May 12, 2011

OSHA Visits the Farm

A couple of days ago my colleague Julie Ferguson blogged OSHA's new focus on farm safety. We all share the concern for the safety of farm workers. But OSHA is upping the ante in a way that requires the immediate attention of both insurance companies and their clients. As part of their investigation into the deaths of two teenage workers in a silo operated by Haasbach LLC, OSHA issued subpoenas for documents from Haasbach's insurer, Grinnell Mutual Reinsurance Co. OSHA wanted to review safety inspection reports and any follow up documentation from Haasbach. The insurer refused, arguing that the subpoena would discourage businesses from allowing insurers to conduct safety inspections if the material contained in the inspection reports can be used against a business during later litigation or OSHA enforcement proceedings.

The U.S. district court has ordered that the records be given to OSHA.OSHA Assistant Secretary Dr. David Michaels praised the decision. "The court affirmed OSHA's authority to obtain relevant information from an employer's workers' compensation insurance company. This is not surprising legally, but it does illustrate that workers' compensation and OSHA are not separate worlds divorced from each other," he said. "Workers' compensation loss control activities overlap with OSHA's efforts to bring about safe and healthful workplaces, and in order to achieve a safe and healthful working environment for all Americans, all efforts of business, insurance, labor and government must move forward together."

The court ruled that OSHA has jurisdiction to investigate the workplace fatalities, and further has the authority to require the production of relevant evidence and the ability to issue a subpoena to obtain that evidence. The requested documents, which included copies of site safety inspections, applications for insurance coverage for the site, and correspondence between Grinnell and Haasbach concerning the site, were found to "reasonably relate to the investigation of the incident and the question of OSHA jurisdiction," according to the decision.

A Tighter Safety Net
The court's ruling has important implications for both insurers and their clients.

Insurers are required to provide safety services, including site inspections with the findings documented in written reports. Usually, the safety inspector asks for a written response within a set time period. With OSHA potentially accessing these reports, there is liability for insurers: did they identify safety problems? Did they follow up to ensure that the problems were fixed within a reasonable period of time? It's another version of the great liability question: what did you know and when did you know it?

Similarly, the documents put insureds at risk. Safety issues have been identified. How did the business respond? Did they fix the problem? Did they perform the necessary training? Did they document their activities to show good faith in correcting identified concerns?

In all of this activity, candor is essential. The last thing anyone wants - and that anyone certainly includes OSHA - is for this court's ruling to have a chilling effect on the routine inspections performed by insurance companies. The concern is that inspectors, sensing OSHA reading over their shoulders, might hedge the findings just a bit - enough, perhaps, to create an ambiguity in the finding that results in an ineffective and unfocused response by the insured, which, in turn, perpetuates the hazard and leads, perhaps, to a serious injury or even death. That would be an unintended consequence of tragic dimension.

Focus on Safety
As always when OSHA becomes involved, there is a lot of money on the table. Following the fatalities, Haasbach was issued 25 citations with a penalty of $555,000. This was in response to the situation where three (untrained) workers became entrapped in corn more than 30 feet deep. At the time of the incident, the workers were "walking down the corn" to make it flow while machinery used for evacuating the grain was running: all in a day's work on the farm, and extremely hazardous.

It is certainly not in the best interests of insurance companies and their clients to build defenses against potential OSHA involvement. If we all share a commitment to safety - and we must - then an open and candid dialogue is essential. To be sure, both insurers and their clients are "on the hook" once problems have been identified. But surely it is in their combined interests to fix those problems as quickly as possible. Insurers and their clients must keep the focus where it belongs: not on OSHA, but on the moment-to-moment, day-to-day safety of workers on farms, in factories and in every American workplace.

| 2 Comments

2 Comments

I could not disagree with your conclusions more about it being in the best interests insurance companies to cooperate with OSHA. I have been at this for 37 years and I am a CSP. I steadfastly refuse to cede any credit to OSHA compliance as being a force for good in workplace safety. When OSHA's chief directive is to work with businesses in improving workplace safety through consultation, they do have a positive impact, as seen by the steady drop in injury rates throughout the first 8 years of this millenium.

The insurance company's role in workplace safety is advising their clients on how to reduce the risks present in their operations, not to act as the sheriff. We as a whole, do not act as inspectors, but act as consultants. We are not there to measure the machine guard openings to see if they are in complete, exact compliance with a specific regulation. Our role is to identify the need for a guard, not set the design specs for a guard.

Ed, you just summed this up rather neatly. " have a chilling effect on the routine inspections performed by insurance companies" is putting it mildly- I anticipate more of a deep freeze than a chill.

In the past, communications between a policyholder and a loss control rep/ risk engineer had been considered private- for the public good. By permitting free and unfettered communication, the employer would be better enabled to provide a safe place to work. Which makes sense- there are MANY more risk engineers in the US than OSHA Compliance Officers. They perform a far greater number of site audits than the regulators- with far more open communication.

Congratulations OSHA- you just killed your reinforcements and allies.

I sincerely hope this very bad and poorly considered bit of jurisprudence is appealed- and relegated to a footnote in safety history.

Subscribe

Submit your email to be notified when this site is updated

Need help with your workers' comp program?

Monthly Archives

About this Entry

This page contains a single entry by Jon Coppelman published on May 12, 2011 2:23 PM.

New York: A Matter of Trust(s) was the previous entry in this blog.

Health Wonk Review: Spring Renewal at InsureBlog is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

OpenID accepted here Learn more about OpenID