Unit V Literature Review

A Discussion of the Legal and Legislative Issues Surrounding Silica-Related Injuries Cassandra R. Cole ∗ Kathleen A. McCullough ∗∗ Summary There has been a dramatic increase in the number of silica lawsuits being filed in recent years. Specifically , some companies have seen a three to fourfold increase in the numbe r of silica-related claims. These movements have created a great deal of concern as to whether silica claims will escalate to the level of asbestos lo sses. As such, the issues surrounding silica liability warrants attention. This article reviews observed reactions by impacted parties and discusses the cu rrent legal and legislative trends related to silica liability. Specifically, there has been news of insurers increasing silica-related loss reserves as well as increases in the use of silica-specific exclusions in liability and umbrella insurance policies.

Recently, Ohio and Georgia passed silica-re lated legislation, which, in part, establishes medical criteria individuals must meet before a lawsuit can be filed. Other states, including Florida, Texas, and West Virginia, have proposed legislation with a similar provis ion. There also is a federal bill that contains some specific silica-related provisions. Finally, there is talk of decreasing the maximum acceptable limits of exposure to silica dust in an effort to reduce the likelihood of injury from exposure. These quick responses from impacted industries, insurers, state and federal governments, and outside agencies may prevent silica from becoming the “next asbestos.” ∗ Assistant Professor of Risk Management and Insurance, Florida State University. E-mail: [email protected].

∗∗ Assistant Professor of Risk Management a nd Insurance, Florida State University. E-mail: [email protected]. Introduction As Congress debates asbestos-related legislation and insurers continue to raise levels of asbestos and environmental reserves, another potential environmental peril has appeared on the horizon. Due to the similarities between asbestos and silica-related liability, recent industry reports have suggested that silica may be the “next asbestos.” For example, a 2004 Standard and Poor’s report stated that S&P was carefully watching developments in silica liability as it “could produce the kinds of litigation and insurance problems that asbestos has” (Insurance Journal, 2004). While other experts say that key differences between the substances will prevent silica claims from escalating to the level of asbestos claims, there is still cause for concern for many companies, insurers, and legislators as the potential for wide spread silica-related losses exists. While the dangers of silica have been known for several years and silica-related safety guidelines have been in place for sometime, the concerns related to increased litigation and the availability of insurance coverage have brought this issue to the forefront. For example, U.S. Silica, a major producer of industrial sand, reported 15,000 new claims in the first half of 2003. This is up from a total of just over 5,000 claims in 2002 and just under 1,400 claims in 2001 (Hartwig and Wilkinson, 2004). Other U.S.

firms such as Halliburton Company and 3M, also are experiencing an increase in silica claims (Hartwig and Wilkinson, 2004). Recently, Ohio and Georgia became the first states to pass silica-related legislation. In addition, others states including Florida, Texas, and West Virginia all are considering bills containing similar provisions. These bills are at various stages of the legislative process. Finally, some of the proposed federal asbestos legislation also includes references to silica-related damages.

The growing attention given to silica-related claims from a legal and legislative standpoint, as well as the wide base of individuals exposed to silica dust, provides cause to closely examine the potential impact of silica liability. The remainder of the article is organized as follows. First, the problem of silica and silicosis is outlined including impacted industries, implications for the insurance industry, and similarities to the asbestos crisis. The next section of the article outlines the current scope of the silica problem as well as overall trends in the number of silica-related deaths and insurance-related issues. The fourth section of the article describes the current trends in litigation including the significant silica-related cases that are shaping the legal environment as well as the applicable defenses related to silica liability. The fifth section outlines current and proposed legislative action related to silica. Finally, the conclusions and public policy implications are discussed. 22Journal of Insurance Regulation Background Silica and Silicosis Silica, technically silicon dioxide, occurs in both crystalline and non- crystalline form. Its crystalline form, commonly know as quartz, is the second most common mineral in the earths crust. 1 Silica is a major component in soil, sand, rock, and many other materials (Hartwig and Wilkinson, 2004). Prolonged and extensive exposure to crystalline silica dust can cause silicosis, a non-cancerous lung disease. Studies in the 1980s suggested that crystalline silica also may be a carcinogen (Branch of Industrial Minerals, 1992). Given the potential dangers, crystalline silica is regulated under the Occupational Safety and Health Administration’s (OSHA) Hazard Communications Standard (HCS). Currently, it is estimated that over 3 million U.S. workers are exposed to crystalline silica (Black, 2002). Further, according to the National Institute of Occupational Safety and Health (NIOSH), a portion of the 3.7 million agricultural workers also may be exposed to dust containing silica (Kingdollar, 2004). Those exposed to silica dust are at an increased chance of developing silicosis. It is estimated that over 250 of the persons exposed to silica will die of silicosis each year (Hartwig and Wilkinson, 2004). Silicosis is a lung disease characterized by shortness of breath following physical exertion, severe cough, fatigue, loss of appetite, chest pains, and fever (Department of Labor, 1996). Like asbestosis, silicosis can take 10 to 40 years to manifest after exposure (Kingdollar, 2004). There are three forms of silicosis: chronic, accelerated, and acute. Chronic silicosis, the most common form, usually occurs after 10 or more years of exposure.

Silicosis can be diagnosed through chest X-rays and lung function tests (Department of Labor, 1996). Additionally, medical studies have linked the inhalation of crystalline silica to chronic obstructive pulmonary disease, lung cancer, tuberculosis, emphysema, lupus, scleroderma, and rheumatoid arthritis (Kingdollar, 2004). Impacted Industries and Regulations According to the U.S Department of Labor, construction workers engaged in sandblasting, rock drilling, masonry work, jack hammering, and tunneling are at the greatest risk for exposure to silica. Also at risk are miners, especially those drilling through sandstone and granite; foundry workers; soap and detergent manufacturers; stonecutters; glass manufacturers; shipbuilders; railroad workers; agricultural workers; and those working with abrasives, ceramics, clay, and pottery (Department of 1. Though there are several forms of silica, the discussion with respect to silica liability generally centers on crystalline silica. For this reason, when the term silica is used in the remaining sections of this article, it is referring to crystalline silica. 23Silica-Related Injuries Labor, 1996). Based on information obtained from the National Institutes of Health, an abbreviated list of types of work sites in which silica exposure can occur include: blast drilling; removing or crushing rock, concrete, or brick; grinding or cutting stones, concrete, bricks or terrazzo; loading or dumping dusty rock, stone, or sand; making products from silica powder or stones; and using abrasives containing silica (Brauer, 2005). This list illustrates the wide range of work environments in which individuals can be exposed to silica dust.

Despite the potential health risks, both asbestos and silica are still used today. However, there are more warnings, regulations, and safety standards applicable to silica than were present for asbestos several years ago. In 1971, OSHA adopted general industry standards related to the permissible exposure limits for airborne silica. In 1974, standards for construction and maritime industries also were adopted. Additionally, in the mid-1990s, OSHA began a Special Emphasis Program to increase the dissemination of information about silica-related hazards and mitigation techniques (Kingdollar, 2004). Industry measures to mitigate silica liability exposure and increase workplace safety include the use of exhaust systems and respirator masks.

Supplier labeling on packaging, as well as employer-provided safety information, also were made common in the 1970s. Warnings on invoices and material safety data sheets maintained by employers became common in the 1980s and 1990s (Kingdollar, 2004). These measures helped to educate those exposed to silica on both the potential dangers of silica exposure as well as property safety precautions to help mitigate the potentially damaging effects of silica.

Liability and Insurance Implications Since many silica-related injuries occur in the workplace, a large number of claims are likely to fall under workers’ compensation statutes.

As noted in a General Re report on silica, “To the extent that the claims are based on workplace exposures of insured employers, workers’ compensation exclusivity and GL exclusions should keep most claims out of the GL arena” (Kingdollar, 2004). However, silica claimants also may look to responsible third parties for another source of recovery. In many cases, this generates products liability and/or premises and operations claims. Common defendants named in these lawsuits are: (1) suppliers of sand or silica flowers and other products; (2) suppliers of products that when altered or cut generate silica dust, such as manufacturers and suppliers of masonry products and refractory materials; (3) abrasives manufacturers and suppliers; (4) manufacturers of blasting guns, equipment, and cabinets; and (5) makers of respiratory masks and equipment (Brauer, 2005). Details related to the interpretation of current policy provisions, the assessment of liability standards, and common defenses being used by these companies are discussed in later sections of the study. 24Journal of Insurance Regulation One major question is whether compliance with OSHA and other safety standards is enough to protect an entity from being held liable. This is of heightened concern since there have been questions as to the adequacy of the current OSHA standards. For example, NOISH has suggested lowering the maximum acceptable levels of silica exposure (Kingdollar, 2004).

In many cases, it has become difficult for firms to obtain coverage for silica-related exposures. For example, many insurers started to exclude coverage for silica in the mid-1980s. However, companies such as E. D.

Bullard Co. were able to obtain coverage through the surplus market in 1992 (Sclafane, 2004c). The Council of Insurance Agents and Brokers’ Quarterly Market Index Survey for the first quarter of 2004 noted the presence of silica exclusions on some renewal policies. The reports, coming from brokers in the Midwest and Southeast, marked the first time that silica has appeared in the market index responses (Council of Insurance Agents and Brokers, 2004). Until recently, there was no standard silica exclusion.

Thus, insurers were forced to write their own policy language generally modeled after asbestos exclusions. However, the Insurance Services Office (ISO) recently developed a silica exclusion and the American Association of Insurance Services (AAIS) is in the process of developing an exclusion as well (Kingdollar, 2005). Silica vs. Asbestos Based on the nature of the exposure, many have suggested that silica has the potential to be the “next asbestos.” Both asbestos and silica-related illnesses can have long latency periods. Further, there has been wide spread exposure to both substances over time. The similar nature of the related health problems, as well as the large pools of plaintiffs and overlapping experts and defendants, have been cited as potential reasons for the rise in silica claims (Kingdollar, 2004). If silica does follow the same pattern as asbestos, there should be great cause for concern. A 2002 study commissioned by the American Insurance Association estimated that the direct costs of asbestos litigation are between $325 and $650 million, and the indirect costs are between $1.4 and $3 billion (Stiglitz, Orszag, Orszag, Sebago Associates, 2002). It has been estimated that total asbestos-related losses could eventually cost the insurance industry as much as $65 billion (Insurance Information Institute, 2005).

While there may be significant cause for concern, there are a few facts that suggest that silica-related claims may not reach the level of asbestos claims. For example, the mortality rate for silicosis was one-fifth that of asbestosis between 1990 and 1999 (Hartwig and Wilkinson, 2004).

Additionally, even though the number of individuals exposed to silica is higher than those exposed to asbestos, the number of claimants involved in asbestos-related suits is significantly higher at this time. Specifically, the number of claimants involved in asbestosis-related lawsuits was more than 25Silica-Related Injuries 20 times greater than those involved in silica-related lawsuits (Green, 2003). 2 Scope of the Silica Problem One of the most interesting trends related to silica liability is that the number of silica-related deaths is down from approximately 1,000 deaths per year in the 1960s to about 250 deaths annually (Kingdollar, 2004).

Additionally, according to statistics from the National Center for Health Statistics, the age-adjusted mortality rates for silicosis have dropped from 1.68 per million in 1990 to 0.88 per million in 1999. 3 The highest levels of silica mortality have been reported in West Virginia, Vermont, Colorado, Pennsylvania, and New Mexico. The lowest levels have been reported in Florida, Nebraska, Wyoming, North Dakota, and Hawaii. 4 Interestingly, of the claims filed against U.S. Silica, 87 percent were filed in Mississippi and Texas, neither of which ranks in the top five states with the highest silica mortality rates (Kingdollar, 2004). Additionally, with the exception of West Virginia, none of the states that currently have passed or proposed silica liability–related legislation rank in the top five states in terms of silicosis mortality rates.

Another observable trend is occurring within the insurance industry.

Insurers have begun to increase reserves for silica settlements. According to a Standard and Poor’s report in 2004, CNA added $81 million to its mass tort reserves, citing elevated silica claims volumes in the last year. Other insurers have mentioned increased silica claims activity in financial reports without disclosing specific reserve amounts. These trends have led Standard and Poor’s to include silica exposure as a discussion topic in credit evaluation of insurers (Hartwig and Wilkinson, 2004). Finally, reports suggest that insurers have learned from the volume of claims and lawsuits generated by asbestos and are more likely better prepared to develop effective strategies for handling claims that may result from silica exposure. These strategies include supporting coordinated defenses, supporting multi-district litigation, and challenging venue changes and medical issues (Sclafane, 2004a). The use of these strategies may help mitigate the severity of insured losses from silica claims. 2. The number of asbestos-related lawsuits is as of year-end 2002 while the number of silica-related lawsuits is as of August 2003.

3. Based on silicosis mortality rates (per million population) for U.S. residents age 15 and over. The data was obtained from the National Center for Health Statistics multiple causes of death data and population estimates from the U.S. Bureau of the Census.

4. Based on the rate per thousand between 1990 and 1999, as complied by the National Center for Health Statistics. 26Journal of Insurance Regulation Legal Issues Current Nature of the Environment As noted earlier, the National Institute for Occupational Safety and Health approximates that over 3 million individuals are exposed to silica on a regular basis (Black, 2002). Though the number of deaths caused by exposure to silica has decreased by 68 percent over nearly 40 years, there has been a sudden increase in silica-related litigation (Green, 2003).

However, the full extent of the number of individuals sustaining injuries from exposure is hard to approximate, which may result in underestimation of the true extent of the problem. This difficulty is partially attributable to insurers coding of claims. While causes of mass injuries such as asbestos and pollution are coded separately, many insurers commonly code silica claims in a general “all other” category (Sclafane, 2004a). This may be due to the fact that only in the past few years have insurers experienced a rise in the frequency of claims. If the current trend of increasing claims continues, it is possible that insurers will develop a separate code for silica-related lawsuits, and thus be better able to estimate the extent of the silica problem.

Liability exposure for silica-related injuries involves three categories of individuals. These are: (1) employers involved in industries in which silica is used; (2) suppliers and manufacturers of materials containing silica and/or suppliers and manufacturers of equipment that uses these products; and (3) manufacturers of safety equipment. The potential liability exposure of employers was brought to the national forefront following the construction of the Gualey Bridge in West Virginia in the 1930s. During the construction, approximately 2,000 workers were exposed to silica, of which it is estimated that approximately 35 percent died of silicosis. Though the interest in silica litigation died down after states included silicosis as a compensable disease under workers’ compensation statutes, there has been a recent increase in the number of cases filed against companies by workers claiming silica-related injuries. Though these claims are expected to remain covered under workers’ compensation statutes, companies operating in these industries are exposed to tort action in cases in which employees can prove gross negligence on the part of employers. In addition to the exposure faced by employers, manufacturers and suppliers of materials and equipment used by workers in affected industries also are facing lawsuits. The primary allegation against these companies is that they failed to provide adequate warnings of inherent dangers related to their products or equipment. The involvement of suppliers and manufacturers in silica-related lawsuits has raised several questions at the core of cases currently before the courts. The first has to do with the nature of some of the products containing silica, such as industrial sand. If the material only becomes dangerous when combined with other materials and/or used by equipment not provided by the particular manufacturer or 27Silica-Related Injuries supplier, the question becomes when does the product or process become dangerous? In other words, who is ultimately responsible for the damages sustained? The issue of establishing the correct trigger for liability will have a major impact on the future level of silica-related losses and the number of defendants.

Other questions have surfaced as a result of the documentation of potential health risks of exposure to silica, which has existed for over 50 years. Specifically, given the wide spread awareness of the risks associated with silica dust, what protection, if any, is afforded to suppliers and manufacturers due to the fact that users of the products or equipment know or shown have known of the potential dangers? In addition, a related question is who shoulders the ultimate responsibility to provide warnings to end-users of the products or equipment? This issue can be complicated by the bulk nature of the product supplied and the number of individuals involved in the supply chain.

Finally, manufacturers of equipment such as respirator masks and protective gear also have been named in lawsuits involving silica-related injuries. In these cases individuals allege that the equipment did not work properly, thus leading to their exposure to silica, and/or that the equipment did not come with proper warning of potential exposure. A few of the large manufacturers of safety equipment used by workers in silica-related work environments have seen a dramatic rise in these types of lawsuits. Emerging Legal Trends While silica-related deaths have dropped significantly over time, there have been several trends that have emerged in silica-related litigation that have caused concern for both potential defendants and insurers. These trends include the growth in the number of companies involved in silica liability lawsuits, the high level of damages sought, the number of multi- defendant silica lawsuits filed, suspected fraudulent activity, and possible forum shopping. In 2004, Gen Re’s August issue of Hazardous Times discussed the rise in silica-related litigation and the current legal environment as a follow up to an issue published in October 2003. At the time the 2003 issue was published, 49 companies were listed as currently being involved in silica-related lawsuits. The number had increased to more than 400 by the time the follow-up issue was published less than one year later (Gen Re, 2004). 5 In addition to the increase in the overall number of firms involved in silica-related claims, individual companies are seeing a growth in the number of silica-related cases on filed against their firms. For example, safety equipment manufacturer E. D. Bullard Co. reported 62 cases in 1999, involving approximately 2,000 individuals. By 2003, the firm had 643 cases 5. The article acknowledges that the list is not all-inclusive but does include defendants involved in cases that have been discussed in the popular press. As such, the true number of companies named as defendants in silica-related cases may be higher. 28Journal of Insurance Regulation involving more than 17,000 individuals (Sclafane, 2004b). Safety equipment manufacturer 3M also has experienced a drastic increase in claims. Specifically, 3M had more than 9,000 silica-related lawsuits pending in 1999. By early 2003, this number had increased to approximately 54,000 (Gen Re, 2004; Sclafane, 2004a). The growth in the number of lawsuits is compounded by the often high level of damages sought. For example, of the more than 9,000 cases pending against 3M in 1999, nearly 20 percent of those specifying damage awards involved claims of $7.5 million or more (Sclafane, 2004a). Further increasing the potential severity of the problem, there has been an increase in the number of defendants named in multi-defendant cases. Recent articles cite averages in some cases of nearly 90 defendants, with maximums reaching 160 (Green, 2003; Gen Re, 2004). Of growing concern to companies, insurers, and legislatures are suspected fraudulent claims and possible forum shopping. There has been evidence to suggest that claimants are committing fraud by “double dipping.” This involves claimants attempting to obtain damages for both asbestos-related injuries and silica-related injuries. Recent evidence of this was uncovered when a list of claimants involved in a federal silica-related lawsuit filed in Texas was compared to a list of claimants having filed claims with the Claims Resolution Management Corporation for asbestos- related injuries. It was discovered that of the more than 8,600 individuals involved in the silica case, nearly 60 percent had already filed asbestos cases, even though it is highly unlikely that individuals will suffer from both asbestosis and silicosis (Insurance Information Institute, 2005a).

Concern that this may become an escalating problem, the U.S. Chamber of Commerce has requested the Attorney General’s office investigate the “possible widespread fraud in the filing of asbestos and silica-related claims” (BestWire, 2005). The request comes after three doctors in the Texas federal case admitted that they, among other things, had not personally made all of the silicosis diagnoses and had never seen some of the patients they had diagnosed with silicosis (BestWire, 2005). In an opinion signed June 30, 2005, Judge Janis Graham Jack of the Southern District of Texas in Corpus Christi wrote "These diagnoses were driven by neither health nor justice. They were manufactured for money." (Barrett, 2005). The Judge remanded back to the lower courts most of the 10,000 silicosis cases and threw out approximately 100 Texas cases in her jurisdiction. Further, the ruling ordered sanctions against Houston law firm O'Quinn, Laminack & Pirtle, which brought roughly 2,000 of the suits (Associated Press, 2005).

Another major concern related to silica claims is possible forum shopping. Specifically, the Coalition for Litigation Justice suggests that many of the silica lawsuits have been filed in what is being referred to as “magic jurisdictions” for asbestos claims (Hartwig and Wilkinson, 2004).

The idea behind forum shopping in this case is that the jurisdictions that 29Silica-Related Injuries have resulted in awards favorable to claimants in asbestos-related cases also may result in favorable awards to claimants in silica-related cases. Common Defenses and Major Cases Companies and their insurers involved in silica-related lawsuits are using a variety of defenses to combat allegations of both negligence and strict liability. Employers of injured individuals have asserted the “exclusive remedy” defense grounded in the workers’ compensation laws.

Specifically, workers’ compensation insurance is the “exclusive remedy” for workplace injuries in the absence of gross negligence, as it was developed to provide a source of compensation to employees for economic damages in cases of work-related injuries regardless of employer negligence. If the assertion of the “exclusive remedy” defense is successful, it may keep a large number of these cases out of the tort arena. This reduces employers’ exposure in that maximum benefits for cases handled under workers’ compensation laws are limited to the compensable damages prescribed by state statutes. In contrast, the potential outcomes of cases handled through the tort system are harder to predict and have potentially high awards (Hartwig and Wilkinson, 2004). In addition, to receive damages under the workers’ compensation system, a worker must have an actual impairment, and the worker must be able to demonstrate that the impairment resulted from an exposure that occurred at the workplace (Brauer, 2005). As such, this limits the cases of compensable workers’ compensation claims only to individuals with medically documented injuries that can substantiate that exposure occurred in a former or current work environment that caused the injuries. The absence of such strict requirements in the tort area of most states has resulted in cases being filed against employers by individuals who can demonstrate exposure but are not currently presenting an actual impairment.

In this case, the pool of potential claimants would include all workers that have been exposed, which is currently estimated to exceed 3 million. This issue also has been at the heart of reform debates related to asbestos. In cases in which third parties are exposed under premises liability, it may be possible that insurers can use the absolute pollution exclusion to bar claimants from coverage. Exposure under premises liability has surfaced in cases in which a worker’s employer does not own the property on which the exposure occurred, as is common in industries such as construction. In these cases, workers allege that the property owner either knew or should have known of the inherent dangers of the presence of silica dust in the work environment (Brauer, 2005). The ability to use the absolute pollution exclusion may depend on the jurisdictions in which cases are filed, as there is variation in how jurisdictions interpret the exclusion and what is considered a pollutant under the exclusion (Hartwig and Wilkinson, 2004).

The absolute pollution exclusion has recently been successfully used in certain jurisdictions. For example, earlier this year the California Court of 30Journal of Insurance Regulation Appeals upheld a trial court decision in a multi-defendant case of nearly 50 companies, which included suppliers and safety equipment manufacturers.

In the California decision, the appeals court found that the absence of a specific silica-related exclusion does not affect the use of the general pollution exclusion for silica claims. Further, the court stated that since silica is commonly regarded as a pollutant byproduct of sandblasting, the general pollution exclusion is applicable regardless of the fact that silica is not specifically listed as a material within the exclusion. 6 Another defense being asserted by some suppliers of products containing silica is that the product, in the state in which it is supplied, is not dangerous as the particles are too large to be inhaled. Therefore, it is the combination of the product with other products, or its end-use, that creates the dangerous environment. As such, the suppliers maintain they should not be liable for injuries sustained once the product has been combined, altered, or used in some other manner. This defense was successful in the multi- defendant case of Haase v. Badger Mining Corporation heard before the Wisconsin Supreme Court. Defendants in this case included suppliers as well as manufacturers of safety equipment. 7 The “known danger” defense or “sophisticated user” defense is commonly being asserted by manufacturers and suppliers of: (1) materials containing silica; (2) equipment used in silica-related processes; and (3) related safety equipment. This defense suggests that the person in the best position to provide adequate warnings of the inherent dangers in using a particular material or equipment should do so. Manufacturers and suppliers of the materials and equipment suggest that the employers of the actual users should provide this warning. This defense has been successfully used in cases filed in several states including Pennsylvania and Wisconsin. 8 However, this defense has not been successful for all manufacturers and suppliers. For example, one of the most widely cited Texas cases involves supplier U.S. Silica resulted in a $7.5 million award as the jury found that U.S. Silica, as the supplier of the industrial sand used in sandblasting by the claimant’s employer, was responsible for the claimant’s injuries as it failed to warn of the inherent dangers of its product. 9 This, along with a similar case involving Humble Sand & Gravel Inc., has proceeded to the Texas Supreme Court. In the case of Humble Sand & Gravel Inc. v. Gomez, the court found that the duty of a supplier to warn depended upon its ability to reach the end-user and ordered a new trial to determine if the supplier could 6. See Garamendi v. Golden Eagle Insurance Company, et al., No. A104076, A104077 (Calif. Ct. App., First Dist.) for more information. 7. See Haase v. Badger Mining Corporation, 2003 WI App 192, 266 Wis. 2d 970, 669 N.W.2d 737 for more information.

8. See Phillips v. A.-Best Products Company, No. 95-4691 (Pa. Oct. 18, 1995) and Haase v. Badger Mining Corporation, 2003 WI App 192, 266 Wis. 2d 970, 669 N.W.2d 737 for more information.

9. See Tompkins v. U.S. Silica Company, 92 S.W.3d 605 (Tex. App. 2002) for more information. 31Silica-Related Injuries have done so effectively. 10 A decision in the case of Tompkins v. U.S. Silica is still before the Texas Supreme Court.

Legislative Responses State Legislative Action 11 Currently, several states have created or are in the process of creating silica reform bills. Generally, these bills are designed to limit access to tort action to cases in which injuries have occurred. This should help individuals who have actually sustained injuries from exposure to silica be compensated in a timely fashion and for the full extent of their damages. As such, the primary focus of the bills is to establish medical criteria individuals must meet before filing a silica-related lawsuit. This approach is more consistent with the way in which these claims are handled under the workers’ compensation statutes.

Ohio led reform in this area with the introduction of House Bill 342 in December of 2003. The final version of the bill, which was signed into law in June of 2004, states that no legal action can be taken by a claimant in the absence of a prima-facie showing unless “the exposed person has a physical impairment, that the physical impairment is a result of a medical condition, and that the person’s exposure to silica is a substantial contributing factor to the medical condition.” 12 In addition, the Ohio law outlines the prima-facie showing requirements that must be obtained from a “competent medical authority.” These consist of:

• Information concerning the exposed person’s work history and exposure history outlining the person’s places of employment and whether the person was exposed to airborne containments at these places.

• Medical and smoking history.

• Verification that the exposed person has both a permanent respiratory problem and silicosis based on specific guidelines.

10. See Humble Sand & Gravel, Inc. v. Gomez, 146 S.W.3 rd 170 (Tex. 2004) for more information.

11. This section specifically discusses bills that focus on silica (or in some cases silica and asbestos). General tort reform bills pending in several states also could affect the number and types of silica-related claims that reach the court systems. 12. Black’s Law Dictionary defines prima- facie as “at first sight; on the first appearance; on the face of it; so far as can be judged from the first disclosure; presumably; a fact presumed to be true unless disproved by some evidence to the contrary.” As such, a prima-facie showing would suggest that the claimant has enough evidence to proceed with a case. 32Journal of Insurance Regulation The law contains similar language in regards to mixed dust claims. 13 Finally, the law places further restrictions on tort actions for exposed persons that are smokers and alleging exposure to silica caused lung cancer. Though creating the minimum medical requirements for filing silica- and mixed dust-related lawsuits was the most widely discussed aspect of the Ohio law, the law contains several other provisions that could have implications for exposed persons, businesses, and insurers. For example, the law: (1) provides details regarding the statute of limitations for filing claims; (2) establishes the liability of property owners in relation to silica exposure; (3) describes the burden of proof requirements for claimants; and (4) outlines the requirements that must be met in order to establish shareholder liability for silica-related claims under the doctrine of piercing the corporate veil. Specifically, the law states that the statute of limitations begins once the exposed person ascertains, or should have been able to ascertain “through the exercise of reasonable diligence,” that he or she has a physical impairment. Since it is possible that an injury resulting from exposure to silica may not be evident for more than 10 years after the exposure occurs, this provision is designed to preserve an exposed person’s access to tort action until an injury presents itself. In regards to the liability of property owners, the Ohio law requires that the exposure occurred on the owner’s property for the owner to be liable. In addition, the property owner is not liable for any injuries sustained for an invitee on the owner’s property working with products contained silica or mixed dust if the “invitee’s employer held itself out as qualified to perform the work.” This could have a substantial effect on the number of premise liability cases reaching the courts.

The Ohio law also describes the burden of proof requirements for claimants which include three conditions: (1) the defendant “manufactured, supplied, installed, or used” the silica or mixed dust to which the claimant was exposed; (2) the exposure to this silica or mixed dust contributed significantly to the exposed person’s injuries; and (3) that the conduct of the defendant was a significant contributing factor in causing the injury sustained by the exposed person. Finally, in order to pierce the corporate veil and allege shareholder liability, the law states that the claimant must show that the shareholder controlled the entity such that the entity “had no separate mind, will, or existence of its own.” The law outlines the specific evidence that can be used to demonstrate this control. These provisions help prevent ungrounded lawsuits from entering the legal system as these types of lawsuits result in high legal costs to defendants as well as clog the judicial system.

Georgia became the second state to passage silica reform legislation.

Though Georgia House Bill 416 contains very similar medical requirements for filing a tort action, as well as addresses the statute of limitations issue, 13. The law defines mixed dust as “mixture of dusts composed of silica and one or more other fibrogenic dusts capable of inducing pulmonary fibrosis if inhaled in sufficient quantity.” 33Silica-Related Injuries there is one very significant difference between the Georgia and the Ohio law. Specifically, the Georgia law also covers asbestos-related injuries while the Ohio law does not. 14 A potential benefit of having one law covering both asbestos and silica exposures is that it may provide more efficient coordination of efforts to minimize fraud through double dipping by individuals claiming both asbestosis and silicosis. In addition, the Georgia law requires that the lawsuit be filed in the county in which the exposed person resides or in which the exposure took place. This limits claimants’ abilities to forum shop for the “friendliest” judicial environment.

Similar silica-related legislation has been proposed in other states including Florida, Texas, and West Virginia. All three states have taken an approach comparable to that of Georgia and created a single bill addressing both asbestos and silica-related claims. 15 These bills are currently in varying stages of the legislative process. 16 Federal Legislative Action In addition to the pending legislation at the state level, Senate Bill 852 at the federal level could have some effect on potential silica-related claims.

The bill, titled the Fairness in Asbestos Injury Resolution Act of 2005 (the Act), is designed to “create a fair and efficient system to resolve claims of victims for bodily injury caused by asbestos exposure.” However, the Act does address several issues related to potential concurrent asbestos and silica claims. Specifically, the Act requires that if exposure to asbestos contributed significantly to the injuries, an exposed person would be precluded from filing a lawsuit related to injuries from exposure to silica. In addition, an exposed person would be precluded from filing a lawsuit alleging silica-related injuries if the exposed person had asserted or filed a claim for asbestos-related injuries, or was entitled to receive a monetary award related to an asbestos-related claim under the Act. As with the provision contained in the Georgia law, these provisions are designed to deal with the growing issue of potential fraud and double dipping by single claimants alleging exposure injuries from both asbestos and silica. Federal legislation passed that has affected the silica-related claims of some federal employees is the Energy Employees Occupational Illness Compensation Act of 2000. This Act, which is part of Public Law 106-398, provides certain benefits to Department of Energy employees that have 14. The Ohio Legislature passed a separate but similar bill addressing asbestos- related claims. House Bill 292, which also was signed into law on June of 2004, was the first bill of its kind passed by any state.

15. See Florida House Bill 1019, Texas Senate Bill 15, and West Virginia House Bill 3036 and Senate Bill 596 for more detailed information.

16. The Florida bill has passed the Legislature and is awaiting the signature of Governor Bush at the time this article was written. If signed, the bill would become effective July 1, 2005 (Hofmann, 2005). 34Journal of Insurance Regulation chronic silicosis as a result of exposure to silica “in the performance of duty.” The law outlines the extent of the compensation.

Conclusion With over 3 million workers exposed to silica, there is the potential for wide-scale injuries resulting from silicosis. In several cases, insurers have already begun to increase reserves due to increases in expected silica losses.

In addition, the similarities between asbestos and silica, in both the nature of the exposure and the type of injuries created, have many experts concerned that silica claims could create a crisis similar to the ongoing asbestos crisis. As the question of whether silica claims will reach the level of those resulting from asbestos has been raised, an examination of silica liability is warranted. This article outlines the current scope of the problem, including impacted industries, implications for insurers, and similarities to the asbestos crisis. In addition, the article reviews the current legal and legislative environment surrounding silica liability. It is well documented that: (1) there has been a sharp increase in the number of silica-related claims in recent years; (2) silica-related injury claims are spilling out of the workers’ compensation area into the liability coverage of third parties; and (3) both the number and types of companies that have been included in silica-related litigation are growing. This has caused reactions by affected and potentially affected companies, the insurance and legislative communities, and various organizations and agencies in an effort to minimize the potential impact of silica liability. For example, potential defendants and insurers are actively working to develop defenses against claims of negligence and strict liability, as well as applying lessons learned from the handling of the massive tort actions filed related to asbestosis to silica-related claims. In addition, insurers have worked to create silica exclusions for particular policies to limit or eliminate coverage for silica-related injuries.

These exclusions are increasingly being added to both liability and umbrella insurance policies at renewal, according the Council of Insurance Agents and Brokers. The recent release of a silica exclusion by ISO and the potential development of a silica exclusion by AAIS may help to standardize the wording of silica exclusions being added to the policies, thereby reducing variation in the types of silica-related claims paid by insurers.

There is both passed and proposed legislation at the state and federal levels that restrict lawsuits from entering the court system unless there is documented medical evidence of an actual silica-related injury. In addition, some legislation contains provisions designed to reduce potential forum shopping and fraudulent activity such as double dipping by filing both asbestosis and silicosis claims. Finally, on the regulatory front, OSHA is considering reducing acceptable limits of exposure to silica dust in an effort to reduce the potential for workers to contract silicosis (Kingdollar, 2005). 35Silica-Related Injuries As legal precedents related to sophisticated users and liability of property owners evolve with respect to silica, it is likely that changes in the warning labels and safety guidelines associated with silica-related processes will evolve as well. While it may be some time before the full extent of the effect of silica liability is known, it is likely that the fast response of a variety of involved parties as well as the lessons learned from the asbestos crisis, may help mitigate the impact of silica-related claims on companies, insurers, workers, and consumers. References Associated Press, 2005. “Federal Judge Throws Out Thousands of Silica Diagnoses,” Associated Press, July 1. Barrett, Eleanor, 2005. “Texas Silica Opinion May Turn Tide of ‘Diagnosing for Dollars,’ Observers Say,” BestWire, July 6. BestWire, 2005. “Ú.S. Chamber Demands Probe of Asbestos, Silica Claims Fraud,” BestWire, April 11.

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Insurance Information Institute, 2005a. Asbestos Liability, http://www.iii.org/media/hottopics/insurance/asbestos/ [Online] Accessed April 29, 2005. Insurance Information Institute, 2005b. Asbestos Liability, http://www.iii.org/media/hottopics/insurance/asbestos/ [Online] Accessed August 1, 2005.

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Sclafane, Susanne, 2004a. “How Much Will Silica Claims Cost Insurers?” National Underwriter, Vol. 108: 12.

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Sclafane, Susanne, 2004c. “As Silica Litigation Moves Forward, Will Defendants Have Insurance Coverage?” National Underwriter, Vol. 108: 23.

Stiglitz, Orszag, Orszag, Sebago Associates, 2002. “The Impact of Asbestos Liabilities on Workers in Bankrupt Firms.” American Insurance Association, December. 37Silica-Related Injuries