Policyholders and brokers, alike, need to be aware of the Ohio Supreme Court’s decision issued last month in Hoyle, because that decision eliminates employers liability coverage for employer intentional torts under R.C. 2745.01 for many, but not necessarily all, policyholders. See Hoyle v. DTJ Ents., Inc., Slip Opinion No. 2015-Ohio-843. The inevitable result of Hoyle is that numerous policyholders have paid substantial premiums for policies which are not worth the paper upon which they are written.
Hoyle v. DTJ Ents., Inc.
The Facts: Hoyle sued his employer alleging employer-intentional-tort claims under Ohio law after he suffered injuries in the workplace when he fell from a ladder-jack scaffold onto a concrete surface. A ladder-jack scaffold consists of two vertically positioned ladders with a horizontal platform spanning the space between them. The platform is supported by brackets (i.e., ladder jacks), which are secured to the ladders with nuts and bolts. Hoyle alleged that his supervisor “kept the bolts in this office and told employees they did not need them because they take too much time to use.” Hoyle claimed that his injuries occurred as a direct result of his employer’s deliberate removal of such safety equipment.
Employer Intentional Torts: R.C. 2745.01, which took effect in 2005 and governs employer intentional torts, requires a plaintiff to prove that “the employer committed the tortious act with the intent to injure another or with the belief that the injury was substantially certain to occur.” Although the statute appears to provide two distinct bases for liability, as previously had been the case under Ohio common law, the statute actually removes the second basis for liability by defining “substantially certain” to mean “that an employer acts with deliberate intent to cause an employee to suffer an injury….” R.C. 2745.01(B).Thus, in order to recover under the statute, an employee must establish that the employer had the intent to injure another. To make such a showing, an employee may rely on direct evidence of intent to injure or the rebuttable presumption of intent to injure created when the employer deliberately removes an equipment safety device. See R.C. 2745.01(C). Because Hoyle had no direct evidence of intent, he relied on presumptive intent.
The Insurance Policy: Cincinnati Insurance Company (“CIC”) issued a CGL policy to Hoyle’s employer that excluded injuries resulting from intentional acts. The employer, however, purchased employers liability coverage through an endorsement for an additional premium. The endorsement stated that it provided coverage for employee workplace injuries “caused by an ‘intentional act’ to which this insurance applies,” with “intentional” being defined as “an act which is substantially certain to cause ‘bodily injury.’” The endorsement, in turn, explicitly excluded from coverage “liability for acts committed … with the deliberate intent to injure." Thus, the endorsement purported to extend coverage for substantial-certainty employer intentional torts, but excluded from coverage employer intentional torts involving an employer’s deliberate intent to injure.
The Holding: In Hoyle, the Ohio Supreme Court held that “[a]n insurance provision that excludes coverage for acts committed with the deliberate intent to injure an employee precludes coverage for employer intentional torts, which require a finding that the employer intended to injure the employee.” Id. atsyllabus. In reaching its holding, the Court reasoned that under R.C. 2745.01, an employer cannot be held legally liable for an employer intentional tort absent a finding that the employer acted with the intent to injure. Accordingly, whether an employee proves that intent with direct evidence or an unrebutted presumption, “intent to injure” remains an essential element of an employer-intentional-tort claim. And because the CIC endorsement specifically excluded acts committed “with the deliberate intent to injure,” the Ohio Supreme Court concluded that there was no set of facts under which the employer would be legally liable to Hoyle that fell within the policy’s coverage. Significantly, the Ohio Supreme Court did not reach the issue of whether Ohio public policy categorically prohibits any type of indemnity coverage for employer intentional torts.
It should be noted that Hoyle was far from unanimous, with two justices concurring in syllabus and judgment only and two justices dissenting. According to the dissent, the lead opinion improperly equated the “intent to injure” required by R.C. 2745.01 to the “deliberate intent to injure” excluded by the endorsement.In the dissent’s view, because “intent” and “deliberate intent” are distinct concepts, the employer could be legally liable to Hoyle for intentional conduct under the statute (i.e., intent to injure) and within the scope of the policy (i.e., not excluded as deliberate intent). Notwithstanding, countless employer-policyholders have paid for employers liability coverage which Hoyle has rendered illusory. As aptly remarked by the dissent: “Can this court truly countenance an insurance company’s assertion that it should be permitted to collect a premium for an event that is never going to happen?”
In the wake of Hoyle, policyholders and brokers should be cognizant that insurance policies containing the same policy language as did the CIC endorsement in Hoyle will not provide indemnity coverage for employer intentional torts under R.C. 2745.01. There, however, is the theoretical possibility that policies containing different language could provide such coverage, given the Ohio Supreme Court’s decision to decline to rule upon the public-policy challenge.As with many insurance coverage issues, careful analysis of policy language and governing law is of paramount importance in determining the scope of coverage available to policyholders.