Recent legal trends are placing increased liability risk on demolition contractors, according to Richard J. Leamy Jr. of Wiedner & McAuliffe Ltd., an attorney who spoke at the National Demolition Association Annual Convention held recently in
According to Leamy, current risk shifting in the demolition industry is transferring the liability for problems on a job to companies that might not have done anything wrong, something Leamy called “one of the most dangerous legal trends in the business.”
“The trend is to impose liability on industries as a whole,” Leamy said, citing examples like issues with lead-based paint or asbestos.
The current legal climate grew out of the development of indemnity agreements that protected general contractors from being held liable for subcontractor misconduct, according to Leamy. However, the very provisions that provided that protection have begun to turn the blame unfairly on demo contractors, as courts have expanded their readings of such agreements, said Leamy.
According to Leamy, demolition contractors can protect themselves from risk shifting by demanding specific language in their contracts and insurance provisions. For instance, when adding a general contractor on an additional insured endorsement, Leamy said phrasing such as “claims arising out of named insured’s work” is too general and open to interpretation. Leamy recommends specific language, such as “arising out of named insured’s negligence.” “You have the power to control the papers,” Leamy said. He also said another option demo contractors can exercise to protect themselves is buying the general contractor a separate owner’s protected policy instead of adding the general contractor or owner as additional insured.
Most importantly, Leamy advised demolition contractors to be aware of the risks and potential liability, as ignorance could lead to costly settlements. “Part of your risk management strategy must be to understand these exposures,” Leamy said.
Another attorney from Wiedner & McdAuliffe Ltd., Paul W. Wiedner, also addressed attendees on trends in workers’ compensation.
Wiedner said that while workers’s compensation is a state driven system and varies widely from state to state, several widespread trends have emerged in recent years, one being rapidly rising medical costs.
Medical claim costs have risen at a near double-digit rate of 9.23 percent between 1996 and 2005, according to figures provided by Wiedner.
Wiedner added that two trends have emerged that can help save employers money when it comes to providing workers’ compensation payments. The first is fee schedules, which is where a state sets pricing for all medical services. This replaces the former practice of a case-by-case analysis of how much a medical provider should be paid for a given service. Forty states have instituted fee schedules, according to Wiedner, many of which are based on Medicare.
Another cost control method is requesting a utilization review, which is intended to reduce or eliminate unnecessary or inappropriate medical services without jeopardizing care. A utilization review (
A third trend in workers compensation has the potential to raise costs for employers. Federal legislation has been approved in the form of the Medicare Secondary Payer Act (MSP) that states that Medicare does not pay for services where payment has been made or can be reasonably expected to be made under a workers’ compensation law or plan. Medicare is therefore asking employers to set aside funds for future medical costs.
The National Demolition Association Annual Convention was held April 1-4, 2007, at the Mirage in