A federal district court in Louisiana has ruled that a workers' compensation insurance company that had the right to inspect its insured's premises and otherwise involve itself in workplace safety did not have a duty to protect its insured's employees from exposure to asbestos.
The Case
Jesse Frank Sheppard sued Mosaic Global Holdings Inc., alleging that he had been exposed to asbestos “[o]n a daily basis” as an employee of Mosaic's predecessor company, Freeport Sulphur Company. This exposure allegedly caused Mr. Sheppard to develop asbestos-related cancer, lung cancer, and/or mesothelioma.
Although Mr. Sheppard had stopped working for Freeport in the early- to mid-1990s, Mr. Sheppard alleged that his asbestos-related ailments were first diagnosed in October 2015.
During Mr. Sheppard's tenure at Mosaic, Liberty Mutual Insurance Company issued several worker's compensation/employer's liability and comprehensive general liability policies to Mosaic.
In his complaint, Mr. Sheppard alleged that Liberty Mutual “knew or should have known of the hazardous health effects of asbestos, but failed to inform or intentionally concealed that information from Mr. Sheppard and his co-employees.”
He argued that Liberty Mutual had voluntarily undertaken to inspect Mosaic's facility, and otherwise had involved itself in Mosaic's workplace safety regime, thereby assuming a duty for safety at Mosaic's facilities.
Liberty Mutual moved for summary judgment on these claims, alleging that it had no duty toward Mr. Sheppard. It relied on form worker's compensation “policy jackets” corresponding to the years that Liberty Mutual had insured Mosaic.
The Policy Jackets
The policy jackets relied on by Liberty Mutual contained the following:
Inspection and Audit
provisions:
(1) GPO 2080 R1, dated October 1, 1966:The District Court's DecisionInspection and Audit. The company and any rating authority having jurisdiction by law shall each be permitted but not obligated to inspect at any reasonable time the workplaces, operations, machinery and equipment covered by this policy. Neither the right to make inspections nor the making thereof nor any report thereon shall constitute an undertaking on behalf of or for the benefit of the insured or others, to determine or warrant that such workplaces, operations, machinery or equipment are safe.
(2) GPO 2080 Ed. 6, dated March, 1975:
Inspection and Audit. The company and any rating authority having jurisdiction by law shall each be permitted but not obligated to inspect at any reasonable time the workplaces, operations, machinery and equipment covered by this policy. Neither the right to make inspections nor the making thereof nor any report thereon shall constitute an undertaking on behalf of or for the benefit of the insured or others, to determine or warrant that such workplaces, operations, machinery or equipment are safe or healthful, or are in compliance with any law, rule or regulation.
(3) GPO 4029 15628, dated April 1, 1984:
Inspection. We have the right, but are not obliged to inspect your workplaces at any time. Our inspections are not safety inspections. They relate only to the insurability of the workplaces and the premiums to be charged. We may give you reports on conditions we find. We may also recommend changes. While they may help reduce losses, we do not undertake to perform the duty of any person to provide for the health or safety of your employees or the public. We do not warrant that your workplaces are safe or healthful or that they comply with laws, regulations, codes, or standards. Insurance rate service organizations have the same rights we do under this provision.
The district court granted Liberty Mutual's motion.
In its decision, the district court ruled that the inspection provisions did not provide a basis for finding a duty on the part of Liberty Mutual to protect the safety of Mosaic's employees.
The district court concluded that the provisions granted Liberty Mutual “the right, but not the obligation, to inspect the insured's premises” and “disavow[ed] any undertaking on behalf of or for the benefit of the insured or others concerning safety.”
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].