Appeals Court Clears The Hartford on Most BP Oil Spill Cleanup Workers’ Injury Claims

Navigators Insurance, part of The Hartford, does not have to cover most medical and injury claims from 2,000 workers who cleaned beaches after the 2010 BP oil spill in the Gulf of Mexico, a federal appeals court decided Wednesday.

In a case that centered on a new type of legal claim for latent injuries, the U.S. 5^th Circuit Court of Appeals found that BP was, in fact, an additional insured that could be covered by policies held by a cleanup company. But two insurance policies could not be combined to satisfy the minimum amount specified in a contract between BP and O’Brien’s Response Management, the court said.

That means that Navigators may have to cover only about $2 million, not the $100 million that BP had demanded.

Also, the cleanup subcontractor is not required to fully indemnify BP because BP materially breached its indemnification provision on what the courts have called “back-end litigation option” claims. The 5^th Circuit noted that BP had broken its contract with O’Brien’s by creating the BELO claims without its consent as part of a 2012 settlement after the Deepwater Horizon oil drilling accident.

The appeals court’s three-judge panel also affirmed the dismissal of a subset of BP’s claims against O’Brien’s, and remanded others to the lower court, U.S. District Judge Carl Barbier in New Orleans, for further proceedings.

After BP’s Deepwater Horizon oil rig exploded in 2010, millions of barrels of crude oil gushed into the Gulf. Much of it ended up on beaches and waterways across Louisiana, Mississippi, Alabama and Florida. Cleanup workers who were hired to clean the gunk from coastal areas months later reported a variety of chronic and acute illnesses. Some workers said that they were not given adequate safety gear or warnings about the toxicity of the oil.

The BELO procedure was created for the cleanup workers whose injuries were diagnosed after the initial BP settlement, and who chose not to pursue workers’ compensation claims, or for which the statutes of limitations had expired.

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Attorneys for Navigators in the case referred calls to The Hartford. Officials there could not be reached Thursday morning.

The majority opinion was written by U.S. Circuit Judge Edith Jones. Judge James Graves dissented.

“In my view, O’Brien’s is not required to indemnify BP on any claims because BP failed to give reasonably practicable prompt notice to O’Brien’s,” Graves wrote. “I would therefore affirm the district court on this issue as well.”

Top photo: Florida beaches were soiled after the accident.