Coverage B: Essential Facts and Why It Could Be a Growing Trend, with Local Attorney Stephen Miles

Coverage B, the secondary part of most workers’ comp policies, does not arise as often as the typical workers’ compensation claim, but when it does the stakes are high. Louisiana Comp Blog sat down with local attorney Stephen Miles of Barrasso Usdin Kupperman Freeman & Sarver in New Orleans to discuss the details of coverage B, the circumstances under which it becomes relevant, and why these cases could occupy a larger segment of the labor litigation space.

Comp Blog: Since it isn’t discussed much, can you explain what coverage B is?

Miles: Coverage B, also called part B or part two is a piece of a typical workers’ comp policy that provides coverage, subject to the terms, conditions, limitations and exclusions of the policy, for the employer for certain kinds of lawsuits that are brought in court, as opposed to workers’ comp claims which usually play out in the Office of Workers’ Compensation or administratively. Coverage B is an atypical kind of claim for coverage under a workers’ compensation policy, but it can come up in a variety of circumstances. Whether there is coverage for any “coverage B”-type claim will depend on the particular facts and circumstances of the case, and the policy language at issue.

Comp Blog: What are those circumstances in which coverage B comes to the fore?

Miles: When I think about cases where coverage B may be implicated and the ones I’ve handled, I can divide them into three main categories, although other types of claims exist. One of the categories is workplace disputes. That’s where two co-workers get involved in an altercation that somehow becomes physical. In other words, there is either violence in the workplace, or, from the other person’s perspective there was a verbal argument that escalated with accidental physical contact. The employer in these circumstances often is alleged to be vicariously liable for the aggressor co-worker’s actions.

Comp Blog: How about the second category?

Miles: The second category is exposure cases – instances when an employee has been exposed or allegedly exposed to a chemical or hazardous material that has allegedly caused injury.

Comp Blog: Would that be willful exposure then?

Miles: Yes, that would be alleged willful exposure. The standard for the employee to overcome workers’ compensation immunity for suits in tort is that the employer “was substantially certain” that the injury was going to result. I would say that there is an upward trend right now for these kind of cases. As time has progressed more information is known about harmful chemicals. As science develops, it allows some employees to claim that a supervisor or other personnel knew about the hazard and knew that the employee’s sickness or illness would result from working around such a hazard. Again, whether there is coverage available will depend on the particular facts and policy language.

Comp Blog: A Jones Act case recently surfaced in Orleans Parish against Halliburton in which the employee, who was working abroad in Africa for five years, developed a particular type of cancer that is only associated with a virus found in African nations. Several of his co-workers had fallen ill during his five years on the job. Would that be a coverage B situation if it didn’t fall under the Jones Act?

Miles: It could be, depending on the factual particulars. This is the type of allegation that an employee may bring against an employer in an effort to overcome the workers’ compensation immunity for suits in tort. Such allegations are oftentimes tough to prove by the employee, but I think there’s a trend toward more and more claims like that – due primarily to the progression of science as I mentioned.

Comp Blog: What’s the third type of coverage B case that you see most often?

Miles: The third scenario I see where coverage B may be implicated, and which may be on an upward trend as well, is “open and obvious condition” cases, when an employee perceives there to be an imminently hazardous situation on a worksite. One scenario is an alleged instruction from another employee or other personnel to an employee to lift a dangerously heavy weight or to do some other task that the employee believes the person giving the instruction knew would lead to injury. Often these cases can be resolved on summary judgment. The bar is very high for an employee to overcome workers’ compensation immunity and to get to a jury and prevail on a claim like this – it’s a much higher standard than a negligence claim. But, that hasn’t stopped people from bringing these kind of claims.

Comp Blog: Why is that?

Miles: A lot of times it’s personal to the employee. The employee might have an issue with co-workers or a supervisor or may really think that he or she knew the right way to do a particular task and then wasn’t heard. For employers, the standard is really favorable to them, as it should be, since workers’ comp is the Grand Bargain. Claims against the employer in court in some sense erode that bargain.

Comp Blog: Are you seeing more coverage B cases in recent years? Are they on an upswing?

Miles: I’m definitely seeing more of them, particularly in the “open and obvious condition” category. The conviction that one is right – that the employee really knew best – can be a powerful motivator to seek out representation and pursue the employer. Also, of course, once you’re in tort the damages can be higher than in the Office of Workers’ Compensation if you can prove your claims. Plus, with high profile cases where a plaintiff gets a multimillion dollar jury award, the information could be publicized and end up online, which may also drive more people toward litigation.

Comp Blog: Is there anything a carrier or company can do to limit their coverage B exposure or minimize the risk of having a coverage B claim?

Miles: The same things that limit workers’ compensation exposure are likely to limit coverage B exposure, including effective loss control and strong underwriting. After a loss occurs, effective litigation management is needed to minimize legal costs and prevent an adverse result in court.

 

Editor’s Note:

Stephen L. Miles represents clients in high-stakes insurance coverage and bad faith litigation as well as in employers’ liability cases, both at the trial and appellate levels across the Gulf South and Southwest. He has handled a wide range of insurance coverage and bad faith cases, including declaratory judgment actions, long-tail environmental pollution cases, claims for coverage under commercial general liability and excess policies, and healthcare payment disputes. His employers’ liability experience includes representing employers in a variety of significant disputes, including cases alleging intentional exposure to dangerous conditions and toxic materials.

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