One of the most common substances on earth, silica plays an essential role in construction, manufacturing, and mining industries. News sources, including The Wall Street Journal, reported a massive increase in silica-related lawsuits in the last quarter of 2003. According to one monitoring group, 35,000 new silica claims as of October 2003 targeted silica sand producers primarily in Mississippi, Texas, Ohio, and Pennsylvania. In fact, the silica claims extended beyond those states and to other industries, including claims against aggregate suppliers, cement and concrete producers, the coal industry, and their equipment manufacturers. A September 2003 Wall Street Journal article posed the question: “Is silica the next asbestos?”

In October 2003, OSHA distributed a massive new draft silica rule (treating silica like asbestos and arsenic) that is estimated to impose costs of $3 billion to $5 billion on construction interests alone. MSHA followed suit by listing silica on its regulatory calendar, although a timetable has not been established. In February 2004, a private standard-setting group — upon which the U.S. and foreign governments rely — proposed to reduce its silica standard to 25% of OSHA and MSHA limits. In May 2004, a study of highway construction and repair workers published in a scientific journal predicted a silicosis outbreak; accordingly, among other solutions, government contract provisions mandating specific silica controls were recommended.

In spring 2004, the Minnesota Supreme Court issued a silica decision restricting the “sophisticated buyer” defense traditionally available to producers delivering products in bulk to commercial customers. At about the same time, a silica insurance coverage exclusion likely to appear in 2004-05 renewals and new policies was circulated in the insurance industry. In September 2004, the Texas Supreme Court undermined the “bulk supplier/sophisticated buyer” defense by reversing a case dismissal, holding that while a bulk supplier may not have a duty to warn its customer company, it may have an obligation to the customer's employees, depending on the balance of several factors (e.g., benefit, effectiveness, burden).

Such developments provide the conditions for massive silica-related liability risks. Following is an examination of factors driving silica litigation, regulation, enforcement, and insurance developments. Actions are recommended to prevent silica from becoming the “next asbestos.”

Silica scare or real crisis?

Center for Disease Control (CDC) statistics show that silica-related mortality has declined by a significant order of magnitude, from 1,800 cases in 1969 to less than 180 in 2000. While a single silica-related death is one too many, CDC data demonstrate a litigation problem, not a national health problem. In fact, CDC statistics show silica-disease mortality on the verge of elimination.

Silicosis and related diseases require years of excessive exposure. The limited number of current cases stems from exposure years ago at levels much higher than those of today, explaining the steeply declining mortality trend. Moreover, given that OSHA reports up to 30% of its silica air samples above the permissible exposure limit (the equivalent of 100 ug/m3), the declining trend demonstrates a high safety factor associated with current OSHA and MSHA standards (Figure 1).

Litigation incentives

Many government policies contribute to the proliferation of silica lawsuits. Some issues can be addressed by employers immediately and successfully, while other tactics requiring Congressional action are more difficult to implement. Moreover, progress in achieving national or state-specific asbestos tort reform (Texas and Mississippi) may lead to increased silica filings as plaintiffs anticipate legislative developments. Such a trend was evident in Mississippi when the largest number of silica cases was recorded in 2003, just prior to achieving tort law reform.

Likewise, company silica risk management can be informed by the latest developments and adjusted accordingly. Gathering state and national information on liability risk issues is key to a successful effort. If tort reform is anticipated in a particular state, for example, a response would be planned to the predicted increase in plaintiff solicitation actions, e.g., mobilizing x-ray vans, before the reforms take effect.

Government regulations

A major silica-litigation risk driver is government regulation, which functions to establish duties and create enforcement channels. Additionally, the assumption of corporate knowledge of risk and standards of care based on such regulation generates evidence in tort liability cases.

Proposing a 50% cut in the silica exposure limit (to the 2000 ACGIH TLV) and regulating silica like asbestos or arsenic, OSHA's October 2003 draft silica rule clearly increases silica liability risk. An estimated $3 billion to $5 billion in new costs imposed by the ruling on the construction industry is attributed to mandatory restricted work zones, air and medical monitoring, and various other items derived from highly hazardous substance regulations — and applied to one of the most common minerals on earth.

A simple comparison of the steep decline in silica-related mortality against OSHA and MSHA enforcement data is instructive. While the agencies register 20% to 40% of samples as violations, mortality steeply declines, thus demonstrating a significant protective factor in the current standards. Good risk management requires that employers get involved in the regulatory process, joining associations and coalitions to oppose unwarranted further regulation.

Enforcement history

More immediately, individual efforts are needed to identify company-specific circumstances that fuel litigation by providing evidence for plaintiffs' lawyers. Currently producing government sampling results nationwide is a 1995 Clinton-era silica “special emphasis” program based on faulty silica sampling and analysis procedures and increased enforcement. Published research and legal victories have established that MSHA labs — and by implication OSHA — produced inaccurate and unreliable silica data; those successes vacated specific citations and closed one MSHA lab. Yet, underlying inaccuracies and methodologies were not addressed and remain in effect today.

MSHA and OSHA programs continue to yield invalid silica measurements leading to citations, often paid without contest on the basis of a cost analysis of the fine versus a long-term risk-and-impact study. And, legitimate citations are often paid without addressing the need for a prevention plan demonstrating a good-faith response. Effective risk management requires attention to silica sampling results and citations, past and future, so that plaintiffs' lawyers will not be able to “spin” them into punitive damages.

It's not too late for an effort to understand, explain and address a silica-sampling and/or citation history to correct program problems. Silica-related disease manifests with 20 to 40 years of excessive exposure, and the asbestos nightmare spanned three decades. Moreover, challenging future invalid silica citations and tightened standards becomes more pressing daily as litigation risks increase. Since the occurrence of invalid citations will expand if the new silica regulations are adopted, a vigorous industry response both to individual company citations and regulatory actions is essential.

Preemptive measures

A review of silica-related legal developments underscores the need for companies to audit their material safety data sheets, warnings, labels, training procedures, product literature, and temporary worker or contractor protections to insure current information, consistent safeguards based on risk, and regulatory compliance. Even an inadequate or misleading warning lawsuit paints the company as a “bad actor” and may be far easier to prosecute than one alleging health effects due to the substance in question.

Recent state supreme court decisions denied the “sophisticated user” defense, generally advanced to counter lack-of-warning charges against sellers of bulk products to users that can be expected to know risks and protect their employees. Two factors were cited in the rulings: (1) risk information was not provided to a purchaser or user lacking an equal position to know it independently; and, (2) providing risk information to a customer's employees may be required, even without an obligation to the customer company. Also worth noting is that recent cases approved millions in punitive damages on the basis that employees were trained, equipped and protected, but temporary workers or contractors were exposed and suffered harm.

Effective risk management entails a review of MSDS, labels, and all related hazard communication materials and protective programs to ensure they reach all high-risk potential plaintiffs, i.e, non-employees not covered by the workers' compensation shield, as well as employees who can use hazard communication failures to try to sue outside the comp system. In addition, risk management should include Spanish translations when needed for warnings and training.

Invalid standards

Silica regulation and litigation problems are fueled also by the American Conference of Governmental Industrial Hygienists (ACGIH), a private group controlled primarily by government employees (e.g., OSHA and MSHA representatives) and selected university scientists. Meeting in secret to develop exposure limits, ACGIH does not identify the authors of its work, nor are conflicts of interest disclosed. Four years ago, the association lowered its silica exposure limit by 50% on the basis of faulty science and has recommended another 50% reduction this year (to 25% of the MSHA/OSHA level).

ACGIH does not seek consensus or use open, transparent procedures like other standard-setting groups, such as ASTM. It does not perform accepted scientific risk assessment, nor does it seek independent scientific peer review of its exposure limits. Further, ACGIH does not analyze the feasibility of its exposure limits — as required for OSHA and MSHA — from either a cost or technical perspective.

Nevertheless, ACGIH's new silica threshold limit value (TLV) is adopted by reference within OSHA and MSHA Hazard Communication rules; it is used by EPA; and, it's a required listing on material safety data sheets. Dozens of foreign governments automatically adopt and enforce new ACGIH limits. Government researchers routinely use ACGIH standards to define “hazards.” Most importantly, new ACGIH exposure limits, like government regulations, will be used as evidence to allege that employers “knew” the risks at ACGIH-defined levels. And, they will be used to create standards of care by which to judge employer protective actions. Given ACGIH's historical role, it is no surprise that OSHA's new draft silica rule considers adopting the most recent, flawed ACGIH silica limit.

The ACGIH myth of validity by virtue of “scientific purity” was debunked a few years ago when a lawsuit on behalf of the trona industry exposed the organization's lack of sound science in addition to its conflicts of interest, forcing ACGIH to withdraw its trona proposal and issue a public apology to the industry. Unfortunately, that case-specific success did not result in significant ACGIH modifications to open its process to public scrutiny or independent scientific review. A consequence of the closed process was the unjustified silica TLV and yet another proposed reduction this year.

Renewed ACGIH activity has prompted consideration of litigation and legislative options. One legislative proposal entails prohibiting the U.S. government from supporting nonconsensus standard groups and “outsourcing” its regulatory authority to organizations, like ACGIH, that act in secret and form the basis for government policy without due process protections. By way of litigation, seeking an injunction against ACGIH for violations of the Federal Advisory Committee Act employs a strategy that proved successful in the trona case. Pursuing damage claims for product defamation and market interference is also under consideration.

The challenge to ACGIH is made more difficult by its “brand,” its former reputation for public service, and the accepted validity of its pre-1990 TLVs. A watershed event for ACGIH was the massive resignation by its TLV leadership in the 1990s. The departure occurred in protest of the organization's new direction and the lack of resources needed to “produce” large numbers of new TLVs and materials sold for funding. Subsequently, the group began to promote an anti-industry, pro-regulatory and plaintiffs' agenda — behind closed doors, without sound science, and ignoring conflicts of interests. Prior litigation has revealed an organization lacking the caliber of the ACGIH that earned its brand name and reputation while producing credible TLVs adopted by OSHA and MSHA as Permissible Exposure Limits (PELs) in the 1970s. Good risk management arguably includes acknowledging current ACGIH operating conditions with the goal of curtailing damage caused by the unwarranted influence of its new TLVs on policy, regulation, and litigation.

Expert opinion, evidence

Companies and associations with silica interests would be advised to enlist experts to anticipate defense needs, monitor scientific literature, respond when appropriate, initiate research to expand the knowledge base, and consult on company programs. Illustrating the importance of such expertise is the following example: A May 2004 Highway Workers Silica Risk article will undoubtedly appear as evidence in lawsuits and provide the basis for governmental imposition of what may be totally unjustified mandates and costs. Yet, the report demonstrably stands on distortions within a project referred to as SENSOR, funded by the National Institute of Occupational Safety and Health (NIOSH) in order to spot the outbreak of disease. From a few cases vaguely diagnosed as silica disease, the authors paint an alarming picture of road construction risks supported by limited worker exposure measurements (typically prone to high margins of error) at the dustiest locations available. The study lacks any reported correlation to the cases cited or any mention of overall time of worker exposure to the reported conditions. (Valiante et al., American Journal of Public Health, May 2004, Vol. 94, No. 5) The SENSOR project is expanding to additional states, and other industries may expect to be similarly targeted. Good risk management suggests the need for a response by impacted companies and associations.

By contrast, in May 2004, Dr. W.G.B. Graham published a thoughtful and extensive analysis of the risk of silica disease among Vermont granite workers. Revisiting a study population of workers used by IARC and ACGIH to support their carcinogen findings, he found the population's experience to contradict the earlier data (W.G.B. Graham et al., Journal of Occupational and Environmental Medicine, May 2004, Vol. 46, No. 5). Thus, good risk management can include the assistance of recognized experts to help company counsel navigate the science, improve protective programs, and assist when (not if) litigation arises.

Insurance exclusions

As insurance carriers respond to perceived financial risks more vigorously than to actual health risks, it is not surprising that the insurance industry circulated a “silica exclusion” for all new policies and renewals. The provision, which denies coverage for future claims in any way related to silica, may significantly impair industry grounds for defense. In creating model insurance plans, the Insurance Services Office appears to have encouraged the exclusion of silica in general liability coverage for general commercial firms, owners and contractors, and product-finishing operations. The draft provision excludes coverage for “bodily injury,” “property damage,” or “personal and advertising injury” related to the actual, alleged, or threatened presence of, or exposure to, silica in any form, as well as harmful substances emanating from silica. Accordingly, a broad range of recognized modes of exposure is included within the exclusion, including silica use, consumption, ingestion, inhalation, absorption, contact, existence, presence, proliferation, discharge, dispersal, seepage, migration, release, and escape. An example of the provision can be found at http://www.jsausa.com/contractor_forms/S262-SILICA%20EXCLUSION.pdf.

Some companies already have received a renewal policy with silica exclusions, and many more are expected. A few companies reportedly have been able to regain coverage by means of negotiation. Good risk management requires awareness of the issues and response options. Although opposition to state insurance commissioners is possible, such initiatives have had limited success to date. Association-based gap coverage may be an alternative, if carefully designed and managed.

Old policies = assets

Old insurance policies may be a company's most valuable asset when confronting silica litigation. As most old policies provide continuing coverage on a “claims occurred”basis, i.e., when silica exposures leading to the claim first occurred, they should be secured and analyzed. The old policies typically do not count defense costs against coverage limits, making them far more valuable than their outdated limits may suggest. By contrast, new policies likely will shift all future silica-related risks to the insured, unless innovative solutions are formulated and put in place.

Silica risk management should include a company team to assist in finding policies (or evidence of policies) from acquired operations and among historical files. The team's insurance “archeologists” and outside lawyers can collect, analyze and value old policies to secure these critical assets. In addition, notice of claims must be given to insurance companies as soon as possible to prevent coverage denials based on lack of timely notification. Accomplishing old policy recovery in advance of litigation permits companies to avoid such “timely notice” arguments.

Inappropriate refusal of coverage by insurance companies can be countered with actions for declaratory relief, i.e., a lawsuit against the insurer to obtain a judicial declaration that coverage is required. Such cases routinely are settled successfully or won, including recovery of attorneys' fees. Additionally, developing the old policy asset is a critical step in achieving “buy back” of the new silica exclusions on a cost-effective basis, since it limits the risk for new coverage.

Overall, several measures comprise an effective strategy for employers to minimize the emerging and increasing financial risks of silica-related issues. First, assigning or retaining legal, financial, risk-management and loss-prevention staff is necessary to identify, assess and understand company risks. Second, company-specific strategic responses must be designed to include the issues and actions set forth and others identified by the silica-risk assessment team. Third, encouragement, support, and participation in coalition and trade association responses to industrywide issues, like the proposed OSHA and MSHA rules and ACGIH activity, are not to be overlooked. Fourth, aggressive pursuit of long-term solutions is essential; succumbing to the temporary seduction of an evasive response, e.g., “It's not on my radar screen” or “There have been only a few claims this year” or inexpensive settlements of bogus claims, serves only to fuel future claims growth. Silica is not the next asbestos — unless failure to act now jeopardizes future protection.

Henry Chajet is a partner with Patton Boggs LLP, Washington, D.C. He can be reached by e-mail at hchajet@pattonboggs.com