Author: WorkCompAcademy

Insurer ACE Ltd. agreed to buy Chubb Corp. for $28.3 billion in cash and stock, creating one of the biggest property-casualty insurance companies in the world. The Wall Street Journal says that the deal comes as property-casualty insurers are facing pressure from what most people view as a stroke of good luck: relatively modest hurricane claims since 2012, the year of superstorm Sandy. With fewer claims checks being sent to individuals and businesses, insurers’ capital bases are growing, and their stepped-up competition with each other to put that capital to work is depressing prices.

This is one of several multibillion-dollar insurance tie-ups since late last year, most recently Tuesday’s announcement of an $18 billion combination of insurance broker Willis Group Holdings PLC and consulting firm Towers Watson and Co. Conditions are ripe for more big deals, analysts say.

The ACE deal, announced by both companies Wednesday, is one of the largest of the year and the biggest among life and property-casualty insurers on record. ACE is adding one of the most well-known names in the U.S. insurance industry. New Jersey-based Chubb is a leading provider of homeowners’ insurance to wealthy Americans through its Masterpiece coverage. ACE also targets high-net-worth customers in its personal-insurance business. Both companies have large operations selling insurance to midsize businesses.

Combined, the companies will have shareholder equity of nearly $46 billion and cash, investments and other assets of $150 billion.

ACE was formed in the Cayman Islands in 1985 by 34 blue-chip U.S. companies to provide then-hard-to-find excess-liability and directors-and-officers coverage. It expanded in 1999 when it acquired the property-casualty-insurance business of Cigna Corp. as that company was narrowing its focus to health insurance. Last year, ACE earned $2.9 billion with $17.8 billion in net premiums written.

Chubb, which operates in 25 countries, last year reported a profit of $2.1 billion on $12.6 billion in net premiums written.

The combined company will be based in Switzerland, as ACE is.

The cities of Victorville and Adelanto have opted to divorce from the San Bernardino County Sheriff’s Work Release program after being asked to provide medical treatment for inmate workers injured on the job – a shift in liability they deemed too dangerous. The story reported in the Daily Press says the key cause for the cities’ concerns is that they may be held liable for all workers’ compensation benefit obligations and expenses for injured workers. According to Victorville City Manager Doug Robertson, this responsibility represents a stark departure from the past, when the Sheriff’s Department would have handled the administration of the claim, including legal or medical expenses. “Our biggest concern is that an inmate worker could go from earning nothing for working all day to realizing a pretty hefty claim amount if they were injured on the job,” Robertson said.

In February, Victorville informed sheriff’s officials that they would be terminating their agreement when new deals apparently shifted the liability from the county to the city. The city of Adelanto also opted not to renew its deal earlier this month for the same reason. At its core, Victorville’s hesitation comes from not wanting to incentivize injuries.

Having participated since 1991 in the program, which allows inmates to serve time through manual labor, the city recently had used 20 to 30 workers on the weekends for tasks including pulling weeds and aiding code enforcement. But Robertson said the liability shift is akin to 20 to 30 potential windfalls every week, a risk he called “huge.”

To fill the void left by the loss of inmate workers, the city recently included nearly $200,000 in its budget for part-time hours. Robertson said the known cost, despite a higher initial investment, is worth it if only to get rid of the liability.

Representing the Victor Valley as the vice chair on the county’s Board of Supervisors, 1st District Supervisor Robert Lovingood said the cities’ exodus from the program has not gone unnoticed. “We want to see the return of the program,” Lovingood said. “We believe we want to restore this. This is something, again, we’ve been paying attention to.”

But not all municipalities are flinching after the change. “The Town has chosen to continue our contract with the Sheriff’s Department for the use of inmate labor,” Apple Valley spokeswoman Kathie Martin said. “In weighing the cost of bearing the worker’s comp burden with the value provided as a labor source, it still makes good business sense to continue.” Martin said Apple Valley runs a lean organization that needs the supplemental workforce provided by inmate workers, who clean the animal shelter, maintain grounds, repair roads and also clean illegal dumping sites on weekends.

Hesperia spokeswoman Rachel Molina said their contract with the Sheriff’s Department actually already included provisions for the city to provide workers’ compensation insurance for the inmates, so the new contract “did not present a significant change.”

Grand Terrace, which traces its program participation back to 1987, also opted to renew a deal this year despite acknowledging it would not know the incurred costs of the liability shift for at least a year.

Still, it remains unclear how many other cities, like Victorville and Adelanto, might be turned off by the change and how possible subsequent program dropouts could affect the program as a whole.

In 2012, California enacted Senate Bill 863 in part to combat an acute “lien crisis” in its workers’ compensation system. In an effort to clear an enormous and rapidly growing backlog of these liens, SB 863 imposed a $100 “activation fee” on entities like plaintiffs for each workers’ compensation lien filed prior to January 1, 2013. Plaintiffs sued in federal court, claiming that SB 863 violates the Takings Clause, the Due Process Clause, and the Equal Protection Clause of the United States Constitution.

The trial court issued a preliminary injunction in plaintiffs’ favor as to the Equal Protection claim, but not as to the other claims. Defendants appealed the district court’s issuance of the preliminary injunction and its denial of the motion to dismiss the Equal Protection claim. The 9th Circuit Court of Appeal reversed and vacated the injunction in the published case of Angelotti Chiropractic Inc. v Christine Baker.

The panel held that the district court properly dismissed the Takings Clause claim because the economic impact of SB 863 and its interference with plaintiffs’ expectations was not sufficiently severe to constitute a taking. The panel further concluded that the lien activation fee did not burden any substantive due process right to court access and also rejected plaintiffs’ claim that the retroactive nature of the lien activation fee violated the Due Process Clause.

Vacating the district court’s preliminary injunction, the panel held that the district court abused its discretion in finding that a “serious question” existed as to the merits of plaintiffs’ Equal Protection claim. Applying rational basis review, the panel held that Labor Code § 4903.06(b), which exempts certain entities other than plaintiffs from having to pay the lien activation fee, was rationally related to the goal of clearing the lien backlog. The panel also reversed the district court’s denial of defendants’ motion to dismiss the Equal Protection Clause claim because the panel’s ruling on the preliminary injunction necessarily resolved the motion to dismiss.

Here, one “plausible policy” goal, for the imposition of the lien activation fee is to help clear the lien backlog by forcing lienholders to consider whether a lien claim is sufficiently meritorious to justify spending $100 to save it from dismissal. In turn, the California Legislature’s decision to impose the activation fee on entities like plaintiffs, while exempting other entities, is rationally related to the goal of clearing the backlog because the Legislature might have rationally concluded that the nonexempt entities are primarily responsible for the backlog. In this regard, the Commission Report states that ten of the eleven top electronic lien filers are independent providers. Thus, the Legislature could have rationally found that independent service providers bore primary responsibility for the lien backlog, and therefore elected to focus on those entities in imposing the activation fee.

Janice Williams-Foreman broke her ankle when she slipped and fell at an oil refinery owned by ConocoPhillips Company. She was an employee of TIMEC Company, Inc. (TIMEC), which was hired by ConocoPhillips as an independent contractor, and was injured in the course and scope of her employment with TIMEC. Williams recovered workers’ compensation for her injury from TIMEC and sued ConocoPhillips on claims of negligence and premises liability.

She was employed by TIMEC as a general helper and safety attendant. Her duties included watching for fire. She never dealt directly with ConocoPhillips personnel, receiving all job assignments, instructions and tools from TIMEC. On May 13, 2012, Williams-Sample was walking from a ConocoPhillips administrative office trailer to a nearby permit shack to drop off paperwork when she slipped and fell near the trailer, breaking her ankle.The trial court granted summary judgment in favor of ConocoPhillips and Williams appealed. The Court of Appeal sustained the dismissal in the unpublshed case of Foreman v ConocoPhillips.

Employees of independent contractors injured in the workplace cannot sue the party that hired the contractor to do the work absent exceptional circumstances defined in the “Privette” doctrine. (Privette v. Superior Court (1993) 5 Cal.4th 689 (Privette).) The trial court found no exceptions to the Privette rule applicable on the evidence presented.

There remains a limited basis for a contractor’s employee to seek recovery of tort damages from the contractor’s hirer. An employee of a contractor may recover from the hirer of the contractor where the hirer retains control over the work performed by the contractor and “exercised the control that was retained in a manner that affirmatively contributed to the injury of the contractor’s employee.”

Mere retention of the ability to control safety conditions is not enough. A general contractor owes no duty of care to an employee of a subcontractor to prevent or correct unsafe procedures or practices to which the contractor did not contribute by direction, induced reliance, or other affirmative conduct.

Boeing knows that its airplane cabins can become filled with toxic air, but refuses to do anything about it, four flight attendants claim in court. Vanessa Woods, Faye Oskardottir, Darlene Ramirez and Karen Neben, along with her husband Nathan, sued Boeing in Cook County after becoming sick while working a flight on one of its planes, leaving them with lifelong medical problems.

In 2013 the plaintiffs were working on a Boeing 737, manufactured in 2012, over several flights with Alaska Airlines, the last of which was from Boston to San Diego. Shortly after takeoff, the plaintiffs say the crew noticed a funny smell in the cabin and the four flight attendants started to fill ill, including dizziness and vomiting. Oskardottir fainted and needed assistance from medical professionals who were passengers on the plane. After landing in Chicago the plaintiffs were treated at Resurrection Medical Center for “symptoms…consistent with hydrocarbon exposure,” the lawsuit states. The plaintiffs claim they still experience symptoms ranging from numbness and tingling, vertigo, extreme fatigue and blurred vision to memory loss, anxiety and depression.” The lawsuit cites numerous examples of similar incidents involving pilots, crew members and passengers.

The plaintiffs say in the complaint that they are exposing “a previously hidden and ‘dirty little secret’ of the commercial airline industry.” The air on all but one of Boeing’s airplanes is pumped through the engines into the cabin, known as a bleed air system, allowing the possibility for it to “become contaminated with heated jet engine oil and its toxic by-products” if there is a leak.

The lawsuit, filed Monday, points to a 1955 study done by the Aero Medical Laboratory showing that inhaling heated oil can damage the brain, liver, kidneys and cause death.It is now known that the chemical by-products from engine oil include “neurotoxins such as organophosphates” that are used in pesticides and nerve gases and were banned for residential use in 2001 by the Environmental Protection Agency, the complaint states. Inhaling them “can cause short-term or transient symptoms as well as permanent and serious personal injury.”

According to the lawsuit, Boeing has been “put on notice more than 40 times” over the past 60 years “that its aircraft was unreasonably dangerous but failed to rectify the flawed design.” In 1953 the company first recognized that heated engine oil could contaminate the air with dangerous chemicals but “alarmingly, to this day, Boeing has never met its…objective to fully identify the contaminants present in cabin air after a fume event,” the complaint states. That same year Boeing was working on a filter system to clean the air but it was never implemented, the plaintiffs say, and air quality sensors are still not used either.

The plaintiffs seek damages for strict liability, negligence and fraud. The plaintiffs are represented by Power Rogers and Smith PC in Chicago, LittlepageBooth in Houston, TX and Friedman Rubin and Brodkowitz Law in Washington.