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SPRINKLER HEADS UNDER FIRE

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LANSDALE, Pa.-By the time newspapers and television stations nationwide reported problems with Omega fire sprinklers last week, Central Sprinkler Corp. already had spent the last 18 months spreading the word itself in an attempt to limit potential liability damages.

Some of the Lansdale, Pa.-based manufacturer's sprinkler heads, which have been installed in buildings nationwide, have failed to operate during tests and actual fires.

But Central has improved its Omega model. It also sent letters to insurers, fire safety officials and sprinkler installation contractors and their associations advising that anyone with concerns about installed Omega sprinklers can obtain a kit from the company. The kit can be used to ship sample sprinkler heads either to Central or to Underwriters Laboratories for testing to ensure they work properly. Central Sprinkler reserved $4 million for the program, a company spokesman said.

That strategy could help Central dampen potential liability should plaintiffs attorneys prove a cause of action related to the sprinkler heads' failure to operate, product liability attorneys and the company spokesman said.

"Not that we are totally driven by that," the Central spokesman said. "We are a company that is driven by safety. But by notifying and offering to test for free, and by working with the contractors at no cost or little cost we have been able to limit our liabilities."

Central and several of the fire sprinklers it manufactures are highly praised by loss-prevention experts. But building engineers, fire officials, property insurers and some risk mangers have known for some time about potential problems with Omega sprinklers manufactured before June 1996.

Despite the company's efforts to get the word out, The Associated Press, followed by other media outlets, last week reported that the sprinkler has had a 31% failure rate in Underwriters Laboratories tests and a 35% failure rate in tests conducted for the Fairfax County Fire and Rescue Department in Virginia. Various fire departments around the country are investigating their use.

The failure rate is significant enough that he would advise customers who have Omegas to replace them, said Ken Buhler, president of Ken Buhler Associates Inc., a Smithtown, N.Y.-based risk management consulting company that specializes in fire sprinkler system analysis.

Other loss prevention specialists say testing to make sure they work may be enough.

"Where we identify these heads, we ask (customers) to have them tested, and if the test results are unsatisfactory, we recommend that they replace them," said Mark A. Tschiegg, vp and managing director of loss prevention field services for Industrial Risk Insurers in Hartford, Conn. "If the test results are OK, then we ask that they test them frequently."

Early last spring, IRI sent out a cautionary advisory to risk managers, warning that Omega sprinklers may not operate as designed and that building facilities may be in jeopardy. The advisory states that IRI will help arrange shipping Omega sprinkler heads manufactured prior to June 1996 to UL for free testing.

While UL has found problems with the Omega model manufactured before June 1996, the independent product research group certified a newer model manufactured after that date. The new model is made with a silicone O-ring. The older models were manufactured with rubber rings that can swell and grip a plunger too tightly, requiring higher water pressure to force them open.

UL began investigating Omega sprinklers in May 1996 after learning about potential problems at a fire safety trade show, a UL spokesman said. There are no other sprinklers it is currently cautioning about.

While UL has certified the new model, Factory Mutual Engineering & Research in Norwood, Mass., has not approved it, nor did it approve the older model with the rubber O-ring, said Carl Miller, chief operating officer of Factory Mutual.

Arkwright Mutual Insurance Co. has had instructions to its field engineers since 1990 to advise customers to use sprinklers other than the Omega model or replace them, said Frank J. Suppe, vp in engineering and risk management for Arkwright in Waltham, Mass.

Omegas have been used widely in buildings considered low hazard by insurers, such as hotels, office buildings and hospitals, Mr. Suppe said.

"The bad news is from a life safety standpoint," he said. "You really want zero defects when you are trying to protect those types of occupancies. You really are protecting people as much as the property."

"If a new project kicks off, we recommend using Factory Mutual-approved heads, and we basically would end up not having Omegas," said Dennis Anderson, vp and director of engineering for Protection Mutual Insurance Co. in Park Ridge, Ill. "If we come in after the fact, we recommend replacing any unapproved sprinklers with FM-approved heads."

While the Factory Mutual System companies recommend using approved models, spokesmen for several of the companies said they can sometimes make underwriting adjustments for buildings that already have the sprinklers installed.

Like others in his field, Mr. Anderson praised Central and sympathized with it for the media attention the manufacturer has recently received.

"They have large numbers of sprinklers that are Factory Mutual-approved, and they have been very proactive in recent years, advancing sprinkler technology," he said. "It's kind of a classic case of the media hooking onto something the technical community has been aware of for a long time."

To date, Central has not faced any lawsuits related to the failure of an Omega head, the company spokes-man said. The company is insured for product liability and has a $50,000 self-insured retention. It will not seek coverage for the $4 million it already has reserved against earnings to address its Omega woes, the spokesman said.

The widespread publicity, along with independent tests documenting problems with the sprinklers, could contribute to a plaintiffs attorney deciding to file a lawsuit, said Ed Greenberg, a defense attorney with Daller, Greenberg & Dietrich in Fort Washington, Pa.

"It may be one more thing to deal with when they get the feeling that a manufacturer or a product line are vulnerable, since they are highly motivated people who work on contingent fees," he said. "They publish information in their journals about companies and products that are in reports."

Insurers that pay for property damage resulting from fires where Omegas are in use could also look to the manufacturer for subrogation, several attorneys agreed.

But Central likely lessened potential damages by changing the materials used in its sprinklers and by warning insurers and customers about sprinklers manufactured before those changes were made, said Kevin Dunne, a partner and product liability expert for the San Francisco firm of Sedgwick, Detert, Moran & Arnold.

However, some state courts allow a manufacturer's subsequent remedial change to a product to be used as evidence of a defect in a strict liability cause of action, Mr. Dunne said. That, however, does not apply in federal courts, he added.

Changing a product but not warning about problems with existing models can worsen matters for a manufacturer, Mr. Dunne noted. Plaintiffs can sue for failure to warn, or they can argue the manufacturer had a conscious disregard for others. In some courts, proving conscious disregard for the safety of others can result in punitive damages.

Some users of fire sprinklers are not taking any chances.

Marriott International Inc. replaced Omegas in its hotels after one head failed in a Marriott Courtyard guest room during a May 1995 fire in Romulus, Mich. While the head nearest to the fire did not discharge, another one nearby did, said Arnold L. Davenport, vp of risk management for the Bethesda, Md.-based Marriott.

"Because Marriott has always prided itself as being a leader in life safety, we looked into it and said, 'We are not going to take any chances,' and we went ahead and replaced the heads," Mr. Davenport said. "We corrected the problem."

Changing the sprinklers can cost about $10 to $15 a head, including the sprinkler and installation labor, several experts said. However, others said things such as water cleanup and variations in labor costs can add to that amount.