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A sexual harassment suit brought by a former employee raised the potential for coverage under a commercial general liability insurance policy, according to the Supreme Judicial Court of Maine.

Amber Martin, a former employee of the Maine State Academy of Hair Design Inc., sued the company for sexual harassment. During the course of her employment, Ms. Martin alleged that officers of the company had made comments and carried out acts of a sexual nature toward her, creating an offensive work environment. Ms. Martin was terminated two days after she told a supervisor that she was considering bringing charges of sexual harassment.

The employer was covered under a CGL policy issued by Commercial Union Insurance Co. that covered damages stemming from bodily injury caused by an "occurrence." The insurance company declined to defend the employer in Ms. Martin's lawsuit. The employer then sued the insurer for breach of contract, seeking a declaration that the insurer had a duty to defend. The trial court ruled for the insurer.

The Academy of Hair Design appealed the decision, and the insurer argued that sexual harassment conduct does not constitute an accident, and therefore, does not constitute an "occurrence" under the policy.

However, the appellate court said that the accidental nature of an event for purposes of a liability insurance contract does not derive from the volitional nature of the act, but rather from the unintentional nature of the consequences flowing from the act.

The appeals court concluded that the insurance company did have a duty to defend the employer, even though the underlying claim alleged intentional conduct.

Maine State Academy of Hair Design vs. Commercial Union Insurance Co., Supreme Judicial Court of Maine, Aug. 12, 1997. (BI/03/A. -- $10)

Oral request for plan information

An Employee Retirement Income Security Act claimant's oral request was sufficient to trigger the civil enforcement penalties for administrators who failed to provide a requested summary plan description, according to the 9th U.S. Circuit Court of Appeals.

John T. Crotty was employed as an attorney at a law firm from Aug. 1, 1989, to Sept. 4, 1992. He participated in ERISA plans offered by the firm. J. Gordon Cook was the plan administrator and trustee.

Mr. Crotty alleged that in January 1992, he orally requested information about the plans from Mr. Cook's assistant. Mr. Crotty never received any summary plan description or any written plan information from the time he became eligible for participation on Aug. 1, 1991, until he left the firm in September 1992.

The month after his departure from the firm, he received a statement of his account balances, which were significantly lower than those listed in his December 1991 statement.

Mr. Crotty sued the plan administrator to recover benefits and penalties under ERISA. The trial court dismissed Mr. Crotty's suit, ruling that Mr. Cook was not subject to statutory penalties under ERISA because Mr. Crotty had not made a written request.

The appellate court said that the administrator of the plans was obligated to furnish Mr. Crotty with the summary plan description at specified times without the need for any request by Mr. Crotty. According to the court, Mr. Crotty's request did not have to be in writing for the civil enforcement penalty of ERISA to apply. The trial court decision was reversed, and the case was returned for further proceedings.

John T. Crotty vs. J. Gordon Cook, 9th U.S. Circuit Court of Appeals, Aug. 15, 1997. (BI/04/A. -- $10)

Horseplay injury not compensable

In a decision only recently reported, an Ohio appellate court ruled that an employee injured in the act of rocking a soda machine in an effort to dislodge a can of soda was not entitled to workers compensation benefits.

John Carrick was employed as a stocker at a grocery store. He arrived at work about 10: 30 p.m. He decided to take a break from his duties at 3 a.m. the next day. He deposited 50 cents into one of three soda machines in the employees' lunchroom. He rocked the machine back and forth in an effort to dislodge the soda when the soda can did not emerge from the machine. The machine tipped over onto Mr. Carrick, fracturing his femur. He subsequently filed for but was denied workers comp benefits.

The appellate court said an employer is not an absolute insurer of its employees' safety and injuries that result from an employee's misconduct or deviant behavior are not compensable, as the conduct falls outside the scope of employment.

According to the court, Mr. Carrick's act of rocking the soda machine could be characterized as horseplay. The hazard created by his tipping of the soda machine was not a hazard incident to the performance of his duties as a stocker, the court said. Thus, the court concluded that his injury did not occur during the course of his employment. The decision to deny benefits was affirmed.

John Carrick vs. Riser Foods Inc., Court of Appeals of Ohio, Oct. 21, 1996. (BI/04/My. -- $10)

These abstracts were prepared by Mayo H. Stiegler. Copies of these decisions are available by sending a $10 check payable to Mayo H. Stiegler, to Business Insurance, 740 N. Rush St., Chicago, Ill. 60611-2590. List the number for each opinion.