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Critical Issue Report Industry comes off well, so far Bridge collapse another high-profile test for insurers By Phil Zinkewicz Earlier this year, in the beginning of the dog days of August, the Interstate 35W bridge in downtown Minneapolis dropped more than 60 feet into the Mississippi River. As a result of that tragic occurrence, 13 people are dead and more than 100 are injured, at last count. The insurance industry, having been severely criticized for its claims-paying posture after Hurricane Katrina, moved quickly on this one. Within weeks of the incident, insurers began paying the initial bulk of claims that began coming in. “There will be no exclusions,” said Mark Kulda, vice president of public relations for the Insurance Federation of Minnesota. “It will all be coverable,” he said, referring to auto damage claims and commercial property damages. Breaking with tradition, insurance companies are even paying claims on automobiles that have not yet been recovered, Kulda said. “One insurer even paid an auto claim on a policy that was written the day after the bridge collapsed,” Kulda pointed out. However, when it comes to liability claims arising from the tragic incident, that’s a different story, according to Kulda. Industry officials have said that there might be a storm of claims and lawsuits involving the construction and design of the bridge and against state agencies involved in maintaining the structure. Said Kulda: “There were some 40 construction workers replacing concrete on the bridge at the time of the collapse. They fell into the water and all but one was accounted for. There might be workers compensation claims from some of these workers. The I-35W bridge is located at the foot of Lock and Dam Number One, the first on a north to south route and the largest on the Mississippi. “There are several shipping companies north of the lock that could end up with business interruption claims,” Kulda continued. “Also, companies who were waiting for deliveries of goods for their own operations might have contingent business interruption claims. There is also a railroad line adjacent to the bridge and when it collapsed, part of it landed on a freight train that was traveling underneath. That could involve serious claims as well.” But, Kulda said, design and maintenance issues regarding the collapse of the bridge are likely to be where the big money lawsuits will come. He said we can only conjecture about who will be the targets of the lawsuits and how many companies and their insurers will be affected. According to Kulda, the 40-year-old bridge had an inherent design deficiency, in that the structure’s weight-bearing mechanism had only one outlet. “If that mechanism is compromised, there is no back-up system to help distribute the weight,” he said. Kulda said that the designers of the bridge took a “calculated risk” at the time. “They didn’t anticipate the failure of a truss. Also, the constant spray of water coming from nearby St. Anthony Falls may also have contributed to the bridge’s ultimate failure. In the winter, the bridge constantly ices over, requiring heavy applications of corrosive sand and salt. Eventually, an automatic de-icing device was retrofitted onto the bridge, adding extra weight and ensuring the continual corrosive process.” Experts are saying that total liability claims from the bridge collapse could reach $1 billion, so Rough Notes asked Kulda who the payers are likely to be. He said that the bridge’s original designers and builders are probably off the hook because there is a six-year statute of limitations on a lawsuit against contractors. “Many of the claims are probably time-barred,” Kulda said. Even if they are not, the state’s liabil-ity is limited to $1 million no matter how many died or were injured. However, over its 40-year history, there have been maintenance people working on the bridge, like the men who were laying new concrete when the bridge collapsed. “Those who have had some business with the bridge recently like painters or the manufacturers of the paint used—anybody who has had anything to do recently with the bridge—could be targeted. Some of those businesses may have had one or two or three insurers, and they could all be brought into the lawsuits. It is bound to become extremely complex.” Also, Kulda said that trial lawyers were busily at work within a day of the collapse, while the divers were still in the river searching for survivors. Some trial lawyers wanted to visit the site, but a judge ruled against them. “Omar Jamal of the Somali Justice Advocacy Center in Minneapolis said he received at least a dozen telephone calls from law firms when it became public knowledge that a Somali woman, Sadiya Sahal, and her daughter Hanah Mohamed, 2, were among those missing after the collapse. Some trial lawyers are even offering to take on liability cases pro bono just to get the notoriety,” Kulda said. “ABC News” Law & Justice Unit has reported that government agencies and private building contractors could face lawsuits over the collapse of the bridge, lawyers told ABC News. However, the dean of the University of Minnesota law school told ABC that state law would prevent most victims from recovering much money from the state, as Kulda pointed out. The lawyers said that any legal liability will depend on the results of ongoing investigations into the causes of the collapse and it’s still too early to know who, if anyone, may be legally responsible for the disaster. Nevertheless, the blame for the collapse is going to have to fall somewhere. Until the cause is determined, the extent of liability lawsuits remains open to question. Minnesota state reports from 2001 and 2005 indicated that there were “fatigue” cracks in parts of the bridge and said that the bridge had no backup system to bear the weight of traffic in the event of an unexpected structural failure. Dan Dorgan, the director of bridges for the Minnesota Department of Transportation, said reports over the last 20 years had found bearing and corrosion problems and fatigue cracks that were repaired in the 1990s. Despite the federal designation, which a federal highway transportation official gave as “problematic,” the bridge was still deemed fit for travel, Dorgan said. Meanwhile, the Minneapolis disaster has motivated lawmakers and state bridge authorities in other states to reexamine the bridges under their domain, keeping a watch on what happens in terms of lawsuits in Minnesota. “It will take at least a year before it’s all sorted out,” concluded Kulda. * The author |
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