solutia inc. v. esis, inc complaint

8/7/2019 SOLUTIA INC. v. ESIS, INC Complaint

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Case4:09-cv-01865-RWS Document 4 Filed 11/13/09 Page1 of 55

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C -..,..iT ::V- L' : '

IN THE CIRCUIT COURTFOR S T . LOUIS COUNTY" '

SOLUTIA IN C.,

v.

ESIS,

Plaintiff,

I N C . ,

Serve at:CT Corporation System120 South Central Ave.Clayton, MO 63105

Defendant.

.

STATE OF MISSOURI

) Case No.

) Div.

2 0 5 9 O C T - 2

JO A " ' 'cwcuir

IfftlMMtfM

2) JURY TRIAL DEMANDED

PETITION

i i ' i "

P H U ' 2

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COMES NOW Plaintiff Solutia Inc.("Solutia"), by and through its undersigned

attorneys, and for its Petition against DefendantESIS,Inc. ("ESIS"), hereby states as follow s:

Parties

1 . Solutia is a Delaware corporation with its principal place of business located at

575 Maryville Centre Drive, St. Louis, Missouri63141.

2 . Upon information andbelief, ESIS is a Pennsylvania corporation with its

principal place of business located at 436 Walnut Street,Philadelphia,Pennsylvania 19106.

3 . ESIS has entered into multiple contracts w ith Solutia w ithin the State of Missouri.

Additionally, ESIS transacts business w ithin this State by providing its claims adjusting, loss

control and risk managem ent services here. ESIS has also damaged Solutia by breaching its

fiduciary duty to Solutia and by negligently performing its claims adjusting services, constitutmg

the commission of tortious acts within this State.

1483195.02


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Case 4:09-cv-01865-RWS Document 4 Filed 11 /13/09 Page 2 of 55

Jurisdiction and Venue

4. This Court has jurisdiction over this matter pursuant to Section 506.500 of the

Revised Missouri Statutes in that ESIS has transacted business w ithin the State of Missouri, has

entered into contracts within the State of Missouri, and has committed tortious acts within the

State of M issouri.

5. Venue is proper in this Court under Section 508.010.4 of the Revised Missouri

Statutes, in that this Petition contains a count alleging a tort, and Solutia was first injured in St.

Louis County, Missouri. Further, regardless of Solutia's place of injury, venue is proper under

Section 508.010.5 of the Revised Missouri Statutes, in that ESIS is an out-of-state corporation

w ith its registered agent located in St. Louis County, M issouri.

Gene ral Allegations

6. Solutia creates and manufactures performance materials for use primarily in the

automotive, architectural, transportation and industrial markets. Though headquartered in St.

Louis, Missouri, Solutia maintains manufacturing and other offices at various places throughout

the United States and abroad.7. ESIS provides third-party administrator services on behalf of its corporate clients,

investigating, adjusting and otherw ise administering various w orkers* compensation claims made

against ESIS 's clients. lot performing its duties, ESIS w orks w ith its clients and their insurance

companies to resolve and dispose of any litigated claims.In this capacity, ESIS assures clients

that its representatives know the local law s w here claims occur. On many occasions, ESIS also

secures local attorneys to represent its corporate clients.

8. ESIS has a longstanding relationship w ith Solutia as its third-party administrator

for w orkers' compensation claims. ESIS became Solu tia's third-party administrator for w orkers'


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Case 4:09-cv-01865-RWS Docum ent 4 Filed 11 /13/09 Page 3 of 55

compensation claims w hen Solutia became an independent corporate entity in 1997. Prior to

1997, ESIS was the third-party administrator for Monsanto,Solutia's predecessor. As Solutia's

third-party adrninistrator, ESIS w as charged w ith handling all aspects of w orkers' compensation

claims against Solutia.

9. ESIS w as serving as Solu tia's third-party administrator pursuant to a contract

between So lutia and ESIS for claims w hich occurred between April 1, 2000 and March31,2001

(hereinafter referred to as the "ESIS Service Agreement"). A true and accurate copy of the ESIS

Service Agreement is attached hereto as Exhibit 1. This ESIS Service Agreement w as drafted by

ESIS and w as substantially similar to agreements that had been in place since1997.

10. The ESIS Service Agreement provided thatESIS w ould provide Claims Adjusting

Services to Solutia for all Claims occurring during the effective dates of the ESIS Service

Agreement.

11. Pursuant to the ESIS Service Agreement, a "Claim" is defined as "monetary

demand against [Solutia] based upon each itemized loss or damage occurring in the United States

or Canada..., resulting from ... bodily injury, sickness, or disease (including death resultingtherefrom)," assuming that the occurrence giving rise to the demand took place while the ESIS

Service Agreement was ineffect, that Solutia reported the demand to ESISin a timely manner,

and that the ESIS Service Agreement did not otherw ise exclude the reported occurrence.

12. Under the ESIS ServiceAgreement, once a Claim was reported to ESIS,ESIS'

obligations were as follows:

a. Investigate, adjust, and otherw ise administer claims, including thearrangement of a defense for litigated Claims, as ESIS deems necessary inaccordance withESIS'best professional judgment as a claims adjuster andstate law s and regulations permit for monopolistic state s....


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b. Review the facts of each Claim and the law applicable thereto todetermine what compensation, ifany, should be paid on the Client'sbehalf for eachClaim....

c. Determine w hat Allocated Loss Expenses shall be incurred in theinvestigation, adjustment,administration, and defense of eachClaim.

d. Make payments for settlement ofClaims and forAllocated Loss Expensesout of funds provided bythe Client toESIS ....

e. Maintain a file on reported C laim s....

f. Dispose of Claim files in accordancewith the Client's directions or, in theabsence ofsuch directions, atESIS' discretion as permittedby applicablestate and federal law s....

g. Provide statistical or lossexperience reportsto the Client concerning the

status of (a) Claims, (b) Claimreserves, and(c) Claim payments as agreedupon by ESIS and theClient in writing from time to time.

h. Maintain confidentiality with respect tothe contents of theClient's fi lessuch that the contents thereofare not disclosed to third parties,except asshall be required for ESIS to carry outits obligations under this PART orto comply with requirements imposed by applicable laws or regulations.

i. Administerall Claims reported totheir conclusion and furtherinvestigate,adjust, and otherwise administer any Late ReportedClaims according tothe terms and conditionsof this PART.

SeeExhibit l .II .A.3.

13. In or around May of 2002, Fannie Ranaldson ("Ranaldson"),an employeeat

Solutia's Pensacola,Florida plant, notified Solutia of her belief that her work for Solutiahad

caused her to suffer certain lung-related illnesses inMarch of 2001.

14. Because the diagnosis ofRanaldson's lung-related illnesses occurred during the

time the ESIS ServiceAgreement wasin effect, ESIS had the contractual responsibility to

manage her claim pursuant to the ESIS Service Agreement.

15. Ranaldson asserted a monetary demand against Solutia based upon damage

occurring in the United States resulting from her lung-related illness (the "Ranaldson Claim").


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16. Solutia reported the Ranaldson Claim in a timely manner toESIS and provided

funds to ESIS for the purpose of establishing a reserve for the payment of m edical bills and other

Claim-related expenses, pursuant to the ESIS Service Agreement.

17. The ESIS Service Agreement did no t otherw ise exclude the reported occurrence.

18. Ranaldson's demand constituted a Claim pursuant to the ESIS Service

Agreement.

19. Pursuant to Florida law , which w as applicable to the Ranaldson Claim and request

for medical treatment, an employer and/or insurance carrier may initiate payment of benefits

"without prejudice and w ithout admitting liability." Fla. Stat. 440.20(4). How ever, if the

employer/carrier "fails to deny compensability w ithin 120 days after the initial provision of

benefits or payment of compensation," the employer/carrier "waives the right to deny

compensability." Id.

20 . On or around June17, 2002, ESIS began making payments from the funds

provided by Solutia, in its capacity as Solutia's Claims Adjuster under the ESIS Service

Agreement, for all medical treatment rendered to Ranaldson for her lung-related illnesses.

21. Between June, 2002 and March, 2005, ESIS continued to make payments for

medical treatment rendered to Ranaldson. The majority of thosepayments were related to

treatment Ranaldson received from Dr. Salvadore Vernali.

22. Dr. Vemali treated Ranaldson for mild asbestosis, a condition allegedly related to

her w ork at Solutia, and Chronic Obstructive Pulmonary Disorder ("COPD"), a condition w hich

unquestionably could not have been related to Ranaldson's w ork at Solutia.

23. Despite the fact that Dr.Vemali's opinion that most of Ranaldson's complaints

w ere related to her COPD, w hich w as not w ork-related and w ere instead caused by her smoking,


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ESIS paid for almost three years of treatment by Dr. Vemali, regardless of whether the

treatments w ere related to Ranaldson's non-w ork-related COPD or Ranaldson 's mild asbestosis.

24 . Prior to March18, 2005, ESIS never denied the compensability of Ranaldson's

Claim and never denied payment for any medical bills submitted by Ranaldson, including those

bills related to treatment of her non-w ork related COPD.

25. On or about March 18, 2005, Ranaldson filed a Petition for Benefits with the

Florida Division of Workers' Compensation("Work Comp. Matter"), alleging she was

permanently and totally disabled as a result ofthe lung-related illnesses Ranaldson claimed w ere

related to her w ork w ith Solutia. ESIS secured counsel in Florida to represent Solutia in theWork Com p. Matter pursuant to its obligationto arrange "a defense for litigated C la im s. .. ."

26. On September 19, 2005, a hearing w as held in the Work Comp. Matter. At the

hearing, the Court took into account in its findings of fact the deposition testimony from Dr.

Vemali, Ms. Ranaldson's treating physician.

27. On October 10, 2005, the Judge of Compensation Claims in the Work Comp.

Matter issued his rulingin favor of Ranaldson and againstSolutia, holding Ranaldson was

permanently and totally disabled and Solutia would be responsible for paying permanent total

disability benefits to Ranaldson ("October 10, 2005 Order"). A true and correct copy of the

October10,2005 Order is attached hereto as Exhibit 2.

28 . In his Order, the Court made several findings of fact related to the testimony of

Dr. Vemali. Among other things, the Court noted that Dr. Vemali had concluded that

Ranaldson's alleged shortness of breath was predominantly caused by her COPD; that any work

restrictions he assigned to Ranaldson were attributable to COPD and not asbestosis, that


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Ranaldson's chronic respiratory complaints were related to her COPD and w ere not related to

asbestosis; and that Ranaldson's COPD w as not w ork-related. See Exhibit 2, pp.5-7,

29 . The Court held that, though the medical evidence tended to show Rana ldson's

disability was unrelated or only very slightly related to Ranaldson's work for Solutia, Solutia

w as responsible for paying permanent total disability benefits because Solutia had failed to deny

Ranaldson's claim within 120 days of the date Solutia first provided medical treatment to

Ranaldson, pursuant to the Florida statute cited above and know n as the "120-dayrule."

30. Specifically, the Court concluded that, by paying for Ms. Ranaldson's medical

expenses for COPD for three years, it"has accepted that condition as compensable and has not

made the requisite showing that they have now discovered information w hich could not have

been discovered w ithin 120 days." See Exh. 2.

31. The Order ofthe Florida Judge of Compensation Claims w as affirmed on appeal,

in a per curiam opinion, by the Florida First District Court of Appeal on October 25,2 00 6.

32. As a result ofESIS' failure to deny the Ranaldson C laim w ithin 120 days, Solutia

is required to pay permanent total disabilitybenefits to Ranaldson beginning on May 26, 2005for the rest of M s. Ran aldson's life. Ranaldson's court-ordered permanent total disability

benefits amount to OneThousand, Four Hundred Forty-Eight Dollars and Forty-Six Cents

($ 1,448.46), payable every tw o.w eeks.

33. hi addition, Solutia must pay Ranaldson's medical expenses related to her alleged

lung illnesses. To date, Solutia has incurred more than One Hundred Thousand Dollars

($100,000.00) in medical expenses related to the Ranaldson Claim and has paid over Two

Hundred Thousand ($200,000.00) in permanent total disability benefits to Ranaldson. Over the


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course of Ranaldson's lifetime, Solutia expects that itwill pay more than One Million Dollars

($1,000,000.00)either to or on behalf of Ranaldsonin relation to her Claim.

34. ESIS unilaterally determined that it would make payments for the medical

treatment rendered to Ranaldson from approximately M ay, 2002 until at least March, 2005.

35. ESIS was responsible for any investigation into Ranaldson's alleged injury and

treatment to determine w hether the treatment w as for a w ork-related illness.

36. ESIS made payments forall bills submitted by Ranaldson, without regard as to

w hether they w ere for treatment related toa work-related condition.

37 . ' ESIS disregarded the Florida "120-day rule" and continued to payMs. Ranaldson

for non-work related illnesses formore than 120 days.

Count I Breach of Contract

38. Solutia incorporates and realleges theallegationscontained in Paragraphs 1-38 of

its Petition as if fully set forth herein.

39. In exchange for the claims adjustingservicesprovided by ESIS pursuant to the

ESIS Service Agreement, Solutiapaid ESIS certain fees set forth in the ESIS Service Agreement.40. The ESIS Service Agreement required ESIS to use its best professional judgment

as a claims adjuster to investigate, adjustand otherwise administerClaims. See Exhibit 1,

H.A.3.a.

41 . The ESIS Service Agreement also required ESIS to"[r]eview the facts of each

Claim and the law applicable thereto to determine what compensation, i f any, should be paid on

the client's behalf foreach Claim." See Exhibit 1, H.A.3.b.


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42 . Had ESIS investigated the Ranaldson Claim as required by theESIS Service

Agreement, ESIS w ould have discovered that the majority o f Rana ldson's medical bills w ere for

treatment for a non-work-related illness.

43. ESIS breached its contractual obligation to Solutia by its failure to provide even

rriinimal investigation into the medical bills for the Ranaldson Claim.

44. Had ESIS known "the law applicable" to Ranaldson's claim, ESIS would have

know n that Florida law requires the employer to deny a w orkers' compensation claim w ithin 120

days of the first provision of medical treatment, or the claim is deemed compensable.

45. ESIS breached its contractual obligation to Solutia by its lack of knowledge of

Florida workers' compensation laws.

46 . The ESIS Service Agreement further charges ESIS w ith the responsibility to

"[investigate, adjust, and otherwise administer claims, including the arrangement of a defense

for litigated Claims, as ESIS deems necessary in accordance with ESIS' best professional

judgment as a claims adjuster and statelaws . . . "

47 . Had ESIS complied with the terms of the ESIS Service Agreement and

investigated the Ranaldson Claim and arranged for a defense of the Ranaldson Claim, Solutia

w ould not have been held liable for Ranaldson's permanent total disability benefits for failure to

deny the Ranaldson Claim prior to the expiration of 120 days from the date ESIS first paid

benefits for Rana ldson's non-w ork-related medical treatment.

48. ESIS' failure to investigate the RanaldsonClaim, its failure to know Florida law

and its decision to pay Ranaldson's non-work related medical bills for more than 120 days

constitute breaches of the ESIS Service Agreement.


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54. ESIS offers its skills and abilities as a claims adjuster to clients like Solutia, who

contract with ESIS forESIS' claims adjusting services.

55. The ESIS Service Agreement grants ESIS the "full authority and control in all

matters pertaining to the investigation, adjustment, and administration ofClaims"covered by the

ESIS Service Agreement. See Exhibit 1,11.A.5.

56. In relation to all Claims reported to ESIS and particularly in relation to the

Ranaldson Claim, Solutia relied upon ESIS because of ESIS' superior skill and knowledge in

regard to claim adjusting and gave ESIS the full authority and control over all matterspertaining

to the investigation, adjustment and administration of the Ranaldson Claim, including giving

ESIS full authority and control over hiring counsel to contest the Ranaldson Claim.

57. Solutia's reliance upon ESIS to properly administer the Ranaldson Claim gave

rise to a fiduciary relationship between Solutia and ESIS, such that ESIS ow ed fiduciary duties to

Solutia.

58. ESIS paid, on Solutia's behalf and from Solutia's funds, for all of Ranaldson's

submitted medical bills for a period of approximately three years, notwithstanding the fact thatthe majority of these bills w ere for a non-w ork related illness. ESIS 's improper payments

subjected Solutia to the application of Florid a's 120-day rule.

59. Because of ES IS's failure to properly investigate and properly pay for only w ork-

related claims, Solutia was found liable to pay Ranaldson permanent total disability benefits

because the Florida Judge of Compensation Claims foundthat Solutia had failed to deny

Ranaldson's Claim within 120 days of the date Solutia first provided medical treatment to

Ranaldson.

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60. ESIS also had a fiduciary obligationto*know the w orkers' compensation laws

w here claims w ere made.

61 . ESIS' lack of knowledge regarding the applicability of the 120-day rule and its

continued payments despite the applicability of the 120-day rule were breaches of ESIS'

fiduciary duty to Solutia.

62. As a result ofESIS' breach of fiduciary duty, Solutia has been damaged in that

Solutia has paid medical expenses for non-w ork related illnesses, and has paid and is required to

continue to pay permanent total disability benefits to Ranaldson for the rest of Ranaldson 's life.

In addition, Solutia has incurred costs and attorneys' fees in this suit and in appealing the Order

of the Florida Judge of Compensation Claims that would not have been incurred had ESIS

properly denied R analdson 's C laim w ithin 120 days of first providing m edical treatment to

Ranaldson.

WHEREFORE, Plaintiff Solutia Inc. respectfully requests that this Court enter its

Judgment on Count II of S olutia's Petition in favor of Solutia and against Defendant E SIS, Inc.,

that this Court award damages to Solutia in an amount to be determined but in excess of$1,000,000.00, and for such other and further relief as this Court deems just and proper.

CountEOT. Negligence

63. Solutia incorporates and realleges the allegations contained in Paragraphs 1-55 of

its Petition as if fully set forth herein.

64. ESIS had a dutyto administer and adjust the Ranaldson Claim in the manner of an

entity reasonably skilled in claims adjusting.

65 . A reasonably skilled claims adjuster w orking w ithclients in the state of Florida

would have recognized that Ranaldson's claims associated with COPD were not compensable as

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a w ork-related injury or illness, and that the failure to deny anon-compensable Florida workers'

compensation claim w ithin 120 days of first providing medical treatment to the claimant w ould

lead to the application of Florida's 120-day rule, whichprohibits the employer from later

denying com pensability.

66 . ESIS' failure to investigate Ranaldson's claims to determine whether they were

related to a work-related illness and ESIS' failure to deny compensability of the Ranaldson

Claim w ithin 120 days of first providing med ical treatment to Ranaldson subjected Solutia to the

application of Florida's 120-day rule and therefore breached ESIS' duty to act as a reasonably

skilled claims adjuster.

67 . But for ESIS' failure to deny compensability ofthe Ranaldson Claim within 120

days of first providing medical treatment to Ranaldson, the Florida Judge of Compensation

Claims could not have relied upon the 120-day rule in finding Solutia liable to Ranaldson for

permanent total disability benefits.

68 . As a result of ESIS' negligence in failing to deny compensability of the

Ranaldson Claim w ithin 120 days o f first providing medical treatment to Ranaldson, Solutia has

been damaged in that So lutia has paid medical expenses for non-work related illnesses, and has

paid and is required to continue to pay permanent total disability benefits to Ranaldson for the

rest of Ran aldson's life. Inaddition,Solutia has incurred costs and attorneys' fees in this suit

and in appealing the Order of the Florida Judge of Compensation Claims that would not have

been incurred had ESIS properly denied Ranaldson's Claim within 120 days of first providing

medical treatment to R analdson.

WHEREFORE, Plaintiff Solutia Inc. respectfully requests that this Court enter its

Judgment on Count IIIof Solutia's Petition in favor of Solutia and against DefendantESIS,Inc.,

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that this Court award damages to Solutia in an amount to be determined but in excess of

$1,000,000.00,and for such other andfurther relief as this Court deems justand proper.

Respectfully Submitted,

LEWIS, RICE & FINGERSH,L.C.

Thtjmas P. Berra,Jr., v#43399tberra(S),lewisrice.comDuaneL. Coleman, #[email protected] Lynn S. Brackman, #[email protected]

500 N. Broadway, Suite 200 0St. Louis, Missouri63102(314)444-7600(314)241-6056 facsimile

Attorneys for PlaintiffSolutia Inc.

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mailto:[email protected]:[email protected]:[email protected]:[email protected]


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r

ESIS SERVICE AGRE EME NTCTbis is not a contract o f insurance.)

Note: The following contractIs a com posite of provisions related to various services m arketed by ES IS, Inc.SECTIO N I contains general provisions that apply to all parts of the co ntra ct Subsequent sections containdefinitions and provisions that areonly applicable to the specific serv ice described within that PAR T. TheClient agrees that ESIS maymeet it obligations described in this Agreement byengaging,at its reasonablediscretion, cost^and on the Client's behalf, the services ofpersons or firms ou tside of ESIS, In c, including thepersonnel of Insurance Company of North America.

SECTIONI - LIST O F INCLUDED SERVICE S: GENERAL PROVISIONSAND DEFINITIONS

PA RT A - C ONTR ACTING PAR TIES: This Agreement is entered into by and between ESIS ("ESIS"), aCalifornia Corporation with an o fficeat 52 5 W. Monroe S t, Chicago,XL 60661,and Solutia, Inc . (the "Client")with officesatMaryville Centre Drive, S t Louis, MO 63166.

cPART B - SERVICES PROVIDED:In consideration o f the fees listed in SECTIONIII, ESIS and the CJienthereby agreemat ESIS will provide the following servicesto the Client a ccording to the G eneral Provisions and thespecific provisions of the applicable numbered PARTS of SECTION II.

PartABCD

ServiceClaims Adjusting Services - OccurrenceClaims Adjusting Services - Reported

Loss Control ServicesRisk ManagementInformation Systems(RMIS)

Billing Numbers4297429843144314

5&4Q570842

PART C - DEFINITIONS: The following definitionsare common to all contracts:

1. Cancellation shallmean the termination o f this A greement prior to its expiration,

2 . ESI S Fe e m eans the amount of compensation owed by the Client to ESIS in accordance withthis Agreementfor specific services rendered.

3. Expiration shallmean the termination of this Agreement atthe end o f the statedterm or renewal hereof.

c

PART D - OBLIGATION S A ND RIGHTS OF ESIS: ESIS will provide services as indicated in the PARTSabo ve. Se e specific "Obligations of ESIS" in SECTIONII of thisAgreement

ESIS Senate A&rcsHMai Sot BC*. Joe, I Exhibit I

LZJ


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PA RT E - O BLIGAT IONS OF CL IENT: The Client shall pay toESIS the amount of any taxes or assessmentswhich may be imposed upon theClient's purchase of the services provided by ESIS pursuan t to thisAgreement, andw here required by law, said taxes or assessments shall be charged10 the Client by ESIS in addition to all other feesfor compensation payable to ESIS hereunder.

PART F - GENERAL PROVISIONS:

1. SEC TION II containsa number of separate PART S. When aPART is included in the list of SERVICESPROVIDED (SECTION I, PARTB) , and a fee is show n for those services in SECTION III, thenthe provisionsof those PARTS are included in their entiretyend, with SECTIONSI and III,form the entire Agreement Theeffective dates and contract periods listed in each PA RT of SECTION II apply to that PART only.The ESISSERVICE AGREEMENT shallremain in effect u ntil the cancellation, expiration, or completion of all PARTS .

2. ES IS shall hav e the right to comm ingle and depo sit in banking accounts, and retain any interest earned thereon,any andall monies which theClient pays to ESIS, includingmonies for Claim settlements, Allocated LossExpenses, or compensation paid in advance for services to be rendered by ESIS to the C lient

3 . If th e Client shall rail to pay any ESIS fee a s charged by ESIS within ten(10) days of receipt ofESIS'invoice,ES IS shall have the right to suspend service untilsuch payments are made. The Client agrees to indemnifyES IS and hold it harmless for the full amou nt of any liability, fees, fines, assessments, judgm ents, or penaltiesresulting from an interruption or cessation ofESIS'services which resulted by reason of th eClient's failure topay to ESIS any fee as required hereunder and fo r the amount of any administrative or legal expenses incurredby ESIS in defending any such action.

c .4. If the Clientmils to make timely payments of any monies owed by theClient to ESIS,whether for Claim

settlem ents, Allocated Loss Exp enses, or compensation for services rendered, ESIS m ay charge the Clientinterest for late payment at the rate ofI%(one per cen t) per month. If ESIS shall incur collectionexpenses inobtainin g mon ies from the Client w hich are ow ing to ESIS, the Client shall reimburse ES IS infull for suchexpenses.

5. This Agreem ent is for the sole benefit of the parties hereto. The terms of this Agreement shall be binding uponand inure to the benefit o f and be enforceable by th e parties hereto and their respective successors andassigns;provided, however, that mis Agreement m ay not be assigned by the either party w ithout the otherparty's priorw ritten co nsen t This Agreement and its attachments and addenda are the entire Agreement by andbetween th eparties w ith respect to the services described herein.

6. Th is Agreement or any individual PARTS hereto may becanceled by either parryfor any reason whatsoever bygiving sixty (60) days prior written notice to the other party.

7. Th is Agreement shall be governed by and construed in accordance w ith thelaws of the Commonwealth ofPennsylvania.

ft, An y provision hereof w hich is prohibited or unenforceable in any jurisdiction shall be ineffective as to suchjuris dicti on, to the extent of such prohibition or unenforceability w ithout invalidating the remaining provisionsof this Agreemen t and w ithout affecting the validity or enforceability of such provision in any otherjurisdiction.

9. The interests of the responsible party hereto shallnot be prejudiced by an inadvertent error or omission w hichmay occur in the preparation, application,or use of th is Agreement; provided, however, that , upon discovery ofany such error o r omission, rectification thereof is ma de by the party responsible for suchem>r or omission aspromptly as practicable.

cE5lSSeHcAcriOTlA J Rcviud 01ALVKW3

2flf|i 5e[iaU.l*c


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Case 4:09rcv-01865-RWS Document 4 Filed 11 /13/09 Page 17 of 55

c

SECTION n - SERVICE SPECIFICATIONS

The followingdetailed specification^) shall be provided byESIS as agreed in SECTION I, PART B above.

PART A. - CLAIMS ADJUSTINGSERVICES (OCCURRENCE)

BILLING NUMB ER 4297 4298

ESIS and the Ctient hereby agree thatESIS will provide Claims Adjusting Servicesto the Ctient according to thefollowingterms and conditions:

I . % CÎMS,ADJU,ST^G^SER\5CES - EFFECTIVE DATES;RENEWALS:^This PART: shall fe efftstiye.wfta''respeW-to,CIajms'(^ÂJiHVgi,2pW'ind ;oi(ni at? 11:59p3n.oh March' 31,2001. Howeverj upon uie expiration of this PART andariy'renewal'pdiotrbr rô^.-KISsbaU continueto perform its obligations hereunder, on theterms set forthin SECTION III and anyAddendum hereto, with respectto Claims arising from occurrences during the term ofthis PART, un til all Claims underthis contract have been paid of settled, all applicable statutes of limitationshave run, and there is no further possibilitythat any additional Claims may arise.

2. CLAIMS ADJUSTING SERVICES-DEF INITIONS:

a. Alloca ted L oss Expenses shall mean any cost or expense ESIS incurs onthe Client's behalf as a result ofESIS* engaging the serviceof firms or persons outside ESIS' organization for work in connection with theinvestigation, adjustment, settlement,or defense of a Claim. Allocated Loss Expenses include, but is notlimited to the following: subrogation; automobile or other physical damage appraisal;all court costs,fees,and expenses; fee s for service of process; fees and expenses to attorneys for legal services; the costofservices o f undercover operationsand detectives; fees to obtain m edical cost containment services; the costof employing experts forthe purpose of preparing maps, photographs, diagrams,and chemical or physicalanalysis, or for expert adviceor opinion; the cost of obtaining copies of anypublic records; and the costofdepositions and court reporters or recordedstatements. Allocated Loss Expensesare not included in ClaimTransaction Fees.

b. Claim or Claims shall meaneach monetary demand against the Client based upon each itemized lossordamage occurring in the United States or CanadaCor in such other locations as maybe agreed upon by theparties and specified inan Addendum to this PART), resulting from physical injury to or destructionoftangible property, loss of the use of tangible property, bodily injury, sickness,or disease (including deathresulting therefrom) if the demand:

1) results from or arises out ofan accident or occurrence which takes place during the term of th is PART,and;

2) is reported to ESIS by the Client on a timely basis,and;

3) is a Claim o f the type described in SECTIONHI, but not excludedby SECTION II, PART A.6.b.

c. Claim Fund shall mean the funds which the Client makes available to ESIS for use in paying AllocatedLoss Expenses and Claim payments, but excluding Special Billed items, on theClient's behalt Claimpayments in exc ess o f thisthreshold shall be paid in accordance with the provisions of SECTION II, PARTA4.f. hereof.

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d. Claim Transaction Fee means the amountof compensation owed b y the Client toESIS in accordancewith SECTION III of thisAgreement

e. Late ReportedClaims shall mean C laims which are within the definition o f Claim and whichare reportedto ES IS afterthe cancellation or expiration of thisPART and any renewalshereof.

f. Discretionary Settlement Authority Limit shallmean themaxiraum amount of money whichthe Client isauthorizing ESIS to spend without obtaining prior approval from the Client in order to settle any one Claim.Allocated Loss Expensesare not subject to nor included in theDiscretionary Settlement Authority Limit

Th e Discretionary Settlement Authority Lim it shallbe established Initiallyin the amount of $10,000 forAuto LiabUjtY.GeneralLiabilityand Prembes Llabilitytype claims-Non-Etigated;Zero (0) for GeneralLiability and Premises Liability Litigated and Products Liability; $5,000 Statutory for Worker'sCompensation typcclalms.,an d may be increased or decreased by the Client; provided, however,(hat in theevent o f any such increase or decrease, ESIS m ay modifythe amounts of the Claim Transaction Fees.

g. Occurrence meansan event or series of even ts deemed by theClient to give rise to one of moreClaims. Itmay include events whichare either causative in nature,or the result of some cause or causes (suchas theonset ofdisease, injury, or damage), or both. It is not intendedto be the equivalentof any commonly used

definition of the term as found in po licies o f insurance.

h. Special Billed Amounts - The amount tobe paid byESIS in respect to any single Claim payment thatexceedsS50.000.00 shall be specially b illed to the Clientand monies paid to ESIS before the check shallbe issued byESIS. -

3 . CLAIMS ADJUSTING SERVICES- OBLIGATIONS OF ESIS - ESIS' obligationsunder this PART are to:

a. Investigate, adjust,and otherwise administer Claims,including the arrangement ofa defense forlitigatedClaims, as ESIS deems necessary in accordance withESIS' best professional judgment as a claims adjusterand state lawsand regulations permit for monopolistic states. The C lient agrees that ESIS may meet itsobligationsby engaging,at its reasonable discretionand on the Client's behalf, the services o f persons orfirms outside ofESIS' organizations.

b. Review the facts of each Claim and thelaw applicable thereto to determine what compensation, i f any,should be paidon the Client's behalf for each Claim. ESIS shall obtain theClient's prior approval beforeoffering to settle any Claim for an amount which exceeds the amount ofESIS' Discretionary SettlementAuthority Lira it, and ESIS shall incur no liability in excess of the Discretionary Settlement Authority Limitas a result o f its failureto settle any Claim foran amount within the Discretionary SettlementAuthorityLimit

c. Determine what Allocated Loss Expenses shall be mcurred in the investigation, adjustment, administration,and defense of each Claim.

d. Make payments forsettlement o f Claims and for Allocated Loss Expenses out o f funds provided by theClient to ESIS. However,ESIS shall have noresponsibility to determine or notify the Client o f exhaustionof the Client's deductible aggregate as defined inany policy of insurance.

e. Maintain a fileon reported Claims. All Claim fileswill be the Client's property and will be availablefar

inspection by the Clientupon reasonable notice to ESIS. The Clientmay conduct, at no additional charge,one formal file review annually at a m utuallyagreed upon central location to review a representativenumber of Claim files. ESIS reserves the right to charge time and expenses involved in formal reviewsbeyond this standard allowance.

f. Dispo se of Claim files in accordance with theClient's directionsor, in the absence of such directions, atESIS' discretion as permitted by applicablestate and federal laws.

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f. Notwithstanding the other provisions of thisPART, in the event that the amount to be paid by ESIS inrespect to any single Claim payment shall exceed the SpecialBill Amount, upon receipt of ESIS' invoicefor this Special Billed Am ount, immediately remit to ESIS thefull amount of such payment as stated on theinvo ice. ESIS shall have no obligation to make such payment unless and until ESIS has received paymentof this Special Billed Amount from the Clien t

5. CLAIM S ADJUSTING SERVICES - GENERAL PROVISIONS:

a. ESIS shall havefull authority and control in all matters pertaining to the investigation, adjustment, andadministration of Claims coveredby this PART, subjectto any limitations which ESIS and the Client mayhave agreed upon as set forth in this agreement or in any Addendum to this PART agreed toand dulyexecuted by bothparries hereto.

b. When and as necessaryin ESIS" judgment, ESIS shall havethe right to communicate directly with theinsurance carrier which i s providing coverage to the Clientin excess o f the amount of the Client'sdeductible orself-insured retention. ESIS may provide information to any such insurance carrier,includingdata which relates to any openor closed Claimor loss,regardless of whether such Claim is likelyto result in liabilityto that insurance carrier. Whendirected by the Client to a specific policy, ESIS shallgive noticeto the designated AC E insurance company of the existence of an individual Claim. A sbetweenESIS and the Client, the Client shall have the sole responsibility to determine whether and w hen C laimshandled on the Client's behalf and Allocated Loss Expenses incurred on theClient's behalf under thisPART equal or exceed ,or are likely to equal or exceed, any specific limit or any aggregate limitationapplicable to the Client's coverageor deductible/self-insured retention under the terms o f theClient'sinsurance policy or p olicies.

c. In the case of any Claimin which the date of the Occurrenceor any element thereof is not known or couldbe disputed factually or legallybut which is otherwise withinthe scope of this PART, ESISwill accept thedate or dates assigned by the Client It is agreed that such acceptance i s notan express or impliedagreement by ESIS or its agents or employeesthat the selection o f the date or dates of O ccurrence iscorrect is fact oras a matter of law. If theClient and ESIS have,at any time, entered into more than on eClaim Service Agreement covering different time periods, acceptance by ESIS of theClient's designateddate of Occurrence is notan express or implied agreementthat the Client's allocation among its contracts iscorrect in fact or law. No action of ESIS orits agents or employees shall be construed as an admission oropinion on any issue of fact or lawor date or dates of events which may be relevantto the obligations o fany insurance company,including the concep t of occurrenceas nsed m policies of insurance.

d. It Is understood that ESIS is affiliated with certain insurance company affiliates of theACE Companies.Sincethe Client may or may not consider its Claims referredto ESIS as relevantto an insurance programwith one or more of these companies, the Clientmust identify each Claim individually to a specific policyif the Client believesthe Claim to be covered. ESIS claims adjusters will have no affirmative duty toparticipate in determination of coverage underany insurance policy.

6. CLAIMS ADJUSTING SER VICES .FEES:

a. ESIS shall impose a Claim Transaction Fee charge for each Claim reported b y the Client to ESIS . Foroccurrences wh ich generate morethan five Claims, ESIS'Claim Transaction Fee will b e fifty percent(50%) of the stated fee for each Claim reported after the first five such Claims. If more than twenty-fiveClaims result from any one occurrence, ESIS' fee will bethe standard charge for the first Sve Claims andfifty percent(50%) of the standard fee charge for the next twentyClaims,and all additional Claims arisingfrom such occurrence shall be calculated on the basis of time spentand expense s incurred by ESIS withrespect to them at a rate that shall be agreedupon in writing.

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b. General LiabilityClaims Transactions Feesas set forth herein shall not be applicableto Claims arisingfrom or related to pollution, toxic material, or environmental impairment of any kind whatsoeverincludingbut not limited to pollution of any w ater, land, or air,arising from or in any way related to asbestosand orasbesto s containing m aterials;or arising from or in any wayrelated to exposure overtime to any allegedtoxic, harmful or defective m aterial, device , substance, agent,or activity including but not limited tochemicals, drugs', petroleumbased products, pharmaceutical products, noise, radiation, electromagneticfields o r repetitive motion.

PART B. - CLAIMSADJUSTING SERVICES (REPORTED)

BILLING NUMBER 4314

ESIS and the Client hereby agreethat ESIS will provide Claims Adjusting Servicesto the Client according to thefollowingterms and conditions:

1. CLAIMS ADJUST ING SERVICES - EFFECTIVE DATES; RENEWA LS: ThisPART shall be effectivewith respect toClaims (as defined herein) reported during the period beginning 12:00 aj n. on the Ap ril 01 ,2000and ending at 11:59 pjn. on March 31 ,2001 . However, upon the expiration of this PART and any

renewal period or periods, ESIS shall continue to perform itsobligations hereunder, on the terms set forth inSECTION W and any Addendum hereto,with respect to Claims reported during the term o f this PA RT, untilall Claims under this contract have been paid or settled,all applicable statutes o f limitations haverun, and thereis no further p ossibilitymat any additional Claims may arise.

2. CLAIMS ADJUSTING SERVICES-DEFINITIONS:

a. Allocated Loss E xpenses shall mean any cost or expense ESIS incurs on theClient's behalf as aresult ofESIS* engag ing the service of firmsor persons outside ES IS' organization for workin connection with theinvestigation, adjustment, settlement,or defense ofa Claim. Allocated Loss Expenses include,but is no tlimited tothe following: subrogation; automobileor other physical dam age appraisal;all court costs, fees,and expenses; fees for service of process; feesand expenses to attorneys for legal services; the cost ofservice s of undercover operations and detectives; fees to obtain medical cost containment service s; the costof employing experts for the purpose ofpreparing maps, photographs, diagrams, and chemical or physicalanalysis, or for expert advice or opinion; the cost o f obtaining copies ofany public records; and the cost of

depositionsand court reporters or recorded statements. Allocated L oss Expenses are not includedin ClaimTransaction Fees .

b. Claim or Claims shallmean each m onetary demand againstthe Client based upon each itemizedloss ordamage occurring in the United States or Canada (orin such other locations as may be agreed upon by theparties and specified inan Addendum to thisPART), resulting from ph ysical injury to or destruction oftangible property, loss of the u se o f tangible property, bodily injury, sickness, or disease (including deathresulting therefrom) if the demand:

1) is reported duringthe term of this PART, and;

2) is reportedto ESIS by the Client on a timely basis, and;

3) is a Claim of the type described in SECTION III, but not excluded by SECTIONII, B2.6.b.

c. Claim Fund shall mean the funds whichthe Client makes available to ESIS for use in paying A llocatedLoss E xpenses and Claim payments, but excluding Spe cial Billed items, on theClient's behalf. Claimpayments in ex ces s o f this threshold shall be paid in accordance with the provisions o f SECTIONII,B2.4.f. hereof.

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d. Claim Transaction Fee means theamount of compensation owed bythe Client to ESIS in accordancewith SECTION III of this Agreement

e. Late Reported Claim s shall mean Claims which are within the definition of Claim and which are reportedto ESIS after the cancellationor expiration o f thisPART and any renewalshereof.

Discretionary Settleme nt Auth ority Lim it shall meanthe maximum amount o f mon ey which the Clientis authorizing ESIS to spend without obtaining prior approval from the Client in order to settle any oneClaim. Allocated Loss Expensesare not subjectto nor included in the Discretionary Settlement AuthorityLimit. The Discretionary Settlemen t Auth ority Lim it shall be established initially in the amount of$5,000 for Worker's Compensation type claims, andmay be increased or decreased by the Client;provided, however, that in the event o f any such increaseor decrease. ESIS may modify the amounts of theClaim Transaction Fees.

g. Occurrence meansan event or series of eventsdeemed by the Client to give rise to one o f more Claims. Itmay include events which are either causative in nature, or the result of some cause or causes (suchas theonset of disease, injury, ordamage),or both. It is not intended to be the equivalent of anycommonly useddefinition of the term as found in po licies o f insurance.

h. Special Billed Amo unts - Theamount to be paid by ESIS in respect t o any singleClaim payment thatexceeds$50,000.00 shall be specially billed to the Clientand moniespaid to ESIS beforethe check shallbe issued by ESIS.

3 . CLAIMS ADJUSTING SERVICES - OBLIGATIONS OFESIS - ESIS* obligations under thisPART are to:

a. Investigate, adjust,and otherwise administerClaims,includingthe arrangement of a defense for litigatedClaims, as ESIS deems necessaryin accordance withESIS' best professional judgment as a claims adjusterand state laws and regulations permit for monopolisticstates. The Client agreesthat ESIS may meet itsobligations by en gaging, at its reasonable discretionand on the Client's behalf, the services o f persons orfirms outside ofESIS' organizations.

b. Reviewthe facts of each Claimand the taw applicablethereto to determine what compensation, if any,should be paid on theClient's behalf for each Claim. ESIS shall obtainthe Client's prior approval beforeoffering to settle any Claim foran amount which exceedsthe amount ofESIS* Discretionary SettlementAuthority Limit, andESIS shall incur no liability inexcess of the Discretionary Settlement Authority Limitas a result of its failureto settle any Claim foran amount within the Discretionary Settlement AuthorityLimit

c Determine what Allocated Loss Expenses shall be incurredin the investigation, adjustment,administration.and defense of each Claim.

d. Make payments for settlement of Claims and for Allocated Loss Expenses out of funds provided by theClient to ESIS. However, ESIS shall h ave no responsibility to determine or notifythe Client o f exhaustionof the Client's deductible aggregateas defined in any policy o f insurance.

e. Maintain a file onreported Claims. All Claim fileswill be the Client's property and will be available forinspection by the Clientupon reasonable notice to ESIS. The Client may conduct, at no additional charge,

one formal file review annually ata mutually agreed upon central location to review a representativenumber of Claim files. ESIS reserves the right to charge time and expenses involved in formal reviewsbeyond thisstandard allowance.

f. Dispose o f Claim files in accordance with theClient's directionsor, in the absence of such d irections, atESIS1 discretion as permitted by applicable state and federaltaws.

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g. Provide statistical or lossexperience reports to the Client concerning the status of (a) C laims,(b) Claimreserves, and (c) Claim payments asagreed upon by ESISand the Client inwriting from tim e to time.

h. Maintain confidentiality with respectto the contents of the Client's files such that the contents thereof arenot d isclosed to thirdparties, except as shall be required Tor ESIS to carry out itsobligations.under thisPART or to comply withrequirements imposed by applicablelaws or regulations.

i. Administerall Claims reported to their conclusion.

4. CLA IMS ADJUSTING SERVICES - OBLIGATIONSOF THE CLIENT - The Client's obligations underthisPARTshallbeto:

a. Refer promptlyto ESIS each Claim which falls within the scope o f thisPART after the C lienthas receivednotice of such Claim.

b. Pay to E SIS immediately upon execution of this PART the amountnecessary to establish the Claim Fund,and maintain the appropriate balance forthe duration o f this PART.

c. Pay to ESIS all Claim Transaction Feesand Claim Fund invoices according to the provisions ofthis PART.If the Clientfails to p ay such amounts according to the termsof this PART, ESIS shall have the right toclaim a retaining lien on theClient's Claim f iles inESIS' exclusive possession untilall Claim TransactionFeesand Claim Fund invoicesdue are paid. This subsection shall survive the expiration or cancellation ofthis PART until all Claims are closedor some mutual agreement is reached byESIS and the Client

d. Continue to remit sufficient moniesto ESIS,upon presentation o fan appropriate invoice, to allow ESIS tomaintain the Claim Fund atall times at an amount sufficient to enable ESIS to pay C laims and AllocatedLoss E xpense paym ents as required by this PART. The Client agrees that "sufficientmonies" as used inthis paragraph shall be asum equal to the sum of

1) all Claim payments and Allocated Loss Expenses, b ut excluding Special Billed amounts,,paid byESIS during the preceding ten (10)weeks;or

2) any other amountas may be mutually agreedupon by the Client and ESIS.

e. ESI S may require the Client to increase the amount of the Claim Fund if the amount of the Claim Fund isinsufficient inESIS' estimationto pay Claims or Allocated Loss Expenses because o f unusualcircumstances beyond thescape of the standard formula. Moreover, i f the Client does not reimburse theClaim Fund on a timely basis followingESIS' mailing of an invoice to the Client,ESIS may immediatelyrequire the C lient to increase the Claim Fund to a level greater than the amount paid on the Client's behalfforClaim payments and Allocated Loss Expenses during the previous ten (10) week period. IftheClientfails to make funds available toESIS within ten (10 ) days after receipt of a Claim Fund invo ice forpayment of Claims and Allocated Loss Expenses in the amount required hereunder, ESIS may suspend itsobligation to make such payments and all other Claims services provided by ESIS under thisPART untilESIS shall receive funds from the Client forthis purpose. TheClient agrees that it will indemnify ESISand hold it harmless forthe full amount of any and all liability,fees, fines,assessments, judgments, orpena lties resulting from an interruptionor cessation o fESIS* Claims services which ESIS caused by reasonof the Client's failure to reimbursethe Claim Fundto the level required under paragraph D above,or to

provide any additional monies forthe Claim Fund which ESISin its discretion may have requestedpursuant to this paragraph.

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f. Notwithstanding the other provisions o fthis PART, in the event that the amount tobe paid by ESIS inrespect of any single Claim paymentshaJI exceed the SpecialBill Amount upon receipt ofESIS' invoicefor this special billedamount, immediately remit to ESIS the full amount of such paymentas stated on theinvoice. ESIS shall have no obligation to make suchpayment unless and until ESIS has received paymentof this special billedamount from the Client.

S. CLAIMS ADJUSTING SERVICES - GENERAL PROVISIONS:

a. ESIS shallhave full authority and control in all matters pertaining to the investigation,adjustment, andadministration o f Claims covered by this PART , subjectto any limitations which ESISand the Client mayhave agreed uponas set forth in this agreement or in any Addendum to this PART agreed toand dulyexecuted b yboth parties here to.

b. When and as necessary in ESIS*judgment, ESIS shall have the right to comm unicate directly with theinsurance carrier which is providing covera ge to the Client in excess o f the amountof the Client'sdeductible orself-insured retention. ESIS may provide information to any such Insurancecarrier,including data which relates to any open or closed Claim or loss, regardless of whether such Claim is likelyto result in liability to that insurancecarrier. When directed by the C lient to aspecific policy,ESIS shall

give notice to the designatedACE insurance company of the existence of an individual Claim.As betweenESIS and the Client, the Client shall have the so le responsibility to determine w hetherand when C laimshandled on the Client's behalfand Allocated Loss Expensesincurred on the Client's behalfunder thisPART equal or exceed,or are likely to equalor exceed,any specific limit or any aggregate limitationapplicable tothe Client's coverageor deductible/self-insured retention under the terms o f the Client'sinsurance policyor policies.

c. Ic the case of any Claim in which the date of the Occurrenceor any element thereof is notknown or couldbe disputed factually or legallybut which is otherwise within the scope of this PART, ESIS will accept thedate or dates assigned by the Client It is agreed that such acceptance is notan express or im pliedagreement by ESIS or its agents or employ eesthai the selection o f the date or dates o f Occurrence is 'correct in fact or as a matter of law. If the Client and ESIS have,at any tim e, entered into more than oneClaim Service Agreement covering different time periods, acceptance byESIS of the Client's designateddate of Occurrenceis not an express or implied agreementthat the Client's allocation amo ng its contracts iscorrect in fact o r law. N o action of ESIS or its agents or employees shall be construed asan admission oropinion on any issueoffset or law or date or dates of events which may b e relevant to the obligations o fany insurance company, including the concept ofoccurrence as used in policies of insurance.

d. It is understood that ESIS is affiliated with certain insurance co mpanyaffiliates of the ACE Companies.Since the Client may or maynot considerits Claims referred to ESIS as relevant to an insurance programwith one or more of these companies, the Client must identify each Claim individually toa specific policyif the Client believesthe Claim to be covered. ESIS claimsadjusters will have n o affirmative duty toparticipate in determination of coverage under any insurance policy .

6. CLAIMS ADJUSTINGSERVICES-PEES:

a. ESIS shall impose aClaim Transaction Fe e charge for each C laim reported by the Client to ESIS. Foroccurrences which generatemore than five C laims, ESIS' C laim TransactionFee will be fifty percent(50%) o f the stated fee foreach Claim reported after the first five such C laims. If more than twenty-fiveClaims result tram any one occurrence, ESIS' fee will bethe standard charge for the first five Claims andfifty percent (50% ) of the standard fee charge forthe next twenty Claims, andall additional C laims arisingfrom such occurrence shall be calculated on the basis of time spentand expenses incurred byESIS withrespect to them at arate that shall be agreedupon in writing.

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b. General Liability C laims Transactions F ees as set forth herein shall not be applicable to C laims arisingfrom or related to pollution,toxic m ateria], or environmental impairment of any kind whatsoever includingbut not limited to pollution o f anywater, land, orair; arising from or in any wayrelated to asbestos and orasbestos containing materials; or arising from orin any w ay relatedto exposure over time to any allegedtoxic, harmful or defectivematerial, device, substance,agent, or activity includingbut not limited tochemicals,drugs, petroleum based products, pharmaceutical products, noise,radiation, electromagneticfields or repetitive motion.

PART C. - LOSS CONTROL SERVICES

BILLING NUMBER 56-405

ESIS and the Client hereby agreethat ESIS will provide Loss Control Servicesto the Client according to thefollowingterms and conditions:

1. LO SS CON TRO L SERVIC ES - EFFECTIVE DATES; RENEWALS: This PART shall be effectiveduring the period beginning12:00 a.m. on April01,2000 and ending at 11:59 p.m. on March 31,2 001 ,and maybe renewed for additionalannual periods as the Clientand ESIS shall mutually agree.

2. LOSS CONT ROL SERVICES - DEFINITIONS: Nonerequired.

3. LOSS CONTROLSERVICES-OBLIGATIONS O F ESIS: ESIS'obtigations under this PART are to :

a. Provide Loss Control Servicesat the Client's locationswithin the Continental United S ates,Alaska,andHawaii. The locations receiving such Lo ss Control Services shall be agreed uponfrom time to time,together with applicableadjustments in the Service Fee.

b. ESIS will provide Loss Control Services which may include butare not limited toall or part of thefollowing activities:

1) analysis o f losses and loss trends;

2) performance o f a survey to identifyloss expo sures and hazards;

3) interviews with key personnel regarding loss control activitiesand their perception of n eeds;

4 ) evaluation o f the adequacy of existing loss control activities;

5) prioritization of needed hazard controls and relatedloss control activities;

6) discussion o f findings andrecommendations with the Client;

7} provision ofa written report to the C lient which includes recommendations;

8) assistance to the Client in their implementation o f corrective action.

c. A more specific statement of activities to be performed under this PART is set forth below:

No Special Conditions required by Client

d. ESIS w ill perform no supervisoryactivities and will assume no obligation to makechanges in the Client'soperations or to implement any recomm endations. Performance of Los s Control Services shall not beconstrued as an approval of d esign or function by u s. The performance of L oss Control Serv ices doe s notsupplant any legal duty of the Clientto provide a safe work place,premises, product;or operation.

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4. LOSS CONT ROL SERVICES - OBLIGA TIONS OF CL IENT: The Client agrees to provide access toall faciliti es, records, and personnel required by the loss control professional inorder to complete the loss

control services requiredby this PART.5. LOSS CONTROLSERVICES-GENERAL PROVISIONS:

a. In the event o f a termination o f this PART,an immediate accounting of Service Fees shall bemade and such fees shall be payablewithin ten (10) days of comp letion of the services providedhereunder.

b. The Client agrees to indemnifyand hold ESIS harmlessfrom any and all Claims wh ich arise asaresult of activities performedunder this PART unless it is determined that a proportion of theliability therefore was caused b yESIS' negligence. Where ESIS has been adjudged to have beennegligent with respectto die provision o f the Loss Control Services agreed upon under this PART,ESIS will indemnify the Client and will be responsible forits proportionate share of liability fordamages. In no event will ESIS be responsible for any punitive damages awarded against theClient

PART D. - RISK MANAGEMENT INFORMATION SYSTEMS

BILLING NUMBER 70842

ESIS and the Client hereby agree that ESIS wi ll provide Risk Management Information Services (RM IS) during theperiod beginning12:00 a.m. on April 01,2000 and ending at 11:59 pjn. on March 31,2001,of the belowlisted typesto the Client according to the followingterms and conditions;and provided through mutually agreed upon equipment'and installation^):

I. RMIS DEFINITIONS:

a. RISK ADVANTAGE LOSS MANAGEMENT- RiskAdvantage Loss Management from ESIS is astate-of-the-art loss management system offeringpowerful, responsive,on-line access to claims, policy and

legal information, and the ability to analyzeloss trends and create risk management reports to supportmanagement decision making. Specificon-line capabilities include, but are not limited to, the following:

t ) read-only inquiry against Claim sdata including paym ents, reserves, recoveries,and basic Claims data;

2) read-only accessto the adjuster's notes;

3) diary/tasks message capability to and f iom the Claim offices (nota permanent part o f the Claim file);

4 ) training on use of the system.

Restrictions on the use o fthe system may occur from time totime as systems for individual lines ofbusiness are enhanced. The range of services m ay be either increased or decreased without notice asenhancements or modificationsto the primary Claim systemare effected.

b. STATEMENT.OF WORK (SOW) is a special customized computer programmingeffort that will beundertaken by ESISat the direction of the Client modifying the standard offerings of eitherCRI.S or CAF.The STATEMENT OF WORK describes in detail specific computer equipment, reports, software,communications lines, access to program libraries and data files,and/or other products and services beingprovided by ESISto the Client asCRIS ADVANCED FUNCTIONS. A description o f the service to beprovided is outlined in the fee section o fthis document The Client agrees to use reasonablecare in definingthe work tobe accomplished. Theclient further agrees that the signed STATEMENT OF WORK agreed to

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Each party agrees that the informationcontained within these RMIS systemsmust be treated in a confidentialmanner by all users and each party further agrees that it will educateall of its employees, agents,or other userswhy may gain authorized accessto the system o f the need for confidentiality in using the information. Eachparty will be responsible for the results of any and all actions alleging breach of confidentiality by any of theirrespective em ployees, agen ts, or otherauthorized users of the information.

In die event of athird party suit alleging defamation, false light,or other invasion orprivacy tort, "violation ofcivil rights, or violation o f fair employment practicelaws,and arising from the use of thesesystems and thisPART, the liable party agrees to indemnifyand hold harmless theother party for all sums due under the termsof ajudgm entor reasonable settlement, including interestand attorneys' fees, upon a final judgment or mutualagreement that one of meparties hereto is liableas charged in such allegations.

Termination or expiration o f the Serv ice Agreementfor any individual service listed abovewill be effectedby ESIS removing the Client's password from the list of authorized users for mat service. No t morethan sixty(60) days after thedate of termination or expiration of this Agreement, the Client shall return to ESIS allequipment provided hereunder.

Each party agrees thai it will not disc lose to any third party any inform ation concerningtrade secrets, methods,procedures, or any other confidential, financial, or business information ofthe other party which it learnsduring the course of its performance of thisAgreement without the prior written consent of the other party.Client acknowledgesand agrees that all software used by the Client in connectionw ith the services including,

without limitation, the screensand output formats generated thereby,are strictly confidential and the propertyof ESIS. Clientwill retain exclusive rights to and ownership o f all data generated byESIS for Clientpursuantto this Agreement

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SECTION m-FEES

PART A - DUE DATES: AH ESIS' fee invoicesare payablenot later than ten (10) days after theClient's receiptthereof.

PAR T B - DESCRIPTION: Theamounts of ESIS1 fees hereunder shall be a s follows:

I. Claims Adjusting Services (Occurrence) Fees:a. Other Fees:Billing Contract Number 4297 4298:

CONTRACT 4297 A 4298Solatia, Inc.will reimburse ESIS monthly for actual service fees incurredduring the previous month. Thefollowing per claim rateswill apply:

Contract 4297

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sS$

825.315490215

$2,299SS

35 0835

S 1,022S$$

54 092 351 3

Contract 429 S$ 1,084$

$

380

106

AutomobileLiabDity BodilyInjury*Automobile Liability Property DamageAutomobile LiabilityPIP*Automobile L iability M edical PaymentsProducts Liability Bodily InjuryProducts Liability Bodily Injury Administrative OnlyProducts Liability PropertyDamageGeneral Liability Bodily Injury*General liabilityProperty DamagePremises Liability Bodily Injury*Premises LiabilityProperty Damage

Self-Insured Workers' CompensationManaged MedicalOnly

Medical Only

'Under this contract, open/reopened claims will be assessedthe following anniversaryfees ateach anniversary the claim remains open from the date reported:$ 200 Automobile Liability Bodily Injury$ 150 Automobile Liability PIP$ 300 General Liability Bodily InjuryS 25 0 Premises Liability Bodily Injury

Contract 4314Claims w ill be billed at a fee per claim rateof $815 forthe first year of handling by ESIS. Each subsequentannual period that claims remain open an anniversaryrate of $315 per claim will be billed. A maximum ofthree (3) additional anniversaryperiods will be b illed.

ADMINISTRATIVE FE E

The ESIS Administrative Fee of $8,000will be billed in twelve monthly installments of $666 .67.

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Case 4:09-cv-01865-RWS Document 4 Filed11 /13/09 Page 31 of 55

( .

2. Claims Adjusting Services (Reported)Fees:

a. Other Fees: Billing Contract Nu mber 4314:

Contract 4314

Claims willbe billed at a fee perclaim rate of $8 IS for the first year of handling by ESIS.Each subsequent annual period thatclaims remain open an anniversaryrate of S3 IS per claim will bebilled. A maximum o f three (3) additional anniversary periodswill be billed.

3. Loss Control Services Fees:

BillingNumber^) 56-405

Elevator Inspection Servicesto be billed as incurredat $9 0 per hour.

4. Risk Management Information Systems (RMIS) Fees:

Billing Numbers): 70842

ESIS willbill the following annualRMIS charges of $53,225 in twelve monthlyinstallments:

Data Maintenanceand Storage:

RiskAdvantage:

CRIS Advance Functions:Graphs

DuplicationAdministrationShipping

ASC Consulting

$2,160$5,000$ 200$4,500

$17,815

$22,550

$11,860


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c

f~

\*-*

Case 4:09-cv-01865-RWS Document 4 Filed11/13/09 Page 32 of 55

IN W ITNESS WHEREOF,the parties have caused this Agreementto be executed on their behalf by theundersigned duly authorized persons.

Solutia, Inc. ESIS

Signature Signature

David P. Jones DonaldJ. ShipletPrinted Name Printed Name

Senio r Risk Managem ent Analyst GeneralManager/Vice Presidentfruited Title Printed Title

Date Date

ESBSvfcApmtra ll of ll Soblii,tac


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c

ADDENDUM#1 to ESIS SERVICE AGREEMENT

RENEWAL OF ESIS SERVICE AGREEMENT

ACCOUNTNAME:Solutia,Inc.

This Addendum is effectiveduring the period beginning12:00 a.m. on April01,2001 and ending at11:59 pjn. onMay 31; 2001, by and between ESIS f ESIS"),a California Corporation with an officeat52S W. MonroeSt ,Chicago,IL 60661,and Solutia,Inc. (the "Client") with offices atMaryville Centre Drive, S t Louis, MO63166,and itshall extendthe original contract between these parties forthe period April01,2000 through March31,2001,a copy of w hichis attached.

1 . T e r m s a n d C o n d i t i o n s - All Terms and Conditionsremain the same w iththe followingnotedexceptions:

Administrative Fee:

No AdministrativeFee will be charged forthis period.

Risk Management Information Systems (RMIS) Fees:

Billing Numbers): 70842

ESIS wilt bill the followingRMIS charges for the period04/01/01 through 05/31/01:

Data Maintenanceand Storage: $2,969

($17.815/12 ) x 2 monthsRiskAdvantage: $2,883(2 LevelIV ID's ($12,500 + $4,800) /12) x 2 months

REVMlAAfaftfintfofESlSSOTfeAimiai loM Soluh.bc. A . t


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STATE OF FLORIDADIVISIONOF ADMINISTRATIVE HEARINGS

OFFICE OF THE JUDGE OF COMPENSATION CLAIMS

Fannie Ranaldson Employee/Claimant,

vs .

Solutia and BroadspireEmployer/Carrier,

OJCCCaseNo. 0500902IDWL and 05009023DWL

Judge: David Langham

FINAL ORDER DENYING COMPENSABILITY OF ALLEGED ACCID ENT OF SEPTEMBER2.2QQ3. DENYING SOME PER IODS OF PERMANENT TOTAL D ISABILITY BENEFITS AND

GRANTING OTHER PERIO DS O F PERMANENT TOTALDISABTUTY BENEFITS.PENALTIES. INTEREST. COSTSAND ATTORNEYS FEES

THIS CAUSE washeard before the undersigned at Pensacola, Escambia County, Florida on

September 19,2005 upon the Claimants claims for compensabilityof9/2/03 injuries, permanent tota l

disabilitybenefits from 9/3/03 to present and continuing, 5% supplemental benefits, authorization ofa

primary care doctor to treat for 9/2/03 D/A, authorization of prescriptions writtenby Dr. Vem ali, and

penalties, interest, costs, and attorney's fees. The petitions for benefits were filed March18,2005.

'Mediation occurred on June 28,2005 (102 daysafter the petition was filed), and theparties' pretrial

compliance questionnaire was filed Aug ust18,2005. The final hearing occurred onehundred eighty-five

(185) days after the petition was filed . John Wesley, Esq. was presentin Pertsacola on behalf of the

Claimant Thomas Condon, Esq. wa s presentin Pensacola on behalf o f the Employer/Carrier (hereafter

"E/C).

Submitted into evidence atthe Final Hearing were the following documents, each accepted and

placed into evidence without any objection exceptwhere noted, as joint exhibits, Claimant's exhibits, or

E/C exhibits, with each individual exhibit being further identified bya numerical designation as fo llows:

Fannie Ranaldson v. Solutia and BroadspireFinal Order OJ CC Case No.05009021DWL

OJCC Case "No. 05009023DWL

Page 1 of 21October 10,2005


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JUDGE'S EXHIBITS MARKEDFOR THE RECORD:

1. Th e parties pre-trial coinpliance questionna ire filed August18,2005 w as marked as

Judge'sexhibit" 1 " for the record .

2. A correspondence filed bythe Employei/Carrier on September21,2005 w as marked as

Judge'.s exhibit"2" for the record.1

J O I N T EXHIBITS:

1. Th e deposition of Salvadore Veraali, M D . taken August9,2005 w as markedas- Joint

exhibit" 1 " and aceepted a s evidence.

2. The deposition of James Fay, M D . taken August25,2005 w as marked as Joint exhibit

"2" and accepted as evidence.

3. The deposition of James Fay, M .D. taken September9,2005 w as marked as Joint exhibit

"3 " and accepted as evidence.

4. The C laimant'sfile from the Social Se curity Adm inistration wa s m arked as Joint exhibit

"4".and accepted as evidence.

5. A payment ledger regarding the M arch29j 2001 date of accident w as marked as Joint

exhibit" 5 " and accepted as evidence.

CLAIMA NT'S EXHIBITS:

1. Th e deposition of Richard Gilmartin taken September 8, 2005 w as ma rked as Claima nt's

exhibit T and accepted as evidence.

EMPLOYER/CARRIER EXHIBITS:

1. None.

i This document mayhave been intended bytie E/C as a closing argument orsupplemental

authority. No pleadingor argument was submitted,however, but merelya letter. The legalsignificance or efficacy ofa letter is at best doubtful. Despite beingsubmitted in suchan informalformat, the documentand its attachmentswere maiked for the Tecord and the case law submittedhas been considered in reachingthe conclusionsherein.

Fannie RanaIdson~v-Solufia and Broadspire Page2 of 21Final Order OJCC Case No. 05009021DWL October 10,-2005

O J C C Case No. 05009023DWL


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In making the determinations setforth below, I haveattempted to distill the salient factstogether

with tbe findings and conclusions necessaryto resolveIbis claim. I have not attempted to painstakingly

summarize the subslance of the parties.' arguments,nor the support given to my conclusions bythe

various documents submitted and accepted into evidence,-nor have I attempted to state nonessential facts.

Because Ihave not done so does not meanthat I have failed to consider all of the evidence.In making

my findingsoffset and conclusions oflaw in this claim; I have carefully consideredand weighed all

evidence submittedto me. I have consideredarguments of counsel for the respective parties, and

analyzed statutory and decisionallaw of Florida.

Based upon the parties* stipulations and tb e evidence and testimonypresented, I find:

1. The Judge of Compensation Claims has jurisdiction ofthe parties and the subjectmatter of this

claim.

2. The parties' stipulations and agreements,set forth in the pretrial compliancequestionnaire are

accepted, adoptedand made an order of the Office of the Judge of Compensation Claims.

3. Any and al l issues raised by way of the Petitions for Benefits fTFB"), but which issues were not

dismissed or tried at the hearing, are presumed resolved, orin the alternative, deemed abandoned

by the Claimant and, therefore, are Denied and Dismissed with prejudice. See.Betancourtv.

Sears Roebuck: & Co.. 693 So.2d 680 (Fla.1" DCA 1997);see also . McLvmontv. A Temporary

SpM fla, 73 8 So.2d 447 (Fla.1st DCA 1999).

4. The Florida Evidence Code controls admissibility o f evidence in workers' compensation

proceedings.2 The procedural aspects of this claim are governed b ythe Division of

&, MartinMarietta Corp. v.ROOD.56S So.2d 40 (Fla. 1st DCA 1990);Odora V. Wekiva.Concrete Products. 443SoJZd 331 (Fla. 1st DCA 1983).

Fannie Ranaldson v. Solutia and Brbadspire Page 3 of 21Final Order OJCCCaseNo.05CK9021D'vVL October 10, 2005

OJCC Case No.05009023DWL


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examination,he concluded that Claimant's shortness of breathis" "predominantly"caused by the

COPD,6 .but she-bas "some dyspnea associatedwith die asbestosis."7

6. Dr . Vem ali opined that the asbestosis diagnosiscould progress. In some patients this could take

in excess of tw enty(20) years, in other patients it progr esses m ore quickly. He testified th at it

"may never interfere with the patient's life cycle," or it is possible Claimantwould eventually

become oxygen dependent or w heelchair dependent due to the shortness of breath..Dr. Veraalli

opined that Claimant's asbestosis condition has not progressed significantlyduring the course of

her care w ithhim. He opined thatCOPD is also progressive, and that it progresses"much

quicker" than asbestosis. Dr. Vemali opined that Claim ant's C OPD ha s progressed during the

time he has provided care and treatment He testified that he prescribed a nebulizer "that w ould

help forthe CO PD ." This machine dispenses abronchodilator medication w hich opens up the

airw ays so m ore air can enter and also facilitates"to get the air out of your lungs." He testified

that the treatme nt for the asbestosis may eventually be steroids and oxy gen, bu t that C laimant

does not ne ed those at this time.9 He diagnosed"pulmonary fibrosis, and tw o, COPD

exacerbation." He opinedthat the nebulizer is "solelyused to treat the COP D." He testified that

there is no treatment for asbestosis until it reaches a stage w her e steroids and/or oxygen are

required. In December 2002, Dr.Vemali corresponded"to w hom it mayconcern"and opined

that Claimant wa s under care for COPD and pulmonary fibrosis. His correspondence also

documents that "any w ork restrictions" are related to the C OPD andnot to asbestosis. Dr.

Vernali testified that inJanuary 2003 Claimant complained of increased S OB that he believed

w as caused by "COPD or pulmonary fibrosis." As o f January2003,Dr. Vemali opined Claimant

He testified that ^people withCOPD can breathein, but they can 't breatheout"He testified that people with asbestosis . . . ca n't breathe in,but they can breathe out."

.The E/C questionedDr. Vernatli as to how it could discern from his billing w hethercare beingbilled for was related toCOPD or asbestosis. Dr.Vernau' testified that thereis no treatment forasbestosis,and so presumablythe Employer w ouldknow thatany treatment renderedis forCOPD. See also. Florida Power Corp.v. Brown.863 So.2d364 (Fla. 1st DCA 2003). .

Fannie JRanaldson v. Solutia and Broadspire Page5 of 21Final Order OJCCCase No. 05009021DWL Octob er 10, 2005

O J C C Case No. OS009023DWL


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was restricted from use o f power toolsand driving. At that time he prescribed Combivent, a

bronchodilator intended to relieve the SOB complaints. Claimantreturned in early February2003

with complaints of anxiety. Dr. Vemaliopined that SOB "could be associatedwith-orbe

exacerbated with anxiety"and so he prescribed Ativan for Claimant's anxiety.'On February27 ,

2003he opined sheshould no t workin a hot or dusty environment, and wasrestricted to

light/medium work. In March 2003 Dr. Vemali prescribed Proventil, another bronchodilator, a

liquid medication that is "aerosolized"by the nebulizer. In May 2003 Claimantreported that she

had continued SOB and was aw akened at night by coughing.Dr. Vem ali opined thatthe cough

"can be associated w i t h . . . COPD and asbestosis." Dr. Vemali w rotea prescription note opining

that Claimant was unableto work "due to her respiratoryproblems." He opinedthat her

restriction from work result from both the asbestosisand the COPD. He testified thathe could

not determine with any degree ofmedical certainty whether her shortness ofbreath at thattime

was related to the COPD, the asbestosis,or- both. On September 5, 20 03Claimant returned

complaining of chest and abdominal pain. Dr.Vernali did not mem orialize any event or accident

that Claimant reportedas a cause of those pains. He testified that if Claimant had reportedany

. event oraccident, he would have recorded thatin bis office note. At that time, Dr.Vemali

.released Claimant toreturn to w ork "light duty," specifically restricted from overhead w ork,

operating heavy equipment/power tools,environmental exposures, bending,twisting, lifting,

pulling, or pushing.9 He testifiedthat "light duty" to him would consist of "shufflingpapers,

sitting, no t movingmuch." Dr.Vem ali opined that these workrestrictions would be the same

even if Claimantdid not have asbestosis, butwas impaired sole lyby the COPD. Dr. Vemali

testified that Claimantreturned on September 11, 2003 with complaints of"deep chest pain." Dr.

Vemali did not documentClaimant expressing any history forthat onset of pain He testified that

Dr. Vcmalli testified that the restrictions assigned in September2003 were die last restrictionsassigned. He also acknowledged (hat he signed a form in April 2004stating that Claimant wasunable towork "indefinitely"at that time.

Fannie Ranaldson v. Solutia and Broadspire Page 6 of 11Final Or der . OJCC Case No. 05009021DWL October 10, 2005



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chest pain may ormay not be-associated with asbestosis, andthe associated difficulty w ith

inhalation. Heexplained that the pain could likew ise be associated w ith the inflammation

associated with COPD .Dr.Vernali diagnosedchest pain and prescribed medication to suppress

cough and provide'pain relief He opined that chest pain associatedwith pleurisy has no

relationship to physical activity, but is associated only w ithinhalation.Dr. Vemali testified that

he thereafter prescribedLortab for Claimant's chestwall complaints, and that this medication also

addressed low back complaints that Claimant made. In January or February 2004, Dr.Vernali

completed a questionnaire from Intracorp. Therein he opined tha t Claimant's chronic respiratory

complaints are related to her COPD and notto her asbestosis. This questionnairealso contains

his opinions that COPD is not work related, that any restriction on working in dusty environments

is related to that COPD , and that future carefor the asbestosis diagnosis w ould be "of a

surveillancenature." He opined that only five percent (5%) to ten percent (10%) of Claim ant's

disability is related to her asbestosis condition.

James Fay isa medical doctor Board C ertified in internal medicine, pulmonary m edicine and

critical care medicine. Dr. Faytestified that a clinical diagnosis of asbestosis w ould require: (1) a

reliable histor yof asbestos exposure,{2) symptoms of shortness of breath, (3)x-ray findings of

increased reticular and nodular markings predominantly in the basesof Ihe lungs, (4) physical

findings of "velcro rales in the bases of their lung exam ination," often c lubbing of the digits, and

(5) pulmonary function studies demonstratinga restrictive pulmonaryimpairment w ith a loss of

total lung capacity. Dr. Fay testified thatDr. Weaver, an industrial medicine consulting

' physician w ith the Em ployer, referred Claimantto him for evaluation. He testified that he

performed a n evaluation of Claimant in January2003 for the purpose of determining Claim ant's

state of health and w hethershe w as totally and perm anently disab led Claimant reported a long

history of smoking cigarettes. She reported the onset of symp toms in 1997 including- cough,"

shortness of breath and wh eezing. Dr. Fay testified that he did not observe Claimant to be short

Fa nn ie Ranaldso n v. Solatia and Broad spire Page 7 of 21Final Ord er OJC C Case No.05009021DvVL October10 , 2005



42/55


of breath (he agreedthat shortness ofbreath is referred to as "dyspnea").- Dr. Fay opined that

Claimant's "symptoms werenot compatible to anyobjective evidence o f disability relatedto the

asbestosis condition. He opined that Claimant's chestand cardiac examination were "completely

normal." He testified that he listened to Claimant's breathingwith an amplified stethoscopeand

she had no abnormal sounds or "any physical findings of eitheremphysema*chronic obstructive

lung disease or asbestosis." Dr. Fay alsointerpreted a pulmonary function studyas demonstrating

no restrictive lung impairment, but demonstratinga "mild obstructive impairment" related to her

smoking history. He testified that the results o f Claimant's pulmonary function studies w ere of

questionable va lidity "dueto. poor effort and poor cooperation." He opined thata CT scan

- obtained in May 2002is not consistent with the diagnosis of asbestosis. He opined that Claimant

had some degree of chronic-obstructivepulmonary disease due to smoking, but that she is "not

permanently totally disabled fromher lung standpoint." In spite of the absence of objective

findings, Dr. Fay opined tiiat Claimant "had

solutia inc. v. esis, inc complaint

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