No penalty for post-accident safety measures

At Wheeling-Pittsburgh Steel Corp. in Mingo Junction, Ohio, overhead cranes moved along tracks above a blast furnace. Walkways parallel to the path of the crane provided for exiting the crane in an emergency. On one side of the crane, the walkway was guar

At Wheeling-Pittsburgh Steel Corp. in Mingo Junction, Ohio, overhead cranes moved along tracks above a blast furnace. Walkways parallel to the path of the crane provided for exiting the crane in an emergency. On one side of the crane, the walkway was guarded. The other side — onto which the crane's cab door opened — was not, to allow the operator to step from the cab to the emergency walkway unimpeded.

On June 20, 1999, during the shift of Joseph Fadeley, a Wheeling-Pittsburgh crane operator, his dead body was found in a ladle 80 ft below the crane. Although no one saw the fatal accident, it appeared that Fadeley had fallen from the unguarded side of the emergency walkway.

Fadeley's widow received workers' compensation benefits for her husband's death. She also sued Wheeling-Pittsburgh for additional compensation, charging the company with a violation of a provision of the Ohio safety code, which requires elevated platforms to be guarded with railings and toe boards.

At a hearing, Wheeling-Pittsburgh argued that another section of the law applied. Special-purpose runways may have the railing on one side omitted, where operating conditions require the omission, provided the falling hazard is minimized by using a runway at least 18-in. wide.

The Industrial Commission of Ohio ruled for Mrs. Fadeley, holding that operating conditions did not require omission of a railing. The Commission based its conclusion on the fact that Wheeling-Pittsburgh erected, after the accident, a modified rail/gate system in the walkway that did not interfere with the crane's operation. Wheeling-Pittsburgh petitioned the Court of Appeals, which vacated the Industrial Commission's order. The court concluded that the special-purpose-runway exception applied, so Wheeling-Pittsburgh was not required to have a railing on both sides of the walkway. Mrs. Fadeley appealed that ruling to the Ohio Supreme Court, which, like the appellate court, concluded that Wheeling-Pittsburgh was permitted to omit the railing on one side of the walkway because the railing would prevent an operator from escaping from the cab.

The court chided the Industrial Commission stating, "We also disapprove of the commission's use of Wheeling-Pittsburgh's subsequent attempts to enhance worker safety as essentially a means to penalize the employer. In the Fadeley case, a tragic accident occurred, and Wheeling-Pittsburgh quickly instituted measures to ensure that such a mishap was never repeated. The commission's reasoning is a true disincentive to such remedial actions. Had Wheeling-Pittsburgh done nothing, the commission apparently would have had no evidence from which to conclude that operating conditions could have been unimpaired by standard guard railing."

State ex rel. Wheeling-Pittsburgh Steel Corp. v. Industrial Commission of Ohio, 795 N.E.2d 664 (Sup.Ct. Ohio 2003), Supreme Court of Ohio, Sept. 24, 2003.

Contract claims not covered by general-liability policy

In 1998, L.B. Smith Inc. sold two Trashmaster industrial-trash compactors to Environmental Recycling Services Inc., a company operating a landfill to dispose of construction materials. Both machines had mechanical problems, which Smith and CMI Corp., the manufacturer, tried unsuccessfully to repair.

Environmental eventually sued Smith and CMI, charging them with breach of warranty, breach of contract, and negligence. Smith's insurer, Pennsylvania Manufacturers' Association Insurance Co., denied coverage on the ground that the general-liability

policy it issued Smith did not cover contract claims. Smith took PMA to court. After a hearing, the Pennsylvania trial court ruled that PMA had to defend and indemnify Smith.

PMA appealed to the Pennsylvania Superior Court and won. That court noted general-liability policies protect the insured against liability for accidental injury to a person or property and do not cover disputes between parties to a contract. Moreover, Smith's policy specifically disallowed coverage when underlying claims from property damage arose out of a failure to perform under a contract.

Smith argued Environmental's claim it was negligent in repairing the Trashmasters brought the dispute under the coverage of its general-liability policy. The appellate court disagreed, citing the gist-of-theaction doctrine, which, it said, ". . . is designed to maintain the conceptual distinction between breach-of-contract and tort claims. Under the gist-of-theaction doctrine, Environmental's negligence claims are actually assertions of breach-of-contract and breach-of-warranty claims. Under the gist-of-the-action doctrine, the claims against PMA must fail because the insurance policy in question does not cover breach-of-contract or breach-of-warranty claims."

Pennsylvania Manufacturers' Association Insurance Co. v. L.B. Smith Inc. 831 A.2d 1178 (Pa.Super. 2003), Superior Court of Pennsylvania, Aug. 28, 2003.

Date of injury fixes liability for workers' comp benefits

Steelwind Industries Inc. is a steel fabricator specializing in the construction of large castings and structural-steel components. In January 1999, Steelwind hired Epic Staff Management Inc. to provide Steelwind with various human-resource services at its Wisconsin plant. Among Epic's tasks were paying wages and securing workers' compensation benefits for Steelwind's employees. At the start of the contract, Epic hired Steelwind's production workforce and formally became the workers' employer for purposes of payroll, taxes, and insurance. Steelwind provided Epic with the money needed for those purposes, and paid Epic a fee for its services.

The one-year contract ended on Dec. 31, 1999. However, the contract stated it would automatically renew for an additional one-year term unless one or both parties gave a termination notice at least 30 days prior to the termination date. By late 1999, Steelwind was dissatisfied with its arrangement with Epic and wanted to terminate it. Steelwind retained workers' compensation insurance, with coverage effective Dec. 31, 1999. However, Steelwind did not provide Epic with the 30-day termination notice required by its contract.

On Jan. 10, 2000, a worker at the Steelwind plant was injured while performing her job. Two days later, Steelwind and Epic reached an agreement to terminate their contract, effective Dec. 31, 1999. The agreement did not address responsibility for injuries sustained by the Steelwind worker two days earlier.

The injured worker filed a workers' compensation claim and Steelwind's insurer paid all benefits due. Steelwind and its insurer than filed an application with the Wisconsin Dept. of Workforce Development seeking reimbursement from Epic on the ground the injured employee was Epic's, not Steelwind's, at the time of the injury. It was decided the worker was Epic's employee, because the Steelwind-Epic contract was still in effect at the time of the worker's injury. Epic and its insurer were ordered to reimburse Steelwind's insurer for the workers' comp benefits paid to the injured worker.

Epic appealed the ruling to the State Labor and Industry Review Commission, which upheld the decision for Steelwind. Epic appealed to the Wisconsin Court of Appeals, arguing the Commission should have honored its retroactive termination agreement with Steelwind in determining who was responsible for paying benefits to the injured worker.

The court upheld the Commission's decision, making Epic responsible for the worker's compensation benefits, concluding it was consistent with the language and the intent of Wisconsin's workers' comp law, as well as with the decisions of Wisconsin courts, which hold that parties' rights and responsibilities become fixed under the workers' comp law on the date an employee is injured. However, the court noted Epic was free to pursue Steelwind in a court action for reimbursement under the terms of the retroactive-termination agreement signed Jan. 12, 2000.

Epic Staff Management Inc. v. Labor and Industry Review Commission, 667 N.W.2d 765 (Wis.App. 2003), Court of Appeals of Wisconsin, June 26, 2003.
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