Now What? Managing CatastrophesVanliner Insurance CompanyOctober 16, 2013

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Your Presenters• Colleen F. Shepherd is the Director of Claims with

Vanliner Insurance Company. As Director of Claims, Colleen's primary responsibility is to manage and direct Vanliner's Claims Department, which handles: Property & Casualty, Worker's Compensation and Cargo Claims. In addition, Colleen manages Vanliner's after-hours hotline, which includes overseeing the rapid response to all catastrophic claims. Colleen started with Vanliner in 2008 as a Claims Attorney. Prior to joining Vanliner, Colleen clerked for the 14th Judicial Circuit Court of Virginia and practiced insurance defense with the law firm of Sinnott, Nuckols & Logan, P.C. in Richmond, Virginia. Colleen is licensed to practice law in Virginia and Missouri, and is a member of the Trucking Industry Defense Association (TIDA) and the Defense Research Institute (DRI).

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Your Presenters• Bradford G. Hughes is Of Counsel with one of the leading litigation firms

in California, Selman Breitman, LLP. Based in Los Angeles, Brad brings a wealth of experience to catastrophic accidents and has specialized experience with both the Federal Motor Carrier Safety Regulations and CSA. Brad defends interstate, intrastate, local "last-mile," and moving and storage motor carriers in a variety of litigation in state and federal court. He has handled every aspect of the litigation of trucking accidents; from 24-Hour response to mediation and trial. A member of the Trucking Industry Defense Association (TIDA), Transportation Lawyers Association (TLA) and the Defense Research Institute (DRI) Trucking Committee, Brad has developed and published numerous materials for use by the moving and storage industry, including a discussion of the obligations of employers after a catastrophic accident. He has also been published regarding the impact of CSA on the transportation industry. Brad regularly presents to moving and storage companies regarding best-practices immediately after catastrophic events.

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Catastrophes

Motor Vehicle Accidents (fatalities)

Environmental Disasters (fuel & oil spills)

Natural Disasters (warehouse & cargo damage)

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Catastrophic Motor Vehicle Accidents• Fatalities and/or Catastrophic Injuries– Your worst day.– What to do and how to do it.

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Accidents Happen: Plan For the Worst

• Your company has just learned that one of its vehicles has been involved in an accident. Details are few, but the report suggests a serious injury, maybe a fatality. What’s your response?

• Whether or not you are at fault, your response and First Report must be the same in every situation.

• Remember, lawsuits are driven by the potential for recovery of monetary damages, not by the fault of the parties.

• In many jurisdictions, if your company is determined to be 1% or more responsible for the accident, it can be held to be responsible for 100% of the damages claim.

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Time is NOT on Your Side

• Catastrophic accidents never happen at convenient times; they can occur at odd hours in unfamiliar places.

• Don’t wait for Monday morning! Contact your insurance carrier immediately! Many insurers have a 24-Hour response hotline available. CALL THEM. Better safe than sorry is the rule of thumb. Let us know as soon as you know.

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The First Report• The First Report triggers your response,

but is it reliable?• Rarely is the severity of the accident

overstated; often, the severity is significantly understated.

• Your Driver cannot be expected to make a complete, cogent and accurate report of a catastrophic situation.

• It is far easier to scale back the response than to attempt to accelerate it.

• You only get one chance to get the First Report done right!

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Contact Your Carrier• Your first phone call after learning of an accident should

be to your insurance carrier. When in doubt, report the incident as a serious or catastrophic accident.

• For most insurers, a report of an accident is received by the insurance company’s staff during business hours or by claims professionals via a hotline after hours.

• If the accident appears catastrophic, it is likely that your carrier will assign a Claims Adjuster to immediately coordinate a rapid response investigation.

• If the accident is NOT reported as involving potentially serious or catastrophic injuries, your carrier will not know to coordinate a rapid response, which may jeopardize the investigation.

• Again, assume the worst and report all claims accurately and immediately!

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Assign a Reliable Supervisor

• If feasible, dispatch a Reliable Supervisor to the accident scene immediately.

• If not, assign a Reliable Supervisor to direct operations remotely.

• You need a Reliable Supervisor actively involved and serving as your point of contact with your insurance carrier.

• A Reliable Supervisor is crucial as your insurance company may chose to retain Local Counsel, and/or a Field Investigator and/or an Accident Reconstruction Expert.

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The Reliable Supervisor in Action• If it is possible to get to the scene, the Responsible

Supervisor should:– Report the precise location of the accident.– Advise law enforcement of his/her presence on the scene.– Locate and support the Driver.– Take photographs, but don’t forget that any photos you take must

be produced in litigation. – Find a DOT-approved drug and alcohol testing facility.

• If it is not possible to get to the scene, the Responsible Supervisor should:– Determine the precise location of the accident.– Determine what law enforcement officials are on the scene.– Maintain cell phone contact with he Driver.– Direct the driver to take photographs .– Find a DOT-approved drug and alcohol testing facility.

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HELP: It’s On the Way

• Your insurance carrier may direct one or all of these professionals to the accident scene:– Local Counsel;– Field Investigator;– Accident Reconstructionist.

• Each has a role.

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Local Counsel• Your insurance carrier may assign Local Counsel,

an experienced trucking attorney, who will travel to the scene to direct the investigation, establish attorney/client privilege, and communicate with law enforcement officials.

• Local Counsel will also assist with preparation of internal accident reports, coordinating others at the scene of the accident and working with your Responsible Supervisor.

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Field Investigator• The Field Investigator is a local professional who

may be a seasoned insurance adjuster or a private investigator.

• His/her role:– Photograph the scene and the vehicles.– Canvass the scene for witnesses.– Locate any vehicle ordered towed from the

scene by law enforcement officials.– Obtain the police reports of the accident.– Aid in getting the driver to a DOT approved

drug/alcohol testing facility.

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The Accident Reconstruction Expert• The “Recon” is an experienced professional,

formally trained in the science of motor vehicle accident reconstruction.

• He/she may be a mechanical engineer or former law enforcement official.

• Responsibilities:– Inspect and photograph the scene, including the debris field,

gouge marks, evidence of paint transfer, and yaw and/or skid marks.

– Take precise measurements in relation to fixed objects.– Inspect for the presence of Electronic Control Modules

(“ECMs”) in all vehicles involved.– Inspect for the presence of Accident Event Recorders (“AERs”)

in all vehicles involved and remove any AER data chips.– Inspect, measure and photograph each of the vehicles involved

in the collision, measuring the degree of deformation or crush damage and noting paint transfer.

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Managing the Driver

• Your driver is the most critical piece of the post-accident puzzle.

• In a “perfect world,” the Driver should not be permitted to make a formal statement to anyone (including the Field Investigator) outside the presence of Local Counsel, in order to maintain attorney/client privilege and best protect the investigation.

• By the time the Responsible Supervisor is in contact or on the scene, however, the Driver may well have spoken to the authorities. It is important to learn to whom the Driver has spoken and what was said.

• Just get the facts. The Driver should be encouraged to be honest without fear of the blame game.

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Will I Lose My Job?

• Post-accident, whether the question is asked aloud or not, it is on your Driver’s mind.

• Be fair: until the facts are in, a decision cannot be made.

• Be supportive: but, don’t give false reassurances and make no promises.

• Be mindful of company policy: don’t rush to terminate solely because the initial report suggests fault.

• Be human: this may be the most serious accident of your professional driver’s career. Because he/she is the most important part of the post-accident puzzle, it is crucial that your driver be cooperative.

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No Excuses, You Must Drug/Alcohol Test Your Driver

FMCSR § 382.303 (Post-accident testing)• The Driver must submit to a drug and alcohol test

“as soon as practicable” following an accident when:– A fatality has occurred;– A citation has been given within 8 hours* of the

accident; and• Bodily injury occurred to anyone who, as a result of

the injury, immediately receives medical treatment away from the scene of the accident; or

• One or more of the motor vehicles involved in the accident was towed from the scene.

*32 hours of the accident for Controlled Substances.

• Don’t forget to follow your own Company Policies, as they may be stricter than the Federal Regulations.

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Drug/Alcohol Testing Rules Alcohol tests.

– If an alcohol test is not administered within two hours following the accident, the employer "shall" prepare and maintain on file a record stating the reasons the test was not promptly administered.

– If a test is not administered within eight hours following the accident, the employer "shall" cease attempts to administer an alcohol test and shall prepare and maintain the same record.

• Controlled substance tests.– If a test required by this section is not administered

within 32 hours following the accident, the employer shall cease attempts to administer a controlled substances test, and prepare and maintain on file a record stating the reasons the test was not promptly administered.

• If the FMCSR time window has passed for DOT testing:– Test anyway!– Not every hospital is DOT-approved: ask!

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Dealing with Law Enforcement• A catastrophic accident is typically investigated by three

separate law enforcement authorities, each with a different role:– Emergency Response;– Commercial Vehicle Enforcement Unit; and – Accident Reconstruction.

• Do not expect Law Enforcement Officials to be communicative or cooperative, especially at the scene.

• A hostile, uncooperative or combative response by company officials gains nothing and may be detrimental to the investigation.

• What’s done is done; work with your insurance carrier to sort out the consequences.

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Law Enforcement Response• Emergency/First Responders:

– The first officer on the scene is responsible for first aid, traffic control, and the collection of information regarding the vehicles, drivers and witnesses.

– This officer usually prepares an “Incident” or “Crash” Report which contains the basic facts, identities of the parties involved and includes any citations of any operator.

• Commercial Vehicle Enforcement Unit:– These officers inspect the commercial vehicle to determine whether it is to be

ordered out-of-service post-accident.– These officers also cite the commercial vehicle owner for any unsafe condition

of the vehicle which may be found or the Driver for log book violations.– CVEU Report is often provided to the Driver or vehicle owner at the scene.

• Accident Reconstruction Team:– These officers do the same thing as your insurance carrier’s Recon, including

examining the scene and the vehicles.– The Accident Reconstruction Report can sometimes take months to be released.

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Law Enforcement: Criminal Citations

• Criminal citations trigger different responses, processes and obligations for everyone involved in the accident.

• Keep in mind that your driver has Constitutional Rights that have to be considered at all times. This is particularly not the time to “go-it alone.”

• Advise your insurance carrier immediately of any citations of any kind received by the driver or by the company.

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Repair and Return to Service• Many times, soon after the accident, a conflict arises:

you want to return your truck to service, but your insurance carrier and Local Counsel object. Why?

• Evidence spoliation: to avoid accusations by the injured party that the company “spoiled” the truck by repairing it to hide evidence of its fault, we typically preserve the truck in its post-accident state until we have given the other party a fair opportunity to inspect and photograph your equipment.

• Spoliation allegations and causes of action add value and costs to claims!

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When You Do Not Own the Truck• When the equipment is under a long-term lease with

an Owner/Operator or a leasing company, the task of preserving evidence may be more difficult.

• Cooperation is the key. Advise your insurance carrier promptly, as its experience can prove invaluable in working through the issues.

• For long term leases, immediately send copies of all leases to your insurer.

• Know that lease fees will continue to incur, but you may still have to preserve the vehicle.

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Preserving Evidence• Electronic Control Modules (ECMs)

– While more common, ECMs vary widely in the type of data recorded, the amount of data recorded and the ease of access to the data.

– On many units, the existing data is “wiped out” when the engine is restarted.

– Typically, we insist that we “tow until we know” what were dealing with. We also demand data downloads of the other vehicles involved.

– Don’t assume that your local truck dealer can perform a download. Often, it is much more complicated and may require factory-trained personnel.

• Accident Event Recorders– You must SAVE THE DATA CARD! All data needs to be preserved.– Only the Accident Recon (or other trained expert) should remove a data

card post catastrophic accident. Do not allow the digital information to be downloaded by anyone other than trained technicians.

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Data Destruction: Disaster• If ECM or Accident Event Recorder information is

destroyed, serious problems are sure to follow.• In many jurisdictions, spoliation of evidence

allows a Judge to instruct the Jury that they may draw an adverse inference that the evidence was destroyed because it was harmful.

• In California, for example, a jury is instructed: – "You may consider whether one party

intentionally concealed or destroyed evidence. If you decide that a party did so, you may decide that the evidence would have been unfavorable to that party." (CACI 204, Willful Suppression of Evidence.)

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The Paper Chase

• Truck litigation is often won or lost “on the paper” – i.e. the DVIRs, the maintenance and service records, the Registration file, the logs, and the Driver Qualification file. Before the accident scene is even clear, you must begin to assemble all records which may possibly be needed to defend the claim.

• It is far easier to assemble the data now than three years from now. Protect yourself: gather the paperwork promptly.

• Secure logs (paper or electronic) for at least the last six months (unless company policy is more stringent).

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Media Management

• In a “You Tube” world, where everyone has a video camera on his/her smart phone, you can expect media coverage almost immediately. Under no circumstances should the Driver ever speak to the media.

• If contacted by the media, you should contact your insurance carrier immediately. Don’t try to handle the media on your own.

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Outreach• Compassion is part of being human; expressing the

company’s concern and sympathy is entirely appropriate, but only if done properly.

• Your insurance carrier should be consulted before any outreach is made.

• Our experience has taught us that when, how and by whom outreach is made makes all the difference.

• Odds are that you have never had to make such an outreach before. So, take advantage of our collective experience before inadvertently making a bad situation worse.

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BUT, We Did Nothing Wrong• Remember, lawsuits are not about fault!• Your frustration is completely understandable, yet our experience teaches

us that regardless of who may be at fault in a catastrophic accident, there are multiple claims to be resisted and defended.

• Even a simple accident can generate each of the following claims:– Personal injury claim by opposing driver;– Personal injury claim by all passengers (including those in your own

truck, if they are not your employees);– Loss of consortium claim by each family member of all personal injury

claimants;– Property damage claim by insurer of opposing vehicle;– PIP/Med Pay claim by insurer of opposing vehicle;– Property damage claim by city, state or federal government;– Tow, recovery and storage charges by police-ordered towing company;

and– Workers’ Compensation insurance subrogation claims.

Catastrophic Environmental DisastersDon’t cry over spilled milk; but, DO cry over spilled fuel and oil.

What you do not know will hurt you.

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Fuel & Oil Spills• You are responsible for cleaning up all spills regardless of

fault. (Strict Liability)• Report fuel spills to your insurance carrier immediately. Your insurance

carrier can help you manage costs.• Hazardous waste disposal and emergency response services are very

expensive if not properly managed from the outset.• Possibility of multiple jurisdictional involvement: (Federal, State, County,

Municipal Environmental Agencies, Fire/Police Departments, etc.)• You may be subject to severe penalties and fines if the spill response is

deemed to be too slow, inadequate, lacking proper regulatory sign offs, or the spill goes unreported/never addressed.

• Fuel and oil spills are environmental catastrophes that can be as expensive and disastrous for your business as a highly publicized fatality accident.

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Cleaning Up…Make sure your responders are trained appropriately:• Step One: Contact Your Insurer• Step Two: Stop the Spill

– The leak or spill should be stopped by properly qualified and equipped personnel. • Step Three: Contain and Recover the Spill

– If the spill or leak cannot be stopped, catch the flowing liquid using whatever is available.

– Spread sorbent material to stop the flow and soak up the petroleum on pavement. Sorbents do not make petroleum nonflammable.

• Step Four: Collect the Contaminated Sorbent• Step Five: Secure the Waste

– If the spill is at a business or if the vehicle in an accident is a commercial vehicle, disposal of the contaminated sorbent is the business' responsibility.

– Normally, the company is required to report spills of petroleum greater than five gallons. – The state/local Pollution Control Agency will direct the business on disposal of the

wastes.

Catastrophic Natural DisastersAvoiding Catastrophic Cargo & Commercial Property Losses

Preparation, Prevention, Responding, Cleaning Up, Rebuilding

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The Inevitable: Natural Disasters• The United States experiences a variety of natural disasters

throughout the year. As a result of hurricanes, earthquakes, tornadoes, and floods the United States suffers billions in losses annually due to natural disasters.

• Regardless of your location, a program of disaster preparedness, mitigation, management, and prevention must be followed.

• Most businesses have not been through a catastrophic property loss.

• Let your insurance carrier assist you during uncertain times.

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Natural Disaster: Prepare & Prevent• Start with determining the cost of a disaster to your business. • Determine the functions within your company that are critical for conducting

business.:– How important is your computer system? – What would happen if all your electronic equipment and records were

destroyed? – Are your files copied “in the cloud?” – Do you have offsite paper copies?– How important are the goods that you are moving/storing? – How valuable are the goods? – How replaceable are the goods? – How repairable are the goods?– How important is your business location and/or facility? – Is there an off-site emergency alternative? – Is your facility secure, or is it particularly exposed to flooding, tornadoes or

wildfire?

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Natural Disaster: Prepare & Prevent• Perform an analysis of site risk (flood, high wind, earthquake)• Strengthen facilities to withstand hazards• Consider placement within warehouses of specific storage items (i.e., raise

items in the event of flooding).• Work with a licensed contractor to determine what steps can be taken to

help protect your building from natural disasters.• Walk-through your business and determine whether everything is

properly secured (i.e., braced inventory in earthquake hazard areas). • Create a disaster prevention and recovery team. • A disaster plan will only prevent problems if it works! Regularly practice

your disaster plan. This ensures that everyone is familiar with the plan. • It makes sure that the plan is up to date to current circumstances. It makes

sure all of the systems actually perform. This means that a regular practice must be included in your disaster prevention budget.

• You cannot ultimately prevent a natural disaster. You can, however, control the impact of a natural disaster on your business.

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Flood Loss Prevention• Flooding causes over one-third of the total

estimated costs of natural disasters.• Flood Prevention & Mitigation:

– Learn warning signs and community alert systems;– Stockpile emergency building materials (i.e., sandbags,

etc.); – Install check valves in sewer traps to prevent flood

waters from backing up in sewer drains;– Elevate buildings in flood-prone areas (including crucial

equipment);– Regularly inspect and clean roof drains;– Anchor the legs of your fuel tank into a large concrete

slab.

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Tornado Loss Prevention• Conduct tornado drills in each season

– Build a safe room. – Have disaster supplies on hand.– Determine if your business uses connections between

the roof, walls and foundation.– Use devices like anchors, clips and straps to secure

wood frame buildings.– Properly brace the end wall of gabled roofs to reduce lift

loads.– Reinforce or retrofit garage doors for strength.– Have window shutters fabricated so they are ready to

use.– Know the difference between a tornado watch (issued

when tornadoes are possible in your area) and a warning (tornadoes have been sighted by radar).

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Hurricane & Wildfire Loss Prevention• Hurricanes:

– Trim back dead or weak branches from trees.– Secure inventory and raise appropriate items above flood levels.

• Wildfires:– Obtain local building codes and weed abatement ordinances for buildings

near wooded areas.– Use fire-resistant materials when building, renovating, or retrofitting

structures.– Create a safety zone to separate building from combustibles.– Prune all branches around building to a height of 8-10 feet.– Keep trees adjacent to buildings free of dead or dying wood and moss. – Remove all dead limbs, needles, and debris from rain gutters.– Store combustible/flammable materials in approved safety containers and

keep away from building.– Use only thick, tempered safety glass in large windows and doors.

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Disaster Recovery• When disaster strikes, contact your insurance carrier immediately.• If an insurers is not involved in the claim handling upfront, the carrier may

still be held accountable for the actions/inaction of the mover who elects to address a claim prior to reporting the claim to its insurance carrier.

• Even in times of disaster, customer service related gestures can frequently backfire and result in a BBB Complaint against your company and/or a Department of Insurance Complaint against your insurance carrier.

• What your paperwork does not say can be construed against you because you drafted the terms and conditions!

• How does your Bill of Lading/Storage Contract read? Are some losses specifically excluded?

• Make sure you are keeping an exact record of the goods you are moving and/or storing. Especially in times after a natural disaster, chaos and confusion can lead to unverifiable claims.

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Disaster Recovery: Clean-up• Photograph, video and log all of the goods (damaged and

otherwise) in your possession.• Photograph, video and log all of the damage to your own goods as

well.• Make absolutely certain that you have accounted for any and all

goods that may have been destroyed, damaged, or lost (and determine which is which).

• Compare your pre-disaster records of goods being stored with all post-disaster records.

• Work with your insurer to determine what is missing, damaged and/or destroyed.

• Create a separate, safe, location to place all goods immediately post-accident that have been (or not been) damaged or destroyed.

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Disaster Recovery: Clean-up• As with spoliation of evidence, it is important that the damaged goods are kept in a

secure location so they can be appraised, remediated, etc. • Talk with your insurance carrier in order to decide how best (or whether) to move

damaged goods. Sometimes, moving the goods can cause greater harm/damage to the goods.

• Don’t guess about what to do after a disaster; talk to your insurance carrier. • Were the goods destroyed in the disaster, or did something happen in the

confusion thereafter?– Theft?

• Police Reports?• Can your shipper establish ownership?

– Employee Infidelity?• Did you complete an investigation? Employee background checks?

• High Value Inventory – High Value Inventory should be routinely logged, especially before an

oncoming natural disaster.

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Disaster Recovery: Rebuilding

• Work with your insurance company to determine when and how you are going to respond to customers regarding their goods.

• Do not make promises that you should not, and cannot, keep. • Contact FEMA / SBA. Disaster assistance money provided

may be available to businesses in an area whose property has been damaged or destroyed following a Presidential-declared disaster (for losses are not covered by insurance).

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