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"THREE SISTERS" Description: One of three allegorical representations of civil law from 14th century Italy. A book of law, the globe or affairs of the world balanced against the hook of commerce. The sword of strength and crown of just rewards.

Original painting by Trevor Goring in the private collection of Powers & Santola, LLP.

Uncovering Corporate Accountability: Detecting who is at fault and why

In today’s growing global market, many large companies are broadening the scope of their businesses into foreign lands. While global competition provides the benefit of low-priced goods for the poorest citizens of the world and provides jobs that have lifted millions of people from poverty, globalization has also meant lost jobs, benefits and security for others. In our country, this has caused a widening gap between the rich and poor, along with diminishing the stabilizing effect of middle-class America. Even companies that do not compete on a global level have adopted strategies to reduce their cost of doing business. One of the obvious targets is reducing the cost of seemingly endless government-imposed regulations that make doing business and staying competitive increasingly difficult. Why suffer the costs of dealing with regulatory agencies and their requirements, such as employee withholding requirements, employee disability policies, payroll reports, worker’s compensation insurance and annual wage increases, when you can eliminate the employee altogether by simply contracting other companies to perform the actual work? As an added benefit, when corporations outsource work, they can actually reduce their legal liability for work-related accidents and injuries. To better understand the dynamics of how this works, consider the facts of a client we recently represented who sustained very severe and permanent injuries during the course of his employment with a forestry service company.

Our client had been hired only a few months before his accident occurred. His employer assigned him to the task of clearing brush and mature trees which ran under and through utility transmission/distribution lines. The utility company that owned the power lines and, through easements previously granted to it, had the right to maintain and control the land the lines were erected upon, hired our client’s employer to remove several decades worth of overgrowth, brush and trees which had blocked access to the poles and entangled the lines. In order to perform the work, a portion of the adjacent state highway was blocked off to create a work zone for the men and their equipment. The accident occurred while our client was walking within this established work zone. He was struck from behind by a large truck that was in the process of backing up several hundred feet. The driver of the truck had a very limited view toward the rear of the vehicle since his visibility was blocked by the body of the truck box mounted directly behind the cab of the truck. After the accident, it was discovered that the truck that hit him was not equipped with a back-up alarm as required by company policy. To make matters worse, there was no spotter, as required by OSHA and New York State regulations, to assist the driver in backing up and to alert our client to the fact that the truck was approaching. Because there was a considerable amount of noise on the job site from the different chainsaws, traffic and general equipment that was being operated at the time, the client said he could not hear the truck approaching him from behind. Had a spotter been present, or if the truck had been equipped with the required back up alarm, he would have had adequate warning of the approaching danger.

As a result of the accident, our client suffered multiple fractures of the pelvis, hips, and legs as well as internal damage to his bladder, ureters and the major nerves running through the pelvis and legs. The testimony described a truly horrific accident scene where our client’s mangled body lay wedged under the rear axel of a 14-ton truck while rescue workers debated whether they should attempt to pull him out or simply drive the truck off his body. It is difficult to imagine how this severely injured man stayed fully alert during this ordeal as he watched fellow workers become physically ill and vomit when they saw his pelvis splayed open like a book. After he was airlifted to the hospital, he underwent four surgeries within the first 14 hours. The severity of the injuries set him up for many medical complications over the four month period that he spent in the intensive care unit, including respiratory failure, life-threatening infections, a major bleeding disorder and kidney failure, to name just a few. In total, he underwent eleven different surgeries, including the amputation of his entire left leg from the level of the hip joint. The amputation was necessitated by an infection caused by the open wounds he suffered when his fractured left femur - the large thigh bone - was traumatically forced through his pelvis and out his lower back.

Under
New York State’s Workers’ Compensation Law, our client received compensation benefits which paid for all medical bills that arose from his accident, an amount which exceeded $360,000. He also received wage loss benefits of $295.37 per week, despite the repeated attempts by the workers’ compensation insurance company to “rehabilitate” him in an effort to “force him off their rolls” With the aid of public housing and his extraordinarily frugal measures, such as having only one light bulb in his three room apartment in order to keep his utility bill manageable, he was able to maintain his independence with some sense of dignity.

No one contested how the accident occurred, or even that the driver of the truck was negligent in how he backed up the truck in the work zone. The real issue in the case was determining who should be financially responsible for this tragic accident - the driver, the forestry company that employed him, the utility company or the injured worker himself? Because of the Workers’ Compensation Law, no legal action could be brought against his employer or the co-employee who operated the truck; no matter how negligent they may have been in causing the accident, or how severely our client’s injuries were.

What about the liability of the utility company that owned the lines and started the project that ultimately led to the worker’s injury? There are many people who would argue that this terrible accident was just an unfortunate or inevitable result of life in our imperfect world, and that everyone should take care of their own problems and stop looking to others for relief. But this view fails to look at the entire picture. When the job is done, the utility company benefits from the work done by the forestry company; the forestry company’s profits on the job are not affected by the injury because of the compensation insurance policy; all of the doctors and hospitals, who truly achieved a medical miracle by saving the life of our client, got paid by the compensation insurance company which, at least in theory, had already charged the forestry company an adequate insurance premium that was commensurate with the risk involved. Or, if not, you can be sure that premium rate increases across the board will occur within the near future. However, the full consequences caused by the injuries did not just stop with the injured worker. Remember, his true cost of living is being supplemented by public housing, a benefit we all pay for through our taxes. Furthermore, the cost to the compensation company is not passed on solely to the utility company; it is passed on to all employers in the same employment classification, no matter how safe their operations may have been during the preceding year. In reality, the injured worker is not the only one who suffers the cost of the injury. Many of us, who had nothing to do with, or to gain from, the clearing of trees and brush from these utility lines will suffer consequences as well. If this is a project that was initiated by the utility company for the benefit of its business why shouldn’t it bear the full cost of the project, including the cost of injury, rather than shifting it on to others?

At first glance, it makes sense that, from the utility company’s point of view, why should it be responsible for the forestry company’s negligence since it had hired a reputable company, with years of experience in the forestry service, in the belief that it would adequately and safely perform the job it was paid to do. Why should they, the utility company, be held responsible for an accident it had little control over?

Under general principals of our civil law, a company will not be liable for injuries caused to an independent contractor’s employees as long as the original company does not direct or control the work that is being performed. Since the question of control over the work can lead to factual disputes that require a trial, corporate attorneys have come up with a way to virtually eliminate liability to injured workers of the companies they outsource their work to. Within the contract to outsource the work, a provision is included that requires the independent contractor - in our case the forestry company - to not only acquire adequate liability insurance to pay the cost of any damages they or their workers cause, but to also list the hiring company - here the utility company - as an additional insured under the same policy. In this manner, if anyone gets hurt and a lawsuit is brought, the utility company will have free legal representation and liability coverage under the policy paid for by the forestry company. In essence, the utility is making the forestry company prepay for an insurance policy, just in case it is sued for an accident involving an injury caused to a worker.

However,
New York  law has long held that there are certain exceptions to the general rule that a person or corporation who hires another to perform a job will not be held responsible for their negligent acts. Under these exceptions, if it is shown that a company, like the utility, has a non-delegable duty imposed by a specific statute, or if the employer has assumed the obligation to perform a specific duty by contract, or, if under certain circumstances where it is in the overall public good to require a company to be responsible for an accident, no matter who does the work for them, then the general principal of law exempting liability for the negligent acts of an independent contractor can be relaxed.

We decided to bring a suit directly against the utility company. We argued that the utility company applied for and received permission from the New York State Department of Transportation to close down sections of the state highway adjacent to the utility company’s power lines in order to accommodate its line maintenance work, as long as the utility company provided a safe environment for all those on the roadway, including workers. Through this permit, we illustrated that if the utility undertook to have its work performed on   a public highway, which if not carefully done would result in creating a dangerous condition for workers, then the terms of the permit would be violated. Even though our client’s employer was in charge of the job site, it was the utility company’s non-delegable duty under the terms of its permit to make sure that the work was conducted in a safe manner. These laws are put in place to encourage owners and contractors to hire only financially responsible and safety-conscious subcontractors so that a high standard of care might be maintained throughout the entire work site. This was well-known to the utility company, who had already required the forestry company to purchase a liability insurance policy for it as part of the terms of the contract. This same insurance company is now proposing that it should not have to pay for the injuries because its client, the utility company, delegated all work to the forestry company, which it also insured but would not be responsible for, because of the protection against suits granted by the workers’ compensation laws. In the final analysis, it is not hard to see who the real beneficiary of this position is.

Before the trial even began, the Court granted part of the injured worker’s motion for summary judgment, finding that the utility company was indeed responsible for the lack of safety on the job, and instructing the jury to decide only whether our client’s actions contributed to his injuries and damages. At the end of the trial, the jury returned a unanimous verdict in favor of the injured worker. They determined that our client was in no way responsible for the accident or the injuries he received, and placed full blame on the utility company’s lack of safety precautions. They were forced to compensate our client in excess of five million dollars for past and future medical costs, pain and suffering, loss of enjoyment of life, and loss of wages. What is most often overlooked in a large judgment such as this, is the fact that we all benefit from the jury’s decision. From the amount recovered, the worker must reimburse the workers’ compensation company, dollar-for-dollar, for all the lost wage benefits he received and, because the jury’s verdict included all future medical and lost wages that the client will incur, the compensation insurance company will no longer have to pay future benefits. Furthermore, all $360,000 in medical expenses that was paid by the compensation carrier, must be paid back to the insurance company, and the injured worker will have to pay all future medical expenses from his jury verdict. In the end, the compensation insurance company will be totally reimbursed, thereby reducing the amount of cost to be passed along to the rest of us through premium increases. More importantly, for the public at large, any public subsidies will also have to be reimbursed. From the remaining amount, the client will be able to ensure his future independence without any cost to the public in the form of social service benefits, Medicare or Supplemental Social Security benefits.

If left to the meager amount of income provided by workers’ compensation, our client would have endured endless hardships in even the simplest of daily tasks. While it is true that no amount of money will ever change what happened, and it will never make our client forget who he once was, the dollar sum was never the most important factor at stake. Our client gained something more than just a means to support himself. By winning this case, he recaptured his dignity, respect and self-worth, something that large corporations like the utility company involved in this case, will never be able to marginalize.

Even though the technicalities of the legal profession may seem confusing and sometimes appear to be counterproductive, our legal system has the flexibility to deal with all conceivable forms of arguments or circumstances. Because most of us never suffer the large losses that can and do occur, people have very little experience in dealing with these situations. However, through the long history of our legal system and the laws enacted by our government, the common working individual can rest assured that, when necessary, the courts stand ready to hold all persons or companies, no matter how big or powerful, accountable for their actions, using as a guide and as the greatest measure of fairness, a jury of our peers.



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