August 29, 2011 Celeste Monforton, DrPH, MPH 3Comment

When OSHA proposed penalties in January 2011 totaling nearly $1.4 million against two Illinois grain handling companies, I noticed the agency’s news release mentioned the employers’ workers compensation insurance carrier. It was the first time that I’d see this in an OSHA news release, and I wondered if it was the start of something new. Apparently, not.

I reviewed the 280+ news releases on enforcement cases issued by OSHA between February 2011 and August 24, and only identified two in which the agency mentioned the employers’ work comp insurance carrier.

One appeared in an April 2011 release about another grain handling facility: North Central Farmers Elevator in Ipswich, South Dakota. The employer received six willful violations for hazards that could cause workers to being engulfed by grain, and proposed a penalty of $378,000. The news release says:

“At the time of the investigation, the workers’ compensation carrier insuring North Central Farmers Elevator was Wausau Underwriters Insurance Co., headquartered in Boston.”

The other case involved Lessard Brothers Construction of Lewistone, Maine. OSHA June 10 news release described the company as having

“a long history of violating workplace safety standards,”

and the agency proposed $243,360 in fines for alleged egregious willful, serious and repeat violations, including failing to provide workers requried fall-from-heights protection. OSHA’s news release reported that this firm had been without State-required workers’ compensation insurance since October 2010.

Back in January when I asked OSHA about their decision to include: “The workers’ compensation carrier insuring Haasbach is Grinnell Mutual Reinsurance Co.” and “The workers’ compensation carrier insuring Hillsdale Elevator is Westfield Insurance Co.” in their January 24, 2011 news release, a Labor Department public affairs officer said:

“Workers’ compensation has many roles including providing benefits and medical care for those injured on the job, but the system is also intended to provide incentives to employers to reduce hazards and injuries through attention to the risks of work. Most insurers include loss control or loss prevention services to assist employers in making workplaces safe. In our efforts to promote transparency and disclosure, OSHA lists the carrier. Our objective is to encourage workers compensation carriers to work closely with employers to protect worker safety and health.” [emphasis added]

I didn’t really buy the “transparency and disclosure” assertion, but it did lead me to believe that we’d be seeing many more insurance carriers mentioned in OSHA news releases. It hasn’t turned out that way. I wonder why not?

An interesting saga did transpire after OSHA mentioned the two workers’ compensation insurers in that original January 2011 news release. The two firms reacted quite differently to the OSHA attention. Mr. Gary Christy of Westfield Insurance commented on my blog post:

“We applaud OSHA for encouraging cooperation between workers’ compensation carriers and the businesses they insure to protect worker health and safety. …Westfield offers our customers access to a wide array of professional risk control services. … Businesses have a financial interest in making workplaces safe, including the affordability of their workers’ compensation insurance. Premiums charged reflect the loss experience of the business.”

The other one, Grinnell Mutual Reinsurance Co., wasn’t so pleased with OSHA’s attention. The insurance company declined the agency’s request to provide documents related to business dealings with the employer, Haasbach LLC, and the grain elevator site where Alex Pacas, 19, and Wyatt Whitebread, 14 were killed in July 2010. In January 2011, OSHA sued in federal court to obtain such records from Grinnell Mutual Reinsurance Co. The insurance company objected, arguing that the Haasbach worksite is not covered by OSHA because it was a farm with fewer than 10 employees, and that self-evaluations records are protected from disclosure.

In May 2011, the judge ruled in favor of OSHA. The judge didn’t seem to buy the insurance company’s claim that disclosure would have a “chilling effect” on businesses because they’d fear that information in self-audit reports could be used against them in subsequent OSHA investigations or civil litigation.

I don’t know about the “chililng effect” but I’d certainly hope that an employer would get chills up his spine knowing that his insurer’s loss-prevention expert recommended some worker safety improvements and he didn’t make a good faith effort to implement them.

3 thoughts on “OSHA news releases rarely name company’s work comp carrier

  1. As OSHA, and other agencies, have been defunded, gutted, captured, or downsized the insurance companies have become the leading enforcers of safety rules. It can have some positive effects. I’ve seen bosses shy away from slapdash safety shortcuts citing that ‘the insurance people wouldn’t like it’ Then we’re all out of work’.

    I’ve also seen it go the other way as coverage is hollowed out and the chains of authority and responsibility are fractured. Florida essentially eliminating journeyman licensing for construction trades in the 80s so now all licensing is done through the contractor. But there are also very limited requirements that a contractor, or other trained person, be on-site. It means when safety rules are not followed and someone gets hurt the contractor can always claim he didn’t know.

    A condition of employment is often signing a procedure manual telling you proper procedure to follow. Failure to follow the procedure is a firing offense. The manual is hundreds of pages long and we were never given time, or even access to it, to find out what the company SOPs are. But you have to sign the paper saying you know, understand, and will comply with those SOPs. The SOP manual is cleared with the insurance carrier.

    With journeyman licensing the workmen were trained, tested, certified, and licensed and there was a requirement that a certain ratio of trained to untrained workmen be maintained. There was much less option for the big boss to say he didn’t know what was going on and nobody on site knew the rules. It also helped if the journeymen were union as most unions maintain a right to stop work for safety reasons.

    But, as it is now we have half-trained and untrained people out on job sites doing stuff they don’t know is unsafe. When they get hurt the boss will drive out, make a great show of claiming the people weren’t following company policy and rules, quietly fire everyone involved, and ‘clean up’ the site for the insurance inspectors to arrive.

    At one site, a local truss manufacturing plant, the insurance guy rolled up as the front-end loader was dropping last of the burned building into a dump truck. As he was stating that the site was supposed to be left untouched the boss rolled up and started cussing out the workers because they were cleaning up when ‘I said to leave it alone’. He then turned to the inspector and said that ‘good workers are hard to find’. He went on the explain that the work site was safe and they had ‘never had any safety issues’.

    Fact is that the place was known as a fire trap for years and it was only luck that kept people from dying. Two people got away with minor burns.

    Bottom line is that the insurance company will pay a fraction of what it cost to replace the building and equipment, and in return they will raise their rates a bit. It is a hollow and unenforceable insurance policy that pays the absolute legal minimum necessary to meet state requirements so nobody is too concerned. The place is effectively self-insured and protected from being sued by local connections, good-ol’boy understandings, and a willingness to fire anyone who complains too loudly

    The boss will send the burned workers to the local ER with a non-work related story of how they got burned. He will pick up the bill but do everything possible to keep it small. Workers get points for working wounded and living with scars. They are encouraged to be loyal, get to work, and shake it off. If extended care, like physical therapy, is required he will comply for a time but quietly fire the worker later, for unrelated cause of course. Welcome to the deep south where every businessman can run his own plantation.

    Where OSHA and insurance companies are seen as interfering with business.

  2. As a long time (I don’t want to do the math…) insurance risk control consultant, I also read with great interest OSHA’s naming of the insurance carriers for the grain company fatalities. I can definitely see both sides of how the two insurers responded: Of course you want to prevent all injuries and illnesses because claims cost money. On the other hand, if all interactions between insurance personnel and the employer are to be second guessed by OSHA or a jury that will indeed have a chilling effect on the sometimes tenuous relationship between the insurer and the employer. I have had my correspondence go through the insured’s legal department to establish privilege, which is fine as long as they do it. No question that information received from an insurer creates legal knowledge- as I recall who saw which property risk control reports was an issue in the litigation resulting from the So Carolina sugar plant explosion. There could also be civil liability imposed on the insurance risk control consultant independent of OSHA.

    The good employers (and good risks) are happy to use whatever insurer services are available. The problem is the reluctant employer: How do we effectively modify their behavior as an employer? In my opinion these guys only pay attention to money and increasing insurance costs (absent effective OSHA enforcement) is about the only way to get their attention.

    Another problem is establishing a working relationship in the first place. Many people have little interest in seeing their insurance representative (does anyone really want to talk to their auto or homeowners agent for example). It takes a few visits to set a working relationship so that the reluctant employer can even start to be convinced that safety and health will save them money. Most insurance carriers (especially in workers’ comp) are not making a lot of money so internal cost pressures limit the quantity and quality of services provided. More than a few insurers have one or two reps and then direct any inquiries to their website (often just a link to As a colleague and I joke about a prior employer, the expectation for the consultant was “You’ve been out here twice, why haven’t you changed their corporate culture yet?”

    Workers comp is an extremely important method of fixing costs of injuries and illness and thus creating an incentive for the reluctant employer to actually protect their employees from injury and illness.

  3. Risk Control Dude,
    I always appreciate your thoughtful comments and perspective as someone who is in the insurance industry.

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