HEIGHT OF ABSURDITY — New York’s Dizzying Scaffold Bill
HEIGHT OF ABSURDITY
New York’s Dizzying Scaffold Bill
By Casey O’Brien
ALBANY, N.Y.—Governor Andrew Cuomo has stated there won’t be much movement on the Scaffold Law this year; but that doesn’t stop the issue from continuing to be highly contested throughout the state.
Labor Law 240, more commonly known as the Scaffold Safety Law, was created in 1885, calling for the “absolute liability” of employers in regards to onsite work accidents and injuries. Today, the opposing stances are either to amend an out-of-date law, or keep the law as is, protecting workers on job sites.
In a recent interview with Crain’s New York Business, the Governor told their editorial board the Scaffold Law was not high on the list of priorities for the rest of the year.
“My calculus is you have to prioritize what you want to get done first. You get a much bigger bang for the buck waging these battles than [trying to reform the] scaffold law, or by the way another 10 battles that have to be fought. Even if you asked businesses writ large [to] prioritize the problems, they would have started: personal income tax, corporate tax, estate tax, property tax … they would have gone right down the list. And I’m going right down the list. Now they would say scaffold, but they would say, scaffold what? No. 8? 12? Depends on what business you’re in, [and] you basically have to be in the construction business,” said Cuomo.
“The New York Insurance Association (NYIA) urges the state to act this year in reforming the Scaffold Act. This antiquated law is suffocating the growth of business and our state’s infrastructure. Fewer New York City schools being built and the astronomical cost to rebuild the Tappan Zee Bridge are just two of the many examples of the profound negative impact the Scaffold Act has on our state,” said NYIA’s President, Ellen Melchionni. “We are the only state in the nation with this law on our books. It is not a construction problem or an insurance problem. The fact that a worker bears no responsibility for his or her actions, even if the person is drunk or ignored safety protocols, is a huge concern for small businesses, municipalities and ultimately New York taxpayers.”
“The Scaffold Act does not increase workplace safety and in fact makes a job site less safe. The only benefactors of keeping the status quo are the personal injury lawyers who see the unfair law as a gold mine. A comparative negligence standard needs to be introduced in all height-related cases. New York will never be business friendly until this law is changed,” Melchionni said.
NYIA, The Independent Insurance Agents and Brokers of New York (IIABNY) and Professional Insurance Agents of New York (PIANY) are in favor of the law being amended to include a “comparative negligence” standard.
“If the worker contributed to his own injury, then that would be considered in the percentage at fault,” said Dan Corbin, Director of Research at PIANY.
“We are in favor of amending the law to adopt a comparative or contributive negligence standard, which is lacking right now,” said Tim Dodge, Assistant Vice President of Research with IIABNY.
“The New York Daily News reported on some cases; for example, a man was standing on wet waterproofing, and he knew it was wet, but decided that was a good time to use a power saw anyway, and got $300,000 for one of his fingers,” said Dodge. “Things like that happen, and that’s the part that’s very frustrating to our contractors and those of us who have to provide insurance to them, because those are things that the construction firm can’t necessarily prevent. They can tell people to use common sense, but you can’t force them to do it.”
Dodge explains that the way the courts currently interpret the Scaffold Law finds the contractor ultimately responsible for an injury, which comes out of insurance policies, causing insurance premiums to rise.
“The initial law, Section 240 was enacted in 1885, and back then there was very little protection for an employee who is working from a height,” said Corbin. “The law made sense back then, but now that we have so many other protections for employees, of course the main one is worker’s comp that pays their doctor’s bills and loss of wages.”
“You have to ask yourself, why does a worker who falls two feet get to sue everybody on the site, when some worker in a manufacturing plant slices off his hand and he can’t sue,” said Corbin. “It just doesn’t make sense anymore to have this law interfere with the construction business.”
One concern with the Scaffold Law is the cost of liability insurance, which both Dodge and Corbin acknowledged.
“The problem in New York is the cost of general liability insurance is higher than the surrounding states. There are several studies that have been done, by ISO and AIA that have suggested that in New York City the costs are 500 percent higher than surrounding states, and outside of New York City it’s about 250 percent higher,” said Corbin. “So the really only significant difference between the states is the Scaffold Law.”
“I think contractors in New York pay high premiums for liability insurance or have trouble getting it because of the severe nature of Scaffold Law claims. It may not be all that frequent, but when they happen they are on the low end of hundreds of thousands of dollars, and on the high end, tens of millions of dollars,” said Dodge.
“In some of those claims the defendant was actually at fault, the defendant was responsible for the injury. But there are some cases where the worker’s own behavior contributed to the accident, where the worker was the one who placed the ladder and didn’t do it properly,” said Dodge. “The courts have interpreted the Scaffold Law to say that even though the worker put the ladder up there, it was in the end the owner and the contractor’s responsibility to make sure it was properly placed. So the worker’s own carelessness in setting up that ladder is never taken into account.”
If the law does not get amended, Dodge says the best case scenario would be the market staying the same, “which is that liability insurance for certain types of contractors is difficult to get, is expensive when you can get it, and sometimes is not terribly comprehensive.”
“The worst case scenario is that it becomes even less available, where the cut of policies becomes even skimpier. There are policies out on the marketplace now that effectively do not cover Scaffold Law claims,” said Dodge. “You could see more of those types of policies on the market if the law stays as it is, or prices climb even higher than they are now, or both.”
According to Corbin, the cost of building will go up if the law is not amended. “Right now one source says that it costs about $10,000 for every home that’s built, and this law is adding to that cost. It’s not just contractors that are feeling the pain, anybody who is hiring the contractors are feeling it because the owners are responsible to pay these claims as well as general contractors, so that adds the cost to school projects, municipal projects, it adds to any commercial building that’s being built, and especially it seems to impact the transportation sector for bridges and elevated highway construction.”
If the bill is amended, Corbin says insurance companies would be able to loosen their underwriting and provide coverage previously unavailable. “If we can get negligence standard, it will make it [easier] to underwrite general liability insurance in New York, and hopefully the market would improve,” said Corbin. “And the bottom line is the contractors will be better protected, and the owners will be better protected, and the costs will come down.”
PIANY were among the 32 businesses who penned a letter to Governor Cuomo, dated April 29, in response to his statements made to Crain’s. The letter reaffirms their stance on amending the Scaffold Law, and urges the Governor to reconsider making it a priority.
“The Scaffold Law drives up costs on virtually every segment of our economy, from major employers, small business and farmers seeking to make capital investments in their businesses, to school districts and local governments. They not only face higher construction costs, but are also on the hook for the Scaffold Law’s outrageous, only-in-New York absolute liability standard.”
“State agencies and public authorities face the same challenges, and see their already generally constrained capital dollars being consumed by much higher insurance costs. Taxpayers and homeowners are paying the price, too, both in the form of higher residential construction costs and even higher tax bills. Even victims of natural disasters like Super Storm Sandy are being hurt by the Scaffold Law, as evidenced by the many relief and recovery organizations that have recently come out in favor of reform.”
Among those who oppose an amendment of the Scaffold Law are the New York Public Interest Research Group (NYPIRG), the Center for Popular Democracy, and the New York State Trial Lawyers Association (NYSTLA).
“The debate around the state’s Scaffold Law is another example of insurers claiming there’s a crisis, without publicly putting out any verifiable data to back up their claims,” said NYPIRG Legislative Counsel Russ Haven. “We’ve seen this before when it comes to the ‘out-of-control’ auto insurance fraud crisis and medical liability insurance. Workers who make their living building skyscrapers and at other risky jobs at high elevations need to know that reliable safety systems are in place and that’s what the Scaffold Law promotes.”
“Every day, there is another reminder of the danger faced by thousands of construction workers in New York. Construction remains one of the most dangerous jobs in the state,” said Josie Duffy, of the Center for Popular Democracy. “That is why workers, especially those working at dangerous heights, need common sense safety laws like the Scaffold Safety Law, to protect them. This common sense law promotes safety by holding accountable those who control a construction site and are responsible for the safety of those who work there.”
On May 6, the Lawsuit Reform Alliance of New York released a report titled “Power of Attorney: Exploring the Influence of the Trial Bar in New York State Politics,” which focused on the spending of New York’s Trial Lawyers. They found that in 2013, lobbying spending had increased 37 percent since 2010.
“Aggregate reported lobbying expenditures between January 1, 2013 and December 31, 2013 totaled $1,147,139, which includes $1,057,139 for NYSTLA and $90,000 for NYATL (New York Academy of Trial Lawyers),” the report states. “This was the first year on record during which NYSTLA spent over $1 million on lobbying.”
In a press release issued by the New York State Chapter of the Associated General Contractors of America, President and CEO Mike Elmendorf stated, “[The] report shows why issues such as Scaffold Law reform, which would create jobs, reduce taxes, and increase worker safety have failed to become law in New York. Governor Cuomo said they were the most powerful force in Albany and now we know there are more than 1.2 million reasons why he may be correct. It’s time for Albany to stand up to the trial lawyers and thier shadowy special interests and pass not only Scaffold Law reform, but many other important pieces of legislation currently being blocked by the trial lawyers – many of which would create jobs, lower taxes, and improve New York’s economy for all New Yorkers.”
Dodge had not seen the report, but said, “The trial lawyers, this is one of their issues, one of many issues that they have. To the extent that they are stepping up their spending on lobbying, they’re probably making their case either more loudly or more often, or some combination of the two. So I don’t think it should be a surprise to anyone that increased lobby spending by the trial lawyers might have something to do with the reform not happening this year.”
“The law has never been under such scrutiny as it is now, so there is a much greater threat to it being revised which would not make the trial attorneys happy,” said Corbin. “So if they see that threat there could be a reason that they are spending more money to oppose any changes.” In February, the Nelson A. Rockefeller Institute of Government issued a study concerning the Scaffold Law, in conjunction with Cornell University. The report stated after Illinois repealed their version of the Scaffold Law in 1995, non-fatal construction injuries had dropped.
The report was received negatively, after it was revealed the report cost $82,000 and was paid for by the state Civil Justice Institute, researchers for the Lawsuit Reform Alliance of New York, who are for amending the law.
The Institute’s Director, Thomas L. Gais has condemned the report in recent weeks, stating the study suffers from “really big weaknesses,” and that it is not considered an official product of the Institute.
On May 1, the Institute issued a statement saying, “The funder did not attempt to influence the development of the research design, collection, or analysis of data at any time during the study.”
The Center for Popular Democracy announced on May 5 they had filed a Freedom of Information Law request with the Institute in regards to the study. Information the Center requested includes the original request for a study, as well as other communications between the Institute and the Lawsuit Reform Alliance pertaining to the Scaffold Law.
“When industry funds bogus research in hopes of undercutting New York’s critical worker health and safety laws, the public needs to know,” said Connie Razza, Director of Strategic Research for the Center for Popular Democracy in a press release. “We take very seriously the fact that industry dollars were used to finance a ‘study’ that puts forward the incredible assertion that New York’s Scaffold Law, which protects workers working at a height, actually causes worker injuries… We are now turning our sights on the money trail that financed this bogus work. Industry should not be allowed to try to buy credibility from institutions like SUNY.”
Assemblyman Francisco P. Moya (DJackson Heights) introduced bill A8745 in February, also known as the Construction Insurance Transparency Act. The bill also has a companion bill in the Senate, S6700, sponsored by Senator Andrew J. Lanza (RStaten Island). The sponsor’s memo explains its purpose as expanding “upon current insurance reporting laws by providing more detailed reporting requirements of liability insurers’ ‘financial statements’ and ‘closed claims’ data, where those insurers provide coverage against claims made under Labor Law 240.”
The memo goes on to say, “This data collection will provide lawmakers with a source of reliable and accessible data that will better enable them to evaluate liability insurance in this area and assist in providing an optimal product to New York citizens.”
“The Construction Insurance Transparency Act is a common-sense measure that seeks to inject some hard facts into the highly-politicized debate over the Scaffold Safety Law. Opponents of the Scaffold Safety Law claim that the law drives up costs, but the fact is, we just don’t know if that’s the case,” said Assemblyman Moya. “The Construction Insurance Transparency Act would close the fact gap by calling on insurance companies to open up their books. I am sure that advocates on both sides of the Scaffold Safety Law divide can agree that transparency makes sense. Support for the Construction Insurance Transparency Act is growing and we look forward to seeing it signed into law this year.”
NYIA opposes S6700/A8745 sponsored by Senator Lanza and Assemblyman Moya that would mandate individual insurance companies to publicly disclose proprietary information related to labor law claims. Industry-wide data is already publicly available. First, each general liability insurer’s rates are already filed with and regulated by the New York State Department of Financial Services. Second, loss costs are calculated by the independent rate service organization Insurance Services Office (ISO) on an aggregate basis,” said Melchionni. “Analysis of ISO’s data shows: costs based on filed rates for New York City exceeded rates for six comparable states by 300 percent to 1200 percent for six construction classes, loss cost averages ranged from 225 percent to 500 percent in New York City for two construction classes, and rates for Long Island and Upstate New York ranged from two to four times the rates for Florida or Connecticut across six construction classes.”
“The bottom line is if insurance companies were able to write this business for even a small profit, many would. The state needs to focus on determining what can be done to encourage more companies to write this type of liability insurance,” continued Melchionni. “The extremely limited number of companies currently in the market is a testament to the problems created by the Scaffold Act. The cost drivers need to be carefully examined. Absolute liability for height-related claims is a blank check in New York—leaving insurance companies, businesses, municipalities and ultimately taxpayers open to infinite threats. Comparative negligence is the overwhelming standard for liability cases in New York. Scaffold Act claims need to be held to that same standard.”
Dodge said IIABNY had not taken a position on these two bills, but did not know if the financial reports would be beneficial.
“I guess the sponsors of those bills have introduced them because they don’t really believe what the insurance companies are saying, so they want to see data on what kind of losses those companies are paying out,” said Dodge. “I think what gets forgotten is insurance companies compete with one another…companies are very much aware of the effect on their competitive position of raising rates when they don’t have to.”
“So while I can understand why people would want to see hard data as to what the companies are paying out, I just think they wouldn’t be charging the prices they were unless they needed to do so to cover their losses. I can understand why people would want more specifics; I’m not sure how much more that would tell us,” said Dodge.
In January, Assembly Majority Leader Joseph D. Morelle (D-Rochester) and Senator Patrick M. Gallivan (R-C-I, Elma) introduced legislation, A3104 and S111 respectively, which would “establish a comparative negligence standard for claims under Labor Law sections 240 and 241 with respect to a recalcitrant worker.”
“This bill does not take away the right of any injured worker to sue. Rather it makes a recalcitrant worker responsible for his own conduct. This approach encourages workplace safety by encouraging workers to take responsibility for their own safety,” states the sponsor’s memo. “There are conflicting court cases that apply the doctrine of recalcitrant worker and this bill would clarify worker responsibility. This bill would establish a uniform standard for the application of the recalcitrant worker doctrine. It also is a modest change in the absolute liability of the safe place to work statute that remains the only such statute in place among the other 49 states.”
“My goal is to modify the law to a comparative negligence standard that will level the playing field and reduce mandated costs for small businesses, farms, manufacturers, municipalities and school districts, and ultimately taxpayers. I would hope that this is one of the priorities that we consider this session,” said Senator Gallivan.
“NYIA supports S111/A3104 sponsored by Senator Gallivan and Assemblyman Morelle that allows for comparative negligence of an injured worker in certain situations,” said Melchionni. “The association also supports additional proposals that would permit comparative negligence in all circumstances.”
“We [PIANY] are in support of any bills that will change the strict liability standard to negligence standard,” said Corbin.
Dodge stated IIABNY did not support these bills, saying they “don’t go far enough.” NYSTLA issued a memo in opposition of the bills in April, stating they would “undermine the protections of New York’s Scaffold Safety Law.”
“[It would] abolish a long-standing public policy intended to protect workers, significantly increasing the opportunity for abuse by unscrupulous owners and contractors of construction sites,” states the memo. “It is also unnecessary given the existing defenses of the recalcitrant worker and sole proximate cause. The fundamental premise of Labor Laws 240, 241 and 241-a is to ensure that safety equipment to protect workers is in place in all circumstances.”
“Unfortunately, this bill would allow site owners and contractors to unfairly shift the burden of safety from the site owner or contractor, who exercises control of the work site, to the worker, who is powerless to exercise such control and is clearly in a subordinate position,” the NYSTLA memo continues. “In doing so, this amendment would skew the playing field and allow such owners and contractors to avoid their obligation to provide workers operating under inherently dangerous conditions with the necessary safety devices as required by the statute.”
Melchionni stated NYIA wishes the Department of Financial Services will take a stand on this issue as well.
“NYIA encourages the Department of Financial Services to take a leadership position on this issue. The state’s insurance experts need to weigh in and explain the detrimental impact the Scaffold Act has on New York’s insurance market,” said Melchionni. “NYIA remains hopeful that the legislature will adopt a comparative negligence standard. We think DFS taking an active role in changing this antiquated law is instrumental to the likelihood of this issue being addressed in the near future.”
