Trends and Issues which Can Affect Workers' Compensation Coverage for Construction Companies
December 26, 2022 —
Saxe Doernberger & Vita, P.C.Recent trends in workers’ compensation coverage suggest that the number of claims are likely to continue to increase, specifically for high-risk industries, like the construction industry. This article explores multiple trends and issues which are likely to impact workers’ compensation insurance for construction companies. Several of these trends and issues reflect demographic, labor, and technological shifts, which have important implications for contractors and construction companies.
1. Technological Innovation and Worker Safety
New wearable technologies and other data-collecting products such as helmets which warn of employee fatigue and sensors which help with ergonomic corrections have emerged in the markets to support safety measures in the construction industry. Although devices such as these tools can help business owners to demonstrate the implementation of safety programs to their insurance carriers, they can also distract the workers who are wearing them or go through a product malfunction, which could lead to injuries in the workplace and could also result in higher workers’ compensation premiums. While these new technological devices are intended to support worker safety on construction sites, it is also important for business owners to evaluate the potential risks of new technologies on a project site.
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Saxe Doernberger & Vita, P.C.
Judge Nixes SC's $100M Claim Over MOX Construction Delays
February 16, 2017 —
Engineering News-RecordA federal judge on Feb. 8 dismissed a claim by the state of South Carolina against the U.S. Dept. of Energy over delayed construction of the Mixed-Oxide Fuel Fabrication Facility, near Aiken, S.C. The claim for financial compensation was part of a lawsuit the state filed in February 2016 seeking payment of $1 million per day—or an annual maximum of $100 million—for the MOX facility not producing fuel by Jan. 1, 2016.
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Engineering News-RecordENR may be contacted at
ENR.com@bnpmedia.com
Additional Insured Coverage Confirmed
February 23, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe Texas Court of Appeals found that Exxon Mobil Corporation was an additional insured under the CGL policy for Exxon's service provider. Liberty Surplus Ins. Corp. v. Exxon Mobil Corporation, 2015 Tex. App. LEXIS 12757 (Tex. Ct. App. Dec. 17, 2015).
Exxon contracted with Wyatt Field Service Company to perform "services" as set forth in various work orders from Exxon's affiliates. The contract also required Wyatt to maintain $5 million of commercial general liability insurance. The contract provided that the policies must cover Exxon and its affiliates "as additional insureds in connection with the performance of Services."
In 2008, Wyatt was assigned to work on a flexicoker unit at Exxon's refinery. Wyatt was to reinstall dummy nozzles and chains. It completed this service in October 2008. Three years later, one of the dummy nozzles pulled free, and the escaping steam and coke burned three individuals who were working on the unit. After the accident, it was discovered that the safety chain had been installed in the wrong location so that it did not properly secure the dummy nozzle.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Demonstrating A Fraudulent Inducement Claim Or Defense
May 18, 2020 —
David Adelstein - Florida Construction Legal UpdatesIn a recent case, Florida’s Fourth District Court of Appeal reversed a trial court’s denial of a motion for a temporary injunction sought by an employer due to an independent contractor’s violation of a non-compete and non-solicitation provision in an employment / independent contractor agreement (“employment agreement”). You can find more on this case and the enforcement of the non-compete and non-solicitation clause
here.
A worthy discussion in this case centers on the independent contractor’s fraudulent inducement defense. Specifically, the independent contractor, as a defense to the injunction, claimed that he was fraudulently induced into entering into the employment agreement because the employer promised he would make a certain amount of money and he would work predominantly in one geographic location. The employment agreement contained NO such representations. Instead, the employment agreement contained a fee and services schedule and the independent contractor would be compensated based on that schedule. It stated nothing as to the independent contractor only having to work, or predominantly working, in one geographic location, or that the independent contractor would be guaranteed “X” amount of money working in that location. Why is this important?
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Jury Convicts Ciminelli, State Official in Bid-Rig Case
August 14, 2018 —
Engineering News-RecordAfter a four-week trial but with less than two days of deliberation, a Manhattan federal jury convicted Louis Ciminelli, former head of the now-defunct Buffalo, N.Y., contractor LPCiminielli, and Alain Kaloyeros, the fired ex-head of SUNY Polytechnic Institute in Albany, N.Y., of fraud and conspiracy in a scheme to rig bids on a $750-million upstate New York manufacturing project.
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ENR.com@bnpmedia.com
Badly Constructed Masonry Walls Not an Occurrence in Arkansas Law
May 10, 2012 —
CDJ STAFFThe US District Court for Maryland has granted a summary judgment in the case Konover Construction Corp. v. ATC Associates to Massachusetts Bay Insurance Company and denied a request for dismissal from ACT. Konover (KBE) was contracted by Wal-Mart to build a Wal-Mart store and a Sam’s Club in Port Covington, Maryland. Superus, Inc. was hired by KBE to build the masonry walls. Superus purchased a policy from Massachusetts Bay Insurance which named KBE as an additional insured. Wal-Mart hired ATC Associates to independently test and inspect the concrete structural steel, and masonry.
After the building was in use, a large crack appeared which was attributed a latent construction defect. Other cracks were discovered. Upon investigation, it was discovered that there were “voids or foam in the concrete block surrounding the reinforcing steel that should have been filled with grout,” and in some cases, “reinforcing steel was missing or not installed in accordance with the specifications.” KBE paid for the repair and remediation and Wal-Mart assigned all rights and interests against ATC to KBE.
KBE filed suit against ATC. ATC called for dismissal on the grounds that Wal-Mart had no claims as the problems had been remediated. Wal-Mart then provided KBE with additional agreements to give them enforceable rights against ATC and Superus. KBE filed a fourteen claims against ATC, Superus, and Massachusetts Bay. In the current case, Massachusetts Bay sought summary judgment and ATC sought dismissal of all claims against it.
Massachusetts Bay claims that they need not indemnify Superus, as “there is no evidence adequate to establish that Superus’ defective work caused any collateral and/or resulting damage that was not subject to an Impaired Property exclusion, and that, in any event, no damage occurred during the policy period.”
As Wal-Mart is headquarted in Arkansas, certain contracts were under Arkansas law. Under the Arkansas courts, “defective workmanship, standing alone and resulting in damages only to the work product itself, is not an ‘occurrence.’” The court determined that collateral or resultant damage would be covered. The court found that “it is clear under Arkansas law, and the parties appear to agree, that Massachusetts Bay is not obligated to indemnify KBE for any repairs to the masonry walls themselves, including any cracks or gaps in the walls.” The court also found that “there is no evidence adequate to prove that any allegedly resultant property damage was caused by Superus’ faulty construction of the walls.” The court also noted that “if the building code violation and structural integrity problem were ‘property damage,’ insurance coverage would be barred by the Impaired Property Exclusion.” Based on these findings, the court concluded that Massachusetts Bay is entitled to summary judgment.
While the court dismissed the case against Massachusetts Bay, the court declined ATC’s motion to dismiss. The court noted that ACT’s alleged negligence in conducting inspections “created only a risk of economic loss for KBE.” Although hired by Wal-Mart, ATC “transmitted its daily testing and inspection reports of the Wal-Mart and Sam’s Club projects directly to KBE.” The court found that “KBE has made a plausible claim.”
ATC also claimed that KBE contributed to the negligence due to the negligence of its subcontractor. The court concluded that it was plausible that “ATC will not be able to carry its burden of proving KBE was contributorily negligent.” The court was less sanguine about KBE’s fraud claim, but though it “may not now appear likely to have merit, it is above the ‘plausibility’ line.”
In conclusion, KBE may not continue its case against Massachusetts Bay. However, the judge allowed the other proceedings to continue.
Read the court’s decision…
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Denial of Coverage for Bulge in Wall Upheld
November 26, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe insurer properly denied coverage for a bulge in a warehouse wall that the insured claimed was caused by Hurricane Ike. Russell v. Scottsdale Ins. Co., 2014 U.S. Dist. LEXIS 143882 (S.D. Tex. Sept. 30, 2014).
Hurricane Ike displaced metal roof coverings on the insured's warehouse, causing interior water damage to several rooms. Scottsdale eventually paid $84,820.36 for the loss of the roof, less the deductible. The parties disagreed on whether a horizontal bulge on the north wall of the warehouse was also caused by the hurricane. The bulging portion of the wall was not cracked, but cracks were seen around the corners and windows. The insured admitted to an engineer retained by Scottsdale that the cracks in the exterior walls had been filled with caulking on several occasions prior to Hurricane Ike.
Scottsdale denied coverage for the damage to the north wall under exclusions for soil sinking, rising, or shifting and for damage from faulty, inadequate or defective design, construction, and repair.The insured later sent a demand for $800,000 for the damage to the wall. A suit was eventually filed by the insured.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Public Projects in the Pandemic Pandemonium
September 07, 2020 —
Ashlynn E. Hutton, Michael J. Crook & Christian F. Torgrimson - Construction ExecutiveDespite the ongoing pandemic, states are opening up for business and establishing a new normal. This determination to move forward includes pushing public transportation projects full steam ahead. While this may be good news for certain industries, it may not be for commercial property owners hoping to see a slow down to public projects and avoid a taking of private property. As many grapple with new economic realities, we examine the approaches employed by states in the southeast to manage construction of public projects in this unprecedented time.
GEORGIA
The Georgia Department of Transportation (GDOT) is moving forward with all of its previously funded public projects, including the massive I-285 Top-End Project, designated as a “Major Mobility Project” for the Atlanta metro region. Affecting approximately 260 property owners along I-285 and Georgia Highway 400, environmental review of the project continues. GDOT anticipates a contract let date in 2022 and construction start in 2023. Like ocean liners, these projects don’t turn on a dime. Under the 2015 Transportation Funding Act, the budgeted funds cannot be shifted to other needs or projects due to economic shutdown. Once environmental review is complete, GDOT will approve the final design and move toward acquiring right-of-way from affected property owners.
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Ashlynn E. Hutton, Michael J. Crook & Christian F. Torgrimson, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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