Where Safety Guard Removed, Insurer No Duty To Indemnify Employer For Injured Worker’s Suit

A worker in an Ohio manufacturing plant sustained serious injuries while clearing jammed materials from a machine.  At some time prior to the incident, an unknown person at an unknown time bypassed an interlock device on the machine, which would have prevented the incident.  The worker brought a lawsuit against his employer alleging claims under Ohio law, including a claim for workplace intentional tort under Ohio Revised Code 2745.01(c), which provides, “Deliberate removal by an employer of an equipment safety guard … creates a rebuttable presumption that the removal or misrepresentation was committed with intent to injure another if an injury … occurs as a direct result.”  The employer made an insurance claim with a request to defend and indemnify to the issuer of its Workers Compensation and Employer Liability Insurance Policy.  The insurer denied coverage and filed a declaratory judgment  action seeking a declaration that it had no duty to defend or indemnify in the underlying lawsuit because the policy specifically excluded bodily injuries “caused or aggravated” by the insured.  The underlying suit later settled for $280,000.

On Wednesday, the U.S. District Court for the Southern District of Ohio had to sort through conflicting existing Ohio case law and concluded that the insurer did not have a duty to indemnify its insured for the settlement on the grounds that the parties unambiguously agreed to exclude coverage for all intentional torts, and that a finding that the employer removed the safety guard at issue triggered the rebuttable presumption under Ohio law that the employer intentionally injured the worker.  The court stated that there was no “middle ground” under 2745.01 in which the worker could recover that would not trigger the policy exclusion.  Interestingly, however, the court decided that the insurer nonetheless had a duty to defend its insured in the underlying action given the lack of a pre-existing authoritative determination from the Supreme Court of Ohio regarding the meaning of the rebuttable presumption contained in 2745.01(c) and the conflicting case law that had developed.