PADI getting sued over Insurance Program

[Thalassamania]

...

As far as subsidizing other instructors, the entire premise of insurance is that the risk of a loss is shared among a large number of insureds. So, yes, you are subsidizing them... just as they are subsidizing you.

But I think, with some justification, that I should not be subsidizing them since I do not need them to subsidize me. I want out of their pool.

 

[Wookie]

The way it was explained to me by my insurer, negligence is anything that happens on the boat that I didn't do enough to prevent, like someone falling down the stairs. I could have prevented someone from falling down the stairs by installing an elevator. That's what waivers are for. Gross negligence is when I push someone down the stairs. Waivers don't help in that case, so we've taken the gross negligence clause out of our waiver, on advice from our corporate lawyer and insurance company. That's what insurance is for.

 

[Scott L]

Having given the whole matter more thought, and recognizing I've had nearly zero experience with the regulatory end of insurance law, I'm still not so sure that what is described as PADI's program is unlawful. And, can anyone say with certainty that the appropriate subsidiaries are not licensed somewhere?

A further thought or two: Do any insurance carriers offer liability policies that would cover a dive shop? Do they have self-insured retentions? What are the premiums like? Can any shops actually afford such insurance?

If I were to guess, Vicencia & Buckley Insurance Services, Inc., the program broker dealer, probaly has the sufficient surplus lines licenses to legally sell the products involved. I believe the crux of this case hinges on disclosures, particularly the paper it was written upon. If only Lexington Insurance is listed with their AM Best A rating then there could be problems as PADI and/or the broker dealer are responsible for most all claims as most claims will fall under $300K. Neither PADI or the broker dealer is rated with AM Best, I can assure you of that. I do not have a functioning printer here at home. Under what name are these policies being sold?

One way or another, this cash cow for PADI is going to take a major public relations hit for the reason cited above and the conflict of interest factor. The more stringent they adjust claims the more money PADI and their lackey insurance broker rake in.

 

[ItsBruce]

... The co-defendant's on a case can be as adversarial to each other as to the plaintiff. One needs to watch out for their own interests and not rely on PADI or the dive shop backing them up.

Quite so. However, many will look a the whole thing and recognize that their own interest is best served by ganging up on the plaintiff and reserving any issues for their co-defendants for later. Otherwise, as one Judge said, "It becomes a feeding frenzy and the plaintiff can sit back and let everyone else do its work."

 

[ItsBruce]

The way it was explained to me by my insurer, negligence is anything that happens on the boat that I didn't do enough to prevent, like someone falling down the stairs. I could have prevented someone from falling down the stairs by installing an elevator. That's what waivers are for. Gross negligence is when I push someone down the stairs. Waivers don't help in that case, so we've taken the gross negligence clause out of our waiver, on advice from our corporate lawyer and insurance company. That's what insurance is for.

I disagree on with your insurer on gross negligence. Knocking someone down the stairs because you are trying to squeeze past them is negligence. Pushing someone down the stairs because you are in a hurry to get down them and the person is in the way may be gross negligence. Pushing them down the stairs so they'll be injured is intentional and probably conscious disregard. Pushing them down as a bad practical joke is a wobbler between gross negligence and intentional.

One court has stated: “Under California law, gross negligence is defined as an act or omission that shows a failure to exercise even slight care or that constitutes an extreme departure from the ordinary standard of conduct.” Further “It requires negligent conduct which is aggravated, reckless or flagrant so as to ‘connote[] such a lack of care as may be presumed to indicate a passive and indifferent attitude’ towards the consequences of one's acts to the safety and welfare of others.”

A few examples from California law:

1. An expert snow skier was warming up for a race and by racing down a ski run. He was in complete control, but was inattentive when he reached the flats at the bottom of the run and as a result crashed into another skier who was stationary on the flats after completing a run. The central question in the ensuing lawsuit was whether the racer's "engaged in reckless conduct totally outside the range of the ordinary activity in the sport." As guidance for the trial court and jury, the Court of Appeal stated: "While racing down an advanced run is part of the thrill of snowboarding, intentionally speeding into a flat area at the base of an advanced run where people have stopped to rest, when one is unfamiliar with the area, without looking where one is going is not an integral and unavoidable part of the sport. [The racer's] conduct is analogous to a freeway driver who exits the freeway without slowing down or looking for other cars that are also exiting."

2. A developmentally disabled 14-year old child who suffered from cerebral palsy, epilepsy, and other disabilities, was enrolled in a summer camp. Camp activities included swimming. The child was a good swimmer. Because of the risk of seizures, a counselor was assigned to watch her while she was in the pool. The counselor watched the child, but was momentarily distracted and turned her attention from the child. When she returned her attention, the child had disappeared and drowned. The court held that it was for a jury to decide if this rose from ordinary negligence to gross negligence.

3. Several young men were horsing around during a party at someone's home. One decided to toss the other into the pool. Unfortunately, the victim of the prank fell short and was seriously injured when he landed on the concrete stairs. The insurer for the family of the young man who did the tossing asserted the claim was not covered because the injury was the result of an accident within the meaning of its policy. The court disagreed. It reasoned that there was no intent to injure, so the injury was an "accident" and the whole incident was not "inherently harmful" as is the case with sexual molestation.

 

[Rhone Man]

In relation to the swapping of views between ItsBruce and Thal: it is a long, long time since I practised insurance law, and that was in a different country, but at least under English law my clear recollection is that the courts took an extremely restrictive view of clauses in PI cover which required the insured to exhibit a certain degree of care for coverage to apply (for pretty obvious frickin' reasons).

Excluding intentional conduct - fine. Excluding certain types of activity - fine. Saying that someone was careless enough to be liable for negligence, but was also so sloppy that it actually negates their coverage is a very tough horse to ride (at least under English law).

The only case where I am aware that it was ever successfully argued was where someone had custody of someone else's Ferrari Testarossa, and they left it on a busy city street, unlocked, with the keys in the ignition. Even then, I suspect that the claim might have been upheld against insurers except for the fact that it was pretty obviously a fraudulent claim.

I'd be astonished if an English court ever negated coverage on the basis of a failure to follow PADI standards. I can't speak for the US legal system though.

 

[Peter Guy]

Rhoneman -- I'd also be astonished if a US Court allowed a professional liability carrier to opt out of defending the suit and covering the damages for "failure to follow PADI standards" unless it was so outside the boundaries that the standards couldn't be seen with a telescope (for example, taking an OW student down to 200 feet on air, AL 80).

 

[Zippsy]

(for example, taking an OW student down to 200 feet on air, AL 80).

Whoa they big fella. Are you saying I am NOT supposed to do that??????

 

[PRL]

Rhoneman -- I'd also be astonished if a US Court allowed a professional liability carrier to opt out of defending the suit and covering the damages for "failure to follow PADI standards" unless it was so outside the boundaries that the standards couldn't be seen with a telescope (for example, taking an OW student down to 200 feet on air, AL 80).

Actually If I remember right, the last case Rick was involved with, and the centerpiece at the last DEMA was very close. Well it involved a DM and Discover Scuba Diving in OW at depth, and bad conditions. IMHO Standards went out the window. Still Rick not only went after the DM, The Shop, The Insurance, But also after PADI. And won on all counts. The depositions are still on Ricks site, however the transcript from DEMA was successfully blocked by PADI lawyers.

 

[DCBC]

...I'd also be astonished if a US Court allowed a professional liability carrier to opt out of defending the suit and covering the damages for "failure to follow PADI standards" unless it was so outside the boundaries that the standards couldn't be seen with a telescope (for example, taking an OW student down to 200 feet on air, AL 80).

I guess it all comes down to what the court deems "reasonable." You know as well as I that no one organization has "control" on this. The "expert witnesses" are a factor and there has been at least one case that I've been involved with that PADI's standards have been held to be "insufficient." Perhaps that's one reason why Quebec regulated diver certification in their jurisdiction...