The Pennsylvania Supreme Court in Tooey v. A.K. Steel et al, No. 21 WAP 2011, 2013 WL 6150887 (Pa. Nov. 22, 2013) has newly created employer liability for long tail environmental exposure claims brought by employees, finding that the Pennsylvania Worker’s Compensation Act does not confer employer immunity for occupational disease claims that have manifested 300 weeks after the date of last employment. Previously, Pennsylvania employers were immune from suit for tort claims of former employees under Section 303(a) of the Worker’s Compensation Act, 77 P.S. § 481, even though those employees were foreclosed from recovering worker’s compensation benefits for occupational disease claims that manifested more than 300 weeks following their last day of employment. Employers may now expect to be sued and be joined to pending cases for a variety of toxic tort claims that result in an occupational disease as defined by Section 108, brought by Pennsylvania workers and their dependents.
In Tooey, the plaintiff was a salesman of asbestos products between 1964 and 1982 and was exposed to asbestos dust. He developed mesothelioma in 2007 and died a year later. Summary judgment on the employer immunity defense was denied by the trial court, but reversed by the Pennsylvania Superior Court, which had concluded that Section 303 (a) of the Act provided that liability of an employer under the Act was exclusive of any other remedy for either an injury or occupational disease sustained in the course of employment. The Act defines “occupational disease” to include asbestosis and cancer resulting from exposure or contact with asbestos. 77 P.S. § 27.1. However, Section 301(c)(2) of the Act specifies that whenever occupational disease is the basis for compensation under the Act, it shall apply only to disability or death resulting from such disease and occurring within three hundred weeks of the last date of employment in the occupation which created the exposure. 77 P.S. § 411(2).
The Pennsylvania Supreme Court, relying on the humanitarian purposes of the Act, and principles of statutory construction, held that the statute conferred employer immunity only where an occupational disease claim was compensable under the Act which would not apply to occupational disease claims that manifested after 300 days. The court noted that because of the 300 day limitation provision governing occupational disease claims, the historic quid pro quo between employer immunity for tort liability and compensability for statutory benefits, could not be achieved. Additionally, the court noted that the 300 day limitation was essentially an unintended carve-out for long tail claims such as mesothelioma.
Pennsylvania employers and their insurers are now exposed to a new species of liability for asbestos and other toxic tort / occupational disease claims for which claimants will contend that employers knew or should have known of the injurious consequences of exposure. The Supreme Court’s decision in Tooey likely applies to injuries which pre-date the decision as the Supreme Court’s construction of a statute generally applies to cases arising from the date of enactment of the statute. Mihalcik v. Celotex Corp., 511 A. 2d 239 (Pa. Super. 1986).
The Pennsylvania Supreme Court gave no indication that the decision would apply on a prospective basis only. An argument could be had that the decision should apply prospectively, notwithstanding the general presumption, based on the establishment of a new principle of law on which litigants may have relied. An argument might be made that retroactive application of the decision exposes employers to a new species of liability previously unanticipated for which employers might not have secured adequate insurance protection. The Court could find, however, that it simply construed an existing statute and did not create a new legal remedy, such that its application should apply retroactively to any injury that pre-dated the decision.
The Insurance Landscape: The Workers Compensation/ Employer’s Liability Policy Should Respond to Toeey Claims
Typically, an environmental exposure claim would be tendered to a commercial general liability (CGL) insurer or for some businesses, an environmental liability policy. However, the CGL Policy removes coverage for a bodily injury to an employee sustained in the course of employment, as well as their dependents and estate. Typically, the insured employer would not be presented with such a claim because of the exclusivity provisions of the Worker’s Compensation Act. However, under Tooey, the Act does not confer immunity—yet coverage is not available under the CGL policy irrespective of whether an employee’s injury is compensable under the Act. Further, many CGL policies include asbestos exclusions that remove liability coverage for injurious exposure to asbestos.
Employers, therefore, will need to turn to what is referred to as Part B or Part Two of the Worker’s Compensation/Employer’s Liability policy for a defense and indemnification. The Part B of the coverage serves as a “gap filler” to protect the employer from tort liability by reason of employee injury claims that are not encompassed by the worker’s compensation system.
This coverage applies to bodily injury by accident or disease sustained in the course of employment. A typical policy requires that the employee’s last day of exposure to the conditions causing or aggravating the condition occur during the policy period. Therefore, where multiple policies were procured during the exposure period, only the last such policy would be triggered. However, the last day of employment might not coincide with the last day of injurious exposure or the employer might not know the date of last injurious exposure. In such an instance, if coverage has been provided by different carriers, agents should tender notice to all carriers that potentially may be on the risk.
While there are exclusions to coverage under the Employer’s Liability coverage form, the standard form does not remove coverage for asbestos related diseases. The policy will often include an endorsement identifying the states for which coverage is afforded. As with all policies, the insured must provide notice to the insurer if an injury occurs that may be covered by the policy. Those employers who are aware that their employees, dependents or survivors have instituted claims against manufacturers may well be advised to tender notice of the injury to their Employer Liability insurer that was on the risk as of the date of last exposure, even if the employer has not been formally placed on notice of a claim.
The policy confers the right to a legal defense and certain other defense related benefits such as judgment interest, taxed costs and the premium for appeal bonds. Part B coverage limits are often less than standard CGL liability limits; therefore, employers will need to look to umbrella/excess policies that confer coverage for damages in excess of limits conferred by the Employer’s Liability insurer.
Pennsylvania has applied a continuous trigger model for asbestos injury claims with respect to identifying which CGL policies must respond on behalf of an insured. J.H. France Refractories Co. v. Allstate Ins. Co., 626 A. 2d 502 (Pa. 1993). All CGL policies on the risk from the time of injurious exposure through manifestation of the asbestos related disease are jointly and severally liable to respond for defense and indemnification of the policyholder. This is a function of the unique etiology of asbestos related disease for which a precise point of determining bodily injury cannot be obtained. A CGL policy requires that a bodily injury occur during the policy period. In J.H. France, the Pennsylvania Supreme Court observed that based on expert medical evidence a direct cellular injury occurs upon exposure to asbestos fibers leading to the production of tissue scarring which progresses to the point of functional impairment of the lungs. The progression of the disease process and the length of the latency of the disease until the time of recognizable manifestation when considered against the CGL policy language justified the use of the continuous trigger model.
The Employer’s Liability policy requires that a bodily injury by accident occur during the policy period; however, with respect to occupational disease claims, some policies require that the last day of last exposure to the injurious conditions occur during the policy period. Strictly applied, coverage under the Employer’s Liability policy would not be governed by the continuous trigger model of J.H. France as the policy language is distinct from that considered in J.H. France. It can be anticipated that litigants will contest whether the continuous trigger model of J.H. France will apply to all latent toxic tort claims or whether the specific language of the Employer’s Liability policy mandates a different outcome. This will also be significant when considering the impact of aggregate annual policy limits which may significantly restrict indemnification for multiple employee injury claims.
The practical implications of that outcome would be less coverage for employers who would not be able to call on multiple primary policies to respond to a claim. Likewise, this increases the risk to excess insurers who are exposed to a claim in a single policy year and where horizontal exhaustion of limits might not be available to mitigate loss exposure. Further, there may be disagreement on when the employee’s last injurious exposure took place if there are conflicting accounts of when asbestos was last used in the workplace. Employers will need to cast a wide net when tendering these claims to the Worker’s Compensation/Employer’s Liability insurer as well as to the excess insurer.
Statute of Limitations Issues
For wrongful death/survival act claims, the statute of limitations commences from the date of death. For non-fatal claims, a discovery rule may be employed which provides that the statute of limitations commences to run from the date on which the claimant knew or reasonably should have known of the connection between their injury and their occupational exposure. The question arises as to whether claims against employers that heretofore were not cognizable prior to Toeey are actionable even if the death or date of discovery of injury is more than two years prior to the commencement of the civil action against the employer.
For purposes of application of a Pennsylvania statute of limitations, the time period commences to run when the cause of action has accrued. 42 Pa. C.S.A. § 5502 (a). A cause of action accrues when a plaintiff could first have maintained his action to a successful conclusion. Kapil v. Association of Pennsylvania State College and University Faculties, 470 A. 2d 482 (Pa. 1983). The statute of limitations does not commence to run until there is an existing right to sue. Konidaris v. Portnoff Law Associates, 884 A. 2d 348 (Pa. Comm. 2005), citing New York & Pennsylvania Co. v. New York Cent. R.R. Co., 150 A. 480 (Pa. 1930).
Prior to Tooey, the Pennsylvania Superior Court had ruled that the exclusivity provisions of the Act did not apply to an occupational disease claim that had manifested more than 300 days after the last day of employment. Sedlacek v. A.O. Smith Corp., 990 A. 2d 801 (Pa. Super. 2010) (“there is no question that, as currently interpreted, the exclusivity clause in most instances effectively abolishes the common law tort action against one’s employer for work-related injury”). Courts might hold that until the date of the Tooey decision, a plaintiff employee did not have a cause of action against an employer for a 300 week plus occupational disease claim, such that the time period to sue did not commence to run until after the date of the decision. Presumably, those claims that have previously been adjudicated or settled against manufacturer, premises or other defendants, would have resulted in a complete release of liability for any and all potential defendant such that it would bar the revival of a claim against an employer. However, for pending claims, plaintiffs may seek to join employers as additional defendants or commence new proceedings against the employer.
An application for re-argument has been filed with the Court and is pending.
The Pennsylvania Fair Share Act Implications
Existing manufacturer/distributor defendants might also seek to join employers for contribution as a joint tortfeasor. For a cause of action that accrues after the effective date of Pennsylvania’s Fair Share Act, June 28, 2011, liability is several and not joint for a defendant who is adjudged to have less than 60% causal negligence for an injury. Where the Fair Share Act applies to a claim, existing defendants have an interest to broaden the defendant pool, so as to decrease the likelihood that any one defendant will be jointly and severally liable for the entire verdict value.
An interesting question arises in this context because a cause of action against an employer might be found to have accrued no later than the date of the Tooey decision, while a claim against a manufacturer defendant would have accrued at the time the plaintiff knew or reasonably should have known of the asbestos-related injury. Ordinarily, a cause of action accrues at the same time for any defendant because it is based on the time when the plaintiff knew or reasonably became aware that some defendant was legally responsible for their injury. Perhaps, in these cases, a uniform date will be selected such that all defendants will be governed by the same standard.
As with any tort claim the plaintiff must establish the existence of duty, breach, causation and injury. Employer safety obligations to their workers will no doubt establish the existence of a legal duty, leaving the key question of whether the employer knew or should have known of the particular asbestos exposure hazard. Causation will always be a hot topic, particularly if the claimant had other workplace exposures as well as exposures to other harmful substances. Employers will be defendants along with manufacturers, retailers, creating a difficult task of for apportionment of causal negligence. Employers might contend that they should be held only secondarily liable to a manufacturer/distributor based on the idea that asbestos was introduced into the workplace by the product liability defendant. Employers might argue that they had no greater knowledge than the employee about the asbestos hazard.
Ordinarily, the employee’s negligence in the handling of asbestos containing materials does not enter the equation at trial as the product defendants are strictly liable for a defective product, foreclosing considerations of comparative negligence. Employers can only be liable on a negligence theory which can bring into play an employee’s comparative negligence in the workplace, e.g. refusal to wear available personal protective gear.
As evident from this discussion, numerous legal and tactical considerations will surface in the handling of asbestos and other toxic tort litigation now that employers are potentially responsible parties. Of course, the outcome of any of these issues is fact driven and harbors uncertainty until court rulings are obtained. The commentary expressed is that of the authors and is not intended to serve as legal opinions or legal advice. Questions regarding the practical implications of this landmark ruling, whether from a toxic torts, worker’s compensation or insurance coverage perspective may be addressed to:G. Daniel Bruch, Jr. 215-299-4312 email@example.com William T. Salzer 215-299-4346 firstname.lastname@example.org Jane Ann Lombard 215-299-4278 email@example.com
 Other occupational diseases include, by way of example, silicosis, coal workers pneumoconiosis, hepatitis C contracted by specified professions. The statute also encompasses a catch-all for occupational diseases in which the incidence of contraction of the disease in the industry or occupation substantially exceeds that of the general population.