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The Impact Tower Fatalities Have on Business

Fri, 08/19/2011 - 12:25pm
Patrick Howey, NATE

No one can fully prepare for a tower site accident or employee fatality. One is too many for our industry or for any business, for that matter. Last year alone, there were seven tower technician fatalities.

The emotional and economic cost is overwhelming.  These deaths affect families, co-workers, employers and the community. While struggling with the loss of a loved one, these families must also deal with the loss of income as well. While companies face possible regulatory citations, operators can also lose hundreds of thousands – if not millions – of dollars through a process which involves regulatory and civil actions yielding fines, settlements and greatly diminished productivity. Ultimately, there are a range of devastating costs with a tower fatality that an employer must address, but it's the human cost which greatly affects family members.

Patrick HoweyThe Human Cost
When a fatality occurs, it's the human cost that employers must address. In these situations, it is critical for the employer to reach out to the next-of-kin as soon as possible to provide information regarding the insurance or other benefits available to them, assist with the funeral/memorial service arrangements, and attend any services or memorials.  In most states, an employer will be responsible for a statutory amount, in some cases in excess of $10,000, for funeral and burial expenses under worker's compensation plans.

Co-workers are also emotionally affected, particularly those who may have witnessed the accident. The employer should consider providing grief counseling or a form of an Employee Assistance Program (EAP) to help them relate to their emotional response.  This can be critical because if an employee is suffering from severe emotional distress, including depression, the employee may be inattentive at work, including safety compliance, and create the potential for the employee to injure himself or others because of lack of concentration.  If a co-worker develops extreme depression or a form of post-traumatic stress disorder (PTSD) as a result of being involved in the accident, there can be liability for medical assistance under worker's compensation, which can cost thousands of dollars.

The human cost can also manifest itself in loss of productivity as employees regain their focus after the accident and during their mourning period.

The Regulatory Cost
In the event of a fatality, Occupational Safety and Health Administration (OSHA) is notified within eight hours and an inspection will be conducted.  Until OSHA releases the site, it is considered "frozen" and no work can be done until witnesses and co-workers are questioned and information is documented. When it comes to civil lawsuits, plaintiff's attorneys will issue subpoenas and investigators will sift through evidence and take statements. Over time, the costs associated with salaries, legal fees and antenna down time begin to add up.

In the event that OSHA issues citations with monetary penalties, the employer faces liability for defending himself/herself against the citations.  If OSHA determines the violation was willful, the penalties can range from $5,000 to $70,000 per violation.  Frequently, OSHA issues multiple willful citations well in excess of $100,000.  If the agency issues significant citations, including a public announcement from its Office of Public Information regarding the employer, the impact can be adverse media coverage, which is damaging to business reputation and customer relationships.

OSHA can also proceed with criminal proceedings against the employer or management representatives. If this happens, the employer will incur significant legal defense costs.  It is not unusual for an OSHA criminal case to exceed $100,000.  Upon conviction, the employer can face a penalty up to $500,000.  If a management representative is convicted, there is a potential for a penalty up to $250,000 and six months imprisonment.

It should be noted that OSHA civil and criminal proceedings can, in many cases, extend for several years, impacting the employer and its employees on an ongoing basis.

Worker's Compensation Cost
In the case of a fatality, the employer will face the cost of a worker's compensation death benefit, in some states between $500,000 - $700,000, as well as the cost of emergency medical treatment for the deceased.  If the employee has been in intensive medical care for an extended period prior to his death, the medical costs can frequently be well in excess of $100,000.

Another collateral impact of the fatality can be the cost of worker's compensation insurance in future years because of the change in the employer's Experience Modification Rate (EMR).  In some cases, an employer may not be able to obtain liability insurance from a carrier and may be assigned to an insurance risk pool with significant increases in coverage premiums.

The Business Cost
The impact to the employer's ongoing business can frequently be the most significant, in terms of immediate suspension or cancellation of contractual agreements with third parties, tower owners or general contractors. Also, penalties in the form of delay claims for inability to complete tower projects while the site is shut down for regulatory inspections or because of third-party personal injury litigation.

Once a tower company has been suspended from performing work by a tower owner or general contractor, it's unlikely to ever have the suspension lifted and to reestablish the relationship that existed prior to the accident.

Taking Steps to Ensure Safety is the Only Conclusion We Can Draw
Whether it's the human, business, regulatory or litigious, the cost of tower accidents can be extraordinary. Tower site accidents and deaths affect such a wide range of issues - from employee mental stability, finance and business function and reputation - that it's vital to take certain precautions and have specific guidelines in place to prevent such accidents. 

• Each and every action listed below is one more way to ensure the tower industry continues to proactively set the highest standards in tower safety among is employers and employees.

In order to limit liabilities, the employer must be pro-active with accident prevention, including:

• Use a meaningful safety and health program that is compliant with OSHA regulations and generally recognized industry safety practices such as the NATE Accident Prevention, Health and Safety Program Guide.

• Conduct training of its employees in all aspects of its safety and health compliance program.

• Ensure that supervisors are monitoring employee compliance with the employer's safety and health compliance program and disciplining any employee who violates the program.

• Maintain appropriate documentation for the issuance of the program, employee training and enforcement through disciplinary action.

• Always remember that one accident has more repercussions than monetary and physical site damage. The strain an accident puts on family members, friends, fellow employees and the employer can never be repaired.

Patrick Howey is the executive director of the National Association of Tower Erectors (NATE). Howey may be contacted at Patrick@natehome.com.

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