By Kevin Sturm, Sturm & Cont, P.A.
Recently, a federal district court in Illinois ruled that OSHA has the right to subpoena safety audits and related records prepared by an employer’s insurance carrier. The case, Solis v. Grinnell Mutual Reinsurance Co., resulted from an on-the-job accident where two teenage employees of Haasbach, LLC were killed when they were engulfed by corn in a grain elevator. During the investigation of this accident, OSHA issued a subpoena pursuant to Section 8(b) of the Occupational Safety and Health Act (29 U.S.C § 657(b)) requiring Haasbach’s insurance carrier, Grinnell Mutual Reinsurance Company, to produce a records custodian to testify and present documents in its possession concerning inspections and reports it had prepared at Haasbach’s facility. Documents sought pursuant to this subpoena included loss control reports, applications for insurance coverage, correspondence, site safety inspections and other safety-related documents prepared by Grinnell prior to the accident. Grinnell declined to produce the records, and OSHA brought suit in federal district court to enforce its subpoena.
Grinnell advanced several legal defenses to OSHA’s request for documents including the following:
- OSHA lacked jurisdiction to investigate Haasbach.
- The subpoena was overly broad because it did not identify the specific hazard or relative portions of a safety inspection and OSHA had an internal policy and practice of not seeking self-audits during investigations.
- The documents sought were covered by discovery privileges including the attorney-client privilege, the work product privilege and an insurer-insured privilege. Grinnell specifically argued that its customer, Haasbach, might be harmed if potentially privileged information was released through OSHA’s enforcement proceeding, to which Haasbach was not even a party, when such information may in fact be privileged in underlying administrative and state court actions pending against Haasbach.
- Grinnell also argued that enforcing the subpoena would have a “chilling effect” on businesses allowing their insurers to conduct safety inspections and on insurers conducting such inspections to determine risk of loss.
The court essentially dismissed all of Grinnell’s arguments under the specific facts of the case before it. First, the court found that the issue of OSHA’s jurisdiction to investigate the fatalities was irrelevant to the enforcement of a subpoena issued to Grinnell during OSHA’s inspection process. Second, the court found that the subpoena was not overbroad and OSHA’s internal policies related to not seeking self-audit reports prepared by employers was inapplicable to the facts in that case since Haasbach had not in fact conducted a self-audit. Next, the court found no applicable privilege attached to the requested documents. Finally, the court rejected Grinnell’s argument that enforcement of OSHA’s subpoena seeking safety-related documents and audits by third parties would create a “chilling effect” that would discourage employers and insurers from conducting such inspections. The court found that while such an argument might be true, correcting that problem was a policy decision that would need to be made somewhere other than the courts.
The court evaluated OSHA’s subpoena and found it enforceable because: it reasonably related to an investigation within OSHA’s authority; the requested documents were relevant to OSHA’s investigation; the request was not overly vague; proper administrative procedures had been followed; and the subpoena did not demand information for an “illegitimate purpose.”
Despite the Illinois court’s decision, employers should not avoid conducting safety audits or having such audits performed by third parties. It should be mentioned that OSHA has an internal policy that it will not “routinely” request “voluntary self-audit reports” during inspections. Such a policy does not prevent OSHA from seeking audit reports prepared by either an employer or a third party if such information is deemed appropriate in a particular case. Evidence regarding when an employer knew of a potential hazard and whether it properly responded to that knowledge is clearly appropriate in determining whether a violation occurred and what level of citation should be issued. What employers need to be aware of is that such audits should be carefully and thoughtfully implemented and that documentation of such audits must be carefully drafted.
Liability on the part of an employer based on the contents of safety audits and related documents could result in not only the OSHA enforcement context but also if civil or criminal litigation arises as a result of an on-the-job work condition. Audit reports could be sought in both the enforcement context and in court proceedings. Since the value of such audit reports generally outweighs the risks, employers and third parties conducting audits should consider the following suggestions when drafting and responding to safety audit reports:
- The wording of reports should focus on specific facts and conditions observed as opposed to speculating as to whether the condition represents a violation of any particular standard. Speculation and opinions of the auditor should be kept out of the report or at least minimized.
- The audit report should avoid characterizing the condition observed as “minimal,” “serious,” “dangerous,” etc. Moreover, the report should avoid placing blame on any particular person or entity.
- If safety problems or issues are identified in the report, there must be documentation related to follow-up corrective measures. Failure to make such documentation can lead to liability and even the possibility of an OSHA willful citation.
- From the employer’s standpoint, it should be ensured that third parties preparing audits are aware of the above-outlined legal concerns related to audit reports.
- Employers should seek legal advice immediately after a work-place fatality or other serious accident in order to avoid or attempt to minimize liability and potentially cloak all or portions of any subsequent accident report or safety audit with the attorney-client privilege or other applicable privilege.
While OSHA may subpoena audit reports during its investigative process, it does not routinely do so. Nevertheless, the possibility of having safety audits and related documents being produced during enforcement and litigation reinforces the need to prepare and to respond to such reports in a prudent and proper manner.
Kevin Sturm is partner with the Spartanburg-based firm of Sturm & Cont, P.A. and serves as SCMIRF’s lead labor hotline attorney.