FYI:

-Mike Hammond

An article at www.news.com entitled "Why Employers are Cracking Down on Email," brought to my attention a potential legal problem. According to the article, 24% of the employers responding to a recent survey reported receiving subpoenas for emails that were stored in their company records. Not only did the content of existing emails lead to legal troubles, but the destruction of emails had their own adverse legal consequences.

The survey, conducted by the American Management Association and ePolicy Institute, revealed that emails written at work have led to litigation for 15% of the companies responding. Interestingly, many plaintiff attorneys now refer to email as "evidence mail."

Employees write and respond to hundreds if not thousands of emails each year. For an employer to monitor every email is impossible. Therefore, managers and supervisors need to monitor themselves and their subordinates.

Adopting the following tips may prevent your email from turning up as "evidence mail" in the courtroom:

l Write every email with the understanding that people other than the recipient may read what you have written.

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Counselors' Comments

 - Surdyk, Dowd & Turner

The ability of a political subdivision to immediately appeal a negative ruling regarding statutory tort immunity has eroded over the past few years with some appellate courts, including the Second District, holding that such an order is not final and appealable and must await a judgment. Although the statutory provision appears to lack any ambiguity, "An order that denies a political subdivision or an employee of a political subdivision the benefit of an alleged immunity from liability as provided in this chapter or any other provision of the law is a final order," a number of courts have held that a decision denying a motion to dismiss or a motion for summary judgment on immunity grounds does not in fact deny immunity but leaves the determination to a jury.

Earlier this year, the Second District Court of Appeals altered its former position on this issue. In Hubbell v. Xenia, 167 Ohio App.3d 294, 2006-Ohio-3369, the court considered the trial court’s denial of summary judgment in favor of the City of Xenia, which claimed immunity should be reinstated pursuant to R.C. 2744.03(A)(5). The city appealed and the Second District first considered whether the trial court’s denial was a final and appealable order. Id. at ¶ 2. The appellee argued against jurisdiction "because the court did not deny sovereign immunity as a matter of law. She asserts that the trial court merely found that genuine issues of material fact precluded a determination, at that time, of whether the city was entitled to immunity." Id. at 4. Recalling three previous cases, Carlson v. Woolpert Consultants (Nov. 24, 1998), Montgomery App. Nos. 17292 and 17303; Garrison v. Bobbitt (1999), 134 Ohio App.3d 373; and Weber v. Haley (May 1, 1998), Clark App. No. 97CA108, the court admitted, "In short, our past approach was to consider denials of summary-judgment motions based on claims of governmental immunity as final, appealable orders when the trial court had concluded that there were genuine issues of material fact." Id. at ¶ 6-8.

Nevertheless, the appellate panel believed it was time to alter its view. Relying upon decisions from the Ninth and Third Districts, the court held:

When the trial court denies a motion for summary judgment because it finds that there are genuine issues of material fact as to the government's immunity, the trial court has not yet adjudicated the issue of whether the political subdivision or its employee is entitled to the benefit of the alleged immunity. In other words, the trial court has concluded that the state of the record does not permit an adjudication of that issue due to the question of fact. In our view, a governmental entity or its employee is not denied the benefit of immunity until the issue of whether the government or its employee is entitled to immunicy has been fully resolved.

Id. at ¶ 13. Despite the court’s recognition that immediate appealability advanced "one of the principal statutory purposes," conservation of time and fiscal resources, it found "several benefits" to its approach, including: judicial economy; and, "a simple, easily applied test for determining" whether an order was immediately appealable. Id. at ¶ 14-15. The court noted the Fourth District had reached an opposite conclusion. Id. at ¶ 10 (Lutz v. Hocking Technical College (May 18, 1999), Athens App. No. 98CA12).

The court also cited to a recent Ohio Supreme Court decision, State Auto. Mut. Ins. Co. v. Titanium Metals Corp., 108 Ohio St.3d 540, 2006-Ohio-1713, for support. In that case, the Supreme Court determined a decision denying a motion to dismiss on immunity grounds was not a final and appealable order.

The Court, however, based that decision upon the limited trial court record: "The trial court provided no explanation for its decision to deny the motion to dismiss. The court made no determination as to whether immunity applied, whether there was an exception to immunity, or whether R.C. 2744.05(B)(1) precludes contribution as the basis for its decision. The court did not dispose of the case." Id. at ¶ 10. The Court included troubling language that appears to preclude appeals from Rule 12(B)(6) denials:

At this juncture, the record is devoid of evidence to adjudicate the issue of immunity because it contains nothing more than Ohio Briquetting's third-party complaint and Oakwood's Civ.R.12(B)(6) motion to dismiss. No fact-finding or discovery has occurred. The trial court's denial of the motion to dismiss merely determined that the complaint asserted sufficient facts to state a cause of action.

There being no final, appealable order, the court of appeals lacked jurisdiction to consider this matter. The court of appeals considered the issue of immunity premature. The record below must be developed in order to reach this issue.

Id. at ¶ 11-12.

The Second District noted the distinction between Hubbell and Titanium Metals, Inc. but found the Supreme Court decision "instructive in that an order is not immediately appealable merely because the trial court denied a request for immunity." Hubbell, 2006-Ohio-3369, at ¶ 21. The panel extended the Supreme Court’s holding, however, when it applied Titanium Metals, Inc. to a fully-developed summary judgment record:

Although the trial court's order herein discussed whether the City of Xenia is entitled to immunity, and the court made that determination in response to summary judgment motions that were supported with evidence, we believe that the court's failure to resolve the immunity question likewise renders appellate review of the immunity issue premature. Until the trial court has denied the claim of immunity - as opposed to failing to grant the request for immunity at that time - the trial court has merely determined that there are questions of fact that need resolution before the immunity questions can be fully addressed.

Id. If the Second District’s view prevails, then political subdivisions would be unable to challenge negative decisions on either motions to dismiss or for summary judgment.

The Supreme Court recently accepted both a certified conflict and a discretionary appeal on the Hubble case. Hubbell v. Xenia, 111 Ohio App.3d 1467, 2006-Ohio-5625. The certified conflict poses the question, "Is the denial of a governmental entity’s motion for summary judgment on the issue of sovereign immunity due to the existence of genuine issues of material fact a final appealable order, pursuant to R.C. 2744.02(C)?" Id. The conflict case is Lutz, supra. Because the Supreme Court also accepted a discretionary appeal, it is likely the Court will provide direction on the status of appeals from denials of motions to dismiss as well.

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The Claims File

- Craig Blair

Because auto accidents are MVRMA's most common claim, we periodically review the procedure for processing these claims. For discussion purposes, our example will involve a city vehicle that rearends another party, injuring both the city worker and the other driver.

At the scene, the first thing to do is check for injuries and call the police. Request an ambulance when necessary, then exchange information. All member vehicles should have "Auto ID Cards" provided by MVRMA. These cards explain who insures the vehicle (MVRMA) and who the other party should contact to discuss a claim. Employees should be instructed to keep comments to a minimum. They should make statements to no one but the police officers who respond to the call.

The loss should be reported to MVRMA within 24 hours, even if the police report is not available. This contact is especially important if weather conditions were a contributing factor. MVRMA will then contact the other party to discuss the claim procedure and explain the immunities and offsets involved.

Staff will inspect both vehicles and the scene of the accident. Obtaining as much information as possible will assist in handling the settlement of any injury claims.

Once its vehicle has been inspected, the city may proceed with repairs. The final bill should be forwarded to MVRMA who will pay the body shop directly.

The employee's injury claim will be handled through Workers' Comp, and MVRMA will not be involved in that process.

Because of the immunities provided to municipalities under Ohio law, the claimant's insurance company will cover the repairs to his vehicle. However, it will not be able to surcharge his future premiums. MVRMA will reimburse the other party for deductibles and any other expenses for which he has no coverage (i.e. rental car, collision coverage, etc.).

Regarding the other party's injury claim, medical bills will first be paid by any auto or health insurance available. MVRMA will be responsible for any unpaid medical bills, lost wages and monies for pain and suffering related to the severity of the injury. However, no payment is made until the claimant is ready to settle the claim.

Hopefully, your employees will benefit from reviewing these guidelines. As always, staff's objective is to represent your city in a prompt and professional manner with as little disruption to your daily business as possible.

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Loss Control Lowdown

-Starr Markworth

With the arrival of winter, employees who work outdoors face an additional occupational hazard---exposure to the cold. Prolonged exposure to freezing temperatures can result in health problems as serious as frostbite and hypothermia.

More than 700 people die of hypothermia in the United States each year. To help protect workers in cold environments, the OSHA website makes the following recommendations:

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Brokers Beat

The ratings given by A.M. Best & Co. and Standard & Poor's are widely used as a standard for measurement for determining an insurer's acceptability. Knowing more about these ratings should allow you to evaluate the financial quality of insurance carriers. This information will be especially helpful when determining the acceptability of certificates of insurance presented to your city.

Best's rating is a two part ranking, separated by a colon. The first portion is Best's assessment of the quality of overall management. The second, given as a Roman number from I to XV, indicates financial size by policyholders' surplus. Standard & Poor's uses a single rating scheme measuring the company's overall financial strength.

The + or - signs following the letter rating indicate the relative position within the class. There is not an exact comparison between the two ratings. Each system uses slightly different criteria and/or weighting. The use of both rating systems provides a better understanding of the strength or weakness of a company.

With regard to Best's rating of policyholders' surplus, Class I is the lowest financial category indicating surplus of under $1,000,000. Class XV indicates policyholders' surplus of over $2,000,000,000. In the middle, Class VII surplus ranges from $50,000,000 to $100,000,000.

Your city should generally require insurance with companies that have a minimum Best's rating of A-:VII and a Standard & Poor's rating of at least BBB. This requirement does not guarantee the insurer will be solvent when called upon to pay a loss, but it does reduce the possibility of coverage being placed with a clearly unqualified insurer.

In some cases, Best or Standard & Poor's does not assign a rating. Best categories for insurers for which no rating is assigned are:

NA-1 Special Data Filing

NA-2 Less than Minimum Size

NA-3 Insufficient Operating Experience

NA-4 Rating Procedure Inapplicable

NA-5 Significant Change

NA-6 Reinsured by an Unrated Reinsurer

NA-8 Incomplete Financial Information

NA-9 Company Request

NA-11 Rating Suspended

Companies with NA-11 rating should be considered unqualified. The fact that Best has suspended the insurer's rating is a trouble sign. Likewise, NA-9 can be an indication of problems, as the insurer has probably requested no rating as an alternative to a low rating. However, some of the NA classifications deserve further investigation. Although Best does not rate very small companies or recently formed companies, these insurers may be otherwise satisfactory if no other good alternatives are available.

For classes NA-2 and NA-3, Best provides a financial performance index (FPI). Those categories are:

8 or 9 Strong

6 or 7 Above Average

4 or 5 Average

2 or 3 Below Average

1 Not Assigned

Standard & Poor's uses an NR to indicate companies not rated.

In some cases, a vendor may be unable to obtain coverage from a company that meets the rating requirements of your entity. In such cases, your entity may wish to review the financial history of the available insurer, determine how long the insurer has been providing the coverage and establish whether or not the insurer is authorized to transact insurance in the State of Ohio.

An authorized insurer is licensed by the Ohio Department of Insurance to write insurance policies and issue them directly to insureds within the state. Another class of carriers, referred to as surplus lines carriers, also have the ability to transact insurance in Ohio but enjoy less scrutiny than authorized carriers. The Ohio Department of Insurance posts lists of both classes of carriers on its website: www.ohioinsurance.gov.

A city may choose to accept an insurer with less than a Best rating of A-:VII or Standard & Poor's rating of BBB, but this decision will be exposing the entity to the possibility of an unpaid claim. As an aside, major insurance brokers and agents insist on placing clients in companies with high ratings as a way of protecting themselves against potential E&O claims from their clients.

You can access ratings over the Internet for no cost at www.ambest.com and www.standardandpoors.com. In addition, Alliant Insurance Services is available to assist you.

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Coming Events

December 6, 2006

Hot Topic Luncheon

The Emeral Ash Borer - How Will It Impact Your City

11:30 am - 1:30 pm

Heatherwoode Golf Club, Springboro, OH

December 18, 2006

MVRMA Quarterly Board Meeting and Holiday Luncheon

9:00 am

MVRMA Offices

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An often overlooked "tool," provided for the convenience of trustees and employees of MVRMA’s member cities, is the MVRMA website www.mvrma.com. It contains just about anything you would ever want to know about MVRMA, is simple to navigate and is updated frequently.

You can "surf" historical, financial and coverage information as well as past issues of Risky Business. In fact, this newsletter was probably on the website the day it was delivered to the printer!

For those Trustees who can't locate their handbooks, the website is a handy alternative. The online Handbook generally contains the most current information, policies and procedures.

We encourage you to use this "tool" and let us know what improvements might be helpful.

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