Sen. Arlen Specter, chairman of the Senate Judiciary Committee, is supporting legislation to create an alternative claims processing system for workers injured by exposure to asbestos and silica. Florida's legislature approved a bill on May 5, that would require claimants alleging asbestos- or silica-related injury to meet specific medical criteria before pursuing their claims. Similar legislation passed or is pending in Ohio, Georgia and Texas. Meanwhile, insurers and insureds must still address silica claims as they arise. So what steps should insurers take to evaluate such claims?
Here are some caveats to consider.
-Watch for fraud or "litigosis."
Silica claims frequently are presented en masse by hundreds or thousands of plaintiffs. Diagnoses often are made in an assembly-line process by one or two physicians or screeners chosen by attorneys. The potential for fraud in this environment is obvious. Motions for sanctions are pending against plaintiffs' attorneys in a Corpus Christi, Texas, federal district court based on allegations that the attorneys presented approximately 10,000 bogus silicosis (the respiratory disease caused by inhaling silica dust) claims. Dr. Gary Friedman of the Texas Lung Institute testified in the case that the only explanation was misdiagnosis--or, as he called it, "litigosis."
-Challenge the due diligence.
This potential for fraud makes it incumbent upon insurers and insureds with large self-insured retentions or fronting policies to act reasonably when handling silica claims. Facing a suit with thousands of plaintiffs, the tendency often is to avoid review of individual medical records and reach a settlement. The insureds and carriers will then turn to excess insurers for the settlement's funding. The excess insurers, however, can challenge the reasonableness of the settlement where it appears that an appropriate investigation was not conducted.
-Take advantage of timing.
Another problem with the "quick global settlement" approach is that it generally overlooks or downplays the timing of each claimant's exposure and diagnosis. Courts generally rely on exposure dates, diagnosis dates, or both, to determine which insurance policies are implicated or "triggered." Where this information is lacking, an insurer may deny coverage for claims.
-Use silica timing.
Many courts have ruled that, due to the harmful nature of asbestos, bodily injury takes place upon exposure and triggers all policies in effect during the exposure. With silica, there is often a tendency to follow asbestos cases. The inhalation of silica particles, however, does not necessarily mean that injury to lung tissue will occur. There is no evidence of adverse health effects from brief or casual exposure to silica dust. Insurers and insureds, therefore, can argue that policies should be triggered based on "manifestation" or diagnosis rather than on exposure. At a minimum, an exposure, to trigger a policy, should be of a type, degree and duration scientifically recognized as harmful.
When handling silica claims, it is critical for insurance adjusters and risk managers to keep an eye on the claims' demonstrated potential for fraud, the significant differences between silica and asbestos in both liability and coverage, and the importance of medical evidence at all stages of claims processing.
JOSEPH A. ZIEMIANSKI is a member of Cozen O'Connor's insurance litigation department and managing partner of its Houston office.
July 1, 2005
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