ROCKFORD, Ill.—A ruling compelling an insurer to provide safety inspection reports and other documents to a federal agency related to a fatal grain bin accident could chill employers' relations with their workers comp insurers.

In the case, Hilda L. Solis vs. Grinnell Mutual Reinsurance Co., U.S. District Court Judge Philip G. Reinhard upheld a magistrate's recommendation to require the workers compensation insurer to testify and present documents concerning inspections and reports that it had prepared for Haasbach L.L.C.

The case stems from the death of two teens last July when they were engulfed in grain 30 feet deep at Haasbach's Mount Carroll, Ill., site.

The U.S. Department of Labor's Occupational Safety and Health Administration said the teens, plus a third worker who was injured, were directed to engage in the banned practice of “walking down the corn,” or walking on moving grain in a storage bin while a conveyor system evacuated the grain from the bottom.

When one teen began sinking into the corn, the other tried to help, but both became engulfed, according to OSHA.

OSHA, which said the victims did not receive safety training nor did the company provide protective equipment, subpoenaed the insurer seeking more information. While Grinnell objected, the Rockford, Ill., federal judge ruled May 2 that it must comply with the subpoena.

“The subpoena for records and inspection documents is a tool that is in OSHA's arsenal and they use it from time to time,” said Philadelphia-based attorney and shareholder Ben Huggett of Littler Mendelson P.C., who represents employers in labor- and OSHA-related matters. “What this order of enforcement highlights is that OSHA is aware there are communications between the insurer and insured and that those communications are not privileged—they are not confidential or protected information.”

Grinnell argued that enforcing the OSHA subpoena would have a “chilling effect” of discouraging businesses from allowing insurers to conduct safety inspections if the resulting reports can be used against the businesses during litigation or enforcement proceedings.

Mr. Huggett agreed. Employers and insurers will have “chilled” discussions, knowing that records of such discussions and inspections could be used against them.

“I tell employers to carefully consider the insurer's inspections and recommendations,” Mr. Huggett said. “The employer needs to address those recommendations in one form or another. They can either accept them or make a compromise on what has been suggested, but employers need to address them in some way and be aware that a document is being created.”

The Iowa-based insurer must produce documents and reports from March 12, 2008, through June 23, 2010, and provide them to OSHA by late this month, according to court order.

Grinnell's general counsel, Dennis Day, said that the company will comply with the order and will not appeal, but it will attempt to keep certain materials from being made public.

“The court affirmed OSHA's authority to obtain relevant information from an employer's workers compensation insurance company,” OSHA Assistant Secretary David Michaels said in a statement. “This is not surprising legally, but it does illustrate that workers compensation and OSHA are not separate worlds divorced from each other.”

Following an investigation, OSHA issued 25 citations to Haasbach and fined the company $555,000. Since then, OSHA has conducted 61 inspections of grain operations in Illinois, Ohio and Wisconsin and has issued 163 violations.