OHIO Supreme Court Leaves Employers Running for Cover

The Ohio Supreme Court just issued a decision that may have implications for employers who have purchased stop-gap insurance. Many Ohio employers have purchased this insurance to protect themselves against employer intentional tort lawsuits, those cases in which their employees sue outside the workers compensation system on grounds the employer either deliberately intended to injure them or the injury was substantially certain to occur because of the employer’s actions.

Indeed, there is now an Ohio statute (R.C. § 2745.01) that governs such actions and gives rise to a presumption of deliberate intent when an employer removes a guard and the employee is injured. The question of whether such lawsuits must be defended by the stop-gap insurer has been decided, at least in part, in this recent Ohio Supreme Court decision.(WCxKit)

In this case of Ward v. United Foundries, et al., the Ohio Supreme Court determined the insurance company did not have a duty to defend in a case where the stop-gap policy had a specific exclusion for bodily injury resulting from an act which is determined to have been committed by the employer with the belief that an injury is substantially certain to occur.

In other words, the particular stop-gap insurance policy purchased by this employer specifically excluded these intentional tort actions. The court determined that this exclusion released the insurance company from the obligation to defend a claim. The court went on to state that the company could refuse coverage in the beginning, and need not wait until the jury rendered a verdict one way or the other.

Because of the exclusionary language, one would have to ask the question: what in fact did the stop-gap endorsement cover? The Ohio Supreme Court held that it covered lawsuits by relatives of an employee, lawsuits in a dual capacity where the employee was using a product manufactured by the employer and was injured and was suing on a products liability theory, and some other very esoteric situations. So the endorsement was not considered illusory.

While this is an important development in insurance law as it applies to employers and intentional torts, it does not answer all of the questions. Most of these stop-gap policies are intended to cover intentional tort claims, or at least to provide a defense. Thus, most stop-gap policies do not have the exclusionary language that this particular policy had. In those instances, will the stop-gap insurance apply, or does this case suggest there is a public policy argument against coverage?(WCxKit)

Employers will want to check with their insurance agents and brokers to determine whether or not their policy includes this exclusionary language and, if so, whether another and better policy can be purchased from the carrier.

Author George B. Wilkinson, Partner. Attorney Wilkinson is Workers Compensation Group Practice Leader at Dinsmore & Shohl in Cincinnati, OH. He can be reached at George.wilkinson@dinslaw.com or 513-977-8316. Many thanks to Attorney Wilkinson who has helped my clients and employers reduce workers' comp costs over the last 20 years.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

OHIO Supreme Court Leaves Employers Running for Cover

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