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Keven Moore: Legionnaires’ Disease liability requires extra protection against potential, big losses

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In an earlier column, I stressed the frequency that Legionnaires’ disease outbreaks still occur some 41 years later after 221 people were hospitalized and 34 people died from an outbreak that occurred at a Philadelphia convention for the American Legion; where the Legionella bacterium earned its name.

This week I decided to emphasize the degree of risk that this disease poses for business owners, corporations and property owners.

When people are infected with Legionnaires’ disease from an establishment, property owners, its owners and/or operators can and will be held liable for victims’ physical and financial suffering.

Nearly 6,000 cases of Legionnaires’ disease are reported annually and more than 10% of victims die in the United States alone; It is under-diagnosed, so the risk is very real. According to a Washington Post article last year, cases of Legionnaires’ disease nearly quadrupled in the United States over a 15-year period.

Illustrations from the CDC

Many business owners, operators and property owners incorrectly presume that their general liability (GL) insurance will cover claims from pollutants and bacteria, such as legionella, mold, fungus, cleaning products, asbestos, lead paint and carbon monoxide.

When faced with a large loss arising out of a Legionnaires’ disease case or outbreak, your commercial insurance carrier’s instinctive first line of defense to control their costs is to go to the policy exclusions section of your policy. And the fact is your typical GL insurance broadly excludes bodily and property damage caused by pollutants and bacteria, including mold, smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.

To properly cover such exposures, your insurance agent should provide you with an Environmental Impairment Liability policy to best protect you from this potentially large loss. The cost of coverage is broadly available and generally very inexpensive. However many business owners often times fail to pick up the added coverage — thus exposing themselves to a lawsuit that could plunge their company into financial ruin.

Many claimants of a Legionnaires’ disease case or outbreak can experience in excess of several hundred dollars in medical bills, lost wages and debilitating injuries and ailments that often times renders the claimant disabled for the rest of their life.

According to an article in TheCLM.org, reports of settlements are rare as most agreements include stipulations that payout amounts remain confidential, but some reports indicate single claim settlements and jury awards have ranged from $255,000 to $5.2 million.

In the event of a Legionnaires’ disease outbreak there are many potential parties who may be held liable and can become targets of a legal action.

Any good attorney representing a claimant from a Legionnaires’ disease case or outbreak will be reaching into just about every available pocket, naming as many responsible parties in the lawsuit as possible — because all it takes is sympathetic jury to win their case. Remember attorneys don’t have to win every case; all they have to do is win a favorable settlement or multiple smaller settlements. When you are fishing you don’t have to catch that big fish to eat well, all you have to do is cast several lines in the water to catch a good mess of smaller fishes.

In most cases, that liability falls on the owners, operators, and/or managers of the premises where the outbreak occurred, whether it is a hotel, resort, hospital, a nursing home, grocery store, a cruise ship, gym, a condominium, an apartment complex, etc. Each has a responsibility to do everything in their power to protect the occupants and guest of their premises from known hazards, which would include the Legionella bacterium which causes Legionnaires’ disease.

Other parties who potentially may be held liable for damages could include persons or entities responsible for the design, development, installation, engineering, construction, manufacture, maintenance, and/or repair of the building water systems that were found to be faulty or defective and, because of that fault or defect, triggered or hastened the growth and dissemination of the Legionella bacterium. Good attorneys working a Legionnaires’ disease case or outbreak will go back to look at the architect, contractors, manufacturers, installers, service firms…etc. in an attempt to draw as many entities into the lawsuit.

The legal exposure associated with Legionnaires’ disease can be very substantial because a lot of times there are multiple victims when an outbreak occurs. If a victim doesn’t die, some will have spent months in the hospital and several more weeks recovering at home.

In addition to the liability exposure, business owners, operators and property owners must take into consideration the loss of business income that tallies every day your operation is shut down to disinfect and abate the Legionella bacterium from your building/operation. These costs will vary by the size and industry, but there are some cases where businesses were losing $200K a day.

Then with the news of a Legionnaires’ disease outbreak, many businesses will then suffer a significant residual loss of goodwill with their customers. The significance of this loss can be detrimental and some never recover, thus forcing them into bankruptcy.

TheCLM.org reported that, in 2006, a jury returned a $193 million verdict in a subrogation action against a manufacturer of equipment used for indoor spas aboard a cruise ship implicated in several Legionnaires’ disease cases. The largest component of this damage award, by far, was for the cruise line’s business interruption and lost bookings as a result of the ship being taken out of service.

Unfortunately, experts predict that the number of legionellosis cases will continue to rise from a variety of reasons from deteriorating water systems, the push for energy efficient, low temperature “green” technology perpetuate conditions conducive to legionellae colonization. In addition, the medical community is developing faster and more accurate diagnostics that can better identify Legionnaires’ disease cases.

Recognizing the exposure is the first step for any business owners, corporations and property owners and the best means for a defense is to develop a Legionella Risk Management prevention program and to have good insurance agent.

Because in my world as a risk management & safety professional, I have learned that you won’t find out how good your insurance agent is, until you have an unforeseen claim and by then… it’s too late.

Be Safe My Friends

Keven-Moore_10221

Keven Moore works in risk management services. He has a bachelor’s degree from University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He lives in Lexington with his family and works out of both the Lexington and Northern Kentucky offices. Keven can be reached at kmoore@roeding.com.

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