February 18, 2015 Practice Points

Policyholders Should be Aware of the Effect of "Presumptive Intent"

Injured employees increasingly rely upon R.C. 2745.01(C), sometimes called the “equipment safety guard” provision, which provides that an employer’s deliberate removal of an equipment safety guard creates a rebuttable presumption that the employer intended to cause injury

by Charlie D. Price and Kyle A. Shelton

Under Section 2745.01 of the Ohio Revised Code, an employer’s intentional tort liability is limited to the rare situation where it acts with “deliberate intent” to injure the employee. Proving deliberate intent, however, is extremely difficult. Consequently, employees increasingly rely upon R.C. 2745.01(C), sometimes called the “equipment safety guard” provision, which provides that an employer’s deliberate removal of an equipment safety guard creates a rebuttable presumption that the employer intended to cause injury. It essentially allows a court to assume the employer intended to injure the employee even if no direct proof of deliberate intent exists —requiring the employerto then disprove intent.

Recently, in Liberty Mutual Fire Insurance Co v. Ivex Protective Packaging, 2014 U.S. Dist. LEXIS 165670 (S.D. Ohio Nov. 26, 2014), the court addressed whether a claim under R.C. 2745.01(C) was covered by an employer’s insurance policy that specifically excluded bodily injuries “intentionally caused or aggravated” by an employer-insured. The coverage dispute stemmed from an underlying lawsuit involving an Ohio manufacturing plant employee who was seriously injured when a machine malfunctioned due to the lack of proper safety guards. The employee sued Ivex, his employer, alleging that Ivex intentionally caused his injuries by removing the safety guards. The parties eventually settled and agreed that Ivex’s liability was limited to a disputed violation of R.C. 2745.01(C).

Ivex requested defense and indemnity from the insurer under the terms of its Workers Compensation and Employer Liability Insurance Policy. The insurer denied coverage and filed for a declaratory judgment that it had no duty to defend or indemnify Ivex because the policy specifically excluded bodily injury “intentionally caused or aggravated” by Ivex.  Ivex disputed this conclusion relying on the Ohio Court of Appeals’ decision in Hoyle v. DTJ Enterprises, 994 N.E.2d 492 (Ohio Ct. App. 9th Dist. 2013), that presumptive intent under R.C. 2745.01(C) does not constitute an “intentional act” and was therefore covered under the employer’s insurance policy.

The Southern District of Ohio agreed with Liberty Mutual on the coverage issue and granted partial summary judgment in its favor. The Southern District distinguished the case before it from Hoyle on the purported basis that Hoyle involved policy language and provisions that were not included in Ivex’s policy. The court then determined that a violation of R.C. 2745.01(C) constituted a “tortious act with the intent to injure another” and, therefore, was excluded from coverage under that specific policy. The court did, however, determine that the insurer had a duty to defend Ivex in the underlying tort action because of the legal uncertainty regarding the interpretation of presumptive intent under R.C. 2745.01(C).

Policyholders can argue that the Ivex court, like other federal courts before it, misunderstood or misapplied Ohio law, resulting in inconsistency and unpredictability for policyholders facing potential claims of injury under R.C. 2745.01(C), at least before Ohio federal courts.  They can further argue that the decision improperly distinguished Hoyle, which considered an analogous policy provision and, in so doing, rendered Ivex’s coverage for employment-related torts completely illusory, a result disfavored under Ohio law. Until the Ohio Supreme Court has an opportunity to conclusively settle this issue, employers should be aware of this uncertainty and mindful that employee claims brought under R.C. 2745.01(C) may result in denial of coverage under certain policy wording. Employers should work with their insurance broker to ensure that their policies contain the most advantageous policy language.

 

Keywords:  insurance, coverage, litigation, Ohio, EPLI, Employment Practices Liability Insurance, intentional acts exclusion, safety guards

Charlie D. Price and Kyle A. Shelton are with Brouse McDowell, Cleveland.


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