Posted on: 10/24/2012
Matthew D. Cassidy, Hoagland Longo Moran
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Brief Background
In the late 1800s, the United Kingdom (hereinafter "UK") started to use asbestos heavily for various industrial projects.[1] During the early 1900s, asbestos use remained stagnant in the UK but eventually saw a vast increase after World War II, remaining at a high level until the early 1980s.[2] Asbestos-related diseases claim more than 4,000 lives each year in the UK[3], making it the single greatest cause of work-related deaths.[4] The use of asbestos is prohibited in the UK but there remains approximately six-million tons of the product within the sovereign state.[5] The UK's Health and Safety Executive (hereinafter "HSE") regulates and controls the handling of asbestos products.
Landmark Decision
On March 28, 2012, the UK's Supreme Court ruled that the liability for insurers was incurred at the time a worker was exposed to asbestos rather than at the time the asbestos-related illness first was discovered or appeared.[6] In BAI (Run Off) Ltd v. Durham & Ors, defendant insurers argued that liability should only be triggered at the time symptoms of asbestos-related illness develop.[7] However, the court held there was a close link between employment and the exposure that led to the illness. The court's ruling will pave the way for thousands of asbestos-related lawsuits in the coming years.
The BAI matter resolved the important issue of when insurance liability in the UK is triggered with respect to asbestos-related diseases. Litigation as to employers' liability insurance coverage for mesothelioma as a result of workplace exposure began in 2006. The argument was based on which insurance companies providing employers' liability insurance were obligated to indemnify employers against claims from plaintiff workers who became ill years after their employment ended.[8] The court disagreed with the court of appeal, which held that the wording of each individual insurance policy should be determinative of which insurance company was legally obligated to indemnify.[9] In its decision, the court held that the wording of the policy should not outweigh the fact that the policy that was in effect at the time the plaintiff worker was exposed to asbestos should be responsible for payment to the plaintiff worker or family members of a deceased worker.[10]
Essentially, the Court's decision somewhat mirrored that of the 6th Circuit's ruling in Insurance Co. of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980), which instituted the "exposure trigger" theory to determine which insurance policy should be used for coverage.[11] In Insurance Co. of N. Am., plaintiff insurance company sought a declaratory judgment to establish which of defendant asbestos manufacturer's insurance carriers should be held liable to defend and indemnify.[12] The defendant asbestos manufacturer faced massive amounts of potential liability for its alleged failure to warn workers and users of its products about the dangers of asbestos, specifically that inhalation of same could cause death, cancer, and other illnesses.[13] The policies were issued by five different insurance companies and the court had to decide which should be obligated to provide a defense to the various lawsuits against the defendant manufacturer. Ultimately, the court adopted the exposure trigger theory as the "superior interpretation of insurance contract provisions relating to injury caused by asbestosis."[14] For purposes of liability, the exposure trigger theory allowed the court to prorate liability among all of the insurance companies which "were on the risk while the injured victim was breathing in asbestos."[15] To the extent the defendant manufacturer was uninsured for any period of time they were also liable for any plaintiffs' asbestos-related injuries, the court treated the defendant as self-insured and responsible for a pro-rata share of the cost of indemnification.[16]
Industrial Injuries Disablement Benefit vs. Workers' Compensation
There are a multitude of workers' compensation-like programs that workers with asbestos-related illnesses may take advantage of.
The Industrial Injuries Disablement Benefit (hereinafter "IIDB) provides for the payment of weekly benefits to people who suffer from certain asbestos-related diseases (among other) contracted in the course of various types of employment. The worker must have contracted the disease as a result of performing work on or after July 5, 1948 when employed in the UK. The benefit will not be paid to any work performed by an applicant prior to the July 5, 1948 date or if the individual was self-employed at the time. Additionally, the IIDB allows for applicants to be treated as a couple if they live with a spouse, civil partner, or someone "as if they were" a spouse or civil partner.[17]
The Department of Work and Pensions regulates and administers the IIDB and applicants with asbestos-related diseases are given priority attention. The applicant must complete a medical examination for determination if they have one of the asbestos-related diseases covered.
The asbestos-related diseases covered under the IIDB are: pneumoconiosis (asbestosis); diffuse mesothelioma; primary carcinoma of the lung with asbestosis; primary carcinoma of the lung without asbestosis but where there has been extensive occupational exposure to asbestos in specified occupations; and unilateral or bilateral diffuse pleural thickening. If an individual is diagnosed with asbestosis, he or she can receive the benefit if the disablement is assessed at 1% or more. If the individual is diagnosed with diffuse mesothelioma, primary carcinoma of the lung with asbestosis, or primary carcinoma of the lung without asbestosis but where there has been extensive occupational exposure to asbestos in specified occupations, then he or she will receive the benefit at the maximum rate from the start of his or her claim.[18]
If the asbestos-related disease was caused by work before July 5, 1948, individuals can still avail themselves of the Pneumoconiosis and Workmen's Compensation Section. Additionally, if the asbestos-related disease was caused by the individual's work as a trainee, he or she can utilize the Analogous Industrial Industries Scheme Castleford program for recovery. The Workers' Compensation Act 1979 Scheme allows for the individual to receive a lump sum if he or she has not pursued legal action against his or her former employer. The diseases covered by the Workers' Compensation Act are: pneumoconiosis; byssinosis; diffuse mesothelioma; bilateral diffuse pleural thickening; and primary carcinoma of the lung when accompanied by asbestosis or bilateral diffuse pleural thickening.[19]
The 2008 Diffuse Mesothelioma Scheme allows for one lump sum payment to be made to an applicant if he or she has diffuse mesothelioma but does not qualify under the Workers' Compensation Act 1979 Scheme. This program covers: self-employed applicants; and applicants who did not contract mesothelioma from their employment (bystander exposure). However, the applicant cannot receive payment under this scheme if they were not a resident of the UK when the exposure to asbestos occurred. The applicant can only receive payment from either the 2008 Diffuse Mesothelioma Scheme or the Workers' Compensation Act 1979 Scheme, not both.[20]
There are additional benefits available to applicants as well: incapacity benefit, severe disablement allowance, disability living allowance, attendance allowance, reduced earnings allowance, retirement allowance, constant attendance allowance, and the exceptionally severe disablement allowance.[21]
Conclusion
With the UK Supreme Court's landmark decision in BAI, the floodgates have opened for a more aggressive litigation approach on the plaintiffs' side. It is important that defendant manufacturers, suppliers, and outside contractors being sued in the UK are aware of the triggering effect of BAI as well as the workers' compensation programs available to plaintiffs.
Matthew Cassidy is an associate in the Hoagland Longo Environmental & Toxic Tort Department, focusing his practice on environmental and mass tort litigation.
[1] Budd, Terry. The Importation of U.S. –Style Asbestos Litigation to the United Kingdom: A Report on Recent Trends, Kirkpatrick & Lockhart Nicholson Graham, LLP (2006).
[2] Peto, J., et al., The European Mesothelioma Epidemic, British Journal of Cancer (1999) 79, 666-72.
[3] Trades Union Congress, http://www.tuc.org.uk/workplace/index.cfm?mins=125&minors=124&majorsubjectID=2
[4] http://www.hse.gov.uk/asbestos/
[5] Trades Union Congress, http://www.tuc.org.uk/workplace/index.cfm?mins=125&minors=124&majorsubjectID=2
[6] Employers' Liability Insurance "Trigger" Litigation: BAI (Run Off) Ltd v Durham & Ors, [2012] UKSC 14 (28 March 2012).
[7] Id.
[8] Sweigert, Ryamond L. UK Supreme Court Pulls Trigger on Asbestos Liability Insurance, Association of Corporate Counsel (20 June 2012).
[9] Employers' Liability Insurance "Trigger" Litigation: BAI (Run Off) Ltd v Durham & Ors, [2012] UKSC 14 (28 March 2012).
[10] Id.
[11] Sweigert, Ryamond L. UK Supreme Court Pulls Trigger on Asbestos Liability Insurance, Association of Corporate Counsel (20 June 2012).
[12] Insurance Co. of N. Am. v. Forty-Eight Insulations, 633 F.2d 1212, 1213 (6th Cir. Mich. 1980).
[13] Id.
[14] Id. at 1223.
[15] Id. at 1224.
[16] Id.
[17] www.direct.gov.uk.benefitsadviser, Jobcentre Plus, a division of the Department of Work and Pensions (September 2011).
[18] Id.
[19] Id.
[20] Id.
[21] Id.