Find Your Footing: Don’t Stumble When it Comes to Slip-and-Fall Claims

Carie Hall | Rumberger Kirk

Some regard slip-and-fall claims as nuisance litigation and often make billboard plaintiffs’ lawyers the butt of jokes. But, occasionally, these claims represent catastrophic injuries with verdicts to match, and even garden variety slip-and-fall claims expose companies to expense and aggravation.

Slip-and-fall accidents are by far the most prevalent accidents for both guests and employees in the hospitality industry. It is surprising how many restaurants, hotels, resorts, and other businesses have high foot traffic but have not exercised vigilance in protecting themselves from this common claim.

When it comes to slip-and-fall claims, prevention is the first step. Make sure your flooring meets industry standards when dry or wet. This starts with looking at the coefficient of friction, a mathematical expression of the ratio between the force necessary to move an object horizontally over another surface and the pressure between the two surfaces. Results can range from near zero (think of ice skates on ice) to greater than one (rubber on rubber).

It can be more complex to assess the real-world slip potential of a floor. Most experts will testify that flooring testing at .5 or better is reasonably safe. Do not depend on your own judgment or that of a floor-material salesperson, or even a product specification sheet. Get an expert opinion when selecting new flooring. Additional consideration is needed if a finish is added to the flooring material after installation. Is it worth having a glossy finish for aesthetic reasons if it reduces the coefficient of friction and increases the potential for accidents?

Another recent trend involves claims that involve a transition between surface materials (e.g., from carpet to tile). Plaintiffs’ attorneys may argue that going from the sure-footed grip of an office carpet to the smooth lobby marble creates a hazard. Aesthetic considerations come into play here, but consider whether the change is too abrupt for the particular use of the area. There may be engineering fixes for such transitions, or perhaps a contrasting color or intermediate surface that prepares people for the change. In some cases, signage may be appropriate.

Prevention protocols should also include how to maintain and monitor a floor that is expected to get wet, such as a lobby when it rains outside. Wet floor signs have become ubiquitous, but many businesses go a step further and have mats available to roll out and absorb water tracked in by guests. Of course, these mats will need to be in good condition to prevent trip hazards or slippage of the mats themselves.

Many slips in restaurants and hotels result from spills, so the first step in prevention is to pay attention and promptly clean them up. Having a timely inspection regimen and documentation that proves it was followed will bolster a defense.

This gets to the legal principle of “knew or should have known,” which closely correlates with the legal determination of what is reasonable. If someone slips on beer that was spilled an hour ago, then that scenario would likely fall into the “should have known” category. However, most courts and jurors would not expect you to detect a spilled beer within seconds or even a few minutes. The reasonableness standard is also affected by the venue. The dining room in a senior center will have a different standard of reasonableness compared to that of a restroom adjacent to a pool or splash park.

After the Fall

The welfare of customers or employees should be your first concern. Once an appropriate party has attended to their needs and, if necessary, called for aid, your staff must do its best to document everything. Take photos from every angle, both close up and broad views for context. Document anything the person said after the incident. (“I wasn’t paying attention,” will not be something a claimant remembers saying by the time you start taking depositions.) Because people scatter quickly, an important, often overlooked step is taking statements from witnesses. The guest who was skipping across the lobby with a beer in each hand or who created the spill that caused her own fall will not remember it that way, making witness statements vital. Document their statements and remember to get contact information for the witnesses.

Documentation should always include the type of shoes the person wore and details about what they were doing at the time. If a claimant was wearing high heels or $1 flip flops from a discount store, talking on a cell phone, and carrying six packages, then it is important information. Most falls are affected by both human behavior and floor conditions, and many states allow for comparative-negligence verdicts in which damages are apportioned accordingly. For example, a careless plaintiff may have been 50 percent at fault for an accident, which means a jury award is reduced by 50 percent. Another guest who carelessly dropped a drink on the floor, even if the person cannot be identified, may be assigned part of the fault, again reducing the amount of potential damages.

Preserve any video evidence. Most public venues have cameras, but many record on a loop that erases everything on a 24-hour or 48-hour cycle. In some states, the evidence you gather during an investigation, such as witness statements and photographs, may be privileged as work product, but that is not the case everywhere. An attorney or insurance carrier can advise on how a state’s law will affect a specific response to accidents. Surveillance video capturing the accident is not likely privileged, but it is better to preserve the video than risk an allegation of spoliation of evidence, which could result in sanctions including an instruction to the jury that they can assume the evidence was not favorable to the party that lost or destroyed it.

If the accident results in a claim, bring in an expert right away to assess the floor surface. Given that litigation may take years to develop, it is imperative that you analyze and document the condition of the surface. Also, be aware that replacing flooring, even for reasons unrelated to the accident, can be detrimental to the claim without proper analysis. Never make any changes to the floor after a claim is made without the advice of your attorney. If a claimant is not offered an opportunity to inspect the floor, that may also give rise to a claim of spoliation of evidence.

Finally, designate someone on staff as the internal slip-and-fall expert. This person should constantly be on the lookout for hazards, keep up with new technology in floor surfaces, execute inspections, and train others in both prevention and response to hazards. With vigilance, you can reduce your exposure to slip-and-fall claims and ensure the safety of guests and employees.

Montana Supreme Court: Insurer Not Bound by Insured’s Settlement

K. Alexandra Byrd | SDV Insights | October 24, 2019

In Draggin’ Y Cattle Co., Inc. v. Junkermier, et al.1 the Montana Supreme Court held that where an insurer defends its insured and the insured subsequently settles the claims without an insurer’s participation, a court may approve the settlement as between the underlying plaintiff and underlying defendant, but the settlement will not be presumed reasonable as to the insurer. Therefore, an insurer who defends its insured cannot be bound by a stipulated settlement that the insurer did not expressly consent to.

The case involved Draggin’ Y Cattle Company (the “Cattle Company”), a ranching and cattle business that utilized the services of an accounting firm, Junkermier, Clark, Campanella, Stevens, P.C. (“Junkermier”), to structure the sale of real property to take advantage of favorable tax treatment. It was discovered that Junkermier’s employee misinformed the Cattle Company’s owners of the tax consequences of the sale. The Cattle Company’s owners subsequently filed suit against Junkermier and its employee and alleged nearly $12,000,000 in damages due to the error. Junkermier’s insurer, New York Marine, provided a defense for Junkermier and its employee.

The Cattle Company’s owners offered to settle the claims against Junkermier and its employee for $2,000,000, the policy limit of the New York Marine policy. New York Marine refused to give its consent or tender the policy’s limit. Subsequently, Junkermier, its employee, and the Cattle Company entered into their own settlement agreement for $10,000,000. The settlement was contingent upon a reasonableness hearing to approve the stipulated agreement.

New York Marine moved to intervene and challenged the stipulated settlement. The trial court, relying on Tidyman’s Mgmt. Svs. Inc. v. Davis, 330 P.3d 1139 (Mont. 2014), held that New York Marine had effectively abandoned its insured when it had refused to settle the claim in good faith and therefore it was “as if it had breached the duty to defend.” The trial court concluded that the settlement was reasonable and entered judgment against Junkermier.

On appeal to the Montana Supreme Court, New York Marine argued that a stipulated judgment, entered into without the insurer’s consent or participation, is only reasonable when the insurer has refused to provide a defense, effectively abandoning the insured. New York Marine noted that it provided its insureds with a defense throughout the relevant proceedings.

The Montana Supreme Court agreed with New York Marine and held that if parties decide to settle without the insurer’s participation, a court may approve the stipulated judgment as between the underlying plaintiff and the underlying defendant, but it will not be presumed reasonable as to the insurer. The judgment against Junkermier and the proceedings were reversed and remanded to the lower court for further proceedings.

This case underscores the importance of involving coverage counsel in settlement negotiations when a defending insurer refuses to agree to a reasonable settlement. Montana policyholders should also consider whether a declaratory judgment action is necessary if their insurer has reserved its rights as to any indemnity owed.

Insurer Must Pay for Matching Siding of Insured’s Buildings

Tred R. Eyerly | Insurance Law Hawaii | September 11, 2019

    The Seventh Circuit found that the insurer was obligated to pay for siding of a building that was not damaged by hail so that it matched the replaced damaged portions of the siding. Windridge of Naperville Condominium Association v. Philadelphia Indem. Ins. Co., 2019 U.S. App. 23607 (7th Cir. Aug. 7, 2019). 

    A hail and wind storm damaged buildings owned by Windridge. The storm physically damaged the aluminum siding on the buildings’ sought and west sides. Philadelphia Indemnity, Windridge’s insurer, contended that it was only required to replace the siding on those sides. Windridge argued that replacement siding that matched the undamaged north and east elevations was no longer available, so Philadelphia had to replace the siding on all four sides of the buildings to that all of the siding matched. 

    Windridge sued and moved for summary judgment. The district court ruled that matching was required. The only sensible result was to treat the damage as having occurred to the building’s siding as a whole. 

    The policy was a replacement-cost policy. Philadelphia promised to “pay for direct physical ‘loss’ to ‘Covered Property’ caused by or resulting from” the storm, with the amount of loss being “the cost to replace the lost or damaged property with other property . . . of comparable material and quality . . . and . . . used for the same purpose.” The loss payment provision offered four different measures for loss, leaving Philadelphia free to choose the least expensive: (1) pay the value of the lost or damaged property; (2) pay the cost of repairing or replacing the lost or damaged property; (3) take all or any part of the property at an agreed or appraised value; or (4) repair, rebuild or replace the property with other property of like kind and quality. 

    The Seventh Circuit noted that the district court’s conclusion that the buildings as a whole were damaged – and that all of the siding must be replaced to ensure matching – was a sensible construction of the policy language as applied to the facts. Philadelphia’s interpretation – pay to replace only the specific panels of siding that were directly hit by hail, leading to two-tone buildings – was less reasonable. Regardless, the unit of covered property consider under the policy (each panel of siding vs. each side vs. the buildings as a whole) was ambiguous as applied to the facts, so the interpretation that led to coverage was favored. 

    Here, each building as a whole suffered direct physical loss as a result of the storm. The storm altered the appearance of the buildings such that they were damaged. Due to the extent of the damage and the lack of matching siding available on the market, the better construction of the ambiguous policy was to require Philadelphia to replace the siding on all four elevations of the buildings. The district court’s judgment in favor of Windridge was affirmed. 

Policyholders and Contractors Unite Against Wrongful Insurance Company Claims Practices

Chip Merlin | Property Insurance Coverage Law Blog | December 5, 2019

While working on and researching for answers to questions posed by Professor Feinman regarding the growing insurance coverage gaps crisis, I came across a very pointed article published about how modern insurance company claims practices are destroying the construction restoration industry.

In Cleaning & Restoration (Quarter 1, 2019) an article, “Our Greatest Need—The Case For, And Path To, Industry Advocacy For The Restoration Industry,” by the Restoration Industry Association (RIA) Board member Mark Springer, stated the following:

In a previous C&R article…. I described a situation where an insurance carrier refused any payment on a water mitigation claim due to a technicality in document upload. It is not my intent to relitigate that argument but rather to expand on some of the issues that restoration contractors face. In that article, I stated a thesis that poses a somewhat grim outlook for the restoration industry. However, with each passing month, I continue to see challenges emerge that reinforce this position. The thesis is this:

‘If restoration companies are unwilling to unite, advocate for sustainable claims practices and take a proactive approach with insurance carrier claims policies, then the restoration industry as we know it will cease to exist within a decade.’

I agree. The significance is that leadership from the largest and most longstanding restoration construction association is promoting this “call to arms” in its own battle with the property insurance claims handlers. It is not only policyholders suffering from catastrophic physical damage to their businesses and homes, the insurance claims industry has focused its claims techniques on those contractors repairing and rebuilding those structures.

Springer made his point further:

‘Claims policies’ go much deeper than the specific policies that a carrier dictates to issue payment. The issues we face are many, and they all impact the entire claims process that a property restoration company must navigate in the course of their day-to-day operations. What follows are some examples of the challenges and threats we face. Realistically, each of these areas, or sectors of concern, are not only necessary but essential in the claims environment. However, there are some key questions that each restorer, and the industry at large, should be examining if we are going be able to operate our businesses sustainably. These questions are not rhetorical; they are not intended to be presented sarcastically or with bias. This isn’t a time for conspiracy theories, but we would be exceptionally naive if we were to think that the largest fiduciaries in the world, who incidentally are the repositories of the largest quantities of data in the world, were looking out for any interest other than their own and that of their shareholders.

Springer provided several examples of methods the insurance claims Industry is leveraging lower claims payments through wrongful claims practices, which are often involving partners of the insurance companies.

  1. Pricing and Scoping platforms found in Xactware, which is operated by Verisk—a company owned primarily by insurance companies until it went public.
  2. Non-adjuster insurance company construction consultants who often delay and raise roadblocks to payment without legitimate reason. The RIA named JS Held as an insurance industry partner consultant that RIA leaders need to have “talks” with.
  3. Third-Party Administrators Growing Influence and Expanded Role in claims adjustment.
  4. Government regulations and rules not under insurance carrier claims rules. Indeed, Springer notes that the result is that less affluent contractors breaking the law will get paid by insurers for the illegal construction, which is performed, but not caught by, government regulators.

Certainly, the insurance company will claim that many contractors overprice materials and labor. They will also point to those that over-scope the damage and method of repair so that Xactware performs a very valuable function in the claims process. They will also point out that expert consultants can help prevent contractors from “gaming” the claims payment system and prevent unreasonable overpayments payments. These are two legitimate concerns. Still, two wrongs never make a right.

I am not certain how insurers get away from the refusal to pay government safety laws for construction workers. Of course, insurance claims managers just saying “no” and then conspiring with financial support for those that break the law is one way to do it, as Springer noted. I am certain that the audit committees checking on governmental compliance for the publicly traded insurers would not like to read these accusations by Springer.

I would suggest that contractors and those concerned about what they can do to help stop the growing trends of wrongful claims practices of the insurance claims industry read the various articles archived by the RIA and support many of their efforts. The RIA has over 1,200 member firms and has been in existence for over 70 years advocating for restoration contractors.

Policyholder interests for high standards of ethical construction practices and fair and ethical claims practices are aligned with the RIA—so should the insurance industry.

Foundations, Basement Walls And Collapse — Connecticut Supreme Court Rules Against Coverage

Larry P. Schiffer | Squire Patton Boggs | November 21, 2019

Homeowners in Connecticut (and other states) have had issues with crumbling foundations and basement walls of their homes due to defective concrete manufactured by a specific supplier. They have turned to their homeowners insurance policies for coverage and coverage has been denied. Multiple lawsuits have been brought. In a series of recent cases, the Connecticut Supreme Court was asked on a certified question in two of the cases to resolve questions of Connecticut law concerning the term “collapse” in the insurance policies, whether the “substantial impairment of structural integrity” standard applied to the “collapse” provision of the insurance policies, whether that standard requires a showing of imminent danger of falling down or actually collapsing), and whether the term “foundation” in the policies unambiguously includes the basement walls of the homes.

The main opinion is contained in Karas v. Liberty Insurance Corp., No. SC 20149 (Ct. Sup. Ct. Nov. 12, 2019). Shorter opinions are contained in Vera v. Liberty Mutual Fire Insurance Co., No. SC 20178 (Ct. Sup. Ct. Nov. 12, 2019) and in a factually distinct opinion, Jemiola v. Hartford Casualty Insurance Co., No. SC 19978 (Ct. Sup. Ct. Nov. 12, 2019). The first two cases came to the Connecticut Supreme Court by way of certified questions from the Connecticut federal court. The third case was a direct appeal of a Connecticut case. The outcome on the coverage question is the same, but the facts and discussions have differences. All three cases held for the insurance companies and against the policyholders on coverage for the crumbling walls.

There’s a lot to unpack in the main opinion and the state court case opinion and quite a bit of deep legal analysis. In the main opinion, the court concluded that the term “collapse” in the policy was otherwise undefined and therefore ambiguous so as to include coverage for any substantial impairment of structural integrity. But the court also held that the substantial impairment of the structural integrity standard required proof that the home was “in imminent danger of falling down,” and that the term “foundation” unambiguously encompassed the home’s basement walls.

In finding ambiguity, the court stated that “although the collapse provision purports to exclude settling, cracking, shrinking, bulging and expansion from its purview, it does not express a clear intent to exclude coverage for a collapse that ensues from what initially began as unexceptional, run-of-the-mill settling, cracking, shrinking, bulging or expansion but what later developed into a far more serious structural infirmity culminating in an actual or imminent collapse.” The court noted that the controversy over the term “collapse” has been around since before 1960 and that with this much warning, the insurer was capable of unambiguously limiting collapse coverage to a building reduced to rubble and actual collapse.

On the standard of substantial impairment, the court clarified that substantial impairment meant imminent danger of falling down as the most reasonable standard. This imminence requirement, said the court, does not render collapse coverage illusory; “it merely gives effect to the reasonable expectations of the parties as evidenced by the language of the policy.”

Finally, the court addressed the coverage exclusion for collapse of the home’s foundation and whether it unambiguously included the basement walls of the home. The court held that it did based in part on the court’s view that even laypersons with no special knowledge understand that the concrete basement walls of a home are part of the home’s foundation.

Since there was no imminent danger of collapse and because the basement walls were part of the foundation, there was no coverage.

I urge anyone addressing coverage for crumbling walls, especially in Connecticut, to read these opinions carefully to determine if the facts are applicable to the findings here.