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The Rough Notes Company Inc.



April 24
08:46 2018

Lemcy Cortez was an employed truck driver of Triple F Oil Field Service. He was involved in an accident in Oklahoma but after Triple F denied his claim, he filed with the Louisiana Office of Workers Compensation for coverage. Triple F was in Oklahoma, but Lemcy argued that he had been hired in Louisiana so it had jurisdiction.

Here is how the courts ruled.

Lemcy Cortez (Cortez) had been hired by Triple F. Oil Field Service LLC (Triple) to drive trucks in Oklahoma. On June 25, 2014, while employed by Triple, Cortez was in a vehicle accident that resulted in injuries to his elbow and back.

Cortez filed a disputed claim for workers compensation benefits against Triple and its insurer, Texas Mutual Insurance Company (Texas Mutual). The claim was filed with the Louisiana Office of Workers Compensation (OWC). The filing was made after, per Cortez, Triple denied benefits even though the injuries occurred while working for Triple. Triple and Texas Mutual filed exceptions to Cortez’s claim. They argued that the OWC had no jurisdiction over the claim as Cortez was hired and was performing in Oklahoma. A trial court agreed that the OWC held no jurisdiction and Cortez appealed.

The higher court reviewed the same affidavits used by the lower court, submitted by Cortez and Triple. Cortez’s arguments supporting jurisdiction revolved around his two statements that he first learned of the driving job while residing in Louisiana, he held a phone interview and was contacted later, again by phone, regarding job logistics and of the need to go to Triple’s training camp. Cortez alleged that he went to the camp, located in Oklahoma, feeling assured that he had already been hired. While at the camp, Cortez was given and passed both a road test and drug test. After passing the tests, the next day he was given the driving assignment in which the accident occurred. One Cortez affidavit included his response to a question regarding his hiring where he stated that he was hired in Oklahoma.

Triple’s affidavit, which included information from a Triple employee who oversaw Cortez’s testing, countered that no employment offered could be made over the phone. Without passing the road and drug tests, no job offer could be made, particularly as the tests were federally required due to Triple’s operating license. Further, Cortez had not completed all of Triple’s required paperwork until after the accident. Both Cortez and Triple acknowledged that the paperwork (which was either undated or backdated) was not completed until after the accident. Therefore, Triple argued that the hiring occurred after the tests, while Cortez was in Oklahoma.

The higher court found that, based on the offered evidence, the lower court rendered a valid decision. The ruling in favor of Triple and against Cortez was affirmed.

Lemcy Cortez v. Triple F. Oil Field Service, LLC and Texas Mutual Insurance Company. Court of Appeal of Louisiana, Fifth Circuit. No. 16-CA-66. Filed August 10, 2016. Affirmed. Westlaw 198 So. 3d 278

How are benefits determined

Workers compensation policies are unique in that they do not provide any description of the Coverage A Workers Compensation coverage actually being provided. Instead the policy contains a section called Workers Compensation Law. The only way to learn about the coverage is to read the Workers Compensation Law of the state that has jurisdiction

Read the PF&M analysis of the General Section of the NCCI Workers Compensation and Employers Liability Insurance Policy.

Note: This analysis is of WC 00 00 00 C. This edition is effective 01/01/15. The changes from the prior edition are in bold print.

The policy opens by explaining that the insurance company agrees to provide the coverages indicated in return for the named insured paying the premium. This is subject to all of the policy’s terms and conditions.


  1. The Policy

The policy includes the Information Page and all endorsements and schedules that are listed on it as of its inception date. It is an insurance contract between the named insured employer and the insurance company identified on the Information Page. The only agreements that affect the insurance coverage provided are the ones stated in the policy. Policy terms and conditions cannot be changed or waived unless the insurance company does so by issuing written endorsements.

Note: Waiver means intentionally or voluntarily relinquishing a known right. As a result, this provision states that a written endorsement is needed to confirm that either party is surrendering a known right. The intent of this language is to prevent any oral agreements or unauthorized written agreements from being considered or treated as part of the insurance policy.

Example: Linda copies a brochure in the human resources office about Employers Liability coverage that describes the coverage the policy provides. She notices several statements to the effect that the brochure only describes the coverage. Linda wants to know exactly what coverage is provided and asks her human resources manager for a copy of the company’s actual policy to review.
  1. Who Is Insured

The employer identified in Item 1. on the Information Page is the named insured. If the form of business is a partnership and the named insured is the partnership, an individual partner is considered an insured but only to the extent of being the employer of the partnership’s employees.

Note: Unlike many liability coverage forms and policies, the spouse of an individual, partner, member, or manager of a joint venture is not automatically included and covered as an insured. If the spouse is an employer, the spouse must be either named or have a separate policy that covers the operations for which the spouse is the employer.

Example: A partner in a law firm is an insured with respect to the employees of the law firm. However, he is not an insured for injuries to his household employees.

Note: WC 00 03 05–Joint Venture as Insured Endorsement makes each member of the joint venture an insured under a policy where the joint venture is a named insured. Similar to the partner as an insured, the member is an insured only with respect to the joint venture’s employees.

Related Article: Workers Compensation and Employers Liability Insurance Policy Available Endorsements and Their Uses

  1. Workers Compensation Law

The term “workers compensation law” means the workers compensation law(s) and the occupational disease law(s) of each state and/or territory listed under Item 3. A. on the Information Page. When those laws change during the policy period, those changes are incorporated into this policy. This is for state and territory law only so does not include any federal workers compensation or occupational disease law(s). It also does not apply to any non-occupational disability benefits law(s).

Note: Because this paragraph specifically excludes federal workers compensation, occupational disease, or similar laws, special endorsements are available when such coverage is required.

Related Article: Workers Compensation and Employers Liability Insurance Policy Available Endorsements and Their Uses

  1. State

When the term “state” is used anywhere in the policy, it means any state of the United States of America plus the District of Columbia.

Note: Item C. above states that territories can be listed under Item 3 and be covered. However, this section does not broaden the definition of state to include territories.

  1. Locations

Coverage applies to workplaces that are listed under Item 1 or Item 4 on the Information Page. It also covers all other workplaces in states listed under Item 3 unless other insurance or self-insurance covers those workplaces.


This policy covers the named insured’s total liability as any state workers compensation law establishes it. Some states have laws that require insuring this total liability under one policy. In states that do not have this requirement, it is possible to “carve out” certain workplaces and exclude them from coverage. An example of this is when a project uses a wrap-up program and all contractors that work within that wrap-up are covered under the wrap-up workers compensation program. WC 00 03 02–Designated Workplaces Exclusion Endorsement is used to carve out the coverage for the wrap-up project from the subcontractor’s policy.

Example: Big Boy Builders subcontracts with Joe’s Flooring Installations to install laminate floors in living/dining rooms in new homes it builds in an exclusive subdivision. All workers on this Big Boy construction project are covered under a wrap-up workers compensation program. Joe does not include any individual workers compensation premium in his costs because the wrap-up covers all workers compensation injuries. Joe can remove the project payroll from his policy by attaching WC 00 03 02–Designated Workplaces Exclusion Endorsement.

Multiple policies issued to insure various employers engaged in large construction projects can be combined for premium discount purposes where the law permits. The same insurance company or group must issue them and they must be limited to the applicable employer’s work at the construction site. Similar coordinated policies are also permitted to address other related cases and circumstances.

Related Articles:

Workers Compensation and Employers Liability Insurance Policy Available Endorsements and Their Uses

Premium Discount Endorsement

Overview of Wrap-up Programs

Insuring Oil and Gas Well Operations – Non-drilling Services

Triple F Oil Field Service provided a variety of services to oil gas wells but they didn’t actually do any drilling. These operations have significant exposures that relate to their proximitly to wells but involve other risks too.

Here for review is a narrative describing the exposures and coverage needs for this industry.

Category: Casual and Artisan Contractors

SIC CODE: 1389 Oil and Gas Field Services, Not Elsewhere Classified

NAICS CODE: 213112 Support Activities for Oil and Gas Operations

Suggested ISO General Liability Codes: 98152, 98153, 98154, 98155, 98156, 98159, 98160, 98161, 98162, 98163, 98164

Suggested Workers Compensation Code: 1322, 6206, 6214, 6216, 6236, 6237

Description of operations: Oil and gas well operations are supported by a number of specialty contractors. While each specialty job or service is unique, many of the exposures are the same because they all take place at the well itself. Services can be provided before, during or after the well is active. Acidizing involves pumping acid into a well in order to break down heavy oil. Casing involves placing a sleeve around the drilled hole to prevent cave in. Cementing involves pouring cement into the casing sleeve as a way to protect against explosion. Perforating is putting holes into the casing so that fluid can flow through it and be pumped in or out. Cleaning or swabbing a well is done to either reopen it or to increase production.

Property exposures at the specialty contractor’s premises generally consist of an office and a yard for storage of materials, equipment and vehicles. If the contractor has research and training facilities, the exposure to fire, smoke, water damage, and theft increases. Scientific devices and other specialty equipment may present unique loss exposures including breakage and equipment breakdown. Equipment should be stored in a fenced and secure area to prevent theft. Business income exposures should be examined carefully if certain equipment cannot be replaced easily or quickly.

Crime exposures include employee theft of equipment and funds. Background checks, including criminal history, should be obtained on each employee prior to hiring. Ordering, billing, and disbursement should be handled as separate duties with reconciliations occurring regularly. Jobsite ordering should be monitored carefully and inventory receipts verified. Audits should be conducted at least annually.

Inland marine exposures include accounts receivable if the contractor offers credit to customers, contractors’ equipment used in operations, goods in transit for materials being transported to and from job sites and storage locations, installation floater, and valuable papers and records for customers’ information such as installation specifications and maintenance contracts. Machinery and equipment transported may be large or present unique or difficult transportation exposures. The training provided to drivers and haulers is extremely important and must be evaluated carefully, especially with respect to loading, tie-down and unloading procedures.

Equipment kept at jobsites is subject to potential well blowout and weather conditions such as tornados, hurricanes, ice and snow. Since these sites are usually occupied around-the-clock, theft potential from outsiders is limited. Equipment can be difficult to track when there are numerous jobsites at isolated locations. Inventory controls are critical.

Premises liability exposures at the contractor’s office are generally limited due to lack of public access. Outdoor storage may create vandalism and attractive nuisance hazards. At the job site, exposures can be significant or relatively limited, depending on the service provided. Services such as perforating and cementing have a direct impact on drilling operations and the potential for explosion. Other services are less directly involved and present a lower exposure. It is important to understand the specific service provided and what could happen if the contractor fails to perform its duties properly.

Environmental impairment exposures are comparatively limited for most service contractors because the oil and gas well operator is primarily responsible for environmental impact at the job site. There may be a secondary exposure for any service contractor that cleans and closes a site that is tapped out or was unsuccessful, particularly if they have violated environmental regulations. Work contracts should spell out the responsibilities of the oil and well operator and the service contractor.

Automobile exposures are high due to the transportation of heavy equipment. All drivers must be well trained and have valid licenses for the type of vehicle being driven. MVRs must be run on a regular basis. Random drug and alcohol testing should be conducted. Vehicles must be well maintained with records kept in a central location. Oversize loads require special handling procedures including loading, tie-downs, and unloading. Much of the driving is done on temporary access roads which can be difficult to navigate. Drivers should be trained and experienced in driving under adverse conditions. Transport of hazardous waste from cuttings can result in environmental spills. Drivers should be aware of and be able to perform cleanup procedures in the event of a collision or vehicle overturn.

Workers compensation exposures vary based on the size and nature of the job. Common hazards include back injuries from lifting and material handling, cuts and punctures from hand tools, and slips and falls due to oily and wet conditions at the jobsite. The use, misuse, maintenance and transportation of large, heavy machinery can result in severe injury or death. Work done on ladders and scaffolds can result in falls, being struck by falling objects, sudden gusts of wind, and other adverse weather conditions. The danger is reduced if there is good maintenance of scaffolds and other equipment, proper use of protective equipment, and strict enforcement of safety practices. Work performed in remote locations limits quick access to medical assistance in the event of an injury. Service contractors must often work under time constraints and deadlines that may involve working on equipment while it is operating. These conditions may cause employees to disregard safety procedures in order to accomplish their tasks, which could result in severe injury or death if an explosion or fire results from an error.

Minimum recommended coverage:

Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Contractors’ Tool and Equipment Floaters, Valuable Papers and Records, General Liability, Employee Benefits Liability, Umbrella Liability, Automobile Liability and Physical Damage, Hired and Nonownership Auto Liability, Workers Compensation

Other coverages to consider:

Building, Business Income with Extra Expense, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Cyberliability, Employment-related Practices Liability, Environmental Impairment Liability, Stop Gap Liability

Taking the next step

Are you interested in pursuing an Oil and Gas Well Operations – Non-drilling Services operation? The first stop is reviewing the narrative described above. When you have identified the operations you want to pursue, consider sending a letter offering to survey the operation. Then once you have, make contact and set up an appointment you can use the questionnaire to work with the prospect on developing an effective insurance program.

Here is some wording you could use in making contact.

Dear [Name]:

If you try on a pair of shoes that don’t fit, you know about it promptly. If you buy insurance that doesn’t fit, you might not know it until it’s too late.

Our company has an extremely effective method of testing coverage by evaluating what kind of insurance, and how much, you should have. We are also able to identify coverage you may have that you don’t need. Our survey has earned high marks throughout [name of your city].

We urge you to take advantage of this no-obligation service. It is especially important now, with the many changes that have occurred in coverage and rates in recent years.

Please drop the enclosed business reply card in the mail today, give me a call at [phone number] or email me at [email address]. We’ll arrange a meeting convenient for you and provide the survey without cost or obligation.

Sincerely yours,

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