Tag Archives: accident fund

The Insurance Implications of Social Networking Websites, Part 3

This is the third part of a six part series of articles discussing insurance coverage for claims that can be brought against individuals or companies because of the use of Social Media websites. Earlier articles in this series can be found here: Part 1 and Part 2. This article discusses coverages potentially triggered under Coverage A – Bodily Injury.

Bodily Injury Coverage
Even if the policy contains a personal injury coverage part (as discussed in part 2 of this series), analysis should still be made whether the policy provides coverage under the bodily injury coverage part. Oftentimes, this is dependent on the policy’s definition of “bodily injury” and “occurrence.”

Does The Defamatory Comment/Posting Made On A Blog/Website Constitute An Occurrence?
In order to trigger coverage under the policy’s insuring agreement there must be a defined “occurrence” that results in defined “bodily injury” during the policy period. Policies typically define “occurrence” as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions” which results in bodily injury. Most jurisdictions hold that it is the insured’s standpoint that controls in determining whether there has been an “occurrence” that triggers the duty to defend under the policy. A majority of jurisdictions have held that an accident is “an unexpected, unforeseen, or undesigned happening or consequence from either a known or an unknown cause.” A deliberate act, therefore, is not an accident.

If the defendant publishes an internet posting that referred to the plaintiff in a derogatory manner, e.g., accusing the person of being a pedophile, then this is a deliberate act which does not constitute an occurrence as defined by the policy. Stellar v. State Farm General Ins. Co., 157 Cal. App. 4th 1498, 69 Cal. Rptr.3d 350 (Cal. App. 2007). Some jurisdictions have held that the very nature of defamation precludes the conclusion that it can occur “accidentally.” See, e.g., Uhrich v. State Farm Fire & Cas. Co., 109 Cal.App.4th 598, 135 Cal.Rptr.2d 131 (Cal. App. 2003); Rogers v. Allstate Ins. Co., 938 So.2d 871, 876 (Miss. App. 2006); Iafallo v. Nationwide Mut. Fire Ins. Co., 299 A.D.2d 925, 926, 750 N.Y.S.2d 386, 388 (N.Y. App. Div. 2002). Some jurisdictions, however, recognize negligent defamation and, therefore, there may be an occurrence triggering coverage. Cincinnati Ins. Co. v. Eastern Atlantic Ins. Co., 260 F.3d 742 (7th Cir. 2001); cf., Baumann v. Elliott, 704 N.W.2d 361 (Wis. App. 2005) (finding no occurrence because complaint did not allege a negligent defamation); Farmers Ins. Exchange v. Hallaway, 564 F.Supp.2d 1047 (D. Minn. 2008) (reversing summary judgment and holding that there may be personal injury coverage because underlying lawsuit alleged negligent defamation and intent to injure had not been decided).

There are, obviously, certain factual situations that may at first blush appear to be intentional, but, upon further, investigation, may constitute an occurrence triggering coverage. For example, an individual intends on posting a defamatory comment on Facebook, spends time typing out the comment, but later decides against posting the comment, but accidentally hits “share” rather than “cancel” and so the item is accidentally posted on Facebook against the user’s wishes. Although the individual may have originally intended to post a defamatory comment, at the moment the comment was indeed posted, the individual did not have that intention. This may constitute an “occurrence” triggering coverage.

Similarly, an individual may have intended to respond to a message on Facebook with defamatory or libelous remarks, but rather than clicking the “reply” button, the individually mistakenly clicked the “reply all” button and, consequently, the message is sent to everyone on the list, rather than just the individual that the user originally intended.

Another example includes attaching a video or picture to a social media website. The individual may have intended to attach file A, but when selecting the file, the individual selected file B, which contained a picture/video of a person in a compromising position such that the individual’s privacy is invaded.

These are a few examples where the claim or complaint may allege conduct that may at first blush appear intentional, but the true facts may reveal that coverage is triggered. Further investigation may be needed to determine coverage.

Does The Emotional Distress Or Other Alleged Damages Resulting From The Defamation Constitute Bodily Injury?
“Bodily injury” is typically defined in a policy as “bodily injury, sickness or disease sustained by a person, including required care, loss of service and death that results.” Courts have held that “bodily injury” encompasses only physical injury and its consequences and does not include emotional distress in the absence of physical injury. Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1, 44 Cal.Rptr.2d 370, 900 P.2d 619 (1995); Nguyen v. State Farm Lloyds, Inc., 947 S.W.2d 320, 323 (Tex. Ct. App. 1997); Wiard v. State Farm Mutual Auto Ins. Co., 132 N.M. 470, 50 P.3d 565 (N.M. Ct. App. 2000). Thus, pure emotional distress does not constitute “bodily injury” for purposes of a policy unless there is specific policy language providing coverage for pure emotional injuries.

Because most social media claims do not involve direct physical contact, there is generally no “bodily injury” triggering coverage in the traditional sense. However, physical manifestations of emotional distress may be covered by the policy even if there was no direct physical contact with the claimant. This may include loss of hair, loss of weight, exacerbation of existing illnesses like Crohn’s disease, etc. If the claimant alleges such physical manifestations resulting from social media torts, then there may be qualifying “bodily injury” as defined by the policy.

Hopefully, this article makes the reader aware that social media torts may not only trigger coverage under the typical personal and advertising injury provided under Coverage B of the policy, if available, but that such social media torts may also trigger “bodily injury” coverage under Coverage A, depending on the particular factual circumstances.

Predictive Analytics In Workers' Compensation Made Easy And Affordable

It's a safe bet that claims will not have a happy ending if the treating physician has a history of being associated with poor claim outcomes. In fact, physicians rated poorly in analytic studies based on past performance are 100% predictive of high costs and inferior outcomes in future claims where they are involved. The question is, how can those providers be identified so they can be avoided?

Applying Analytics
Whether the cause of poor performance is misunderstanding Workers' Compensation or deliberate fraud, the claim results will be dismal. Nevertheless, in order to analyze provider performance, one must know where to find the data, what to look for, and how to apply the knowledge gained from analysis to achieve improved results.

Data can offer a clear picture of actual provider performance. Evaluating physician and other provider performance is a matter of scrutinizing the data using industry research to learn what to look for. In fact, leveraging published industry research is the way to skip the laborious and expensive regression analyses and other predictive modeling methods.

Industry Research Reveals What To Look For
Exposing substandard providers is a matter of integrating and analyzing the data to understand the course of the claim and the providers who were involved. Selecting the data items to monitor can be guided in the first instance by industry research. Organizations such as the National Council on Compensation Insurance, the California Workers' Compensation Institute, and the Workers' Compensation Research Institute continually publish their research based on data they collect from members. These organizations offer research regarding medical issues causing cost escalation in the industry, and usually make results available from their individual websites.

Search
Academia and other organizations produce and publish research, as well. The best way to access other research is to use Google or other search engines to find research studies regarding specific issues and interest areas. For instance, if the concern is low back pain, simply use Google to find research and scholarly articles on the topic as it relates to Workers' Compensation.

Indicators Of Performance
When the indicators of performance are identified, they can be tagged in the data to analyze individual providers. Providers associated with a preponderance of negative indicators will fall into the lowest class category. On the other hand, those whose results are exemplary will rise to the top — best in class.

Where To Find The Data
Billing data tells the story of diagnoses, treatments and the billed amounts. However, billing data by itself is never broad enough in scope to evaluate providers because it tells only a part of the story. Claim adjudication level data tells another part of the story. It describes the actual paid amounts, return to work, the amount of indemnity paid, and whether legal was involved. But there is more.

Analyzing Pharmacy Benefit Management data is imperative. Overuse of prescribed narcotic pain relievers is now a major concern in Workers' Compensation medical management. Prescribing excessive opioids is unconscionable, but the guilty are often not identified and avoided as they could and should be.

Provider performance should be scored by claim outcome combined with costs and other factors. Unless the initial injury was catastrophic, return to work following a workplace injury is often a function of medical management that should be measured. Analyzing multiple data indicators from disparate data sources is powerful in describing physician performance. It is also objective and fair.

Integrating The Data For Analysis
Any one Workers' Compensation data source by itself is inadequate for the purpose of evaluating provider influence. Only the broad scope of data concerning a claim can provide a clear picture of the claim and provider culpability in outcome. Therefore, collecting the data from its various sources (billing or bill review, claim adjudication systems, and pharmacy data), then integrating current and historical data are crucial steps in provider performance analytics. The next steps are identifying, evaluating, and monitoring the data elements that are indicators of performance both from the medical and Workers' Compensation viewpoints using research as a guide.

Link Analytics To Operations
Analytics results of any variety that remain in graphic form, in a brochure, or pinned to a wall are useless in the effort of actually containing costs. The findings must be functionally applied to operations to make them actionable. Information regarding best (and worst) in class doctors identified through the methods discussed here must be made available to network managers and others in a usable form. Moreover, the information should be specific, current, dynamic, easily accessible, and contain objective supportive detail. The work of analytics is not complete until its results are operationalized and actionable.

Deny Defense And Lose The Right To Belatedly Control Defense

An Insurer Should Never Deny A Defense Unless Absolutely Certain There Is No Potential For Coverage

The District Court, Northern District of California, granted a motion for summary judgment in favor of KB Home in part against the Travelers in Kaufman & Broad Monterey Bay, et v. Travelers Property Casualty, No. : 5:10-CV-2856 EJD (N.D.Cal. 07/18/2012)

Background
Travelers issued commercial general liability policies to Norcraft Companies, L.P., (“Norcraft”) a cabinet installer. The Norcraft policies provide coverage for “property damage” arising out of an occurrence that takes place in the coverage territory and that occurs during the policy period.

Subcontract And Aldrich Action
On or about January 22, 2003, and February 5, 2003, KB Home and Norcraft entered into subcontracts to furnish, deliver and install cabinets at certain homes within two housing developments in Monterey, California. The subcontracts required Norcraft to name KB Home as an additional insured under its commercial general liability policies.

On October 21, 2008, a number of homeowners commenced a lawsuit in Monterey County Superior Court against KB Home, Aldrich, et al. v. KB Home, et al. (“Aldrich Action”). The homeowners alleged a number of construction defects, including “cabinet and wood trim” defects, that resulted in damage to the homes and their component parts.

KB Home filed a cross-complaint against various parties, including Norcraft, alleging among other things that Norcraft is contractually required to defend and indemnify KB Home with regard to the Aldrich action.

Travelers’ Acceptance, Withdrawal, And This Action
On April 1, 2009, Glaspy & Glaspy, counsel for KB Home, tendered the defense and indemnity of KB Home as additional insureds under the Norcraft policies in the Aldrich action. This initial tender included copies of the original Complaint, First Amended Complaint, KB Home’s Cross-Complaint, a Stipulation and Order of Reference to the Special Master, the Subcontract and additional insured documentation.

On April 6, 2009, Patricia E. Dlugokenski (“Dlugokenski”), a senior technical specialist for Travelers, acknowledged receipt of the tenders and requested additional information, including: a statement of claims or documentation related to the alleged defects and deficiencies, expert investigation reports into defects or damages, current pleadings and any Case Management Order or Pre-Trial Order documents, and the location of any document depository.

On April 6, 2009, in response, KB Home provided an updated Homeowner matrix, the amended complaint, and the dismissal of one of the plaintiffs’ homes. KB also informed Travelers that the Pre-Trial Order had not yet been filed and there was no defect list but that KB Home would forward the defect list as soon as it is received. On July 6, 2009, Dlugokenski noted in the internal Claims Notes that “it is likely some, although minor damages resulted from [cabinet] installation. Damages to the walls or pulling away from the walls could be attributed to installation.” (Emphasis added) Also on July 6, 2009, Dlugokenski issued a letter accepting KB Home’s tender as additional insureds under the Norcraft policies.

The letter also requested information that would assist Travelers in its evaluation of the demand for payment of defense expenses, such as contact information for all carriers who have been provided a tender of defense, their responses, the amounts they have paid, the percentage they agreed to pay, a litigation budget, and an additional insured matrix showing the carriers tendered as well as their responses.

On October 20, 2009, Dlugokenski sent an email to KB Homes’ counsel requesting “documentation of damage caused by our named insured (defect report, etc.)” KB Home’s counsel informed Travelers that no defect list was available to date.

On November 5, 2009, Tom Frazier (“Frazier”), Travelers’ unit manager conducted a review of KB Home’s tenders and found that they lacked documentation of damage or liability arising out of Norcraft’s work. On December 1, 2009, KB Home contacted Travelers about its outstanding balance and requested payment. On December 10, 2009, Dlugokenski responded with a single-sentence email stating, “We will be withdrawing our acceptance.” On February 9, 2010, Hartford Casualty Company (“The Hartford”), another insurance company, accepted KB Home’s tenders of defense and issued a payment of $30,000 for KB Home’s defense in the Aldrich action. The Hartford made no further payments.

On March 9, 2010, Dlugokenski sent a letter to KB Home advising that Travelers was withdrawing from KB Home’s defense.

On May 27, 2010, KB Home filed this action against Travelers. On July 8, 2010, Fred Adelman, counsel for the Aldrich plaintiffs, signed a letter stating that “[t]he plaintiffs in this action are pursuing recovery for damages arising out of the cabinets.”

On August 4, 2010, KB Home provided the Aldrich plaintiffs’ preliminary defect list regarding cabinets, entitled “Aldrich, et al. v. KB Home, et al., Preliminary Defect List.” On December 17, 2010, based on the August 4, 2010 defect list, Travelers sent a letter to KB Homes in which it agreed to participate in the defense of KB Homes as an additional insured from August 4, 2010 forward and that it was appointing Christian Lucia of Seller Hazard Manning Ficenac & Lucia (“Sellar Hazard”) to represent KB Home in the Aldrich action. Travelers added that if KB Home wished to continue to retain Glaspy & Glaspy to provide it with a defense it could do so, but at its own expense.

On January 4, 2011, KB Home sent a letter to Travelers stating that Travelers has forfeited any right to control KB Home’s defense because it breached its duty to defend KB Home. KB Home also stated that Sellar Hazard had “a clear conflict of interest and is currently representing a subcontractor directly adverse to KB Home in a pending construction defect lawsuit and that under no circumstances will KB Home waive the conflict.

On January 28, 2011, Travelers issued payment of $73,654.54 to KB Home as payment for its one-half share of KB Home’s defense fees and costs in the Aldrich action pursuant to its equal shares allocation with The Hartford. On July 19, 2011, Norcraft and the Aldrich plaintiffs reached a settlement in the Aldrich action by the terms of which plaintiffs agreed to an issue release related to all cabinet issues, in exchange for the lump sum payment of $30,000. Travelers claims that, as of August 25, 2011, it had paid in excess of $187,418 in the defense of KB Home in the Aldrich action, which it claims is the amount of all outstanding invoices presented.

On August 26, 2011, KB Home filed its Motion for Partial Summary Judgment. Also on August 26, 2011, Travelers filed is Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment. On September 16, 2011, Travelers filed counterclaims against KB Homes for reimbursement, unjust enrichment, breach of contract, and declaratory relief.

Discussion
KB Home sought partial summary judgment that:

  1. Traveler’s duty to provide KB Home a defense was triggered from the date of tender, April 1, 2009;
  2. Travelers breached its duty to provide KB Home a defense; and,
  3. Belated payment of the costs of the defense in the Aldrich action did not cure Traveler’s breach of its duty to defend KB Home.

Travelers sought summary judgment in its favor on KB Home’s breach of contract claim because:

  1. KB Home breached its duty to cooperate by refusing to accept Travelers’ appointed counsel;
  2. KB Home cannot prove a duty was owed when Travelers denied coverage because Travelers’ duty to defend had not been triggered;
  3. KB Home has not presented any evidence of resulting damages. Travelers also sought summary judgment in its favor on KB Home’s breach of covenant of good faith and fair dealing because:
    1. Travelers never withheld benefits due under the policy;
    2. Any delay in paying benefits was based on a genuine dispute regarding coverage; and,
    3. Travelers conducted a reasonable investigation of KB Home’s tender.

The District Court considered both motions and ruled against Travelers and in favor of KB Home in most parts of its motion. It reasoned about the various issues:

Breach Of Contract
For an insurer, the existence of a duty to defend turns not upon the ultimate adjudication of coverage under its policy of insurance, but upon those facts known by the insurer at the inception of a third party lawsuit. Hence, the duty may exist even where coverage is in doubt and ultimately does not develop. The defense duty is a continuing one, arising on tender of defense and lasting until the underlying lawsuit is concluded or until it has been shown that there is no potential for coverage.

The Norcraft policies provide coverage for “property damage.” The Norcraft polices do not cover property damage to Norcraft’s work arising out of it or any part of it.

Travelers argued that the complaint does not allege that other property was damaged as a result of the cabinets. Specifically, Travelers argues that the Aldrich complaint only alleges the existence of cabinet and wood trim defects at the homes and that the cabinets were installed so as to interfere with the cabinets’ useful life.

Travelers’ reading of paragraph 17, however, appears to consider only the final sentence of the allegation which list the defects, including cabinet and wood trim defects, to which the rest of the paragraph makes reference. The immediately preceding sentence states that the “defects … have resulted in damage to the homes and their component parts. Thus, the complaint alleges that cabinet and wood trim defects caused damage to the homes and their component parts, which potentially includes parts of the homes other than the cabinets.

The District Court concluded that as a result of the Aldrich complaint tendered on April 1, 2009, Travelers was required to defend KB Home unless and until Travelers could demonstrate, by reference to undisputed facts, that the claim cannot be covered. KB Home’s motion for partial summary judgment that Travelers owed it a duty to defend as of April 1, 2009 was granted.

Travelers failed to present evidence showing a genuine issue of fact regarding whether, at the time of its March 9, 2010 withdrawal, there was no potential for a covered liability.

To be excused from its duty to defend by KB Home’s alleged breach of the duty to cooperate, Travelers must show prejudice that resulted from KB Home’s withholding these documents. Travelers has not identified any related prejudice, much less provided evidence upon which a reasonable jury could find prejudice. KB Home, however, has pointed to evidence that Travelers was not prejudiced by these documents because, even if these documents had been produced earlier, Travelers would have acted no differently.

Travelers’ expert, Gene Irizarry, declared that “even though KB [Home] did not provide the Lot Files to Travelers, had it done so, no duty to defend would have been triggered.” This evidence indicates that, with or without the documents, Travelers still would have determined that it did not have a duty to defend. Thus, assuming that KB Home withheld these documents, Travelers has not raised a genuine issue of fact regarding whether Travelers was excused from its duty to defend as a result.

The undisputed facts demonstrate that Travelers breached its duty to provide KB Home with a complete and immediate defense of the Aldrich action when it withdrew from KB Home’s defense on March 9, 2010. Therefore the District Court granted KB Home’s motion and denied Travelers’ motion.

Whether Travelers Cured Its Breach By Its Belated Payment
KB Home also moved for summary judgment that Travelers’ belated acceptance of its duty to defend does not cure its prior breaches. In opposition, Travelers argued that KB Home has not provided any evidence of damages. KB Home sought judgment that Travelers’ failure to take up KB Home’s defense when its duty was triggered is not cured because Travelers did so after KB Home filed this action.

A belated offer to pay the costs of defense may mitigate damages but will not cure the initial breach of duty. KB Home’s motion for summary judgment that Travelers did not cure its breach by its belated payment for KB Home’s defense was, therefore, granted by the District Court.

“The insurer’s right to control the insured’s defense extends to the right to select legal counsel.” Travelers Property Cas. Co. of America v. Centex Homes, No. 11-3638-SC, 2012 WL 1657121, at *4 (N.D. Cal. May 10, 2012). However, “[w]hen an insurer wrongfully refuses to defend, the insured is relieved of his or her obligation to allow the insurer to manage the litigation and may proceed in whatever manner is deemed appropriate.” Eigner v. Worthington, 57 Cal. App. 12 4th 188, 196 (1997).

Here, the Aldrich action was tendered to Travelers on April 1, 2009 and triggered Travelers’ duty to defend. On March 9, 2010, Travelers declined to participate in the Aldrich defense. Travelers, however, agreed to defend KB Home on December 17, 2010, after KB Home had provided Travelers with a defect list from the Aldrich plaintiffs on August 4, 2010 and after KB Home filed this lawsuit.

Duty To Defend Arose Immediately Upon Tender
Since Travelers’ duty to defend arose immediately upon the April 1, 2009 tender, Travelers’ withdrawal and delay in providing KB Home with a defense divested it of the right to control KB Home’s defense. Thus, Travelers failed to demonstrate that the undisputed evidence shows KB Home’s rejection of Travelers’ chosen counsel was a breach of the cooperation clause.

During the time the insurer had rejected the tender of the defense, the insured arranged and paid for its own defense. The belated tender did not fully remedy the harm caused by the insurer’s refusal to defend by later paying the insured’s attorney fees, though this belated decision unquestionably mitigated its damages.

Breach Of Duty To Investigate
An unreasonable failure to investigate amounting to such unfair dealing may be found when an insurer fails to consider, or seek to discover, evidence relevant to the issues of liability and damages. Based on KB Home’s initial tender, on July 6, 2009, Travelers’ Claim Notes document Traveler’s decision to accept KB Home’s defense because of a likelihood of covered damages.

An insurer’s early closure of an investigation and unwillingness to reconsider a denial when presented with evidence of factual errors will fortify a finding of bad faith. KB Home, therefore, presented evidence sufficient to create a genuine issue of fact regarding whether Travelers acted in bad faith in refusing to defend KB Home.

Conclusion
For the reasons discussed above, the District Court ordered as follows:

  1. KB Home’s motion for partial summary judgment that Traveler’s duty to provide KB Home a defense was triggered from the date of tender, April 1, 2009;
  2. Travelers breached its duty to provide KB Home a defense; and
  3. belated payment of the costs of the defense in the Aldrich action did not cure Traveler’s breach of its duty to defend KB Home.

Travelers’ has been found to breach its duty to defend in two cases in California because of its failure to thoroughly investigate upon tender of defense and that, when it had second thoughts and agreed to defend, found it had lost its right to control the defense.

If, as in KB Homes, there is a small potential for coverage, a defense should be provided promptly subject to a reservation of rights. Withdrawing that defense when there is no additional investigation or new facts is not within the custom and practice of Commercial General Liability insurers in California and most of the country.

Travelers then added insult to the injury caused by its withdrawal of defense by coming back and offering to defend with control of counsel and the defense and ignoring the conflict of interest between it, its chosen counsel, and the additional insured. In addition, had it done a thorough investigation, it could have accelerated the settlement negotiations and resolved the Aldrich case for less than the amount of defense costs.

Take The Construction Jobsite Crime Quiz

Cost Retention and Safety Enhancement: Protecting Your Assets

While construction activities are fluctuating due to the current economic situation, general, heavy/highway and specialty contractors continue to face increasing consumer and regulatory demands and requirements to provide a safe, healthy and secure work environment for their employees.

However, the consequences of theft and lack of security in the workplace are not always understood. Several states have contractor-based trade associations who partner with law enforcement, e.g. the Construction Industry Crime Prevention Program (CICP), which monitors, participates and assists contractors in protecting your assets.

To test your knowledge, Take the Crime Quiz

True or False:

1. Substance abuse is an important factor contributing to crime.
Unfortunately, True. The Construction Industry Crime Prevention Program has been notified that some construction firms have relaxed their hiring standards, including substance abuse polices, because of the severe labor shortage. Employee theft accounts for around 85% of a firm’s theft problem. One employee with a substance abuse problem can be a firm’s entire theft problem in addition to creating a safety problem on the jobsite.

2. Attitude has nothing to do with theft on a jobsite.
False. Rationalization and opportunity are two of the leading factors in employee theft. The common rationalization from some employees is “The contractor leaves all these tools, generators and equipment unprotected, because they are so rich. Obviously they don’t care. Besides, I need a drill at home.” Congratulations, you have just had a theft.

Most construction firms provide the opportunity for theft if there is poor or no inventory control at a jobsite, lack of inventory accountability, no one is watching payroll checks, or the firm is willingly handing out replacement tools and materials.

3. So long as employees are working and getting paid, the job is getting done.
True. However, job quality and efficiency can be compromised. Thefts and vandalism can rise in direct relationship to how employees are treated. It is always wise to review your layoff and termination procedures and see that they are carefully and calmly carried out.

Terminations alone account for some of the worst vandalism cases identified by the Construction Industry Crime Prevention Program. The Construction Industry Crime Prevention Program historically had taken a close look at these cases and in each one, the employee was terminated in front of his peers by an angry site manager. While one can sympathize with the site manager’s frustration — so often justified — but it can cost him/her dearly in the long run.

All jobsites should be made extra secure, locks changed, and an obvious tightening of security implemented following a difficult termination or layoff.

4. Using Tailgate Safety Meetings to discuss crime incident is detrimental and takes away from production on the jobsite.
False. Many contractors have controlled thefts by using a safety meeting as the basis for discussion. Routine and/or regular discussion of vandalism and theft can control the issue and raise awareness among the employees.

Ask for employee input. Treat the person with the best crime prevention tip of the month with a gift certificate. The majority of employees are honest, but they often perceive the company’s attitude as “not caring” because it is never discussed.

5. Posting signage to deter theft or a reward poster is beneficial.
True. Many crimes and theft have been uncovered because of postings and utilizing safety meetings to discuss items such as these. If you belong to a Construction Industry Crime Prevention Program, pass out reward fliers. Ask anyone with information to call the CICP hotline and remind them they can remain anonymous. State that losses are going to be investigated, and make a point of assigning someone the responsibility of securing the jobsite. Be obvious about looking through debris piles and control debris. A clean jobsite presents a concerned, careful attitude that will also send strangers on down the road to look for easier pickings.

6. Crime problems are not an issue in construction.
False. If you don’t think you have a crime problem, it probably isn’t being tracked. Check with your Safety representative, Risk Manager, Insurance loss control representative or claims adjuster to verify just how much this exposure is causing a problem.

Your safety rep, insurance representative, risk manager, law enforcement and the Construction Industry Crime Prevention Program can share with you various ways in which to lower your loss exposure as well as retain efficiency, productivity and replacement costs.

7. The majority of jobsites are cased during the day, especially for equipment.
True. Crime statistics reveal the job is cased throughout the day, especially for items which return a high dollar value on the black market.

All strangers should be challenged, and all visitors should be required to sign in at the job trailer or with the site manager and the rule must be enforced. Contact your CICP organization for appropriate signage to reduce your liabilities after hours. Signage, as offered by the Construction Industry Crime Prevention Program, offers a round-the-clock emergency crime hotline that is visible and well known to law enforcement and the public. This is a good deterrent.

8. Crime is preventable.
True. Keep padlocks closed at all times. Use only case-hardened padlocks and if you must use chain, it should be case-hardened as well. Check to see that padlocks are closed in recessed covers on bins.

With increasing insurance premiums, contractors cannot afford to ignore the long range implications of crime if they want to improve their bottom line and reduce their liabilities.

9. A suspect, including strangers, often returns to the scene of the crime.
True. They want to gauge the reaction on the jobsite. As Andy Warhol says, everybody has 15 minutes of fame. For contractors, indifference, no “tightening up,” and/or a business-as-usual attitude only escalates the suspect’s confidence and your theft problem.

Unfortunately, the repeated crimes of contractors’ job trailers or tool bins being broken into is an indication of a repeat offender. Besides, they get needed tools every time.

In 2001, California Youth Authority inmates informed the Construction Industry Crime Prevention Program of Northern California that they often vandalized a site and returned early in the morning to watch the site manager “yell and cuss,” knowing there would be little or no follow up. This reactive approach to theft gave the offenders the confidence to start up equipment, move it around, and cause more damage.

Proactive approaches to deter crime, theft and vandalism includes handing out reward fliers, addressing crime issues at tailgate meetings, tightening up on inventory control, and security. Motion sensor lights hooked up to alarms are also effective, especially when wired to come on in unexpected areas.

10. Crimes, vandalism and thefts are part of doing business, and insurance covers the losses.
False. Case studies revealed one contractor had sustained a $400,000 judgment. A juvenile raced his motorcycle all over their jobsite, causing major damage. He crashed the bike, resulting in him becoming a paraplegic. The judge ruled they did have “No Trespassing” signs, but they did not have enough!

Three 4- and 5-year-old children started up a backhoe in Berkeley. It took five patrol cars to get them stopped as they crashed into street barricades and generally caused havoc and panic for the residents.

The company was very fortunate: they were not sued by the neighbors, nor by the children’s parents for leaving the backhoe with the keys in it outside the locked gate. In addition, the news media did not “showcase” the contractor on the six o’clock news for endangering children who live in a low-income neighborhood. Fortunately, the only injuries sustained were to the equipment.

A contractor’s risk manager went pale when the Construction Industry Crime Prevention Program informed him that a drug addict, according to his statement, “needed a ride home” and drove one of their backhoes five miles over county roads, parking it near his house.

The possibilities of a tragedy in these scenarios is very real. Negative publicity, impact to public relations, associated costs and headaches do not need to be outlined for any risk manager, superintendent or owner. Even though the examples listed above are not your employees, the exposure and risk is out there. The bottom line is that the company loses money, injuries occur, and the liability is great, unless you take strong preventive measures to minimize this.

11. If your tools and equipment cannot be positively identified, in most cases the thief is the winner.
True. Mark all tools and equipment with the driver’s license number of a principal operating owner in a firm or clear company identification. Employees should be required to do the same. Take inventory. If your site managers can’t tell law enforcement or your insurance company what is missing following a theft and/or provide serial numbers, the thief is the winner. However, take caution, blue spray paint and somebody’s initials on a bunch of hand tools does not qualify as “positive identification.”

Tally your Score
So, how did you score in protecting your assets? Hopefully, 100%. Yet, if not, there are resources to help you. Contact your trade association, your state/regional Construction Industry Crime Prevention Program, and your loss control representative. These organizations can assist you in physical site surveys, law enforcement liaison and recovery of your assets. Be smart and get involved in cost retention and safety enhancement.

Record $2.3 Million+ Backpay Order

Shows Underpaying Or Violating Other Rules For Employing Foreign Workers Risky Business

Underpaying and failing to meet other H-2A visa program requirements for its employment of temporary foreign agricultural workers was an extremely costly mistake for Yerington, Nevada-based onion grower Peri & Sons.

Under a consent order entered by U.S. Department of Labor Administrative Law Judge Steven Berlin in San Francisco, Peri & Sons must pay a record total of $2,338,700 in back wages to 1,365 workers, plus a $500,000 civil money penalty to the Department of Labor for failing to properly pay foreign agricultural workers working under the H-2A visa program.

The consent order announced by the Labor Department Wage and Hour Division on July 10, 2012 reminds U.S. businesses of the need to meet compliance responsibilities when employing foreign workers and illustrates the significant risks that employers of foreign workers risk by failing to meet minimum wage and hour, overtime and other requirements for the employment of foreign workers.

The record back pay order stems from charges brought by the Labor Department’s Wage and Hour Division after it determined that Peri & Sons violated the Fair Labor Standards Act and the H-2A visa program requirements by underpaying H-2A employees involved in irrigation, harvesting, packing and shipping of onions sold in grocery stores nationwide.

All of the affected workers came to the U.S. from Mexico under the H-2A temporary agricultural worker visa program. In most cases, their earnings fell below the hourly wage required by the program, as well as below the federal minimum wage of $7.25 per hour for a brief period of time. Investigators also found that workers were not paid for time spent in mandatory pesticide training or reimbursed for subsistence expenses while traveling to and from the U.S. Additionally, Peri & Sons did not pay the worker’s return transportation costs at the end of the contract period.

The H-2A temporary agricultural worker program permits agricultural employers who expect a shortage of domestic workers to bring nonimmigrant foreign workers to the United States to perform temporary or seasonal agricultural work. The employer must file an application stating that a sufficient number of domestic workers are not available and the employment of these workers will not adversely affect the wages and working conditions of similarly employed workers in the U.S.

Employers using the H-2A program also must meet a number of specific conditions relating to recruitment, wages, housing, meals and transportation. See more on H-2A visa employment rules here.

Reflective of the Obama Administration’s heavy emphasis on the enforcement of wage and hour and other laws protective of workers, the Peri & Sons order shows the potential risks that employers run when violating these rules.

To minimize these exposures, employers of H-2A or other workers employed under special visa programs should carefully manage these programs to ensure their ability to demonstrate compliance with all requirements of the visa program, the Fair Labor Standards Act, and other relevant laws.

These programs should include careful and ongoing due diligence to maintain a current understanding of all applicable requirements for the legal employment of these workers and the establishment of systemized processes and documentation, both to maintain compliance and to preserve evidence necessary to demonstrate this compliance against possible investigations or charges.