Insurers Must Use

Caution To Avoid

Drive-By ADA Suits

When drafting the Americans with Disabilities Act, federallegislators probably did not anticipate the rash of mass-complaintlawsuits being filed under the ADA's "public access" provisions. Infact, the filing of so-called "drive-by" lawsuits has becomesomething of a cottage industry for the plaintiffs' bar, withevidence of abuses cropping up in many states across thenation.

The "drive-by" moniker is to be literally interpreted. Often,the named plaintiff never sets foot on the subject premises.

Graphic examples of this are the suits filed against fast-foodfranchises that contain boilerplate allegations of non-compliantshower facilities for customers.

When was the last time you showered at McDonald's?

Of course, there are some well-meaning plaintiffs who, whilegenuinely seeking to ensure compliance with the ADA, have allies infederal court judges who want to immediately know, at the firstcase management conference (and are entitled to immediately know),why a defendant facility is not in compliance with a law that hasbeen in place for 15 years.

The usual answer--at least privately to defense counsel--is thatthe insured never gave the ADA much thought because there had neverbeen any complaints (the old "I'll- cross-that-bridge" mentalitythat heightens all otherwise insurable risks).

Unfortunately, the truly aggrieved appear, at least to thesedefense lawyers, to be few and far between. The problem has grownto the extent that there is legislation pending which would attemptto prevent these lawsuits, or at the very least, control them.

For example, in California, where ADA lawsuit abuses arerampant, the Senate Judiciary Committee is considering the passageof new legislation, Senate Bill 855, which would require those whohave not been harmed to provide notice and allow businessownersagainst whom the lawsuit was filed the opportunity to remedy anyADA violations before incurring any court awarded penalties.

Despite the recent onslaught of the "drive-by" trend, ADAlawsuit abuses have been in question for at least several years.Since 1999, two U.S. assemblymen representing districts in Florida(Reps. Mark Foley and Clay Shaw) have been introducing the "The ADANotification Act" with each term of Congress. It would require anyplaintiff to provide "notice of the alleged violation" and 90 daysto correct the violation before proceeding with a lawsuit. Only ifthe defendant has not corrected the violation after that timeperiod has passed can the plaintiff file a lawsuit.

At issue with respect to the pending legislation is whether ornot the ADA already takes into account potential abuses. Manycriticize the ADA as a vaguely-written law which can thereby giverise to abuse and, in view of the current conditions, has.

Others believe lawmakers should stay away from the issue andforce entities such as the American Bar Association to startpolicing attorneys who are encouraging or participating in abusivelawsuits.

Regardless, businesses--in particular, smaller, more vulnerabletargets and their employment practices liability insurance carriers(whose products do not specifically exclude third-party claims bycustomers)--can take proactive steps to protect against potentialexposures. Available remedies under Title III of the ADA includecompensatory damages, attorney's fees and orders of remediationwith attendant penalties if the remediation is not completed in atimely manner.

First Step: Be Aware

For those carriers that do not already specifically excludethese "third-party" risks, the list of carrier precautions beginswith re-evaluating whether traditional EPLI policies are theappropriate tools for addressing these exposures. This starts withrecognizing that the original intent of "third-party" coverage inan EPLI policy was probably to protect employers for the acts oftheir employees toward outside vendors, customers, visitors andother third parties.

Query: Given the increasing number of these unforeseen claims,are underwriters doing enough to evaluate the risks?

Are they aware that under the "public access" provisions of theADA, their insureds (who have 15 or more employees) can be sued byanyone in federal court who feels the insured's facilities areinaccessible to the disabled?

Certainly, this type of risk needs to be controlled "upfront"lest it evolve into something truly unmanageable.

Should this particular third-party risk be specificallyexcluded, or is it more appropriately covered under some generalliability policy?

Step Two: Take Action

Carriers need to take a proactive role in educating not onlytheir insureds about the risks under the "public access" portion ofthe ADA, but their underwriting and claims handling staff aswell.

It is important to have competent ADA expertsavailable--particularly those recognized as architectural "access"experts--to conduct audits of insureds' facilities and to identifyany potential exposures. Qualified ADA/Access experts will alsoreview a company's policies and determine how its employees--inaddition to the general public--are impacted by the "public access"provisions of ADA.

They will offer advice as to the need for various communicationstools to promote greater awareness of ADA and the "public access"provisions, as well as for employee training.

These experts will either conduct the training themselves orrecommend a qualified professional resource.

Addressing Allegations of Violations

If a matter is already in suit, it is critical to have anADA/Access expert promptly conduct an on-site investigation of thesubject facility or premises to determine first, if there is meritto the claim(s) and second, whether there are additional violationsnot identified in the suit.

While many of these claims arise directly under the federal ADA,a qualified expert must still guide the insured through the myriadof state, local and municipal building codes that often makecompliance difficult.

Once the expert produces a formal report, the insured and thecarrier can go about determining how to resolve the suit. Despitethe existence of compensatory damages for successful plaintiffs,attorneys' fees seem to be the principal component of anysettlement negotiations.

An important consideration in negotiating any settlements is toensure that the insured has ample time to do the necessaryremediation.

Finally, the insured must understand that its failure toremediate any violations not addressed by the suit could jeopardizefurther coverage should future claims arise.

Preventing Alleged Violations

Directly on the carriers' side, there should be additionalconsiderations when underwriting this type of third-party exposure.The authors, in conjunction with a nationally-recognized ADA/Accessexpert, have developed a checklist of underwriting criteria for ADAcompliance.

Beyond relying on the checklist, carriers covering thosecategories of business with a high degree of interaction with thepublic (and thus, higher third-party exposure risks) should beespecially heads-up when it comes to potential ADA "public access"violations. Examples of these types of entities include: securityoperations, property managers, entertainment venues, health carefacilities, educational facilities, hotels, restaurants, membershipclubs (i.e., health, country and private clubs), counseling centersand auto dealerships.

Closing Remarks

When the ADA went into effect in 1990, it was with theunderstanding that businesses would take the initiative and modifytheir facilities as necessary in order to comply with its "publicaccess" provisions. Of course today, 15 years later, manyorganizations ranging from small businesses to large public sectorfacilities, such as schools and government buildings, still havenot stepped into compliance with these provisions. Many are simplycontent to wait until an actual claim is made in court.

Some observers, in particular, those who advocate on behalf ofthe physically-challenged, estimate that a good majority ofbusinesses (in excess of 6 million companies) are not incompliance.

With that in mind, and considering the fact that there are nobuilt-in enforcement tools within the law, carriers and theirinsureds must be vigilant with respect to ADA "public-access"compliance.

o Ask to see site plans approved by the local architect.

o Ask whether there is a corporate parent which maintains andrequires its franchises to follow a particular design standard thatmust be integrated into ADA compliance.

o Ask whether the insured has performed any recentrenovations.

The ADA requires a certain percentage of the cost of renovationsto be directed to remedying ADA violations.

o Determine the number of "public- access" filings in thejurisdiction where the insured is located and whether they shareany common traits (e.g., same attorney, plaintiff, expert,etc.).

These are claims which, in most circumstances, can be prevented.When they are not, they can be very expensive--expensive for thecarrier as a "covered" loss and expensive for the insured who mustbear the cost of remediation in addition to any other fees ordefense costs that may be incurred under its deductible.

A checklist of underwriting criteria for ADA compliance isavailable free of charge upon request to Mr. Voluck [email protected].

Philip R. Voluck and Michael Kaufman are partners of the defensefirm, Kaufman, Schneider & Bianco, LLP, in the PlymouthMeeting, Pa., and Jericho, N.Y., offices. The firm concentrates itspractice in EPLI, non-medical E&O, D&O and constructionLaw.

Caption:

Many organizations have not stepped into compliance with ADAprovisions. Instead, they are simply content to wait until anactual claim is made in court.