COVERAGE FOR EMPLOYMENT INTENTIONAL TORTS

Presented by: Brian D. Sullivan June 21, 2013

I.

INTRODUCTION TO THE INSURABILITY OF INTENTIONAL TORTS IN OHIO

The Ohio Supreme Court first dealt with the issue of the insurability of intentional torts in 1938. Rothman v. Metropolitan Cas. Ins., 134 Ohio St. 241 (1938). In Rothman, the plaintiff was a passenger in a truck that went off the road and overturned. Rothman sued the company for wanton misconduct, and was awarded $500. Rothman then filed a supplemental petition against Metropolitan Casualty, the trucking companys insurer. Metropolitan refused to pay the judgment because its policy only covered bodily injuriesaccidentally suffered. The Court found coverage, drawing an early distinction between a willful act and a willful injury: It is well settled that from public policy standpoint the act of intentionally inflicting an injury cannot be covered by insurance in anywise protecting the person who inflicts such injuryIn our opinion, only those acts which are not motivated by an intent and purpose to injure are to be regarded as covered by the terms of this policy. The Court then left this issue alone for approximately fifty years before addressing the insurability of intentional conduct again in a string of cases in the late 1980s and early 1990s. Preferred Risk Ins. Co. v. Gill, 30 Ohio St.3d 108 (1987); Wedge Products, Inc. v. Hartford, 31 Ohio St.3d 65 (1987); Harasyn v. Normandy Metals, Inc., 49 Ohio St.3d 173 (1990); and Physicians Ins. Co. v. Swanson, 58 Ohio St.3d 189 (1991); and Penn Traffic Company v. AIU Insurance Co., 99 Ohio St. 3d 227 (2004). This confusion has been exacerbated with the recent enactment of an employer intentional tort statute that has withstood constitutional scrutiny. These decisions have left a confusing patchwork of legal principles which must be navigated in understanding an insureds risk to employment-related exposures and assessing whether an insurance product addresses those risks. II. HISTORICAL DEVELOPMENT OF EMPLOYER INTENTIONAL TORTS Generally, an employee is precluded from suing the employer as a result of a work-related injury that is covered by the Ohio Workers Compensation Act. See Ohio Constitution Article II, Section 35; R.C. 4123. However, in 1982, the Ohio Supreme Court in Blankenship v. Cincinnati Milacron Chemicals, Inc., 69 Ohio St.2d 608, 614 (1982) created an exception to this rule. Blankenship held that an employee could sue his employer for work-related injuries only if the employer intentionally inflicted the injuries. Under Blankenship, the Ohio Supreme Court specifically held that neither Article II, Section 35 of the Ohio Constitution nor R.C. 4123.74 preclude an employee from seeking damages against his employer for an intentional tort. Blankenship, supra at syllabus. Of course, this exception was created only for the most egregious cases.

A. Historical Development of Case Law 1. Blankenship v. Cincinnati Milacron Chemicals, Inc., 69 Ohio St.2d 608 (1982). a. As noted above, the Court in Blankenship created an exception to the general rule that an employee is precluded from suing an en employer as a result of a work-related injury. Blankenship held that an employee could sue his employer for work-related injuries only if the employer intentionally inflicted the injuries. b. Thus, Blankenship established the common law action for employer intentional torts. c. Notably, the court reasoned that Affording an employer immunity for his intentional behavior would not promote [a safe and injury-free work environment], for an employer could commit intentional acts with impunity with the knowledge that, at the very most, his workers compensation premiums may slightly rise. Id. at 615. 2. Jones v. VIP Development Co., 15 Ohio St.3d 90 (1984). a. The Court clarified the Blankenship holding by providing a working definition of the tort: An intentional tort is an act committed with the intent to injure another, or committed with the belief that such injury is substantially certain to occur. Id. at 95. b. Further, the Court determined that an employers intent could be inferred from the circumstances of the case. 3. Wedge Products, Inc. v. Hartford, 31 Ohio St.3d 65 (1987). a. The Court held that an intentional tort allegedly committed by an employer against its employee is not covered by an insurance policy which provides protection for bodily injuries neither expected nor intended by the employer. This care arose from personal injuries actions filed by two employees injured as a result of two separate punch press accidents. The employees both alleged that their injuries resulted from intentional torts committed by the employer. The insurance company declined to defend the employer because (1) the injuries were expected or intended, and (2) the injuries arose out of and in the course of their employment. The trial court consolidated the actions and held that the insurance company was obligated to defend the employer. In applying the Jones definition of intentional tort (that a tortfeasor commit an act with (1) the intent to injure another or (2) the belief that such injury is substantially certain to occur), the Court reasoned 3

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that no coverage is provided if the employer intended to injure the employees. In quoting Jones, the court noted that a specific intent to injure is not an essential element of an intentional tort where the actor proceeds despites a perceived threat of harms to others which is substantially certain, not merely likely, to occur. Further, the court cited Blankenship for the proposition that public policy is contrary to insurance against intentional torts.

4. Van Fossen v. Babcock & Wilcox Co., 36 Ohio St.3d 100 (1988). a. The Court recognized that difficulties surrounding intentional tort law began with Blankenship and ultimately resulted in the lower courts misinterpreting the phrase substantial certainty as set forth in Jones. b. In Van Fossen, the Court sought to limit the inference of employer intent and establish knowledge as an important element. 5. Physicians Insurance Company of Ohio v. Swanson, 58 Ohio St.3d 189 (1991). a. While not in the employment context, the Court provided further insight into what constitutes an intentional tort for purposes of insurance coverage. b. The Court held that, in order to avoid coverage on the basis of an exclusion for expected or intentional injuries, the insurer must demonstrate that the injury itself was expected or intended. The Court further held that it is not sufficient to show merely that the act was intentional. c. This case arose from an insurance coverage dispute between the parents of a child that shot another child in the eye with a BB gun and the parents two insurance companies. Both insurance companies sought a declaratory judgment seeking a declaration of their obligations under their respective contracts. Specifically, they sought a ruling that the policies exclusionary provisions exempted them from the duty to defend and indemnify the claim. 6. Fyffe v. Jenos, Inc., 59 Ohio St.3d, 570 N.E.2d 1108 (1991). a. b. This case clarified the previous holding by the Court in Van Fossen and established the standard for employer intentional tort liability. The Court set forth a test for establishing intent with respect to the substantial certainty aspect of intentional torts. Under Fyffe, a plaintiff must satisfy a three-prong test to successfully maintain a cause of action for an employer intentional tort:

(1) knowledge by the employer of the existence of a dangerous process, procedure, instrumentality or condition within its business operation; (2) knowledge by the employer that if the employee is subjected by his employment to such dangerous process, procedure, instrumentality or condition, then harm to the employee will be a substantial certainty; and (3) That the employer, under such circumstances, and with such knowledge, did act to require the employee to continue to perform the dangerous task. 59 Ohio St. 3d 115, 118, 570 N.E.2d 1108, 1112 (1991). B. Insuring Against Intentional Conduct When the Ohio Supreme Court held that employees could sue their employer for an intentional tort in Blakenship, supra, employers began to purchase insurance policies covering injuries sustained by employees during the course and scope of their employment in an attempt to protect themselves against employer intentional torts. Miller v. Midwestern Indemn. Co., 2nd Dist. No. 15360, 1996 WL 397450 (Feb. 23, 1996). Reviewing the development of the case law surrounding employer intentional tort coverage, a dispute arose among the courts as to whether insuring against intentional torts was against Ohios public policy. Initially the Supreme Court held that insurance for intentional torts was against public policy. See Wedge Products, Inc. v. Hartford Equity Sales Co., 31 Ohio St.3d 65 (1987). Three years later, however, in Harasyn v. Normandy Metals, Inc., 49 Ohio St.3d 173 (1990), the Ohio Supreme Court distinguished direct intent and substantially certain intentional torts. The court held that it was not against public policy to insure against substantially certain intentional torts. Id. 1. Harasyn v. Normandy Metals, Inc., 49 Ohio St.3d 173, 551 N.E.2d 962 (1990). a. In Harasyn, an employee lost four fingers from his left hand in an industrial accident and alleged that his injuries were a result of an employer intentional tort within the meaning of Blankenship. Id. at syllabus. b. The relevant insurance policy defined occurrence as an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured. Id. c. In holding that insuring against substantially certain intentional torts was not against public policy, the Court noted that the presence of insurance has less effect on the tortfeasors actions because it was not the tortfeasors purpose to cause the harm for which liability is imposed. Id. at 176. Further, the Court concluded that the policy of assuring victim compensation should prevail. Id.

2. Doe v. Shaffer, 90 Ohio St.3d 388, 738 N.E.2d 1243 (2000). a. In Shaffer, the Ohio Supreme Court addressed the issue of whether the public policy precluding liability insurance coverage for acts of sexual molestation also prohibits coverage for a nonmolester for related [negligence claims]. Id. at 390. The Court held that Ohio public policy permits a party to obtain liability insurance coverage for negligence related to sexual molestation when the party has not committed the act of sexual molestation. Id. at 395. In reaching this conclusion, the court cited Silverball Amusement Inc., v. Utah Home Fire Ins. Co., 842 F.Supp. 1151 (W.D.Ark. 1994), for the proposition that the intentions or expectations of the negligent insured must control the coverage determination, and not the intentions or expectations of the molester. Id. at 393.

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3. Safeco Ins. Co. v. White, 122 Ohio St.3d 562, 2009-Ohio-3718, 913 N.E.2d 426. a. b. c. In Safeco, the insureds 17-year-old son committed a violent intentional tort against a neighbor. Id. at 1. In citing Doe, the Court noted that whether the act is intentional must be determined from the perspective of the person seeking coverage. Id. at 26. In holding that the insureds were entitled to coverage, the court stated that, when a liability insurance policy defines an occurrence as an accident, a negligent acted committed by an insured that is predicated on the commission of an intentional tort by another personqualifies as an occurrence. Id. at 27.

4. Allstate Ins. Co. v. Campbell, 128 Ohio St.3d 186, 2010-Ohio-6312, 942 N.E.2d 1090. a. In Allstate, several teenage boys placed a placed a Stryofoam target deer in the road. Id. at 2. The plaintiffs took evasive action to avoid the deer that caused the vehicle to leave the road and overturn. Id. b. The Court addressed the issue of whether the rule of inferred intent should be extended to all torts where there is a substantial certainty of harm or limit it application Id. at 33. c. The Court stated that it could not say, as a matter of law, that placing a target deer in the road necessarily results in harm. As such, the Court held that the doctrine of inferred intent applies only in cases in which the insureds intentional act and the harm caused are intrinsically tied so that the act has necessarily resulted in the harm. Id. at 56. 5. Buckeye Union Ins. Co. v. New England Ins. Co., 87 Ohio St.3d 280 (1999). a. In Buckeye, the Ohio Supreme Court reiterated the courts holding in Harasyn and Physician Ins. Co. of Ohio v Swanson, 58 Ohio St.3d 189 6

(1991), stating that an intent to injure, not merely an intentional act, is a necessary element to uninsurability. Id., 87 Ohio St.3d at 283. b. The court again discussed the distinction created in Harasyn that direct intent torts are excluded from coverage while substantial certainty torts are not excluded. Id. 6. Penn Traffic Co. v. AIU Ins. Co., 99 Ohio St.3d 227, 2003-Ohio-3373. a. The Ohio Supreme Court again examined the issue of whether substantially certain intentional torts are barred by exclusions in insurance policies or Ohio public policy. b. The Ohio Supreme Court held that a genuine issue of material fact remained as to whether the substantial certainty intentional tort was covered by the umbrella policy. Id. C. The Legislative Response In response to the needs of employers, the Ohio General Assembly has attempted to codify the law regarding intentional torts on three occasions. 1. R.C. 4121.80 a. In 1986, the legislature enacted R.C. 4121.80. This code section defined an intentional tort as an act committed with the intent to injure another or committed with the belief that an injury is substantially certain to occur. b. The Ohio Supreme Court, however, declared this legislation unconstitutional. Brady v. Safety-Kleen Corp., 61 Ohio St.3d 624 (1991). The court concluded that the legislature exceeded its constitutional authority by promulgating a law that addresses a situation which takes place outside the context of an employment relationship. 2. R.C. 2745.01 a. The General Assembly passed in 1993 R.C. 2745.01, which also attempted to exact a stricter standard of proving intent by the employer. b. The Supreme Court struck this provision down in State ex rel. Ohio AFL-CIO v. Voinovich, 69 Ohio St.3d 225 (1994). In coming to its decision, the Court relied upon the previous holding of Brady as evidence that the section on intentional torts was not related to the common purpose of the bill. c. The legislature passed a revised version of R.C. 2745.01 in 1995 that replaced the common law cause of action with a new statutory provision that required the plaintiff to establish by clear and convincing evidence that the employer caused the injury. 7

d. Again, the Ohio Supreme Court found the legislation unconstitutional in Johnson v. BP Chemicals, Inc., 85 Ohio St.3d 298 (1999). The Court held that this standard is so unreasonable and excessive that the chance of recovery of damages by employees for intentional torts committed by employers in the workplace is virtually zero. 3. R.C. 2745.01 a. In 2004, the legislature enacted a new version of R.C. 2745.01 to repeal sections 2745.01 and 2305.112. The statute took effect April 07, 2005. b. The new version defines the substantially certain to occur element to include any conduct where an employer acts with deliberate intent to cause an employee to suffer an injury, a disease, a condition or death. R.C. 2745.01(B). c. Further, the new statute creates a rebuttable presumption that the removal [of an equipment safety guard] or [deliberate] misrepresentation [of a toxic or hazardous substance] was committed with intent to injure another if an injury or an occupational disease or condition occurs as a direct result. R.C. 2745.01(C). d. The full text of R.C. 2745.01 is as follows: (A) In an action brought against an employer by an employee, or by the dependent survivors of a deceased employee, for damages resulting from an intentional tort committed by the employer during the course of employment, the employer shall not be liable unless the plaintiff proves that the employer committed the tortious act with the intent to injure another or with the belief that the injury was substantially certain to occur. (B) As used in this section, substantially certain means that an employer acts with deliberate intent to cause an employee to suffer an injury, a disease, a condition, or death. (C) Deliberate removal by an employer of an equipment safety guard or deliberate misrepresentation of a toxic or hazardous substance creates a rebuttable presumption that the removal or misrepresentation was committed with intent to injure another if an injury or an occupational disease or condition occurs as a direct result. (D) This section does not apply to claims arising during the course of employment involving discrimination, civil rights, retaliation, harassment in violation of Chapter 4112. of the 8

Revised Code, intentional infliction of emotional distress not compensable under Chapters 4121. and 4123. of the Revised Code, contract, promissory estoppel, or defamation. III. THE OHIO SUPREME COURTS RECENT ANALYSIS OF THE STATUTE A. Hewitt & Houdek 1. Hewitt v. L.E. Myers Co., 134 Ohio St.35 1999 (2012). a. The Ohio Supreme Court held that, as used in R.C. 2745.01(C), equipment safety guard means a device designed to shield the operator from exposure to or injury by a dangerous aspect of equipment and does not include protective rubber gloves and sleeves that are personal items that the employee controls. The deliberate removal of an equipment safety guard occurs when an employer makes a deliberate decision to left, push aside, take off, or otherwise eliminate that guard and does not include an employees failure to use, or the employers failure to require an employee to use, protective gloves and sleeves. b. Mr. Hewitt, an electrical worker, was assigned to tie in a new power line that was de-energized. Although workers were required to wear protective gloves, Mr. Hewitt opted not to wear them because a co-worker allegedly stated that he should not need to wear them as the line was deenergized. At one point, a wire Mr. Hewitt was holding came into contact with an energized line and he received an electrical shock, causing severe burns. Mr. Hewitt filed an action against his employer alleging a workplace intentional tort in violation of R.C. 2745.01. 2. Houdek v. Thyssenkrupp Materials, 134 Ohio St.3d 491 (2012).

a. The Ohio Supreme Court held that, absent a deliberate attempt to injure another, an employer is not liable for a claim alleging an employer intentional tort, and the injured employees exclusive remedy is within the workers compensation system. b. The employer assigned Mr. Houdek the task of relabeling inventory on warehouse storage racks. Because other employees operated sideloaders in the same area, employees were directed to alert sideloaders before they began working in a specific aisle. The employer did not provide reflective vests to its employees working in dimly lit areas, did not require the placement of orange cones at the end of aisles in which employees were working, nor did it provide expandable gates to prevent machinery from entering aisles where employees were working. Although Mr. Houdek informed the sideloader operator that he would be working in a specific aisle, the sideloader operator drove down the aisle Mr. Houdek was

working in and pinned him against a scissor lift, breaking his leg and shattering his ankle. B. Where are we now? Insurability Concerns The plain language of R.C. 2745.01 and the Ohio Supreme Courts holding in Wedge Products indicates that deliberate intent torts are uninsurable. However, R.C. 2745.01(C) creates a rebuttable presumption of deliberate intent in situations where an employer deliberately removes an equipment safety guard or makes a deliberate misrepresentation of a toxic or hazardous substance. If an employer fails to successfully rebut the presumption of deliberate intent, an employee can effectively prevail on a claim without affirmatively demonstrating an employers deliberate intent. Courts will have to analyze whether it would be appropriate for an insurer to provide coverage for a claim brought pursuant to R.C. 2745.01(C). To date, no court has analyzed this issue.

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