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Accident investigations vital but potentially perilous for employers

Posted On: Sep. 30, 2020 7:00 AM CST

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After a workplace accident or a near-miss, employers must review the incident to prevent future safety issues or to comply with regulatory requirements, but they need to take care that they are not creating documents that can be used against them, experts say.

While accident reviews often are required to comply with U.S. Occupational Safety and Health Administration reporting obligations, they may be discoverable unless employers take steps to create attorney-client privilege during the investigation and written review, they say.

“Most employers are pretty comfortable with what they need to do in an investigation, but not always clear about the procedure for who is doing the investigation, how to document it, and that’s particularly problematic when you have health and safety folks leading the show,” said Cressinda Schlag, of counsel in the Austin, Texas, office of Jackson Lewis P.C.

Without legal guidance, an investigation team may develop a report or document that the company was at fault or in violation of a health or safety regulation, she said.

Investigation documents, if not protected by attorney-client privilege, can lead to higher workers compensation costs and the loss of the exclusivity provision of the Workers Compensation Act if it is found that an employer had a severe disregard for employee safety, said Kate McMahon, Washington-based partner at Conn Maciel Carey LLP during a recent webinar hosted by the law firm.

Audits and investigations, however, are critical for workplace health and safety programs and can eliminate hazards, identify accident causes beyond an employer’s control and show the effectiveness of a safety program, which can lead to reduced workers comp, she said.

But there are “significant risks that can be created by conducting these investigations and audits, especially with written product,” Ms. McMahon said.

Invoking the attorney-client privilege can prevent disclosure of sensitive information, but “the key is the document has to be done to prepare for anticipated or existing litigation. … If the document is created in the ordinary course of implementing a health and safety program, it’s not covered,” she said.

To invoke attorney-client privilege, either in-house or outside counsel must be a part of the investigation team, and the individual must clearly be involved for the purpose of providing legal advice, said Caroline Donelan, partner in the Los Angeles office of Blank Rome LLP.

For many workplace investigations, keeping information private is unnecessary, but employers should detail what types of accidents carry a significant enough risk to have in-house or outside counsel involved, Ms. Schlag said.

For instance, in a situation in which an OSHA investigation is likely, an employer may want to use attorney-client privilege “strategically by having one team conduct a nonprivileged investigation that would be open to OSHA, while another group conducts a “deep dive under privilege” with counsel, Ms. McMahon said.

For very serious incidents, such as an accident involving multiple fatalities or hospitalizations, an employer may want to have a third-party conduct the investigation in partnership with outside counsel, which ensures attorney-client privilege, Ms. Schlag said.

While the underlying facts of an incident would not be protected from being discoverable, “results and findings of the investigations in any written report providing an analysis of actions that need to be taken by the company” from the outside investigators and attorneys would be privileged, she said. 

Interview notes and statements from an investigation, however, may be discoverable, and only crucial information should be recorded, Ms. Donelan said.

“What I like to do is to be very judicious with those interview notes and then prepare a sort of executive legal summary,” she said. “Include in the summary of facts what you are doing, but make sure that is a fully privileged legal analysis or legal recommendation.”

Employers also should guard against waiving attorney-client privilege, Ms. McMahon said. Even inadvertently sending information to someone on the wrong team could waive privilege “not only to that document, but the subject matter,” she said.

While C-suite executives and high-level managers would likely be considered managing agents of a company conducting an investigation and entitled to the attorney-client privilege protections, lower level managers may not be covered, Ms. Donelan said.

However, there are tradeoffs when employers conduct privileged investigations because it limits the ability to share the information openly, said Micah Smith, partner in the Washington office of Conn Maciel Carey. 

OSHA also does not have a normal default policy of requesting audit reports and will only “request audit reports if they have a basis to believe there is a hazard present,” he said.

Unless there is a fatality, Brad Giles, president-elect of the American Society of Safety Professionals, who is based in New Meadow, Idaho, said he has “never been an advocate” for keeping an incident report or audit private through attorney-client privilege. He noted that OSHA does not have the manpower to investigate the majority of documented injuries.

“The whole concept of doing (an investigation) is the fact finding to figure out what went wrong,” Mr. Giles said. “Our basis on how we approach this is, rather than holding it tight, take advantage to make the best out of it. If we had an issue on our process or program, we need to make that available to our employees and subcontractors.”

It is crucial that employers use information they have learned from an incident investigation, said Jeff Corder, Clearwater, Florida-based vice president of loss control at AmTrust Financial Services Inc. 

“I’ve seen companies that have fantastic safety programs, great accident investigations and self-audits … then they just sit in the drawer and don’t do anything with them,” he said. “If something’s wrong and you don’t fix it,” the employer is risking OSHA fines and other liability, he said.