The Law

State Jurisdiction Holds: Underlying Asbestos-Exposure Suit Would Not Be Covered

It was a tough lesson learned in court: When a company holds facilities in multiple jurisdictions, an insured is most prepared when it knows under which jurisdiction its policies live.
By: | September 14, 2018 • 2 min read

In 1970, Tenneco, an oil and gas corporation with headquarters in Houston, acquired J.I. Case, which primarily did business out of Wisconsin. At the time, J.I. held insurance coverage through CNA Financial. When the CNA policies expired in 1972, Tenneco added J.I. to its general insurance policies under Travelers Indemnity Company.

These policies covered Tenneco and all its wholly-owned subsidiaries with an anti-assignment provision that stated, “Assignment of interest under this policy shall not bind the company until its consent is endorsed hereon.”

J.I. assigned certain assets and liabilities to CNH Industrial America, which also primarily did business out of Wisconsin. CNH believed insurance coverage to be a part of the agreement, however neither J.I. or Tenneco informed Travelers of the assignments.

When CNH found itself in an asbestos-exposure suit, it sought coverage for defense costs and losses. CNH turned to both CNA Financial and Travelers, yet the two insurers denied duty to defend.

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A Wisconsin court quickly ruled that CNA Financial’s policies with J.I., and under Wisconsin law, would cover the suit and the two parties settled. However, the court deemed it could not decide Travelers’ involvement due to those policies stemming from Texas jurisdiction.

CNH argued that the relationship between J.I. and Travelers was “direct, extensive, and centered in Wisconsin and independent of Travelers’ relationship with Tenneco.”

However, Tenneco found within its policies general requirements for several of its major divisions and how these requirements were to be applied to its subsidiaries. Within these clauses, it argued that J.I.’s relationship with Travelers was not “independent of Travelers’ relationship with Tenneco,” and therefore the Texas law would govern the ruling.

Travelers pointed back to the clause on anti-assignments and relied on the lack of notice from either J.I. and Tenneco, and the court ruled in the insurer’s favor.

Scorecard: CNA Financial will cover defense costs for the underlying asbestos-exposure suit against CNH, but Travelers is off the hook.

Takeaway: When a company holds facilities in multiple jurisdictions, an insurer is most prepared when it defines under which jurisdiction its policies live.

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]