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Cleveland, Ohio, United States
Currently an attorney and insurance industry professional. Mr. Stoll is a commercial lawyer, arbitrator and mediator who also serves as insurance coverage counsel and advisor to numerous businesses throughout the country. He is also a licensed insurance agent/broker.

October 25, 2007

TRIPRA Terrorism Risk Insurance Program Reauthorization Act


* Note: See my post of 12-28-07 for update on TRIPRA.

The Senate Banking Committee passed the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2007. The TRIPRA bill would extend the current federal terrorism insurance backstop, which is set to expire at the end of this year, for an additional seven years. In addition, it would modify the definition of terrorism to include domestic acts of terror and would require ongoing reports to Congress from the President's Working Group on inclusion of coverage for group life and nuclear, biological, chemical and radiological (NBCR) events.

“With the terrorism backstop set to expire, this significant step toward extending it on a long-term basis comes at a critical time,” says Charles Symington Jr., Big “I” senior vice president for government affairs and federal relations. “We applaud the committee for taking action and hope this crucial legislation will gain full Senate approval as soon as possible.”“Getting this important legislation passed before the end of the year is a priority for our members and we are grateful to the committee for advancing it a step closer,” says Jason Spence, Big “I” assistant vice president for federal government affairs.

Taken from Big "I" News & Views, October 18, 2007

October 4, 2007

Will The New Employment Intentional Tort Statute Survive Constitutional Scrutiny?



*SEE BLOG POST of 3/24/2008 for recent Appellate Case (Kaminski); and BLOG POST of 9/25/07 for recent Trial Court Case (Berry), both dealing with the Constitutionality of the Current Statute and coming to opposite conclusions.

The History - In a Nutshell:

R.C. 4121.80.
The Ohio legislature has been attempting to codify Ohio's Employment Intentional Tort ("EIT") claim since 1986. The first statutory enactment was contained in R.C. 4121.80. That statute was a response to the judicially created cause of action for EIT, which was deemed by the General Assembly to be too liberal. Under R.C. 4121.80, the Ohio legislature (1) expanded the defenses available to employers; (2) eliminated a trial by jury; (3) established an intentional tort fund for employers to contribute to from which payment to injured employees would exclusively be made; (4) offset damages by workers' compensation benefits; (5) set damage limitations; (6) heightened the standard for proving an intentional tort by defining "substantial certainty" as "deliberate intent"; and (7) made all of these changes applicable to pending and future claims.

Clearly, the General Assembly's intent in codifying the EIT in Ohio was to attempt to balance the competing interests between employers and employees. The state run workers' compensation system was established to tip the scales in favor of employees through a system of compensation regardless of fault on the part of employers. The employers contribute financially to that system and the intent of protecting employees from workplace injuries is served. The General Assembly recognized that the common law EIT was further tipping the scales in favor of employees and in the interests of balancing the competing interests of employers and employees, was attempting to codify (not eliminate) the types of claims that rise to the level of intentional and, thereby, outside of the workers' compensation system.

Brady v. Safety-Kleen (1991), 576 N.E.2d 722.
In Brady , The Ohio Supreme Court held that section 4121.80 was unconstitutional in toto. The statute exceeded the legislative authority granted to the Ohio legislature under both sections 34 and 35 of the Ohio Constitution. It violated section 34 by eliminating the prior common law right of action and not furthering the comfort, health, or general welfare of employees within the meaning of that section. It violated section 35 because the statute was required to address a cause of action occurring within the scope of employment, and an EIT may arise out of the employment relationship, but according to Brady does not occur within the scope of employment.

R.C. 2745.01 and R.C. 2305.112 (Eff. 11-1-1995).
The General Assembly again attempted statutory reform of the EIT effective November 1, 1995, with the enactment of two new statutes (2745.01 and 2305.112). R.C. 2745 created a statutory cause of action for EIT. The limitations imposed within that statute included (1) elimination of the "substantially certain" level of intent; (2) requirement of "clear and convincing evidence"; and (3) threatening sanctions for improperly presented EIT claims. R.C. 2305.112 reduced the statute of limitations for an EIT from two years to one year.

Johnson v. BP Chemicals, Inc. (1999), 85 Ohio St.3d 298.
In Johnson, The Ohio Supreme Court struck down R.C. 2745.01. The Court held that the statute imposed excessive standards of deliberate and intentional acts, with heightened burden of proof and that the imposition of such a statute was not within the General Assembly's power as it did not further the comfort, health, safety, and general welfare of all employees. In its opinion, the Court noted that the minimal level of proof under the statute would require that the employee essentially commit a criminal assault in order for the EIT to be actionable. This made the proof so unreasonable and excessive that the "chance of recover is virtually zero." This was felt to be an insurmountable obstacle for an injured employee and not one that was authorized to be imposed under the General Assembly's powers.

R.C. 2745.01 (Eff. 4-7-2005).
The General Assembly has now repealed former sections 2745.01 and 2305.112, and enacted new R.C. 2745.01. This newly enacted 2745.01 differs from the prior version in that it does not: (1) require a heightened standard of proof; and (2) attempt to impose any threat of sanctions in improper EIT claim filings. Although the new statute does attempt to increase the level of intent that is required under the common law EIT cause of action, it does create certain rebuttable presumptions and allow for certain inferences of intent when dealing with "substantial certainty" claims. For instance, in the manufacturing arena the statute permits a rebuttable presumption that an injury was "substantially certain" to occur if there is a deliberate removal of a safety guard or a deliberate misrepresentation of a toxic or hazardous substance. However, outside of those two areas of exemption, an employee must establish that the employer deliberately intended to cause the employee's injury, disease, condition or death. It is questionable whether this new statute will be forgiving enough to pass constitutional muster.

The Future - What Does It Hold?

The Future:
The General Assembly is charged with enacting laws in furtherance of the "comfort, health, safety and general welfare of all employees." In creating a monopolistic workers' compensation system, they have done that and tipped the scales in favor of employees in order to allow compensation. It would appear that the General Assembly also has the authority to enact a statute that deals with tort claims between those same parties (employers/employees)in order to balance those same and competing interests.

It is noted that previously, in Brady, The Ohio Supreme Court held that the General Assembly may not impose upon the common law EIT as such claims did not occur within the scope of employment. However, recently in Penn Traffic Co. v. AIU, (2003) 99 Ohio St.3d 227, the Ohio Supreme Court held that an EIT does, in fact, arise out of employment and occur during the course of employment. If this is true, then Brady may no longer be an obstacle for the Court in upholding R.C. 2745.01. For in Penn Traffic, the Court has acknowledged the General Assembly's right to legislate the EIT as they have those rights within the employment context.

Finally, if the less stringent standards contained in the new statute do not create an "insurmoutable obstacle to victims" of employment intentional torts, then there would appear to be a sufficient basis to find that the new R.C. 2745.01 is, indeed, constitutional.

Assault & Battery - Duty To Defend

Second District Court of Appeals Holds That Stop-Gap Endorsement Contained In Commercial General Liability Policy Provides Coverage For "Substantially Certain" Claims Including Assault and Battery

Read the Case: GNFH, Inc. v. West American Insurance Co. (2007), 172 Ohio App.3d 127

In the Trial Court: The trial granted summary judgment against the insured on the issue of whether appellee, an insurance company, had a duty to defend appellants with regard to an intentional tort claim. The trial court found that the acts alleged in the complaint were sexual harassment and sexual battery torts. The Trial Court classified the claims as “direct intent” torts, which are precluded by public policy in Ohio from being covered by insurance.

In the Court of Appeals: The appellate court held that a duty to defend did exist for the claims of assault and battery under two of the three policies discussed. The Second District Court of Appeals reasoned as follows:

Under the most recent public policy pronouncement of the Ohio Supreme Court, intentional acts that result in injury are not necessarily “direct intent” torts, and insurance in such cases is not against public policy. Some allegations in the underlying complaint involved negligent conduct, which would not require direct intent to harm. Moreover, the conduct that might be classified as criminal in nature, like assault, is not a direct or specific intent crime. Specific or direct intent is also not required to establish sexual imposition. For example, R.C. 2907.06(A)(1) prohibits sexual contact where the offender knows the contact is offensive to the other person or is reckless in that regard. Therefore, coverage was not automatically precluded on the basis of public policy.

Whether coverage exists depends on the language used in the policies. The appellate court held that allegations in the complaint raise a duty to defend under two of the three insurance policies under review. One “Stop-Gap” liability endorsement specifically provides coverage for bodily injury claims which are substantially certain to occur, but are not directly intended. While a second “Stop-Gap” liability endorsement excludes coverage for bodily injury that is “expected or intended” by the insured. However, the court opined that excluding coverage for a “substantial certainty” tort would render the endorsement illusory, since the only coverage offered under the endorsement is for employer torts that are not covered by Workers’ Compensation.

After finding a duty to defend the insured for the assault and battery alleged, the case was reversed and remanded for further proceedings.