Hints That you Might Have a Subrogation Case

Anytime that the failure of a product causes personal injury or property damage, there is a possibility that an insurance carrier could recoup its expenditures from the manufacturer, installer or servicer.  However, not all product failures result in grounds for subrogation claims.  Sometimes products “wear out” and when they do, it can be due to the expiration of the useful life of the product.  Case in point: water heaters.  Depending on who you talk to, the useful life of a residential water heater can be anywhere between five and ten years.  Then there are those more expensive models that can last between 10 and 15 years.  The life of a product has to be taken into consideration, usually during the investigation phase, so as to make sure that the subrogation case will not be summarily dismissed if the case goes to court.  In the case of fires, both structural and vehicular, where the cause was electrical or mechanical malfunction; the key here is whether the equipment was recently installed or serviced by an outside service company or individual.  In the case of existing equipment, the question of maintenance will arise and become a key piece of information.  If the equipment has been allowed to go unmaintained, then it might be possible for a manufacturer or installer to argue that the operating condition of the equipment was beyond their control and they cannot be held liable.   The same thing applies to situations involving water damage.  Water damage can occur from leaking refrigerators, dishwashers, washing machines, and any other piece of equipment that uses water in the process. 

There are also situations that arise where subrogation is not so obvious.  Assuming that an employer is operating a safe workplace, on the job injuries can be caused by the operation of equipment that is not properly guarded.  OSHA regulations are in effect that prohibit the operation of rotating or moving equipment without proper guarding.  Such equipment includes, conveyors, wire drawing machines, drill presses, milling machines, and stamping machines.  In many instances, rotating equipment is operated with the use of pulleys or flywheels.  These components have to be matched to the rotational speed of the machine.  If the machine is operated at a speed greater than the rated speed of the flywheel, then it is possible for the flywheel to fail.  If the flywheel fails under normal loading and within its expected life, then subrogation is possible.  However, if someone in the plant has increased the rotational speed of operation beyond load limits, then subrogation is most likely not possible.  It should be noted that many smaller pulleys are adjustable and as a consequence, rotational speed can be increased to a dangerous level.  In addition failures from hydraulic hoses can occur where the operator is sprayed with hot oil.  If the hose is routinely replaced as a maintenance item but, fails during its service lifetime, then it can be argued that the hose was defective and likely warrants a subrogation claim against the manufacturer.  Similarly, pressure vessels can EXPLODE and cause property damage and serious injury.  Vessels containing air, water, oil, or any other fluid under PRESSURE must be certified for the service.  If the vessel failed during its expected life, was not over-pressurized, maintained by minimizing corrosion, and inspected on a regular basis; then, subrogation against the manufacturer is a possibility.  However, if the vessel was manufactured in house, by the insured, then any injured employees might have a design defect claim against the employer.               

Ford Fusion Recall

The Ford Motor Company has announced that it has recalled 2013 – 2016 Fusion vehicles equipped with 2.5 liter engines as a result of a faulty transmission shifter cable.  The vehicle can roll away if the transmission is not in the “park” position when the driver exits the vehicle.  The parking brake should be applied before leaving the vehicle in order to prevent a roll away occurrence.  Approximately 270,000 vehicles in North America are affected.  It has been determined that the bushing that holds the shifter cable to the transmission can degrade over time and allow the cable to separate from the transmission.  When the driver moves the shift lever into “park” position, the transmission might not shift into the “park” position leaving the vehicle in a condition to potentially roll away, unattended.  A moving and unattended vehicle has the potential to cause personal injury to pedestrians as well as property damage.  While the remedy is still under development, Ford expects to begin recalling vehicles on May 28, 2019.  For additional information, owners can contact Ford by calling 1-866-436-7332 and reference recall # 18V471.

Pumps and Glycol Solutions

Just completed two webinars; one on the use of glycols as heat transfer fluids and the other on retrofitting pumps in HVAC applications.  Both of these topics are related in that pumps are used to circulate fluids, including glycols, to transfer heat.  Typical applications for glycol use include the food and beverage industry, HVAC, and process chemical.  Pumps applications not only include the previously stated industries but also, utility; both electrical and water, petrochemical, and plastics, to name a few.  Insurance carriers that cover businesses in these industries need to be concerned because property damage as well as personal injury can occur when spills and pump failures occur.  Corrosion is a major problem in systems using carbon steel piping as a conduit for the transmission of the gylcol.  If not properly mixed and the correct inhibitors added, the glycol solution can be acidic and cause wear to occur in pipes and fittings resulting in leaks and spills, if not carefully monitored.  Similarly, the internal components of pumps can come under attack and fail as a result of the acidic conditions that could arise if the glycol solution is not properly mixed.  However, during such instances, insurance carriers are also considering the possibility of subrogating against a third party in order to recover their expenditures.  Potential defendants would include the company mixing and/or installing the glycol solution, the designer and installer of the piping system, and the selector and installer of the pump used in circulating the glycol.  It should be noted that the internal components of the pump can be selected based on compatibility of the fluid to be circulated.

Craigslist and Recalled Products

ABC News has reported that Craigslist is allowing users to post ads in an attempt to sell recalled products. It is against the law to knowingly sell recalled items.  Please be careful when purchasing any manufactured item, whether from Craigslist, Ebay, or any other forum where products are offered on an “as is” condition.  Before you buy do a little homework; it might save you a lot of pain in the future.  Get the name of the manufacturer, model and serial numbers.  Go to the manufacturer’s website and check for a recall on the item.  If you can’t find the item, check the Consumer Product Safety Commission’s website; www.cpsc.gov to see if they have any recalls for the product.  By law, manufacturers are required to report defects to the CPSC as soon as they learn about a problem.  If you find a recalled product – STAY AWAY FROM IT!  Remember, products are recalled because there is the possibility of personal injury or property damage or both.  In either case, working through a serious injury or property damage can be expensive and time consuming.

Educating the public…

In the course of conducting forensic engineering investigations over many years, there is one thing that keeps coming up. That is, people will ask me why their carrier would send an engineer to investigate. It immediately became obvious (early in my forensic career) that policy holders were poorly educated about subrogation. Questions like “do they suspect me of doing something wrong?” and “are they trying to get out of paying the claim?” frequently arise. First let me say that we are engaged because of the way we have been educated and trained to think. In short, we are problem solvers which makes us ideal for figuring out how property damage and personal injuries might have occurred. Second and more importantly, engineers are looking for evidence of a defect in a product, regardless of whether that product is mechanical, electrical, or structural. The reason is because most policies have a clause in the contract that allows the insurance carrier to take possession of whatever evidence is available and litigate against a manufacturer in the name of the insured policy holder. The purpose of doing so is to recover whatever damages have been paid to the insured party. In most homeowners as well as auto and business policies, the carrier’s rights are “subrogated” to the insured’s rights meaning that if the carrier accepts a claim and pays for damages, their rights to recovery are behind the insured’s if the insured recovers anything. For example, let’s say that an insured property owner sues another party for damaging his home and the property owner’s carrier pays to have the house fixed. If the property owner sues and is awarded a judgment for a specified amount, his insurance carrier has a right to that judgment amount as stated in the subrogation clause of the insurance contact. However, defective products are not the only things that can trigger subrogation suits. Faulty work can also cause property damage and personal injury. If a mechanic performing an oil change on someone’s vehicle leaves the oil plug loose causing the new oil to drain and subsequently ruin the engine, he and the company he works for can be sued and held liable for the engine damage. Again, suit would be filed in the name of the auto policy holder and if awarded a judgment, the carrier would be entitled to the award if they spent money to have the engine repaired or replaced.

Having said all of the above, these are the reasons that the public needs to be educated on what prompts insurance carriers to engage engineers and why. The public needs to understand that part of the insurance business is holding those responsible for producing the faulty products and services that they sell.

Is Technology Changing Too Fast?

I just finished reading an article about how in the not to distant future we will have autonomous vehicles. That is to say that cars and trucks will drive themselves. The article, published by the Society of Automotive Engineers, went on to predict that autonomous vehicles would be available by the year 2020, only seven years from now. As a forensic engineer that investigates vehicular accidents, I can’t help but wonder what is going to fail that will cause these vehicles to crash. And something will FAIL. Will it be a software glitch or will some system that is supposed to detect danger miss a cue? History is littered with examples of engineering failures that have caused massive amounts of property damage as well as countless numbers of lives. Imagine traveling at some high speed and smashing into another vehicle because your vehicle, NOT YOU, failed to apply the brakes. The point to be made is that manufacturers, regardless of the industry, are all too eager to be the first to get a new product on the market. When the public starts buying the product, it’s not until then that we find out that the product has problems that have not been eliminated. What products am I talking about? Just think phones, computers, appliances, and yes, cars. I’m sure something will come to mind. Is technology changing too fast? Yes, I think so. As long as manufacturers rush to get their products to market before they are ready, we, the consumers, are going to be paying the price. As a result, I also think that those same manufacturers should be held responsible for property damage and personal injury if their products fail to perform as advertised.

California Gas Line Explosion

Earlier this year, one of the local television stations in the Nashville Tennessee area reported on a gas explosion in a residential neighborhood. (The story can be found on our website at www.rjhill.com – click on WSMV I Team.) In that report, the gas company denied any wrongdoing even though the line was clearly their responsibility. One of the things that came out of that investigation was that the age of the pipe was approximately 20 years old at the time of the explosion. With miles and miles of pipeline, the gas company has the responsibility for making sure that the line is safe and not leaking. Safety is an obvious issue and it is in the gas company’s best interest not to have to pay for property damage and personal injury as a result of an explosion. Now, we are hearing about another gas explosion, this time in San Bruno. It has been reported that the line involved was installed in 1948 and was a 30 inch line that was classified as a high risk. Why then, do gas utility companies, let their gas lines get to the point where public safety is compromised? Surely, they consider human life more important than their pipelines. Is the economics such that the replacement of aging pipelines is more expensive than paying for property damage, personal injury and wrongful death claims? Is keeping the gas company profitable more important than spending money on pipeline improvements? The public needs to know.