Legal Roundup: Atlanta Hotel Juggles Responsibility for Legionnaires, Courts Consider Contraception and More

A look at recent court decisions and how their rulings have an impact on risk management and the insurance industry.
By: | February 3, 2020

Misclassification Suit Leads to $2.75M Settlement for 50 Workers

The Case: Fifty workers sued electrical contractor Power Design and two subcontractors claiming that they were misclassified as independent contractors not employees, failing to pay worker benefits or unemployment insurance taxes.

Scorecard: Power Design will pay $2.75 million to the workers and the District of Columbia — “the largest sum ever levied in a wage enforcement action by the district,” Construction Dive reports.

The workers will receive $879,056 in back wages. The district will receive $1.8 million and $50,000 will go towards local workforce redevelopment programs.

Takeaway: Misclassification of workers can rob them of sick leave, overtime benefits, and other legal protections — and the government officials are taking the issue seriously and going after potential bad actors. 

Atlanta Hotel Sues Over Legionnaires Outbreak

The Case: Fireman’s Fund Insurance Company is being sued by the owners and operator of the Sheraton Atlanta, Arepeii Sa Hotel and The Arden Group, and Merrit Hospitality. The Sheraton Atlanta suffered a large Legionnaires disease outbreak in July.

Continental Insurance Company, Navigator’s Insurance Company, and Ohio Casualty Insurance Company were also named in the court documents.

The lawsuit comes six months after the type of pneumonia killed one guest and infected approximately sixty others at the Sheraton Atlanta. Over 50 bodily injury claims have been filed against the hotel. The illness is caused by Legionella bacteria and was found in the hotel’s cooling tower and in a decorative fountain within the facility, confirmed by the Georgia Department of Public Health.

Scorecard: It is unclear whether or not the hotels will receive coverage due to the likelihood the insurer will argue it was neglected maintenance that caused the outbreak.

The Takeaway: More than any other industry, hospitality employers must enforce the due diligence of their employees in order to avoid liability, should these types of claims not pay out.

Supreme Court Will Consider Birth Control Precedent Set by the ACA

The Case: The Supreme Court will decide if the Trump administration can expand exemptions regarding employers’ requirement to cover contraception in health insurance plans beyond religious organizations.

In an effort to allow employers to “run their business in a way that’s consistent with their beliefs,” President Trump has lobbied to extend the exemption of the mandate, which was enacted by the Affordable Care Act under the Obama Administration, to allow more employers to claim exemptions from providing contraceptive coverage. The exemption already extends to churches and similar institutions.

But federal courts are saying no dice.

The Scorecard: Pennsylvania and New Jersey challenged the administration’s initiative and won a national injunction.

“Two federal courts have blocked the Trump Administration’s rules because they would allow virtually any employer to deny women access to contraception for any reason — including the belief that women should not be in the workforce,” said Pennsylvania Attorney General Josh Shapiro.

This is the second time since 2014 that the Supreme Court has examined the Affordable Care Act law.

The Takeaway: Health care, like cannabis, is another industry where differing federal and state regulations and stances on legality can complicate the insurance process. &

Emily Spennato is a former staff writer with Risk & Insurance.

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