Inherent in our concept of justice is the fact that one who causes an injury should pay for it, and where multiple entities are jointly responsible for the same injury, liability should be allocated consistent with their degree of culpability. As a cumulative result of a number of Oregon laws, however, parties with the greatest culpability may not pay anything for the injuries they cause.

In Oregon, as in most states, the statutory workers’ compensation system is the exclusive remedy for an employee injured on the job against his or her direct employer. Only the direct employer that provides the workers’ compensation insurance is actually immune from civil liability, however, and the injured worker can collect workers’ compensation benefits and still sue another contractor or the owner of the job site.

When an injury results from the immune employer’s failure to train, provide safety equipment or supervise its own employees, liability cannot be allocated fairly. Those who are defendants in this type of lawsuit are not allowed to bring a claim against the immune employer regardless of the degree of negligence resulting in the injury. In fact, Oregon law says a jury cannot even consider the fault or negligence of the immune employer when allocating fault to the defendants.

Also unique in Oregon is the Employer Liability Law (ELL). Prior to passage of workers’ compensation laws, this statute was introduced to provide a statutory cause of action to an employee against the direct employer. The problem is that it was never repealed. So, while the ELL does not apply to the “employer” anymore, it places a high burden on the non-immune contractors, subcontractors and owners having responsibility for work involving a risk or danger to employees because this law requires the use of “every device, care and precaution that is practicable to use for the protection and safety of life and limb … without regard to the additional cost of suitable material or safety appliance and devices (ORS 654.305).”

The immune employer is not the only beneficiary of the Legislature’s protection. The workers’ compensation insurer has a lien against any recovery the injured employee may get from a third party for the benefits the insurer paid under the workers’ compensation system, and the workers’ compensation insurer even has the right to bring the lawsuit against potentially liable third parties if the employee does not. So, even if the immune employer had the greatest degree of fault in actually causing the injury, if the injured employee recovers against the non-immune defendants, the workers’ compensation insurer may ultimately pay nothing at all.

In the context of construction, parties are not free to allocate risk as they are in other industries because the law voids risk allocations in “construction agreements” broadly defined to include contracts for the “planning, design, construction, repair, improvement or maintenance of any building, highway … or project … attached to real estate (ORS 30.140(3).” For instance, ORS 30.140 voids indemnity agreements to the extent that they require one party to indemnify another party for the other party’s fault.

Construction contracts frequently require that a contractor name the project owner as an “additional insured” on general liability insurance policies. One benefit of being an additional insured in most states is that when sued by a contractor’s employee for an on-the-job injury, the owner can tender the lawsuit to the contractor’s insurer. But not in Oregon.

Also void are any contractual terms requiring that one party have its insurer waive the right of subrogation. Subrogation is the right of the insurance company that has paid a claim (such as a workers’ compensation insurer) to bring a lawsuit against other parties who may be liable for the same injury.In Oregon, contractors are a uniquely protected class. A provision that waives their rights of subrogation, indemnity or contribution is void to the extent the injury or damage is caused by another person (ORS 30.145(1). Other states allow construction projects to include workers’ compensation insurance in wrap-up policies purchased by the owner or general contractor for the benefit of all employers, whereas Oregon allows this only when the project value is over $90 million.

It is time that the Oregon Legislature took another look at the equities of the cumulative effect of these piecemeal laws. Maybe workers’ compensation should be the exclusive remedy of an injured worker against everyone working on the job site as it is in other states. Perhaps it is time to bid adieu to the ELL or modify the laws to allow a jury to consider the fault of the immune employer when awarding damages against others.

Louis Ferreira is an attorney in the construction and design practice group of Stoel Rives LLP. Contact him at 503-294-9412 or lou.ferreira@stoel.com.

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Unfortunately, insurance requirements in contracts are not easy to understand. The language used in insurance requirements is not always intuitive, but we all know that the consequences of not having the right insurance can be severe.

Following is a look at the language used to describe commercial general liability (CGL) policies. They insure a business for bodily injury, personal or advertising injury, or property damage lawsuits. The insurance is for third-party claims, so it does not usually cover damages to the insured’s own property, but it does usually require that the insurer pay for a defense from lawsuits against the insured that seek damages of the type that are covered.

The terms “bodily injury,” “personal or advertising injury” and “property damage” all have specific meanings in CGL policies. Typically, bodily injury is the coverage that responds when someone is hurt or killed. But does it also cover someone who is not physically injured but claims to have been emotionally distressed? The answer is maybe – it depends on the wording of the policy.

How does bodily injury differ from personal injury? In CGL language, “personal or advertising injury” coverage is a defined list of things like false arrest, libel/slander or wrongful eviction (when committed by a landlord). The advertising coverage extends to lawsuits claiming publication of materials that slander or libel, using someone else’s idea or copyright in your advertisement, or publication of information that violates a person’s right of privacy.

Property damage means physical injury to tangible property. It also usually covers damages caused by the loss of use of property. These are broad categories of coverage, and the next dozen pages or so of policy language limit or exclude coverage from these “grants” of coverage.

In contractual insurance requirements parties try to describe the coverage they want. The first thing we ask for is a standard CGL policy form written by a reputable insurer that will still be solvent if there is a lawsuit. Usually we see something like “a CGL policy written on an ISO form;” sometimes the ISO form is even specified, like “CG 00 01 10 01.” ISO (Insurance Services Office Inc.) is an organization that drafts forms for the insurance industry. Not all insurers use these forms, but they are the closest thing to a standard in the industry.

The next requirement may say that the insurer has to be rated by Best’s Insurance Guide with some minimum rating. This rating is intended to rate the insurer’s ability to pay claims and meet its financial obligations. Usually we want something better than a B+ rating. This is usually followed by a roman numeral that categorizes the size of the insurer in millions of dollars of worth.

Next, we focus on the limits of insurance required. The “limit” is the maximum that the insurance policy will pay. Limits come in different types. There are “general aggregates,” which express the maximum amount of money the insurance company will ever have to pay under the policy. There is usually a “per occurrence” limit, which is the most the insurer has to pay for each separate “occurrence,” another defined term in the policy. Then there is the “ongoing operations” versus “completed operations” issue.

Think of it as the distinction between accidents that happen while the contractor is still working and those that happen after the work has been done. To cover accidents that occur after the contractor has driven away, we seek coverage for “products, completed operations,” which expresses limits for bodily injury and property damages that may arise away from the insured’s premises and after the insured has completed its work.

While the standard ISO form does provide coverage for completed operations, companies that are looking for a deal sometimes buy policies with no completed operations coverage. Also, a per-project limit can ensure that the contractor’s insurance is not used up on one of the contractor’s other projects.

Then there is frequently a medical expense limit. Why is there a separate limit for medical expenses when the policy provides for a separate bodily injury limit? Because the medical expense coverage is a “no-fault” coverage for third-party bodily injury that occurs on the business’s premises or arises from the business’s operations. If there is fault and a lawsuit ensues, the loss falls under the bodily injury coverage.

There are also additional insurance issues that specify who will be named as an additional insured and what the scope of that coverage will be. Will it go to ongoing operations only, or will it extend to claims arising after the contractor’s work is done?

Always be on the lookout for “endorsements” to a policy. We frequently see insurance endorsements that exclude what the insured wouldn’t want to see excluded from its policy. For example, insurance companies frequently add endorsements to policies limiting coverage for residential work, work on buildings of more than two stories, or work on condominiums. We have even seen roofers with policies that have endorsements excluding coverage for any damage arising out of roofing operations and general contractor’s policies that do not cover construction operations.

It’s also important to consider how long coverage is needed. Since only the damage that occurs during the policy year is covered, contracts requiring insurance typically specify the number of years that insurance must be maintained to account for the possibility of a lawsuit to be filed years after the project is substantially complete.

It is important to understand what coverages are available and what exclusions may be in the fine print, and to recognize this language in the contract. But then an insured party can do a better job of managing risk on its projects.

Louis Ferreira is an attorney in the construction and design practice group of Stoel Rives LLP. Contact him at 503-294-9412 or laferreira@stoel.com.

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