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Episode 8: Malware Event at MedStar Health: Risk Management Considerations
From the revitalization of downtown Buffalo to new high-rises in the Battery, New York is experiencing a building boom. According to New York City Mayor Bill DiBlasio's website, 88 million square feet of new construction were built in New York City in 2015, a 329% increase since 2009. The site also boasts a 517% increase in new housing units since 2009, with 62,040 new units built last year.
Yet this building boom has a dark side. Accidents, jury verdicts and settlements involving construction workers have also increased. Cases of this nature are especially challenging since New York is the only state in the country which imposes strict liability for practically all accidents occurring at a construction site via New York Labor Law Section 240 and 241.
According to claims data provided by the Port Authority of New York and New Jersey, the liability costs on one joint NY-NJ bridge project are more than double on the NY side. Researchers at the Rockefeller Institute of Government estimate that Labor Law 240 costs New York the tax payers $785 million a year.
This article provides an overview of these unique laws and a checklist of issues that could relate to construction site coverage.
New York Labor Law Section 240, also known as the "Scaffolding Law," was designed to protect workers from falls and/or injuries from falling objects. Classic suits could include:
New York Labor Law Section 241, while similar to Section 240, focuses on the safety of a construction site at ground-level. Also known as the "Safe Place to Work Law," this section outlines specific regulations about how the areas of a construction site should be arranged and operated. In doing so, it aims to prevent slip and fall and/or trip and fall accidents, chemical hazards, air contamination, etc.
These two laws impose absolute liability on the construction companies, property owners and/or contractors who are responsible for maintaining a safe work environment. Generally, it does not matter whether or not the injured worker acted negligently, unless their negligent conduct was the sole cause of injury.
An owner or contractor found to be liable under Labor Law 240 is not automatically assumed to be negligent. In some cases, liability can be passed by contract or in limited circumstances by common law to another party. Typically this is the only defense available to an owner or general contractor.
Labor Law 240 does not provide an automatic award every time a worker falls from an elevated height or is hit by a falling object. However, the law is a very powerful tool for the plaintiff's lawyers; it is estimated that injured workers win almost 90% of Labor Law 240 cases.
A few recent examples highlight the challenge of defending construction injury cases.
There is a serious movement in Albany to change the standard for a 240 case from absolute strict liability to comparative fault. The bill, S111-2013, was introduced three years ago but is still in committee.
In the construction industry, it is common practice for contractors to require subcontractors to procure a certain amount of liability insurance for themselves as well as for upstream parties (i.e. the owner and the general contractor) and to defend and indemnify the upstream parties from any liability arising out of the subcontractor's work.
Since New York's General Obligations Law Section 5-3221 voids construction agreements that attempt to transfer a party's liability for its own negligence, indemnification agreements should clearly state that the owner and general contractor are retaining liability for their own negligence. We suggest the following language:
Hold Harmless & Indemnification Agreements
To the fullest extent permitted by law, the party performing the work under this agreement, hereby known as the contractor, shall defend, indemnify and hold harmless the property owner and property manager and their agents for whom the work is performed, for any liability, loss, or other claim for damages for death, bodily injury or property damage arising out of performance of the work by the contractor or any agent, servant, employee, subcontractor or supplier of the contractor, except to the extent of any fault attributed to the property owner and property manager.
The contractor shall obtain insurance covering the property owner and property manager as additional insured's for any liability arising out of the work with limits not less than---- million. This insurance shall be primary insurance and any other insurance covering the property owner and property manager shall be non-contributory. The coverage must be provided for both ongoing and completed operations. The coverage must be provided through coverage forms using standard ISO wording and must not include language that would limit or exclude the standard ISO coverage for injuries to the contractor’s employees or the employees of any agent, servant or subcontractor, or exclude contractual indemnification and/or change the definition of an insured contract to exclude coverage for the very type of contract that would transfer the risk to the subcontractor. The measure of damage for failing to provide the necessary coverage is not limited to the cost of premium.
Waiver of Subrogation/Workers Compensation Immunity
The contractor agrees to waive any and all rights of subrogation against the property owner and property manager. In addition, the contractor agrees the indemnification obligation shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable by or for the contractor under workers compensation acts, disability benefit acts or other employee benefit acts.
Certificate of Insurance Requirement
A certificate of insurance must be provided to the property owner and property manager prior to the commencement of work as evidence the contractor is maintaining its own general liability and workers compensation insurance with sufficient limits to cover a significant loss. The certificate must show the property owner and property manager as additional insureds for ongoing and completed operations on a primary and non-contributory basis.
Author: Kate Browne, JD, Senior Vice President, Claims, Swiss Re Corporate Solutions
This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice.
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Episode 8: Malware Event at MedStar Health: Risk Management Considerations
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