Defending Your Business

Welcome to my inaugural contribution to Welding & Gases Today. As GAWDA’s Coordinating Counsel for Welding Fume Litigation, I will use this space to keep you informed of developments in fume litigation and related insurance recovery issues. You can also keep abreast of developments by logging onto the secure, members only area of the GAWDA Web site and then clicking on the JDF link.

As you are well aware, welding fume litigation poses a significant threat to your industry and businesses. What steps can you take to defend your business?

Search and Locate. Look for any and all policies covering your business at any time over the last 40 to 50 years. Even expired “occurrence” policies may still provide coverage if the claim arose during the period the policy was in force. Policies issued before 1970 are less likely to contain pollution and other exclusions and limitations found in more recent policies, so your older policies may be your most valuable insurance assets against these claims. Do not wait until you are sued. It may take you weeks or months to find and assemble this information. Start your search for policies now. Enlist your insurance agents and brokers to help you (you paid their commissions for years). Keep an eye out for anything that may help you identify an insurance company or policy number, such as partial policies, renewal notices, premium statements, invoices, check stubs or other records of payment.

Read Your Policies. You must adhere to all terms and conditions of each policy. If you fail to do so, your insurance carrier may use your failure to comply with the policy as a defense to coverage.

Notify Every Insurer. If you receive a demand or a summons, immediately notify your insurance agent or broker. If you do not have an agent, you must notify your insurer directly. You must notify every insurer, which is why it is crucial that you begin identifying all possible coverage now. Make sure every company is notified and provide them with copies of all legal papers you receive. Your failure to provide timely notice will jeopardize your claim. Let your carriers know the date you have to respond to the suit.

Make Sure You Have Legal Representation. Make sure you are represented in the lawsuit. The lawsuit will go on, even if your insurance company is slow in deciding whether to provide a defense. You must protect yourself in the meantime at your own cost. You are required to formally appear and respond to the lawsuit in writing, usually within 20 or 30 days after being served. If your insurance company does not indicate that they will be providing you an attorney immediately, you will need to hire an attorney to represent your interests. Most insurance carriers will eventually reimburse you for all or part of the costs of hiring counsel once they decide to provide a defense. Failure to respond in a timely manner to a lawsuit may result in a default judgment being entered against your company. A default will also void most coverage.

Consider a Risk Retention Group. Most, if not all, insurance carriers writing CGL policies in the United States now specifically exclude welding fume liability. This means that traditional insurance coverage for welding fume liability no longer exists. Participation in an RRG may be your only option for limiting your welding fume exposure going forward.

We can help. Please contact me if you are sued. We can help you find local counsel to protect your interests in the tort cases. Since plaintiffs usually sue large numbers of distributors, you should consider hiring common attorneys. Hiring common counsel can reduce defense costs because counsel will be able to spread some of the legal costs associated with defending these cases among multiple distributors. We are coordinating the defense of these actions and can get you to an attorney qualified to represent you. We can also assist you with questions or disputes regarding insurance coverage.

Even if you do not need assistance, I would still like to hear from you. Please let me know of any lawsuits involving your companies and your experiences with your insurance companies. The more information I have regarding member experience, the more useful this service will be to GAWDA and its members.

(Disclaimer: The foregoing article is provided by GAWDA for informational purposes only and is not intended to be, nor should be, relied upon as legal advice to any individual member.)

Gases and Welding Distributors Association
Meet the Author
GAWDA Joint Defense Fund Coordinating Counsel Mike Degan is a partner with Blackwell Sanders Peper Martin LLP, in Omaha, Nebraska. Members can reach him at (402) 964-5000 and at mdegan@blackwellsanders.com.