Prompt Injury Reporting Could Save Health Clubs Thousands In Legal Fees

Kim Marshall was injured while working out on a treadmill at Bally’s in Tacoma, Washington.  As a result of her injuries, Marshall filed suit against Bally’s Pacwest; Life Fitness, the company that manufactured and owned the treadmill, and Washington Athletic Repair, the company that installed and maintained the treadmill.  There were some discrepancies as to what actually caused Marshall to be ejected from the treadmill, and it was this discrepancy that led to the dismissal of her suit.

The following facts where established in Marshall’s original deposition:  She set the treadmill at 2.5 miles per hour for fifteen minutes.  The treadmill abruptly stopped at thirteen minutes.  Ms. Marshall reset the machine, but it restarted at 6.2 miles per hour instead of the slower pace she had initially programmed.  This sudden start threw her backward, causing her to strike her head against a plexiglass wall.  The blow to the head resulted in a brain injury.

However, when questioned at trial, Ms. Marshall said she could not remember anything after resetting the machine.  She could not recall the speed the machine restarted at or even if she was thrown backward into the plexiglass wall or to the side against something else.  Her attorney stated that she had a two-week memory lapse following the brain injury.

The trial court concluded that once she testified in court that she could not remember what actually happened after she reset the treadmill, she could not point back to her deposition and assert that pervious testimony as fact.  And because she could not tell the court what the machine did when she reset it, she had no proof that the machine malfunctioned at all.  The court reasoned it was just as likely that she tripped, fainted, or fell after resetting the machine because there is no other evidence to establish what happened.

Marshall attempted to win on another legal theory called spoliation, which is the intentional destruction of evidence.  This theory is based on the assumption that, when one party intentionally destroys evidence relevant to a case, that evidence must have been unfavorable to them.  In this case, Marshall’s injuries occurred in May 1993, and her attorney did not ask to examine the treadmill until September 1997.  After Marshall’s injury, the treadmill remained in use at Bally’s.  In November 1993, Washington Athletic replaced the CPU in all Life Stride 9500 treadmills, including the one at issue.  Marshall’s attorney had not requested that the CPU be preserved.  That same treadmill remained operational until April 1997, when its frame broke.  At this time, the machine was returned to Life Express for replacement.  The court concluded that, because Marshall’s attorney did not request to inspect the machine until four years after the incident, Bally’s could not be held accountable for having destroyed evidence.

Finally, the court also took into account the waiver clause in Ms. Marshall’s Membership contract with Bally’s.  The clause stated, in part, that the club member is “voluntarily participating in these activities and assume(s) all risks of injury… that might result” and that the member agrees “to waive any claims or rights (the member) might otherwise have to sue (Bally’s) a factor, the court took into consideration when dismissing Marshall’s claim the fact that she could not prove that her injury resulted from any malfunctioning of the treadmill she was using.

  Marshall V. Ball’s Pac West, Inc., 972 P.2d 475, (Wash.1999).

In My Opinion  Proper accident and injury reporting can go a long way in documenting proper practice and enhance the ability to succeed in litigation.  In the above case, if witnesses observed that the plaintiff tripped, rather than her claim that she was thrust from the treadmill the claim could have immediately been dismissed, thus saving on expensive legal defense fees.  Prompt accident investigation procedures including written statements of witnesses are important.

Article Compliments of From The Gym To The Jury, Volume 1, Number 1

Collapse of Temporary Structure Exclusion In Sports

General Liability insurance policies for sports and recreation organizations sometimes contain a potentially dangerous exclusion entitled “Collapse of Temporary Structure Exclusion.”

Presumably, the purpose of this exclusion is to protect the General Liability carrier against paying a claim in the event of collapse of bleachers or similar structures such as tents, signs, billboards, and fences that are temporary in nature.

Unfortunately, the exclusion does not define “temporary”.  Does “temporary” mean a one time event?  A season?  A Year?  Are any bleachers that can be moved considered temporary?

Bleacher collapse is a serious event in terms of both the number of spectators that can be injured and their severity potential.  Because of the seriousness of these bleacher collapse incidents, sports organizations can’t afford to have this ambiguous exclusion on their General Liability policy.

Source:  John Sadler

Contractual Liability Limitation In Sports General Liability Policies

Standard General Liability policy forms automatically include coverage for many types of contractual liability that may be assumed for tort liability for injuries to third parties in certain types of hold harmless and indemnification provisions. The Contractual Liability Limitation endorsement can take away needed protection for a sports organization that enters into certain contracts

For example, a league may send a team to play in a travel tournament and the agreement with the tournament host may include an indemnification and/or hold harmless provision that requires the travel team and its administrators to contractually assume all liability for injuries to players during tournament events, even if due to the sole negligence of the tournament host. In the event of a player injury during tournament host provided entertainment such as a swimming party, the travel team would be contractually responsible for all damages even though liability for such would normally belong to the tournament host but for the hold harmless / indemnification provision. The presence of the Contractual Liability Limitation in this example would likely remove all General Liability coverage for the travel team and may subject its administrators and coaches to personal liability.

The presence of the Contractual Liability Limitation endorsement should be negotiated out of a General Liability policy for a sports organization. If negotiations are not successful, a new carrier should be found upon renewal.

Source: John Sadler

Punitive Damages Exclusion In General Liability Insurance

The punitive damages exclusion on a General Liability policy can have a devastating effect for sports and recreation organizations such as teams, leagues, recreation departments, camps, etc. and their directors, officers, employees, and volunteers. General Liability policy forms containing this exclusion should be avoided since coverage for punitive damages is generally available in the market place.

Most of the lawsuits that arise in the sports and recreation context for participant and spectator injury ask for punitive damages in addition to regular compensatory damages. This is why the lawsuit papers use high voltage words to describe the wrongful conduct such as wanton, willful, grossly negligent, acting with reckless disregard for the safety of others, etc. Punitive dames are meant to punish the wrongdoer by making an example for others to see.

Since most lawsuits ask for punitive damages, it makes sense that coverage for such is desirable in order to reduce the worry factor.

Punitive damages may not be insurable in some states as such coverage may considered to be a violation of public policy. Various state statutory codes that limit coverage for punitive damages often distinguish between directly assessed punitive damages and vicariously assessed punitive damages. Directly assessed punitive damages are those that are awarded directly against the wrongdoer. On the other hand, vicariously assessed punitive damages are those that are assessed against a defendant that was not directly negligent but instead had liability imputed under agency principal law. For example, a corporation may be vicariously liable for the acts of its employees.

The following states have laws that limit the insurability of punitive damages that are directly assessed against the defendant: AR, CA, CO, CT, FL, IL, IN, KY, LA, ME, MA, MN, MT, NV, NJ, NY, ND, OH, OK, OR, PA, RI, TN, UT, and VA.

The following states have laws that limit the insurability of punitive damages that are vicariously assessed against the defendant: NY, OH, UT, and VA.

A number of states are currently undecided on the issue of insurability of punitive damages.

Source: John Sadler

Beware Athletic Participant Exclusion In Sports General Liability

The existence of “Exclusion – Athletic Or Sports Participants” is by far the most troubling exclusion that is commonly found in General Liability policies of sports and recreation organizations. The applicable language of this exclusion reads: “With respect to any operations shown in the schedule, this insurance does not apply to “bodily injury” to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.”

Obviously, sports and recreation organizations frequently face these types of lawsuit risks and the damages tend to be severe in nature. Therefore, it is unconscionable for this type of exclusion to appear in the General Liability policy of a sports organization if such coverage is readily available in the market place. And, such coverage is readily available and affordable in the current market place with the exception of certain semi pro adult sports or sports of a high risk nature.

Sports and recreation organizations that have the Athletic Participant Exclusion have their coverage reduced to nothing more than a policy that covers lawsuits arising out of spectator injuries.

If the General Liability policy is “silent” and there is no mention of the Athletic Participant Exclusion, it can be safely assumed that coverage automatically exists even if it is not affirmatively stated. However, some carriers provide an affirmative coverage grant by creating a coverage called Participant Legal Liability (even though this is not necessary and is primarily a marketing ploy). It is important to note that most carriers that specialize in writing General Liability for sports and recreation organizations do provide the affirmative coverage grant of Participant Legal Liability on a special endorsement. But, the special endorsement may actually introduce certain new exclusions such as Player vs Player or Participant vs Participant which would not be found if the policy were silent. These two exclusions will be discussed in a future blog.

It is always surprising to me to find out how many sports and recreation organizations have the Athletic Participant Exclusion on their policy but don’t seem to be aware even though they have presumably knowledgeable insurance agents and risk managers looking out after their interests. I teach classes to recreation department administrators and I have found that the Athletic Participant Exclusion exists on roughly 25% of the General Liability policies that they bring to class to be reviewed.

Source: John Sadler

Covered Activities Under Sports General Liability Policies

• Tryouts
• Games
• Practices
• Tournament
• Non Sport Outing