Rule 409: Offers to Pay Medical and Similar Expenses

Risk Management Flow Chart

Risk cannot be fully eliminated. Part of being a business leader is accepting and mitigating risk. Accidents are a side effect of doing business.

From primary costs to societal costs, accidents are costly. When one occurs, businesses need to respond by assisting the injured. Prompt medical attention reduces the likelihood of serious injury. Indeed, minor untreated injuries can become serious. Whether you are liable or not, offering to pay for the associated medical expenses upfront can greatly decrease your overall risk. Unless, the probative value is substantially outweighed, the evidence of offering to pay or paying cannot be used against you to prove liability.

Rule 409 (The Federal Rules of Evidence) states, “Evidence of furnishing, promising to pay, or offering to pay medical, hospital, or similar expenses resulting from an injury is not admissible to prove liability for the injury.” Indeed, Rule 409 is policy driven to encourage companies to pay for the medical expenses of those injured on their premises. Nonetheless, Rule 409 does not preclude the admission of accompanying statements or the admission to prove a different fact at issue that is not liability.  To develop an accident protocol to help mitigate risk, contact us.

Posted by Sarah Crabtree Perez and Chad Trownson

Open-and-Obvious Doctrine Saves Save-A-Lot from Liability

Caution Wet Floor

Slip-and-Fall cases can cost a company substantial dollars.  As just one example, in Cintron-Colon v. Save-A-Lot, Ms. Clinton-Colon was shopping at an Ohio Save-A-Lot when she slipped on “a bright yellow liquid and fell.” Largely due to the nature of the puddle being bright yellow the court concluded that the “liquid would have been observable to a reasonable person. Therefore, the puddle was an open-and-obvious condition and the store owed no duty to the appellant (Ms. Clinton-Colon) to warn of its existence.”

For slip and fall cases, the Supreme Court of Ohio adheres to the open-and-obvious doctrine, which directs a court’s attention to “the nature of the dangerous condition itself, as opposed to the nature of the plaintiff’s conduct in encountering it.” Therefore, the open-and-obvious doctrine requires an objective analysis that looks to whether a “reasonable person would deem the danger open-and-obvious,” rather than the subjective opinion of the victim.

Whether a hazard is visible is not the sole consideration of the open-and-obvious doctrine, the attendant circumstances must also be considered.  Attendant circumstances encompass all the facts involved with the accident. If a distraction occurred that would reduce a reasonable person’s attention, the distraction must be taken into account and a reduction of the amount of care expected.

Not all puddles are bright yellow and carry a strong presumption of being open-and-obvious. Especially in the winter season, floors become wet for a variety of reason and become slipping hazards that could cost you millions. To reduce the probability you are found liable for a slip and fall case, you can post signs indicating the floor is wet at your store entrance. As was held in Finzzo v. Speedway, a Michigan case, “Regardless of whether the wet floor itself was an open and obvious condition, the wet floor signs posted at each store entrance to warn customers of a potential risk certainly were.” The court further elaborated, “The proper display of a wet floor sign makes the danger associated with a wet floor open and obvious as a matter of law, and is in fact why such signs are used.”

 

Authored by Sarah Perez & Chad Trownson

Breaking the Ice; New York’s Law on Clearing Icy Sidewalks

Winter Time, Snow Removing

Living and working in Ohio, we have learned to use extra caution when there are icy conditions. Even with extra caution, walking on ice can be dangerous. Roughly 1% to 5% of falls result in a serious fracture, according to the Journal of Bone & Joint Surgery and it is likely that ice related falls are worse than that. In fact, over 20% of US private industries injuries stem from slip and fall accidents.

19 Action News (a Cleveland news company) recently highlighted the dangers of ice on sidewalks. Most of 19 Action News’ advice falls into two categories; walk careful in proper footwear and to remove ice that creates the danger.

In New York, lawmakers have attempted to define the extra care that is required in clearing the sidewalks.  The New York Administrative Code indicates liability for snow and ice typically begins “four hours after the snow ceases to fall.” There are two main exceptions at play. First, there is an exception for certain nighttime hours (9:00 PM to 7:00 AM). Second, there is an exception if the removal would damage the pavement or the weather does not permit its removal.  If you live or work in New York, you better have your shovel handy.

For More Information:

The National Library of Medicine National Institutes of Health detailed the likelihood of injuries for age, profession, gender and a variety of other factors.

 

Authored by Sarah Perez & Chad Trownson

Lake Health’s New Pilot Project Benefits Self-Insured Employers

Risk Management Flow Chart

In theory, insurance is directly linked to risk. Imagine flipping a coin. If it lands on heads, then you get $1.05. If it lands on tails, then you lose $1. Chances are you would be willing to play the game because the stakes are low. A risk neutral person would flip the coin because the expected results are favorable. However, most people and established companies are actually risk adverse. Imagine flipping a coin again. But this time, if it lands on heads, you get $105k, but if it lands on tails you lose $100k.

Did your propensity to play go down? If you were forced to play, would you be willing to pay $1,000 to avoid playing altogether? If so, you are likely risk adverse. Insurance companies thrive because of risk aversion.  Through pooling, insurance companies greatly reduce their risk.

Self-insured employers understand the risks and benefits associated with their employee’s health care, which makes Lake Health’s pilot program all the more intriguing.   Lake Health, a Northeast Ohio-based community health system is partnering with Lubrizol Corp., Progressive Corp. and the Lake County Schools Council directly to provide various degrees of health care to roughly 2,500 people.  By cutting out insurance companies, Lake Health and its reported partners could see an enormous windfall and reduced risk. Interesting concept. We will see who follows suit.

 

Authored by Sarah Perez & Chad Trownson

BP Oil Spill: A Case Study in How Limited Liability May Only Go So Far.

Oil Spill On Beach

The Gulf of Mexico oil spill of 2010 is widely considered the worst U.S. oil spill of all time. BP has paid over 40 billion dollars in spill related expenses and may owe around 14 billion more in federal fines.

Litigation surrounding the spill has produced a host of interesting legal issues, and the litigation over the federal fines is no exception. According to the Wall Street Journal (http://www.wsj.com/articles/oil-prices-to-play-into-bp-fine-1421610065), BP believes it “has no obligation to lend money to its subsidiary and that the court should disregard the broader BP group’s financial resources in imposing a fine.” If BP owes no obligation to pay the debts of its subsidiary, then it would not have to pay the roughly 14 billion in federal fines and the subsidiary would most likely go bankrupt or face a smaller fine.

This is one example of how using subsidiaries to reduce risk is a valid business strategy, but it is not full proof. The U.S. Justice Department argues, “BP’s subsidiary is controlled by the parent,” thus BP is responsible for the federal fines. Essentially, the USJD is attempting to remove the limited liability of the subsidiary and make BP fully liable for the subsidiary’s action.

In addition to liability for fines, BP is required to make court-ordered settlement payments to businesses affected by the oil spill pursuant to a settlement agreement approved by the U.S. District Court for the Eastern District of Louisiana in 2012.  Claims may be made for both economic losses and property damage.  The settlement is referred to as the “Deepwater Horizon Court-Supervised Settlement Program.”  Currently, the deadline for affected business to file claims and take part in the settlement is June 8, 2015.  Retailers who have lost sales as a result of the spill and its related decline in tourism and shopping may consider whether they are able to submit a claim.

For more information on the settlement and claims process, visit:  http://www.deepwaterhorizonsettlements.com/

 

Authored by Sarah Perez & Chad Trownson

Tiger Woods Again Making News—This Time for a Slip and Fall

NORTON, MA-SEP 1: Tiger Woods tees off the fourth hole during thTiger Woods will go down as one of the greatest golfers of all time. He receives publicity regarding his level of golf play all the time, good and bad.  And, he will also forever be known for his reputed $110 million divorce from Elin Nordegren in 2010.  However, Tiger is currently receiving other attention in the legal world related to his former security guard’s slip on wet marble while patrolling Tiger’s mansion in 2010 (actually owned by Tiger’s company).  The former guard, John Davis, has decided to sue based upon a negligence theory: namely, the marble was wet due to negligent orientation of a sprinkler.  Of course, attorneys in Woods’ camp argue the risk was foreseeable.  This is just another reminder that premises need to not only be safe for customers and business invitees, but for employees and independent contractors as well to avoid costly workers’ compensation and tort claims.

For more information visit: http://www.businessinsurance.com/article/20150205/NEWS06/150209905/302

http://www.miamiherald.com/entertainment/ent-columns-blogs/jose-lambiet/article8725001.html

Authored by Sarah Crabtree Perez and Chad Trownson

Data Security Risk Should Rank High on Retailers’ Priority Lists

Identity Theft

A recent study suggests data security is very low on many executives’ priority lists of perceived risks to their businesses.  Over 800 executives in Australia, France, Germany, Hong Kong, Norway, Sweden, UK and the US were asked what the greatest risk to their companies were, and data security finished 8th. http://enterpriseinnovation.net/article/few-business-decision-makers-see-poor-data-security-greatest-business-risk-549396326.   Business competition, finding talented people, maintaining profits, growing the business, attaining and maintaining a great reputation, deployment of new technology, and supporting legacy infrastructure all come before protecting one’s data. Additionally, while 63% of the executives expected to suffer a security breach at some point, only 44% believe their critical data is completely secure.  Even less (37%) believe their consumer data is completely secure.  Yet only 1% of the executives saw data security as the greatest risk to their business.

Is this lack of fear crippling any movement toward widespread change in policy regarding data protection? A recent study has found that 70% of executives believe that their organizations do not even understand the full risks associated with data breaches (Study). Only 45% of executives believed that their own company’s response to data breaches was proactive or well-developed.

So what can be done? According to the 2014 Executive Breach Preparedness Research Report, in order to control and respond to data breaches, a company must start taking into account the importance and value of their data in their business operations.  “Without a well thought out plan in place, and without the proper guidance, training and process instituted throughout the organization, executives can stumble when dealing with the public outcry once sensitive data has been compromised,” said Arthur Wong, Senior Vice President and General Manager for Enterprise Security Services at HP (http://www.computerweekly.com/). Wong also notes that while no amount of money can completely protect companies from highly sophisticated cyber attacks, with proper preparedness, an attack can become a “speed bump in the road” rather than a “catastrophic business event”.

Therefore, the first step towards being prepared involves executives understanding that data security is critical. It should be considered at the same challenge level as finding talented people, maintaining profits, and growing the business.  As the holiday shopping season approaches, retailers should be mindful that it only takes one data breach to push customers through the doors of a competitor.  Looking through that lens, data security should be quickly on par with concerns like business competition, maintaining profits and overall business growth.

 Post by Sarah Crabtree Perez and Daniel Broidy

Ebola Concerns for Employers–Darned if You Do, Darned if You Don’t

Forbes reports that four people are currently being treated for Ebola in America, two nurses who contracted it while treating a patient in Dallas, and two who were infected while in Africa and subsequently came to America (Forbes). Whether or not Ebola ends up spreading in America or follows the much more likely path and is fully contained, businesses need to at least consider the effect that it can have on their companies.  If Ebola were to spread, businesses would, according to USA Today, be greatly affected because many insurance plans do not cover Ebola.  (USA Today).  According to the Occupational Safety and Health Act, all employers have a legal obligation to provide a safe workplace for their employees (OSHA Liability). Therefore, businesses would be forced to purchase much costlier insurance plans or worry about possible liability from their employees contracting Ebola and potentially spreading the disease.

Additionally, the spread of Ebola could possible lead to whistleblower issues. Some employees may refuse to work at a place that they feel unsafe due to the presence of a disease in their workplace. Would these employees have a legitimate whistleblower claim if they were fired due to their refusal to work? It is likely that any employee who makes an official complaint would be legally protected under the Occupational Safety and Health Act and to prevent liability, employers would have to show that either: 1) there is no hazard or 2) that they have developed a response plan that will reasonably protect their employees from harm. (Environmentalsafetyupdate).

Although there are legitimate workplace safety concerns, in dealing with the threat of Ebola, employers must not run afoul of federal or state disability laws and or laws that protect employee medical information. The Americans with Disabilities Act (“ADA”) precludes employers from questioning employees about their health or medical condition without a legitimate business justification.  Employers also may not disclose medical information of employees.  Compliance with OSHA is likely a legitimate business justification for requesting medical information, however,  it will only be legitimate if an employer has a reasonable basis to believe an employee may have been at risk for exposure.  For example, if the employee is showing any of the symptoms of Ebola after recent travel to an infected region, the employer will have a reasonable basis to take steps to protect other employees and may request the employee at issue seek a medical examination before returning to work.  (http://blogs.wsj.com/riskandcompliance/2014/08/11/the-morning-risk-report-ebola-and-the-americans-with-disabilities-act/)

In general, it would be wise for employers not to overreact, particularly given the current contained nature of the virus in the US.  However, staying informed to be able to respond swiftly, effectively and lawfully should the threat be realized is critical. Employers should regularly consult the CDC for guidance on spotting symptoms and protocol for preventing the virus’ spread. Additionally, a look at the EEOC’s guidance on pandemic flu is instructive: http://www.eeoc.gov/facts/pandemic_flu.html.

 For Further Reading on Ebola and Ebola in the workplace visit:

http://www.cdc.gov/vhf/ebola/

http://www.cdc.gov/niosh/topics/ebola/

Also, USA Today posted a story about Target leaving behind their data breach for the holiday season. That article can be found here:

http://www.usatoday.com/story/money/business/2014/10/21/target-holiday-plans/17663057/

Our Blog post about Target and other Data Breaches can be found here:

http://perez-morris.com/blog/proposed-legal-ramifications-for-retailers-suffering-from-data-breaches/

Post authored by Sarah Perez and Daniel Broidy

Training Middle Management Can Save Millions When Faced With Whistleblower Situations

According to a recent Wall Street Journal article (WSJ.com/blog) a vast majority of whistleblowing employees go to the manager or supervisor they trust most with their concerns, which often tends to be an employee in middle management. In fact, 95% of all incidents are reported straight to managers, not hotlines (Corporate Secretary). Because of this, it is essential that businesses train their middle management to appropriately handle whistleblower situations. If untrained, there can be huge financial and public relations implications.

Unfortunately however, according to Christine Chi, General Counsel of Financial Crime Compliance and Co-Head of the Global Internal Investigations Group at HSBC Holdings PLC, “[h]aving sophisticated enough personnel to engage in a meaningful and responsible back-and-forth with someone who’s raised concerns…takes a lot.” So, what is the value to the company to invest in training and personnel who are sophisticated enough to handle these situations?

The two biggest fears, which stop whistleblowers from coming forward, are (1) fear of retaliation and (2) fear that no action will be taken to stop the issue (Corporate Secretary). According to a recent study, 62% of all whistleblowers lost their jobs, 18% felt they were harassed or transferred, and another 11% had their job responsibilities or salaries reduced (http://ethics.csc.ncsu.edu/). With trained middle management who know how to appropriately act in whistleblower situations, companies have an opportunity to investigate and take corrective action regarding any internal problems.  Without a trained middle management, companies risk situations similar to GM’s (Philly.com) whose management ignored a whistleblower regarding faulty Chevy Cobalt parts, which led to 13 deaths and 54 accidents (businessweek), or Trader Joe’s who is currently being sued by a former employee for allegedly firing him for whistleblowing (Northjersey.com/traderjoes). In Trader Joe’s case, the employee was allegedly fired for not having a “sense of fun” for reporting spoiling food, rodent droppings and faulty coolers and freezers.

Addressing and fixing internal issues as they present themselves and before they become a financial and legal hardship is absolutely paramount for businesses.  Case and point: GlaxoSmithKline agreed to a $3B settlement for misbranding their drug Paxil (among other things); Merck, Sharp, & Dohme, agreed to a $950M settlement for misleading doctors regarding their drug Vioxx (ConstantineCannonWhistleblowerSuccesses); and GM was forced to recall 20 million vehicles after ignoring a whistleblower who tipped them off to serious problems.

Many of these examples started as small problems and were ignored or never fully corrected by the company, forcing whistleblowers take their complaints outside the business, to places like the SEC. Just last year, the SEC gave out their biggest award ever, when they awarded an anonymous whistleblower $14M (Shrm.org). As the awards and whistleblower protection laws grow, it is imperative that businesses both stay out of trouble, and have trained management to deal with any and all whistleblower issues. If businesses train their middle management to deal with issues brought forth by whistleblowers in efficient and effective ways, it may have extra costs up front, but they may be able to save themselves millions (or even billions) in prevented lawsuits, regulatory agency issues, and public relations nightmares.

 

For more reading on whistleblowing check out these links:

Post by: Sarah Crabtree Perez and Daniel Broidy

A Small Spill Creates a Big Mess

Donnea Collins of Louisiana is suing Whole Foods for what she contends was negligence on the part of the retailer. The suit alleges that Ms. Collins slipped and fell on a “liquid” while shopping in the produce section of her local store. Ms. Collins’ lawyers contend Whole Foods should have known about the issue and cleaned it in an appropriate manner. Additionally, according to the lawsuit, Whole foods is accused of “failing to maintain the premises, failing to periodically inspect and clean, failing to keep the premises clean, failing to warn of a dangerous condition and failing to place warning signs.”

This is not the first time Whole Foods has been sued due to a slip and fall issue. In 2010, a Whole Foods in Pennsylvania was sued for $50,000 when a customer slipped and fell and sustained injuries which necessitated medical attention.

To determine whether there is liability in slip and fall cases, the courts look at:

(1)   Actual or constructive knowledge of some condition on the premises by the owner/operator;

(2)    That the condition posed an unreasonable risk of harm;

(3)    That the owner/operator did not exercise reasonable care to reduce or eliminate the risk; and

(4)   That the owner/operator’s failure to use such care proximately caused the plaintiff’s injuries

 (Wal-Mart Stores, Inc. v. Ortiz, 2000 Tex. App. LEXIS 5199; Keetch v. Kroger, 845 S.W.2d 262, 264 (Tex. 1992); Corbin v. Safeway Stores, Inc., 648 S.W.2d 292, 296 (Tex. 1983).

For a company such as Whole Foods to escape liability they often must prove that they could not have known about such dangers and thus they do not fail the reasonableness standard. Will Whole Foods be held liable in this new case? Read more here: http://dailyinbox.com/woman-goes-after-whole-foods-company-after-slip-and-fall-accident/.

 Post by Sarah Perez and Daniel Broidy