Category Archives: Claims

by | January 13, 2011 · 6:30 am

Hospitality Industry Risks: Hotel And Restaurant Owners And Management Must Have Emergency Plans And Insurance In Place To Manage Crisis

Hotel owners and management must be able to deal with catastrophic events and know the answers to the following:

  1. How quickly could you restart?
  2. Would insurance provide money for next week’s rent and wages?
  3. What would the bank say?

Massive floods are one thing, but what if a neighbouring building caught fire or your kitchen burst into flames? Start your managers and staff thinking through the issues, while they’re still in the headlines…

  • Check Data Backup Systems: are they all onsite or are copies of data, systems and staff records kept elsewhere? Is the safe fireproof or just a box with a key? Online backup systems like Carbonite work well, and data storage is very cheap – but you need to start it happening!
  • Is the Insurance cover complete? Would it cover a situation like the current floods? Does it cover intangible items as well as equipment? What about loss of profits and staff wages while rebuilding happens?
  • Are Staff trained for fire and first-aid emergencies? This is the type of training that’s usually regarded as ‘nice to have’ rather than essential. Do they know how to handle a fat or an electrical fire? What about an elderly customer who faints or collapses? Or flood waters coming near electrical connections?
  • How will you keep Customers & Staff informed? It’s more effective if your email newsletter or SMS alerts are already part of their world, then you can really keep their loyalty active. Your Facebook Page and Twitter updates will also reach many others…
  • Have a Crisis Management Plan, designed to cover the many risky situations where you depend on only one alternative: eg only one staff member who’s qualified with first aid, one chef who knows how to cook the favourite dessert, one key for the liquor store, or one computer with all the staff records.
  • Crisis Management Downloads: ready to use (and edit) Safety Manual and Rules, Maintenance Logbook, Cleaning Rosters (greasy dirt is a big cause of kitchen fires) and a raft of other systems designed to keep your business organised and safe.

For more:   http://www.hotelnewsresource.com/article51387.html

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by | December 14, 2010 · 6:36 am

Hotel Industry Employee Risks: Texas Hotel Owners “Failed To Carry Workers’ Comp Insurance And Enforce Safety Procedures” Says Suit Brought By Banquet Service Employee Who Was Injured On Job

On or about August 13, 2009, Plaintiff suffered an injury to her right shoulder area when a co-worker, Banquet Manager, Gus Garza, suddenly and without warning struck her while opening a door which was intended to be an exit door instead of an entrance door as he was using it,” the suit filed Dec. 7 in Jefferson County District Court states.

She claims the defendant companies — HTL Operating doing business as Elegante Hotel and Investment Corporation of America — did not carry workers’ compensation insurance at the time of the incident. As a result, Howard claims she should be entitled to all common-law damages.

A Beaumont woman has filed suit against the owners of a hotel where she claims she was injured while working as a banquet server. Sharon Howard alleges she was performing her duties as a banquet server at MCM Elegante Hotel in Beaumont on Aug. 13, 2009, when she sustained injuries to her shoulder.

Because of the incident, Howard suffered a severe and permanently disabling injury to her right shoulder and has not been able to work, according to the complaint.

She blames the hotel for causing her injury and for the pain and suffering she endured, as well as the medical costs she incurred.

The hotel’s owners negligently failed to enforce proper safety procedure and failed to properly equip doors, according to the complaint.

In her suit, Howard is seeking a judgment in excess of the minimum jurisdictional limits of Jefferson County District Court, plus pre- and post-judgment interest, costs, attorney’s fees and other relief the court deems just.

John Werner of Reaud, Morgan and Quinn in Beaumont will be representing her.

For more:  http://www.setexasrecord.com/news/231951-hotel-server-sues-over-shoulder-injuries

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by | November 27, 2010 · 6:53 pm

Hotel Industry Liability Issues: “Bed Bug” Court Verdicts Have Recently Found Hotel Owners Liable When “Conscious And Deliberate Behavior” Allowed Infestations To Proliferate

The recent surge in bed bugs has created an uptick in litigation against motel owners and landlords alike.  duLac’s article focuses on a Maryland attorney who is filing a series

Bed Beg infestations at hotels can result in guilty verdicts against hotel owners if conscious and deliberate behavior led to infestations going untreated.

of bed bug liability suits.  The typical compensatory damages claim is $200,000, and many of the suits claim punies.  Bed bug suits, in Maryland and elsewhere, generally face three major issues.

First, plaintiff will have to prove notice on the part of the motel owner or landlord.  Actual notice is best, but constructive notice should suffice.  For constructive notice, the focus will be the length of time the condition (bed bugs) has been in place.  The Maryland suits contain mostly conclusory allegations, so discovery will be important.

Second, plaintiff will have to establish compensatory damages.  Bed bugs are nasty creatures, and I have a lot of sympathy for people impacted by them.  Plaintiffs in Mathias got a jury verdict for compensatory damages of $5,000.  A Florida attorney quoted in duLac’s article is leaving the bed bug liability field because the damages are too small.  He noted that he settled one case for $4,000 and another for $10,000.

Finally, a fairly standard punies regime requires a plaintiff to prove some type of conscious and deliberate behavior on the part of the defendant.  In Mathias, the hotel owners were informed about the bed bugs.  Instead of paying for a $500 extermination, the owners allowed the bed bug situation to fester for nearly two years.  It was widely known the hotel had bed bugs.  There were certain rooms that employees were not supposed to rent out because of the bugs, yet the rooms were rented if there were not enough other rooms available.  Guests were informed the bugs were ticks (as if that’s better!).  Under these circumstances, the court upheld a punies verdict of $186,000.  If proving notice in the Maryland cases will require the discovery of significant facts, for punies the bar is even higher.

For more:  http://lawprofessors.typepad.com/tortsprof/2010/11/bed-bug-liability.html

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by | October 31, 2010 · 12:44 pm

Hotel Industry Employee Risk Management: Employee’s Use Of Stairs In Multi-Story Hotels Subject Them To “Significantly Greater Risk Of Injury” And Result In Higher Workers’ Compensation Benefits

“Because the employees’ periodic breaks were mandatory, Phillips was required to use the staircase six times during each shift. In fact, in its opening brief, Rio calculated that during the course of Phillips’ 17-year employment, she traversed the stairs approximately 25,000 times,’
 
“…the court concluded that the frequency with which Phillips was required to use the stairs subjected her to a significantly greater risk of injury than the risk faced by the general public. Consequently, Phillips should be awarded benefits, the high court wrote…”
 

The Nevada Supreme Court has ruled that although employers are not “absolutely liable” when employees are injured “on the job,” companies should apply the “increased risk test” to determine whether they are entitled to workers’ compensation benefits.

The justices explained the increased risk test in Rio All Suite Hotel & Casino v. Phillips. According to court documents, Kathryn Phillips was a poker and blackjack dealer at the Rio All Suite Hotel & Casino in Las Vegas. While taking her mandatory 20-minute break during her usual eight-hour shift, she walked down the stairs to the employee break room, slipped, and fractured her ankle.

Her treating physician determined her injury was work related, and Phillips had surgery to repair her ankle. But Rio’s third-party administrator, Sedgwick CMS, denied her claim saying Phillips did not prove the injury arose out of her employment.

“The types of risks that an employee may encounter during employment are categorized as “those that are solely employment related, those that are purely personal, and those that are neutral,” the high court said.

 

 

 

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by | October 25, 2010 · 3:16 pm

Hotel Industry Pool Safety Risk: FEMA To Enforce “No Glass Zone” Rule That Prohibits “Glass-Enclosed Pools” In Florida

FEMA, the Federal Emergency Management Agency, doesn’t allow oceanfront hotels to close off their pools with glass walls for the winter. This year, the agency will make sure that rule is enforced, whether the city and the hotels like it or not.

In response to FEMA, the manager of the Myrtle Beach Hampton Inn isn’t sure what to do to close off his outdoor pool to make it an indoor pool this winter.

If he puts up the same glass walls the hotel has been using for years, he’ll be in violation of the FEMA rule. But if he doesn’t, the hotel will lose customers.

“It’s too cold to swim in the wintertime, even though the pools are heated. It needs to be enclosed,” said manager Tom Moore.

The hotel could buy Plexiglas or vinyl enclosures that FEMA allows, but Moore says that would cost up to $20,000 the hotel hasn’t budgeted for.

A couple of years ago, FEMA first became aware of the glass walls used by oceanfront hotels and decided they were hazardous, but the rule wasn’t enforced.

Then this summer, the Myrtle Beach Area Chamber of Commerce announced it had pushed a bill through the U.S. House of Representatives to allow the enclosures. Hoteliers thought the problem was solved and that was the end of it.

But the bill never came up for a vote in the Senate, the Senate has adjourned until mid-November and FEMA has now told the city of Myrtle Beach: time’s up, enforce the rule or else.

“We’ve sent letters to all the hotels that are affected, saying November first is when the rule takes effect. You will not put up your temporary pool enclosures that violate FEMA’s regulations then or expect the consequences,” said city spokesman Mark Kruea.

http://www.carolinalive.com/news/story.aspx?id=531094

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by | October 7, 2010 · 5:49 pm

Hospitality Industry Risk Management: Hotel Owner Must Review “Employment Practices Liability Insurance” Coverage Language To Determine If It Covers “Wage And Hour” Lawsuits

 In Professional Security Consultants, Inc. v. United States Fire Insurance Co., Case No. CV 10-04588 SJO (SSx), Judge James Otero recently denied an EPL insurer’s motion to dismiss a complaint seeking coverage for costs incurred to defend and settle an underlying wage and hour class action.    

The exclusionary language at issue was typical of such exclusions, barring coverage “for violations of the responsibilities, obligations or duties imposed by…the Fair Labor Standard Act…or similar provisions of any federal, state or local or foreign statutory or common law.”

The underlying litigation alleged that employer Professional Security Consultants (“PSC”) violated various provisions of the California Labor Code, including wrongfully withholding overtime compensation. PSC was insured under an EPL policy issued by United States Fire (“US Fire”). US Fire moved to dismiss the coverage action on the basis of its “FLSA” (Fair Labor Standards Act) Exclusion. Citing California law regarding the breadth and scope of an insurer’s duty to defend, the court denied US Fire’s motion.

The court noted that the policy’s definition of an “Employment Practices Wrongful Act” included “employment-related misrepresentations.” Comparing this policy language to the allegations of the complaint, the court emphasized the underlying plaintiffs’ allegation that PSC “[d]isseminated false information throughout [PSC’s] facilities and amongst [PSCs] employees, reciting that, under [PSC’s] labor policies and practices and under California law, the members of the Illegal Wages Class were not entitled to overtime compensation.” The complaint therefore alleged “employment-related misrepresentations,” triggering the potential for coverage under the policy.

The court also rejected US Fire’s argument that there was no potential indemnity coverage because any amounts allegedly owed to the underlying Plaintiffs were not covered “Loss” under the policy. The court observed that the policy’s definition of covered Loss included “damages,” and that the underlying complaint expressly sought to recover damages.

For more:  http://www.lexology.com/library/detail.aspx?g=75f1cf83-81de-43a4-8217-45ef67ed56ec

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by | September 14, 2010 · 6:05 am

Hotel Industry Health Risk Management: Hotel Owners Should Negotiate “Loss Of Attraction” Or “Contingent Business Interruption” Insurance Coverage For Losses Arising From Bed Bug Infestation

“…many hotels have negotiated for “loss of attraction” coverage, which covers the actual loss a hotel might sustain if it had to cancel reservations or was unable to accept bookings due to an infestation.”

State inspectors have the authority to shut down an establishment that poses an "imminent health hazard" involving fire, flood, sewage backup, rodent infestation, bed bug infestation or "any other condition that could endanger the health and safety of guests, employees and the general public."

“I would say both business interruption and to some extent contingent business interruption are two of the most difficult values for a business to assess,” says Craig Lapsley, vice president at Travelers Global Technology.

In evaluating those risks, companies have to consider their earnings, operating expenses and payroll–which is often overlooked but should be included, he says. In addition, companies need to consider how long they could be out of business and how long it could take to get back up and running.

“It’s difficult for insurance professionals, who do it all the time, and it’s extremely confusing for insureds,” Lapsley says.

Whenever there are large losses or catastrophic events, a very large percentage of insureds invariably turn out to be underinsured when it comes to business income, he says.

What makes contingent business interruption particularly tricky to assess is that it involves operations that are outside the company’s direct control. A company’s own operations may be in fine working order, but it may nevertheless suffer a significant loss of business income because of a disruption in the neighborhood, or with one of its suppliers, or with one of its buyers.

 For more:  http://www.riskandinsurance.com/story.jsp?storyId=13708831

 

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by | September 5, 2010 · 9:03 am

Hospitality Industry Health Insurance: American Health Strategy Project Aims To Lower Health Insurance Costs Through Increased Data On Employees Medical Leaves, Drug Utilization, Disability Claims And Demographics

 Until now, most employers setting up value-based insurance designs have relied primarily on medical claims data, which may or may not provide a complete picture of health risks lurking in their workforces, said Marianne Fazen, executive director of the Texas group.

In addition to medical claims data, employers participating in the American Health Strategy Project will collect data on family medical leaves, pharmaceutical and prescription drug utilization, short- and long-term disability claims, workers compensation claims, employee assistance program usage, disease management and employee demographics

The Texas Health Strategy Project is one of five initiatives announced in May by the Washington-based National Business Coalition on Health as part of the American Health Strategy Project, which intends to help employers use data from multiple sources to develop and implement value-based insurance designs. Such designs remove barriers that might prevent employees from receiving necessary health care, such as preventive screenings and maintenance medications.

While the Texas project is under way, the four other projects involving other coalitions—the Midwest Business Group on Health in Chicago, the Oregon Coalition of Health Care Purchasers in Portland, the Pittsburgh Business Group on Health and the Virginia Business Coalition on Health in Virginia Beach—are in various stages of deployment.

For more:   http://www.businessinsurance.com/article/20100905/ISSUE01/309059972

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by | August 22, 2010 · 8:17 am

Hotel Industry Fire Risks: Hotel Managment Must Have “Properly Maintained Fire Escapes, Exit Lights, Fire Extinguishers And Smoke Alarms”

“…inspection reports obtained by the newspaper showed the apartments did not have properly maintained fire escapes, exit lights, fire extinguishers or smoke alarms…”

The lawsuit filed by the families of Gerardo Reyes Perez and Humberto Hernandez Vanegas, who both died in the apartment building fire, was dismissed with prejudice, according to online court records. A dismissal with prejudice means the lawsuit cannot be refiled against building owner Corazon Peterson, also known as Corazon Moen, and her insurance companies.

A second wrongful death lawsuit has been dismissed against the owner of the Independence Hotel Tap that burned in February 2009, killing three men. The suit was dismissed after a “minor” settlement.

But the amount of the settlement is unknown. Judge John Damon approved an order to seal documents related to the case, including the settlement paperwork, and Moen as well as attorneys representing both sides of the suit did not respond to calls for comment.

The Hotel Tap building failed its last three fire inspections prior to the blaze that also killed Ronald Stuart Beck Sr. His family also filed a wrongful death suit, which was dismissed in June.

Moen denied the failed inspections when questioned by the Winona Daily News last year, saying smoke alarms and fire extinguishers were in the building at the time of the fire. But inspection reports obtained by the newspaper showed the apartments did not have properly maintained fire escapes, exit lights, fire extinguishers or smoke alarms.

The families of Perez and Vanegas contended in their lawsuit that none of the issues were addressed at the time of the February blaze, saying the building was in “general disrepair.”

The suit specifically cites anguish experienced by Perez’s brother Jose Reyes Perez and sister Blanca Morales. The pair were “at the scene of the blaze at its pinnacle and could only watch as the building burnt uncontrollably, and knowing their brother was inside, unable to escape,” the suit states.

Moen in her answer filed in March acknowledged the failed inspections but said the problems were fixed before the fire.

For more:  http://www.winonadailynews.com/news/local/article_34815248-ada3-11df-bd70-001cc4c002e0.html

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by | August 16, 2010 · 8:28 am

Hospitality Industry Insurance Risk Management: Las Vegas Hotel Has Insurance Policy That Fails To Name Hotel As “Additional Insured”, Complicating Payment Of A Submitted Claim For Structural Damage

The floor collapsed and dropped almost a foot, resulting in damage to the structures of both the lounge and the hotel.

The Luxor also sought compensation as an “additional insured.” The lease between the casino and developer required the latter to name Luxor as an additional insured on all policies. No doubt the Luxor assumed (that dangerous word!) that this language covered its exposure to loss.

However, the developer’s insurance policy restricted the coverage of an additional insured. Luxor’s entitlement was limited to indemnification for money it paid to people injured by the developer’s acts or omissions. The casino was not entitled to compensation for its own losses…

The casino invoked the Unfair Insurance Claims Practices Statute, a law adopted by numerous state legislatures.

The Luxor Hotel & Casino Hotel contracted with a developer to construct and operate a restaurant called the Cathouse Lounge (nothing is subtle in Vegas) on the mezzanine level. The developer gutted the space, made structural modifications and installed new fixtures and equipment.

One night during Cathouse’s third month in operation, while a large crowd was enjoying good food and fun ambiance, a portion of the structure began to buckle. The floor collapsed and dropped almost a foot, resulting in damage to the structures of both the lounge and the hotel. The lounge was evacuated immediately. Thereafter the county Department of Building Services ordered Luxor to close both the Cathouse and damaged portions of the hotel pending repairs. Luxor hired an expert to determine the cause of the floor’s failure. Turns out the renovations were insufficient to support the sizeable number of people the lounge attracted.

Both Luxor and the developer paid to repair the structural deficiencies and for damage to their respective property. The Cathouse reopened in three weeks and submitted a claim to its insurance company. The Luxor also sought compensation as an “additional insured.” The lease between the casino and developer required the latter to name Luxor as an additional insured on all policies. No doubt the Luxor assumed (that dangerous word!) that this language covered its exposure to loss.

However, the developer’s insurance policy restricted the coverage of an additional insured. Luxor’s entitlement was limited to indemnification for money it paid to people injured by the developer’s acts or omissions. The casino was not entitled to compensation for its own losses. Yikes!

This is a very significant limitation. Luxor was seeking compensation for costs of repairing structural damage to its own facility, replacing its own destroyed property and interruption of its business. The insurance company denied the claim based on the indemnification-only coverage, and the court upheld the denial. This was not the plan Luxor had in mind when it included the requirement that the casino be listed as an additional insured in the developer’s lease.

But lawyers are clever folks and Luxor was well-represented. The casino invoked the Unfair Insurance Claims Practices Statute, a law adopted by numerous state legislatures. This act requires, among other consumer protection provisions, that insurance companies respond to claim letters within 30 days of receipt. The insurance company in the Luxor case waited months before acknowledging the hotel’s claim. The penalty for violation is mandatory payment of the claim. This is true even though the policy does not otherwise cover the claim. So the court awarded Luxor the money it sought. Sometimes the back door can be a great alternative.

For more:   http://www.hotelworldnetwork.com/legal/read-your-insurance-contract-closely-then-read-it-again

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