Limiting Exposure to Lawsuits

Park La Brea Apartments is a huge complex in Los Angeles, Calif., with more than 4,000 units. “Come to a home you deserve,” the complex advertises on its website. But 16 renters didn’t feel they “deserved” the bed bugs they complained about over a three-year period. The jury agreed and awarded them a $3.5-million verdict in December 2017.

Andy McGinty is executive vice president and chief operating officer at LIPCA Insurance. The pest management company for the apartment complex was his insured, and even though it wasn’t named in the lawsuit, that didn’t prevent the property managers from looking for another pocket to pick.

“In every lawsuit I’ve had — I’m talking dozens and dozens — the people who had pests didn’t sue the pest control operator; every one of them sued the property manager,” McGinty said. “But that won’t stop the property manager from trying to pass the blame.”

In reality, the pest management company is at the mercy of the property manager, or whoever is hiring the PMP, to tell the PMP what to do, McGinty explained.

Unfortunately, what happened in the La Brea case is typical with bed bug suits in multi-tenant complexes. The property manager calls in the pest control operator to perform a treatment, which they do, and then explain that additional follow-up is necessary to resolve the problem. But the manager doesn’t think additional work is needed, or doesn’t want to pay for it, so the bed bugs return. Tenants sue the property manager which, in turn, tries to pass the blame onto the pest management firm.

“Many of these cases favor the plaintiff,” McGinty said. “The pressure was on my insured as the defense, but in the end they didn’t get hit with anything because they had done their job and had the documentation to prove it.”

WAYS TO LIMIT EXPOSURE. Though PMPs can’t stop property managers from suing their companies, there are ways to limit their exposure.

Pay attention to contracts: The PMP must have a contract with the property manager, and including the right language can help prevent fault. “Through experience, we can say that contract language can be the all-deciding factor in litigation,” said Todd Burke, area executive vice president/COO at PestSure, a pest control insurance provider. “Poor contract verbiage can lead to claim payments for damages not caused by the PCO’s negligence.”

Many insurance providers can help pest management companies review contracts from their customers to identify problematic language and suggest proper verbiage.

Document! Document! Document!: When it comes to protection from lawsuits, documentation is key. “If the PCO does not have properly documented service records, the defense cannot prove that pest control services were completed and completed correctly,” Burke said. “For this reason, an operator’s service file is critical evidence to support its defense.”

Document site visits, work performed, products used and as many details as possible in writing — even photos. Keep emails. If the property manager turns down additional work necessary to rid the building of bed bugs, have a record of that refusal. The PCO can even send a physical letter to the property management company saying what treatment was recommended and refused — in a polite, professional way. This letter could be enough to walk out of some lawsuits.

“It is our experience that proper documentation is a strong foundation to refute allegations of negligence,” Burke added. “While documentation is not the only factor, it is extremely difficult to obtain a favorable outcome without it.”

Know when to walk away: Bed bug treatment is not effective without proper preparation. McGinty recommends giving the tenant and property manager a prep sheet, clearly listing tasks that must be completed in order for the PCO to perform effective service. If the area isn’t properly prepped, walk away. “The termite industry has finally learned this,” he said. “If there are clothes on the floor you won’t be able to get into every nook and cranny and the treatment won’t work, so just walk. Put that information in the contract saying if it’s not prepped we’re going to charge you for our show-up fee anyway.”

This also goes for clients whose properties are too large or too complex for a pest management firm. “If you don’t have the resources to do an effective job, don’t take on clients that are too big for you or your exposure,” he added.

Educate the customer before the fact: Letting the customer know what to expect up front is never a bad idea. Many times tenants panic when they find bed bugs and throw out everything — from sheets to clothes to mattresses — when this isn’t really necessary. Then they want it all replaced, which can lead to high property damage claims and yet something else to resolve in a lawsuit. Let the property manager and tenant(s) know this. McGinty said some pest control operators will even educate cleaning and maintenance staff on what to look for and what to do so that everyone is on the same page.

Do a good job: Performing quality work that meets “peer industry standards” is also important to limiting exposure to lawsuits, McGinty said. This means using the correct products, spending the correct amount of time treating, following up and properly training employees. When it comes to poor quality work, he said, “That’s where the PMP gets hit.”

Insurance providers can be great resources for PMPs looking to limit their exposure. “We know what plaintiff attorneys are going after and ways to mitigate it,” McGinty said. “But a lot of it also comes down to using common sense.”

The author is an Ohio-based freelance writer.