April 2015

A recent Wisconsin court case found manure spread on a farmer’s field is a product; but once the manure runs-off into his well, the bacteria in the fertilizer is an environmental hazard, not part of the product.  For the purpose of this discussion, let’s assume the bacteria residing normally in the well is distinguishable from the bacteria normally residing in manure.

Illness from bacteria involves the species of bacteria and its population.  The population is measured in “colony forming units” (CFU)  Homogenized milk might be home to 10,000,000 microbes per ounce, which is a healthy addition to your digestive system, no problem.  Anthrax can make you very ill at 100,000 CFUs.

The court struggles with the origin of the bacteria, and the factors raising its population to pathogenic levels.  Something of a chicken and egg question.  The bacteria in cow manure will be those found in milk, think about the host for both.  If the population of human health-threatening bacteria in the well is increased by feeding them manure, then the manure is a product and the bacteria is a contaminant.

Where will this finding be applied next?  Consider the food service industry.  Will restaurant dishes now be considered the product while salmonella is an environmental contaminant?  Do restaurants need to begin investigating environmental liability policies?  Yes.

Don’t overreact to this news.  Each state individually regulates insurance.  Wisconsin folks might need to review their options if the appeals court upholds this division of bacteria and source.

Ask your professional agent to read the policy language in your general liability products form and interpret the environmental exclusion.  These policies have different language.  Redouble your efforts to eliminate any bacteria which could be a health hazard.  Follow health department guidelines, particularly for food handling.

Every business will be affected by this ruling.  Good risk management analyzes exposure in advance of the crisis.  Where can bacterial infections originate in your operation?

Malpractice reflects many occupations: design engineers, doctors, lawyers, any advisors, consultants or professionals who render opinions. Sometimes referred to as professional liability or errors and omissions insurance, let’s use malpractice as a catch-all for these purposes.

Malpractice concerns a standard of care, an expected level of professionalism. For example, architects should use the building code as an important reference. But building codes are minimums; do you really want your house built to a minimum of safety standard? Yet, when design professionals stray from strict building codes, they must prove the betterment, have it approved, and then they are still liable in the event of failure, or perceived failure.

Deck collapses are frequent and potentially disastrous. Most occur because the deck is overloaded well beyond design capacity within the building codes. Knowing this fact, should the architect stray from code and reinforce the connection between structure and deck more? Does this create a duty to inspect the construction to assure the changes were implemented? Does this variance from strict code increase or decrease the design liability?

These are the questions all professionals should ask themselves. Fifty years ago, doctors were not sued for malpractice. Today, it is commonplace. What advances occurred in medicine over the last fifty years? If longevity increases lifetime discomfort or dis-ease, has advancement created expectation among patients for living longer and healthier, but disgruntlement when any set back occurs?

Consumers are more savvy today, and will be even more in the future. Science and technology advancements occur as a trial and error iterative process. New drugs, products, designs, and best management practices take time and unexpected consequences happen. The political process to accept change and betterment is also slow. So as a professional attempting to raise the standard of care, you must be aware of the legal consequences.

Review your limits of liability on your professional liability policies. Read or have a professional explain coverage as it relates to “experimental” or “developed” solutions.