12-17-12; PART 2: Did IL WC Litigation End on 12/6/12?; The Madison County Multi-Billion Tobacco Litigation Is Over; Be Prepared for Ramped-Up OSHA and much more

Synopsis: Has the Madison County IL Tobacco Litigation finally ended?

Editor’s comment: We were chagrined to see former Illinois-Workers’-Compensation-Commission-Chairman-Now-Madison-County-Circuit-Court-Judge Dennis Ruth not allow reopening of a class-action lawsuit that once won a $10.1 billion judgment against tobacco giant Philip Morris (now Altria) but was overturned on appeal to the IL Supreme Court. Judge Ruth said Plaintiffs failed to show information revealed in subsequent cases involving “light” cigarettes would have changed the outcome of this one. Lawyers argued in a hearing in August 2012 over reinstating the case. At that time, Ruth ruled out a request that he simply reinstate the $10.1 billion award amount.

Judge Nicholas Byron, now retired, ordered huge compensatory and punitive damages in 2003 after a two-month trial over whether Defendant violated Illinois law by marketing “light” and “lowered tar and nicotine” cigarettes as safer options. The case originally was filed in 2000. It was the first time a tobacco company lost a consumer fraud suit.

In 2005, the Illinois Supreme Court reversed the trial court’s judgment, based on a defense claim the Federal Trade Commission authorized wording for cigarette descriptions. The suit was dismissed the next year, after the U.S. Supreme Court refused to review the verdict. Plaintiff’s firm sought to revive it in 2008, after the U.S. Supreme Court ruled in a different suit, involving Philip Morris parent company Altria Inc., the FTC never authorized use of the terms “light,” “low” or “reduced.”

The Madison County case sat inactive for several years with both sides arguing over whether the IL Supreme Court decision in 2005 or the local court’s dismissal in 2006 started the time period on a two-year appeal deadline.

If you aren’t aware, Circuit Court Judge Byron awarded Plaintiff’s counsel a $1.1 BILLION dollar attorney fee. It is hard to understand/comprehend how much money that is. For example, if they had 10,000 hours of work in the case, that attorney fee would have worked out to over $100,000 per hour. If they had 100,000 hours in the case, that fee would have been $10,000 per hour. Either way, to our knowledge, that is the highest attorney fee ever awarded in the history of this planet.

The main reason we felt the whole thing fell through is the State of IL gets $500M from this tobacco defendant every year. Our State needs the money big time. If these Plaintiffs were to get $10.1 billion, it would bankrupt the tobacco companies and the State would no longer get their annual settlement money.

The last odd thing about the case is the appeal bond earned Madison County nearly $17.7 million in interest, according to Carol French, chief finance officer for the Madison County Circuit Clerk’s office. That was enough money not only to finance a criminal justice center on Vandalia Street but also to pay off debt on the Madison County Administration Building and purchase new radios and other state-of-the-art computer technology for their sheriff’s department. The County also paid off about $2 million in early retirement obligations for its employees.

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Synopsis: OSHA will continue to vex U.S. business under this Administration. Here are some thoughts from KCB&A on how to be prepared.

Editor’s comment: During the first Obama administration, OSHA became increasingly aggressive in enforcement in every employment sector. They routinely rejected efforts to work with or get along with employers to improve and enhance workplace safety in favor of blunt enforcement with higher citation classifications and enhanced penalties.

With the recent reelection of our sitting President and the understanding Dr. David Michaels, Assistant Secretary of Labor, will remain the head of the OSHA for the next term, employers across the board can expect more of the same from OSHA moving forward.

There is no question OSHA has moved to enhanced classifications with higher penalties. OSHA classifies alleged violations of its standards as either

ü  “Serious” meaning the agency believes there is a substantial likelihood of serious injury or death as a result of the violation, or

ü  “Other than Serious” meaning, although a violation may have occurred, OSHA does not consider it likely to result in serious injury.

OSHA’s preliminary finding that a violation is “Serious,” comes with a much steeper monetary penalty. This trend has been on a steady upward spiral over the last term. Between 2010 and 2011, the last year for which penalty information is available, the per-citation penalty for Serious classifications more than doubled.

Between issuing more citations as Serious and increasing the penalties for such citations, a U.S. employer could easily find itself facing monetary liability well into six figures or more, without any true accident or employee injury in your workplace. We feel this demonstrates a punitive and anti-business focus of this administration.

OSHA has also become more aggressive in placing employers into the Severe Violators Enforcement Program, or SVEP. SVEP was created by the agency as a means of focusing on and heavily penalizing employers whom the agency believes have shown indifference to safety and health obligations by issuing repeat or willful violations. An employer in SVEP can expect increased and more comprehensive inspections, substantial penalties and other abatement enhancements if violations are found. Between July 2011-2012, the number of U.S. employers placed into SVEP doubled. OSHA has showed no signs of reducing the pace.

Top Ten Most Violated OSHA Standards

The following is a list of the Top 10 most frequently cited standards following inspections of worksites by federal OSHA. OSHA publishes this list to alert employers about these commonly cited standards so they can take steps to find and fix recognized hazards addressed in these and other standards before OSHA shows up to cite and then penalize. If you haven’t reviewed your work sites with this list in mind, it can be a great starting point.

Ø  1926.451 –  Scaffolding

Ø  1926.501 –  Fall Protection

Ø  1910.1200 – Hazard Communication

Ø  1910.134 –  Respiratory Protection

Ø  1910.147 –  Lockout/Tagout

Ø  1910.305 –  Electrical, Wiring Methods

Ø  1910.178 –  Powered Industrial Trucks

Ø  1926.1053 – Ladders

Ø  1910.303 –  Electrical, General Requirements

Ø  1910.212 –  Machine Guarding

Like the Scout motto: “Be Prepared.”

We can expect and anticipate this agency will focus on pet OSHA projects, including:

·         Dealing with Whistleblower Statutes--OSHA has primary investigatory responsibilities for twenty-two different whistleblower statutes, from Sarbanes-Oxley to the Federal Aviation Act to the Affordable Care Act. The number of whistleblower claims and cause findings rose dramatically in 2012 and are expected to continue in 2013.

o   Our vote is to stay ahead of them and insure you have a path or pipeline for reporting.

·         Ergonomics--OSHA is focused on industry-specific and task-specific guidelines to reduce and prevent workplace musculoskeletal disorders that are commonly the result of repetitive, forceful, or prolonged exertions of the hands or the frequent or heavy lifting, pushing, pulling, or carrying of heavy objects.

o   A prudent step for safety and risk managers is to review OSHA Logs and workers comp data.

o   Identify repetitive or cumulative trauma stressors, and

o   Figure out approaches to reduce repetitive stress.

·         OSHA Logs--OSHA has also toughened up on its recordkeeping requirements including OSHA Logs, written compliance programs and certifications. Although typically classified as “Other than Serious” violations, OSHA has been increasing the instances in which it has found recordkeeping violations to be “Repeated” or “Willful,” which carry with them a potential 10x penalty enhancement.

o   Confirm required records are accurate and up to date, particularly if you have been cited by OSHA in the past.

o   Employers should have a proper records retention policy in place—if you need help, send a reply.

·         Workplace Violence--While this hazard has attracted attention in the media, OSHA has been particularly focused on the retail industry to ensure employers have policies in place and have properly trained their employees to recognize potential situations and seek assistance.

o   Have a Workplace Violence Prevention Program in place to advise employees violence or threatening behavior will not be tolerated

o   Outline reporting procedures for future instances of workplace violence and

o   Directs employees to a defined path for situations where they feel unsafe or threatened.

KCB&A has several OSHA experts on staff. We charge lots less than the national law firms and do very solid defense work and consulting—give us a call or send a reply for further assistance.