Silica Lawsuit Risk Reduction

							Silica Lawsuit Risk Reduction
               By

        Henry Chajet
Stop Silica From Becoming The
     Next Asbestos Crisis
            June, 2005
                        Silica Facts
• Crystalline Silica (quartz) is one of the most common minerals
• 3 Billion tons/year of sand, gravel, stone, aggregates
• Unknown billions of tons of silica disturbed in mining,
  construction, agriculture; manufacturing, and transportation
• Exposed population in the millions
• Inhalation of “fine” silica dust, above OSHA/MSHA limits,
  can cause respiratory disease and death
• Silica deaths in US < 150 in 2002, down from >1800 in 1969
• Exposure limit reduction proposed by ACGIH and NIOSH
• ACC: current OSHA/MSHA exposure limit protective
• Scientific debate over IARC carcinogen finding
  Silica Lawsuit & Financial Risk Factors
• 2003-05: 50,000 New silica claims ; 2005 growth slows
• 1990-05: Government sampling creates evidence
• 2003-06: Draft OSHA rule – massive costs & risks
• 2004-05: Insurance coverage exclusion & claim denials
• 2004-05: ASTM standard; ACGIH TLV @ ¼ OSHA
• 2003-05: Defenses upheld, but warning duties expand
• 2004-05: False Texas claims investigated by NY Grand Jury
• 2004-05: Press and NIOSH increase silica awareness
• 2004-05: Legal reform (medical criteria in Oh, Tx, Miss, Ga);
  federal asbestos reform stalled
            Asbestos Mortality: 1968-1999
 1400

 1200

 1000

  800

  600

  400

  200

     0
         68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98
CDC NIOSH- Worker Health Chartbook, 2004
Underlying and Contributing Cause of Death
               Silica Related Mortality




OSHA / MSHA sampling shows trend established
while exposures were well above the PEL.
                            OSHA Silica Compliance Data
                              (Construction & Manufacturing)


                  50
% OVER STANDARD




                  40

                  30

                  20

                  10

                  0
                       79    81   83   85   87    89    91   93   95   97   99
                                                 YEAR

                                            >0.10 mg/cu M
                       MSHA Silica Compliance Data
                            (Metal and NonMetal Mining)


                  20
% OVER STANDARD




                  15

                  10

                  5

                  0
                  79

                       81

                            83

                                 85

                                      87

                                           89

                                                91

                                                     93

                                                           95

                                                                97

                                                                     99
                                            YEAR

                                           >0.10 mg/cu M
             OSHA Oct. 2003 Draft Rule
                  • Reduced Silica Exposure Level (PEL)
                  • Action Level (50% Reduced PEL) Triggers
                    Duties
                  • Air Monitoring
                  • Medical Monitoring
                  • Silica Restricted Work Zones
                  • Feasible Engineering Control Priority
                  • Respirator Use and Programs
                  • Medical Removal, Transfers, Pay Protection
                  • Product Substitution

       Proposed Rule Expected In 2005-6; Regardless
       Of Rejection By Small Business Review Panel
Copies of rule, analysis available at: www.pattonboggs.com news –Insights.
             ACGIH TLV® RISK
•   2004 –2d Silica (TLV®) Reduction Proposed in 5 Years
     – OSHA=.1 mg/m3 ; 2000 ACGIH TLV® .050; 2004 .025
•   Founded By Gov Employees, Chaired By OSHA Official
•   Adopts Health Standards In Secret Meetings
•   No Disclosure of Authors or Potential Conflicts
•   No Independent Peer Review or Risk Assessment
•   No Appeal Process, Public Rights, or Due Process
•   Respected Group Lost Credibility Post 1990
•   TLV®s Adopted by OSHA / MSHA / Foreign Govts
•   TLV® Must be On Product MSDS / Training Materials
•   Enforced by OSHA Under the General Duty Clause
•   Used in Litigation For Health Risk and Duty
    Understand The Silica Risk
• Asbestos—30 Years To Bankrupt 60 Companies;
  Action Now Reduces Future Silica Risks

• First Defendants—Silica Suppliers; Expansion To
  Other Producers, Users, and Equipment Suppliers

• Particular State Laws And Plaintiff Friendly Forums

• Contractors & Customers Pose Highest Risk: No
  Comp Shield; Exposure Control & Warnings More
  Difficult; Potential For Punitive Damages

• Risk Communication (Warnings) & Risk Transfer
  (Insurance and Contract Provisions) Are Critical
         2003-5 Key Court Decisions
• 2003 Miss federal district court upholds bulk supplier &
  sophisticated user defense—dismisses case
   – Bulk supplier not in best position to relay hazard info;
     particularly when employer of user is sophisticated.
                     >> BUT >>
• 2004 Wisconsin—defenses may not be applicable if
  important information / protection given to employees,
  but not to contractors, customers or product users
  (Badger Mining).
• 2003 Texas case punitive damages upheld (e.g. non
  employees exposed to hazards, not warned and not given
  same protection as similarly situated employees (Texaco).
         Texas Supreme Court
   Humble Sand & Gravel 2004 Decision
Flint supplier for abrasive blasting had no duty to warn its
customer company (abrasive blasting operations)
                        >> BUT >>
Whether supplier has duty to warn its customers’ employees is
determined on a case-by-case basis, by weighing:
    • Likelihood of serious injury from supplier’s failure to warn;
    • Burden on a supplier to give a warning;
    • Feasibility and effectiveness of a supplier’s warning;
    • Reliability of operators to warn their own employees;
    • Existence and efficacy of other protections; and
    • Social utility of requiring suppliers to warn.
   Kentucky Supreme Court Permits
      Private Lawsuit For Harm
    Caused By Regulatory Violation
• Hargis v Baize, No. 2002-SC-0969, May 19, 2005

• 5-2 Decision Permits Lawsuit Of Widow Of Independent
Contractor Employee (trucker killed while unloading)
To Sue Saw Mill Owner

• Multi-Employer Work Site Doctrine Adopted (owner/GC/
 site controller—can be responsible for non-employee compliance)
         Insurance Update & Options

• Silica Coverage Exclusions Initiated In 2004-5 Policies
• Silica Claim Coverage Denial Based On “Pollution
  Exclusion” Upheld In California Case
• Secure Hidden Assets: “Old” Policy Recovery ( Based on
  “Claims Occurrence”) Can Provide Coverage for Claims
  that Arose During Their Term ( 10-40 Years Ago)
• Consider Expert Insurance Assistance, Financial Risk
  Assessment and Funding Alternatives
                Lessons Learned
• Focus Actions on High Risk & Maximum Benefits
• Insurance Coverage Essential – Asset Recovery Pays
• Contractors And Customers Present Highest Financial
  Risk, Even Though Health Risks May Be Lowest Of All
• Accurate Communication Reduces Liability Risk
• Inaccurate/ Inconsistent Communication Increases Risk
• Regulations: Minimum Standards ( MSDS, Labels)
• Use Contract & Purchase Orders For Risk Transfer
• Tools and Equipment Can Be Problems & Solutions
                Risk Reduction Checklist
• Insurance Coverage – Old Policy Assets Recovered ?
• MSDS, Labels, Warnings Accurate? Reaching Exposed Users?
• Contracts, POs, Commercial Docs (e.g. weight slips) Impose Duties?
• Contractor Management / Risk Reduction Program In Place?
• Tool & Equipment Assessments Made? Warnings Updated?
• Customer Warnings & Instructions Accurate & Coordinated?
• Property & Truck Warning Signs Considered?
• Customer Observation, Suggestions, Instructions, Assistance Offered?
• Web Site & 800 Telephone Number In Service?
• Air Sampling (work sites, customer sites, contractors) Conducted?
• Respirator Program In Place For Exposed Personnel?
• Health Monitoring For Employees At Risk Offered?
• Inspection / Violation / Complaint Response System In Place?
              Patton Boggs Risk Reduction Services
Companies are faced with an ever-growing array of legal mandates, funded with more
than one billion federal dollars for safety and health alone. Regulatory compliance is a
daunting task, but perhaps the easiest challenge posed by OSHA, MSHA, NIOSH,
ATF, EPA, DOT, the Chemical Safety Board, NTSB, and others.

Far greater risks are posed by evidence created by the agencies which not only leads to
enforcement, but can adversely impact lawsuits, insurance coverage, and shareholder
value. Patton Boggs provides coordinated risk reduction strategies that help
companies focus resources on high risk, maximum benefit solutions, including:
 •   Toxic tort risk audits                                    •   Enforcement counseling and defense
 •   Program & policy development                              •   Litigation, arbitration, and mediation
 •   Management training                                       •   Informal settlement representation
 •   Acquisition due diligence                                 •   Agency rulemaking advocacy/ litigation
 •   Regulatory counseling and advocacy                        •   Private standards counsel and litigation
 •   Contractor management programs                            •   Scientific research counsel
 •   Crisis/ incident response & defense                       •   Product stewardship and liability counsel
 •   Liability and coverage analysis                           •   Congressional counsel & lobbying
 •   Internal investigations                                   •   “Whistleblower” / discrimination defense
 •   Expert retention and management                           •   “White collar” defense

Visit our website to learn about our practice areas, review bios or newsletters:
www.pattonboggs.com or call Henry Chajet or Mark Savit at 202-457-6000.