Tony Putrelo of Putrelo Construction Company Inc. observes the construction site of the Marcy Municipal Building in Marcy, N.Y. He has been in the business for 18 years and has seen his insurance premiums climb, in part due to the state's scaffold law.
 
Marilu Lopez Fretts / Utica Observer-Dispatch
 
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Susan John, D-Rochester, (left) chair of the Assembly Labor Committee, talks with fellow Assembly member Nancy Calhoun after a legislative meeting in Albany. John isn't convinced that the scaffold law should be repealed.
 
Mark Vergari / The Journal News
 
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Bernard Iacovangelo, the CEO of Faber Homes, at the site of a development in Chili, N.Y., believes that insurance liability can add as much as $10,000 to the cost of building a house.
 
Will Yurman/ Rochester Democrat-Chronicle
 
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Robert L. Brenna, Jr., in his Main Street office in Rochester, N.Y., is an attorney who handles cases relating to the scaffolding law. He suspects insurance companies have artificially increased their rates to builders.
 
Will Yurman/ Rochester Democrat-Chronicle
 
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Only in New York: 2

Costs climb on scaffold law

By JAY GALLAGHER
Albany Bureau
(Original publication: June 14, 2004)

HENRIETTA, N.Y. — On a snowy Saturday morning in January in this Rochester suburb in 1999, a roofer named Scott Miller was laying shingles on a two-story home in a new subdivision.

When it was time for him to come down, according to lawyers involved in the case, he decided to first climb onto the lower garage roof. So he unhitched his safety line to make that switch.

But he slipped and fell to the ground about 20 feet below. He broke one ankle in two places and shattered the heel on his other foot.

Miller, who under state law was entitled to workers' compensation benefits to pay for his medical care and a portion of his lost wages, also sued the roofing company for $5 million.

In other states, the case would be decided on how much the company was to blame for failing to provide a safe workplace, versus how much the decisions Miller made contributed to his injuries. But in New York, builders say the deck is stacked against them: Millers' role couldn't even be brought into the case.

"Because it was absolute liability, we didn't have any defenses,'' said Eileen Buholtz, the Rochester lawyer who represented the roofing company, Besroi Roofers, in the case. "We couldn't argue bad judgment or any negligence on his part. We were stuck.''

And so, builders say, are they. Because of a unique New York statute known as "the scaffold law" that holds builders absolutely liable in most instances for injuries caused by falls on work sites, they are having trouble getting liability insurance. And when they can get it, it is so expensive that it adds as much as $10,000 to the cost of building a home, they say.

"I guess I'm one of the lucky ones,'' said Bernard Iacovangelo, the CEO of Faber Homes, which built the house from which Miller fell. "I can still get insurance.'' But the price has gone from $14,500 five years ago to almost $92,000 now.

Miller's case was eventually settled for less than $1 million. But that and other awards like it, builders say, are driving their rates through the roof.

Tony Putrelo, who runs a commercial construction company in Sequoit, a small Oneida County community south of Utica, said he saw his liability-insurance premium go from $137,000 a year to $460,000 after a worker was awarded $75,000 for a fall that Putrelo claims was the worker's fault.

"That just about put me out of business,'' he said. "When I bid a job for $35 an hour for a carpenter, the insurance costs me almost as much.''

While many builders traveled to Albany earlier this year to press their case to get the Legislature to change the law, Putrelo wasn't among them.

"It's not worth it. It's like talking to a freaking wall,'' he said.

No chance for defense

The cause of their problem looks clear to people like Putrelo, Iacovangelo and other builders: The state's antiquated law gives them little or no chance to defend themselves against lawsuits resulting from injuries that are not their fault. The way to fix it is to have the Legislature pass a law that allows juries to consider whether actions of the worker — like Miller unhooking his safety line — may have contributed to the injury. (Miller couldn't be reached for comment and his lawyer, Dominic Pellegrino, didn't return phone calls.)

But to those on the other side, the situation looks far less clear.

Trial lawyers, who usually get one-third of the awards given to injured workers, blame the insurance companies, whom they say have artificially inflated rates to increase profits in the wake of the decline of their investment income from Wall Street.

"This is an insurance problem,'' said Robert Brenna, a Rochester trial lawyer who handles scaffolding cases. "Their basic goal is: Give us your premiums and we don't pay anything.''

"People still have this idea that this is a runaway jury system,'' he said. "It's not. You know that McDonald's case that a woman spilled coffee on herself and got millions? That's not true,'' he said.

(The award against McDonald's to 79-year-old Stella Liebeck of Albuquerque, N.M., who suffered third-degree burns over 16 percent of her body in the 1992 incident, was reduced to $480,000 on appeal.)

However, losses on general-liability policies in New York are five times higher than seven comparable states, according to a study done for the American Insurance Association.

The discrepancy is highest in New York City — 745 percent above the norm, according to the report. Even in the rest of the state, the losses were still 235 percent higher than the average of the other states.

The report said about one-third of the difference is due to the scaffold law.

A study by the St. Paul Travelers Insurance Co., the largest writer of liability insurance for contractors in New York, said the scaffolding law accounts for much more: About three-fourths of the losses they have paid out in New York on the claims of general contractors are because of the scaffold law.

"There has been a tremendous upsurge in claims since 1996,'' said Raul Allegue, a St. Paul's-Travelers spokesman — almost 150 percent.

He said he suspects that a change in the workers'-compensation law in 1996 that limited lawsuits for injured workers under that statute led to more suits being filed under the scaffold law.

"There has been no upsurge like this anywhere else,'' he said. "This is not a crisis anywhere else.''

Lawyers back statute

But if New York has more worker-injury-related lawsuits than other states, it is also safer than most states to do construction work, according to federal Bureau of Labor Statistics figures used in a study done by the state Trial Lawyers Association. The scaffold law, the lawyers say, is the reason.

The state had less than five nonfatal injuries per 100 workers in 2001, lower than all states except Louisiana, which had less than four and a half, according to the study.

A year earlier, 30 of the 1,183 construction deaths in the country were in New York. That was only 2.5 percent of the total, while the state accounts for almost 7 percent of the nation's population.

"New York State's unique Scaffold Law has been a significant factor in achieving this success,'' the trial lawyers state in their report.

But builders say that other factors, like responsible contractors, might be behind the stellar safety record.

The trial lawyers' report also points to the collapse of a pedestrian bridge over a road project near Utica in 1992, when a worker died and seven others were injured, and the collapse of a 14-story scaffold in Manhattan that killed five workers as evidence of the danger of the job and the need for strict laws.

More than a century

The scaffold law has been around since 1885. "New York has had a lot of tall buildings for a long time,'' as well as a sense that the people working on them needed to be protected, pointed out Assembly Labor Committee Chair Susan John, D-Rochester.

But two decisions in the last dozen years — one in 1992 and the other last December — highlight the dispute over it.

The 1992 decision involved a contractor named Daniel Spano, who was hired by the Roman Catholic diocese of Buffalo to help demolish the Corpus Christi Church school in the city.

Spano and two men working for him were on the fourth floor of the school, a floor above the gym. The workers testified that Spano ordered them to knock out trusses that were supporting the floor they were standing on. They said they warned him that if they knocked down the trusses, the floor on which they were standing would collapse.

Spano told them to do it anyway, according to court records. The floor collapsed and all three were injured. The Appellate Division of the state Supreme Court ruled nonetheless that the diocese had to pay damages. The court said that under the scaffold law, the owner essentially had no defense if a worker on a construction site was injured in a fall.

"Absolute liability is imposed on defendants, the owner and contractor, where, as here, plaintiff was engaged in the performance of his work at the time he fell from an elevated work site,'' the Appellate Division of the state Supreme Court ruled.

The verdict in this case was part of a trend that seemed "like a violation of common sense,'' Michael Steinberg, a state Supreme Court law clerk and labor-law expert, wrote in an analysis of the case.

But some lawyers say a case decided last December by the Court of Appeals, the state's highest court, turned the law back in the direction of the owners.

The court said that Rupert Blake, a New York City contractor, was not entitled to damages after he fell and broke his ankle while working on a two-family house in the Bronx because the accident was completely his fault. He apparently forgot to lock the extension clips of the ladder in place before climbing up on it. He fell when the ladder retracted.

"The point of the (scaffold law) is to compel contractors and owners to comply with the law, not penalize them when they have done so,'' Judge Albert Rosenblatt wrote in the court's unanimous decision.

But that's not the end of the builders' or insurers' problems, officials say.

"Now (the scaffold law) is not a complete giveaway, just a big giveaway,'' said Bernard Bordeau of the state Insurance Association, an industry group. "But it doesn't have insurance companies flooding back into the market. The only thing that will get them back is to repeal it.''

The builders are planning to launch their own insurance company through the state Builders' Association in response to the refusal of many private companies to write policies for them. Premium levels haven't been set yet.

Repealed elsewhere

Lawmakers in Illinois, the only other state for years to have a similar statute to the scaffold law, repealed their law in 1995.

"It's been a tremendous help and a definite savings. General-liability rates dropped dramatically,'' said Todd Maisch, a lobbyist for the Illinois Chamber of Commerce. He said liability-insurance rates have dropped about 20 percent.

The Illinois AFL-CIO is working to get the law reinstated, because "the more safety, the better," said union spokeswoman Beth Spencer.

Maisch pointed to figures that show Illinois workplaces are now safer than they were when their version of the scaffolding law was on the books, but Spencer said they could still be improved.

Maisch said "sheer political muscle'' got the change through when Republicans gained control of both branches of the Legislature, as well as the governorship, for the first time in decades.

In Albany, a group of builders in March met with John, who as the Assembly Labor Committee chair is the key legislator in the debate. A bill to repeal the law sponsored by Assemblyman Joseph Morelle, R-Irondequoit, Monroe County, is sitting in her committee. (A companion bill also awaits action in the Senate.) Although she was open to talking about the issue with the builders, she wasn't convinced the scaffold law should be repealed.

Steve Spitz, who runs the Javen Construction Co. in Penfield, Monroe County, told John that up until 1996, he was paying about $35,000 for a $15 million liability policy. Now he is paying $153,000 for $5 million of coverage.

"I used to sleep well with $15 million of coverage. I don't sleep so well with $5 million,'' he said.

He blamed the steep rise in premiums in part to a claim of a painter who was hurt on stairs his firm had installed on a school-construction job.

"I have absolutely no defense,'' he said.

"For the first time I've considered, 'Should I be in this business?''' Spitz told John. "Maybe not.''

John sympathized with the squeeze Spitz and the other contractors are in, but she said she's not convinced repealing the scaffolding law is the answer.

"I know premiums are going up and some can't get any insurance at all,'' she said. "This a problem we're trying to work through.''

"We're trying to get a handle on how much the increase in insurance rates has to do with (the scaffold law),'' she told the builders. "Other kinds of insurance are going up fast as well.

"Some of my colleagues would say this is a manufactured crisis. I'm not saying it's a manufactured crisis,'' she said.

In a later interview, she said she was looking for a way to make insurance more available and get premiums down without doing away with the law, which she thinks is important to keep workplaces safe. But so far, there have been no discussions along those lines.

"They don't want a modification of the law,'' she said of the builders and other scaffold-law opponents. "They want no law. I'm not sure the Legislature is ready to have no law.''