthful workplace. And if one of the remaining suits finds success in another jurisdiction, the financial imperative may become more pressing as well.

Confined Space reports more on the safety hazards involved in this case, and also reports extensively on a proposed European initiative called REACH (Registration, Evaluation and Authorization of Chemicals) that increases the chemical industry’s responsibility for generating knowledge on chemicals, evaluating risk, maintaining safety standards, and substituting safer chemicals when possible.

More information:
Labor perspective from IBM Alliance
Tech industry reportage at Information Week
Toxic technology: Critics say chemicals used in making chips cause serious illnesses
Dirty secrets of the chipmaking industry
CCOHS: Health effects of trichloroethylene

Exclusive remedy, “bad faith” claims, and the $12 million lawsuit

Friday, January 23rd, 2004

Exclusive remedy generally protects an employer from a lawsuit. If an employee suffers a work related injury, the employer provides a state-regulated schedule of benefits to cover medical care and lost wages during recovery. In exchange for these benefits, the employee forfeits the right to sue. Workers compensation becomes the sole or exclusive legal remedy. Often, this protection is extended to insurers who are acting as agents for the employer.

However, there are exceptions. One exception is bad faith on the part of the insurer. A successful bad faith suit might be triggered by an insurer’s nonpayment of claims, mass denial of claims, or the like.
This week, a woman in South Dakota just secured a $12 million award for a bad faith claims practice, most of it in punitive damages. The claim involved the denial of about $8,000 in medical bills for a carpal tunnel injury. The original grounds for denial centered around compensability and whether the injury arose out of and in the course of employment.

Her insurer said the denial occurred because “there was a lack of proof that her hand problems were caused by her work” and further suggested that “her hand problems were likely the result of a 1998 home injury, not her work in the kitchen of the nursing home.”

A determination of work-relatedness and compensability are huge issues in many repetitive stress injuries, and if this claim dispute had ended there, the claim might have stayed within the realm of the state workers comp authority to uphold or deny. But in this case, the insurer’s claims handling practice was the smoking gun that gave rise to a charge of bad faith, opening the door to a suit.

” … the case centered around a Travelers Insurance incentive program that offered bonuses to claims workers who lowered payouts on claims. Called the Claim Professional Incentive Program, it offered workers end-of-year bonuses of as much as 20 percent of their pay if they reduced overall payouts from one year to the next.
Abourezk argued that the program created an improper conflict of interest for claims adjusters, who are supposed to be motivated by fairness to claimants, not cost control for insurance companies.”

The judgement will be reviewed by a higher court so the punitive award may or may not stand, but it serves as a cautionary tale to insurers — who are, after all, essentially finance companies — that managing a workers compensation claim is not simply the exercise of processing paper in the most cost efficient way possible, but the response to a human event. In our experience, keeping the focus on the person rather than the dollars generally results in the most favorable outcome by whatever measures you use for success.

You say it’s your birthday?

Tuesday, January 6th, 2004

…and those spankings from co-workers left you feeling a little bruised? Generally spanking, birthday spanking rituals in the workplace are not a good idea.

Well you’ll get no relief from the tort system, at least not in Minnesota where the Appeals Court invoked exclusive remedy as the only potential avenue of relief. It will be interesting to see if this passes the compensability test. Usually horseplay isn’t compensable, but it can often hinge on whether the employer has a policy discouraging any horseplay, or whether they actually condone or even participate in any tomfoolery. If the company president was among the paddlers, it may prove to be an expensive birthday party indeed.