Risk Scenario

The Man on the Jack

An energy company drops the ball by not making the necessary accommodations for an injured employee returning from documented leave.
By: | August 18, 2015 • 10 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

On the Muscle

When his supervisor waved to him, Early Hart took one hand off of the jackhammer trigger, plucked the earbud out of his right ear and picked up his head in acknowledgement.

Scenario_ManontheJack

“Whatcha got?” Early shouted to his boss, the clattering, echoing din of the jackhammer coming momentarily to a halt.

“Break time!” shouted his boss. “Put that hammer down and come get out of the sun!”

“Don’t want to break. Wanna work,” Early shouted back at him, smiling.

Early wiped at his brow with a grimy backhand. Sweat was pouring down his face, the bulging muscles of his arms and his burly torso.

“Break!” the boss said as an answer, still smiling back. Early did as his boss said and set the jackhammer down to rest on the pile of broken asphalt he was creating in the middle of Green Avenue.

Early strode confidently to where his boss and a handful of other workers were already gathered under an enormous sycamore. The gate to his boss’ pickup truck was down and the guys were pulling drinks of iced tea out of an enormous orange thermos.

The son of a local alderman, Roger Hart, Early made a name for himself at a young age, as a Gloucester County New Jersey high school football star. College wasn’t for him though, and he thought himself lucky to have landed a job with KMF Energy Solutions, working on a gas line replacement crew for the utility.

Partner

Partner

It didn’t hurt that his boss was his father’s cousin, Frank Walter. Frank eyed Early admiringly as he came forward to join his co-workers under the shade of the tree.

“You’re a strong young man, but if you want to stay strong in this heat you better hydrate!”

Early took the cup of iced tea Frank offered. He had no argument with a cold drink of tea in this heat and humidity.

“It’s all good,” he thought as he sipped his tea. Lowering his cup, he spied his SUV, with two surfboards strapped to the top of it. In two and half hours he’d be in the water.

***

When Early paddled into the surf break, the other nearby surfers gave him plenty of room.

Early had a reputation as one of the best amateur surfers on the East Coast.

Even without knowing his reputation, anyone with sense could deduce that the owner of muscles like those didn’t need to worry about objections over sharing a wave. He could clearly take care of himself or any shoreline disputes that came his way.

The swells that day were big. Some kind of a storm must have been working its way up from the Caribbean.

Early surfed one big wave, then another. He was joyous in the feeling of immeasurable strength that a young man has in taking on the ocean and feeling no fear.

That’s when it happened.

Early knew these waters well, but no one knows everything, and in this case Early’s undoing was a sand bar that had built up where he wasn’t expecting one. A big breaker drove him into it.

The wave flipped Early and he hit the sand bar hard, with his lower body extending over the edge of it and his lower back taking the brunt of the wave’s force.

It was all Early could do to stagger to the beach. He felt crippled.

“Hey! Hey Early!” one of the other surfers yelled.

Early was mobile, but after being examined by a doctor, he was placed on eight weeks of short-term disability with a severely strained lower back.

An Uneasy Feeling

Back at work, Early was under orders from the doctor to take it easy for a while. His injury was expected to fully heal, but for now a dull pain and unfamiliar physical limitations remained for the normally strong and capable man. But Early’s relative Frank Walter knew the way of the world. Frank felt he needed to protect Early and shield his condition.

Scenario_ManontheJack

Frank gave Early lighter duty, but he didn’t formally ask for an accommodation for Early from human resources. Early was given jobs like operating the hose to keep dust down or working traffic control, but his pay rate and job classification remained the same.

Frank walked up to Early one day as Early stood morosely at the edge of the job site, holding a sign that said “stop” on one side and “slow” on the other.

“What’s the matter with you?” Frank asked Early.

“I’m bored,” Early said.

“Be happy you’ve got a job,” Frank said under his breath.

“What do you mean?” Early asked.

“Things are getting tight around here,” Frank said. “I’m hearing some rumors about layoffs.”

Advertisement




One of Early’s co-workers walked by. He was the kind of person who tended not to mind his own business and he liked to start trouble.

“Same pay, lighter duty. Must be nice,” the co-worker said, eyeing Frank and Early malevolently.

“You mind your own business Johnny,” Frank said to him. “Get over there and load the concrete saw onto the truck like I told you to do a half hour ago!”

Johnny ambled off, in no big hurry.

“I’d fire that coyote tomorrow!” Frank said under his breath, for only Early to hear.

But it was Frank who lost his job, the very next day, as part of a KMF management reshuffle.

Early had been back at work only three weeks when he got a new boss, Del Miller. Miller didn’t know Early, but Early’s ginger approach to his work gave Miller a bad first impression, albeit a mistaken one.

“That guy’s just flat-out lazy,” Miller said to himself as he watched Early pick up a single two by twelve at a time instead of two or three like his co-workers did.

“Is there something the matter with you, young man?” Miller asked Early one morning, after they’d been working together for a week.

“No sir, nothing,” Early said, not anxious to be overly candid with a new supervisor he barely knew.

“Mama’s boy,” the troublemaking Johnny said under his breath to Del Miller the next Monday, as Early ducked working the concrete saw and instead picked up a hose and watered the street to keep the dust down.

With KMF’s managers under pressure to cut costs, Early was terminated by the disapproving Del Miller, five weeks after coming back from short-term disability. Del Miller wanted someone who could perform all the requirements of the job.

Lawyering Up

Roger Hart was not the type to baby his son, but when Early was terminated, Roger consulted with a friend, Avery Fischer, who was known as one of the best labor attorneys in the state of New Jersey.

Scenario_ManontheJack

The Thursday after Early was terminated, he had a meeting with Avery Fischer in Avery’s office in Trenton.

“When you got back to work after your injury, did anyone within KMF discuss with you what you were and weren’t able to do within your job duties?” Avery asked Early.

“No sir, they didn’t,” Early said.

“Did the company offer you any kind of accommodation, say a desk job or a job driving where you wouldn’t be called on to do so much physical labor, or an official adjustment in your current job?” Avery asked Early.

“Not officially. After Frank lost his job, I was back to normal expectations on the same job, working as a laborer on the road crew.”

Roger Hart was at the meeting with Avery and Early, and it was at this point in the conversation that Avery turned to Roger with a meaningful glance.

“It looks to me, Roger, that KMF is in clear violation of the Americans with Disabilities Act Amendments Act here.”

“How so?” Roger said.

“The company initiated no dialogue with Early, made no effort to check in with him, talk to him about his back injury.”

“And?” Roger said, guessing that there was more to it.

“And they made no attempt to determine if a reasonable accommodation would allow him to continue employment. By leaving him on the road crew – in the same job with the same expectations – to get picked off by this new supervisor, they hung an injured man out to dry. That’s a clear violation,” Avery said.

Roger Hart needed to hear no more. KMF had gotten rid of his cousin, who worked for the company for 14 years, and then they’d terminated the apple of his eye, his son Early, who he knew as a hard-working young man, bent on achievement.

“So, what do we do?” Early said, turning to the two older men.

“We sue,” Roger said.

Avery nodded his head in agreement.

“We sue.”

KMF’s defense attorneys, displaying the same inadequate knowledge of the ADAAA as the company’s line managers, decided to take the case to court.

They got hammered.

Avery Fischer argued that KMF Energy Solutions failed to comply with the ADAAA in three substantial ways:

  • The company failed to maintain a dialogue, in fact didn’t dialogue at all with a worker who had a lingering disability, in Early’s case, an injury-weakened back.
  • The company made no attempt to recognize the limitations of their employee and determine whether his current job could be modified to allow him to continue to perform the essential job requirements – or if there was another job within the company he would be qualified for and would be possible within his limitations – a clear violation of the act.
  • The company terminated an employee for performance issues without first reviewing all of the facts to ensure whether the situation was truly a performance issue or if the performance issue was due to a medical condition from his recent and known eight-week short-term disability.

The judge agreed and KMF Energy Solutions was hit with a penalty judgment that ran in the low to mid six figures.

The next one to lose his job was Del Miller.

Webinar – Compliance crossroads: How are you navigating the intersection of ADA/ADAAA and workers’ comp, disability or leave?

Watch Sedgwick delve deeper into ADA/ADAA compliance with our sister publication, Human Resource Executive®.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Sedgwick to produce this scenario. Below are Sedgwick’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance®.

1. Appoint your experts: When compliance is on the line, someone in your organization needs to be well-versed in ADA/ADAAA and the interactive process. This may not be your front line managers. Appoint someone to be responsible for triggering the accommodation process and engaging appropriately when employees return from a workplace injury, a non-work injury or illness or another medical need.

2. Document, document, document: Companies need to make sure that standard procedures regarding leave or accommodation under the Family Medical Leave Act or the Americans with Disabilities Act are in place, up to date and triggering interactive process review – as well as clearly communicated to employees and supervisors. A robust information management platform is key to supporting the process and necessary documentation.

3. Alternative options: If you are able, offer a chance for those in need of accommodation to be reassigned to another job, even temporarily. Sometimes time off from work may be the best or only option; although the goal of ADA/ADAAA is to keep people at work and every effort should be made to meet an accommodation request, supervisors need to keep in mind that there may be cases where an accommodation within someone’s current position isn’t possible or advisable due to the nature of their job or the significant hardship it would place on the business.

4. Consistency: Different injured employees with debilitating conditions should be treated with consistency under the Americans with Disabilities Act, regardless of whether their need for accommodation is due to a work-related injury, a non-occupational injury or illness or for another medical need. Don’t treat employees differently based on whether they need temporary vs. permanent accommodation, based on their type of leave or based on personal feelings.

5. Medical review: Make sure you request and document medical reviews of any request for accommodation as part of the overall interactive accommodation process.

Additional Partner Resources

ADA Accommodation Services

White paper: Managing the new ADA

edge magazine: Keys to compliance

Sedgwick Connection Blog

LeaveLink / ADALink




Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

Partner

Partner

Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

Advertisement




“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

Advertisement




But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.