Getting into Court: An Arkema Story

(WorkersCompensation.com) - Ostensibly, the workers’ compensation system is designed to protect both employers and employees. From the perspective of employees, it allows them to receive remuneration for workplace injuries without the time and expense of a full-fledged trial, even if their own negligence, or the negligence of their employer, contributed to the injury. From the perspective of employers, it allows them to not be bogged down with multiple lawsuits, which would certainly occur absent the current workers’ compensation system.

There are, however, certain circumstances in which a claim for workplace injury can be removed from the workers’ compensation arena and be heard in a court of law. Employers should be aware of this as the cost and the potential damages can be greater in court than they are in a standard workers’ compensation claim.

A recent case in Florida demonstrates how this works. According to a complaint filed in the Tampa Division of the United States District Court for the Middle District of Florida, Arkema, Inc., a chemical manufacturer, entered into an agreement with Bulk Resources to safely handle the transfer of toxic materials from railcars to tank trucks for delivery to Arkema’s customers. Bulk Resources also assumed responsibility for cleaning the railcars after transfer of the toxic materials. As part of the agreement, Bulk Resources agreed to defend Arkema “from and against all suits, actions, claims, losses, expenses, damages or costs, including reasonable attorney’s fees and costs, or liability of whatever character incurred by or which may be brought or asserted against Arkema . . . for any injury (including death) . . . arising out of Transloader . . . or subcontractor’s performance or failure to perform the Transloading Agreement.” [Complaint ¶ 9(a)] Additionally, as part of the agreement, Bulk Resources agreed to hold Arkema harmless “from and against all suits, actions, claims, losses, expenses, damages or costs, including reasonable attorney’s fees and costs, or liability of whatever character incurred by or which may be brought or asserted against Arkema . . . for any injury (including death) . . . arising out of Transloader . . . or subcontractor’s performance or failure to perform” the Transloading Agreement.” [Complaint ¶ 9(b)]

On October 8, 2015, tragedy struck: Two Bulk Resources employees were injured, and a third died while attempting to clean out a railcar that had not been properly ventilated. Ordinarily, these workplace injuries would have to be resolved through the workers’ compensation system. However, the two injured employees and the relatives of the employee who died filed a lawsuit in the Federal Court of the Eastern District of Louisiana and in state court in the Orleans Parish District respectively. The way they were able to get the suit into court was based on a report by the Occupational Safety and Health Administration (OSHA) that concluded the accident was caused by intentional acts. [Complaint ¶ 18] Arkema’s suit asks Bulk Resources to honor the above contract provisions and indemnify it against the suit filed by the harmed workers.

This lawsuit is instructive in that it demonstrates one of the few ways to get a workplace injury claim into court — that is by alleging that the injury was caused by an intentional act of the employer. Workers’ compensation law is designed to protect employers from liability for negligent acts. In simplest terms, a negligent act is an accident. An intentional act, as the name implies, involves actual intent by the employer to harm the employee, or negligence that’s so wanton that the harm would be foreseeable to a reasonable person. In this instance, the injured employees are alleging that the employer reasonably should have known of the dangerous condition of the railcar, and sending employees in there was negligent to the degree of being reckless.

As a threshold matter, employers need to be aware that most workers’ compensation insurance policies do not provide coverage for intentional acts. Also, from an employer’s perspective, there are many more disadvantages to being in court than there are from an employee’s perspective. The employer could get hit with punitive damages above and beyond the actual damage suffered by the claimant. Also, a court case will be heard by a jury of average citizens and not a workers’ compensation hearing officer. Sometimes juries will be more sympathetic to an injured person as opposed to the large employer. 

Although rare, workplace injury claims can be heard in a court of law. However, by taking reasonable safety precautions, an employer can limit this possibility and the increased damages exposure it may cause.

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