February 8, 2006

"Stone Walls and Steel Bars" for Business Decisions

Business decisions other than outright fraud don't often lead to prison, but here are a couple of situations where this is likely to happen. The Insider has been tracking Rhode Island's Station Night Club fire, which took place three years ago. One hundred people died in a raging inferno that reached 1800 degrees in less than two minutes. The blaze was triggered by the (illegal) use of fireworks, in a club where highly flammable acoustical tile had been (inappropriately) installed. In the first criminal trial stemming from this sad event, Daniel Biechele, 29, the business agent for the rock band, Great White, pled guilty to involuntary manslaughter. He faces up to 10 years in prison. The fate of the bar's owners, Jeffrey and Michael Derderian, is still up in the air, although it seems likely that Biechele will testify against them. They, too, are likely to be headed for stone walls and steel bars.

Bus to Nowhere
You may also recall the horrendous incident during the chaotic evacuation from Hurricane Katrina, when a Texas bus caught fire and incinerated 23 nursing home residents. Global Limo, Inc., and its owner, James H. Maples, have been indicted for conspiring to falsify driver time records and failing to inspect the company's bus fleet to make sure the buses were safe.

The driver and some passengers escaped, but others were trapped when oxygen tanks on board fed the flames and exploded.

Maples and Global Limo are charged with three counts each: conspiring to falsify documents to allow drivers to go long stretches without appropriate rest, failing to inspect and maintain company buses and failing to require drivers to complete vehicle inspection reports. The conspiracy charge carries a five-year maximum prison sentence and a $250,000 fine.

The Comp Dimension
It's important to note that a previous grand jury declined to indict the driver. They apparently determined that he was not responsible for the explosion. This will raise some interesting issues from the workers comp perspective. The driver may try to sue his former employer, charging that their criminal negligence in the maintenance of the bus injured him above and beyond the type of injuries covered by workers comp. In other words, because the employer may be found criminally negligent, the driver may be able to transcend the "exclusive remedy" of comp and access tort remedies for his pain and suffering (which are not compensable under comp).

Readers may recall that in the Station Night Club fire, the Derderian brothers neglected to secure workers compensation coverage for their employees - 4 of whom died in the fire. They managed to dodge a $1 million fine by filing for bankruptcy, but the long winding road toward civil damages and prison still lies ahead of them. It's not often that business owners go to jail for their decisions, but these are two instances that appear to reach the criminal level. I don't think that these are evil people who intended to do harm, but they now face the grave consequences of their business decisions. It's enough to give any manager pause.



In Texas, I believe that the exclusive doctrine can be overcome if the act was caused by " intentional act or ommission of employer or by employer's gross negligence". In those states where exclusive remedy exceptions exist, this type of burden is common.
In Tex, it may only apply to fatal claims, but I am not sure.

Dave, you're right.

Sec. 408.001(b) of the TX Labor Code:
"This section does not prohibit the recovery of exemplary damages by the surviving spouse or heirs of the body of a deceased employee whose death was caused by an intentional act or omission of the employer or by the employer's gross negligence."


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This page contains a single entry by Jon Coppelman published on February 8, 2006 3:42 PM.

Avian Bird Flu: When Second Class Workers Meet a First Class Hazard was the previous entry in this blog.

What's the greater obscenity? is the next entry in this blog.

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