Susan Aldridge Partner at Norton Rose Fulbright (US) LLP and Marc Penchansky, a Partner at White & Williams, LLP presented on the following topic: Human Trafficking Lawsuits: A Growing Risk for Insurance. Their presentation covered federal and state statues that provide relief for claimants who allege they have been trafficked, as well as a review of some applicable case law. A video replay of this session is available on the AIRROC On Demand platform.
The Trafficking Victims Protection Reauthorization Act (“TVPRA”) is the key federal statute that provides relief for claimants who allege they have been trafficked. The act establishes human trafficking and related offenses as a federal crime. The act was amended and reauthorized and now includes a civil right of action for victims. The statute of limitations under TVPRA is 10 years or if a minor at the time of the offense, 10 years from age of majority. Compensatory and punitive damages are allowed under this legislation. Case law with respect to TVPRA was reviewed, highlighting the civil claim elements and calling attention that actual knowledge of the trafficking is not required, rather it is sufficient to receive a financial benefit. As such, victims are able to sue not just anyone who engages in trafficking but also anyone who knew or should have known they were doing business with a trafficker. There are many state statutes with similar provisions to TVPRA. There are a host of claims that can also be brought under common law, such as negligence, assault and battery, false imprisonment, and intentional infliction of emotional dismiss, all of which typically have much shorter statutes of limitations that the 10 years provided under TVPRA.
Interesting statistics were included in the presentation – 458 federal claims brought under the TVPRA in 2020 with courts awarding over $255m in civil damages. 52% settled or resulted in judgments for plaintiffs and fewer than 8% ended with involuntary dismissals or judgments for defendants.
It is of little surprise that general liability policies were not designed with human trafficking claims in mind. However, with the sharp increase in trafficking lawsuits, civil TVPRA claims raise numerous coverage issues. CGL policies are construed to provide coverage under both Coverage A (bodily Injury/property damage) and Coverage B (personal and advertising injury). Most policies require an occurrence be caused by an accident. The abuse and molestation exclusion is most commonly invoked when insurance policies are faced with claims of this nature. In addition, other potentially applicable exclusions may apply, such as the criminal acts exclusion.
The trafficking cases that have garnered the most attention in the insurance industry are cases against hotels and motels. Besides the hospitality industry, other targeted industries at risk for these types of trafficking claims include staffing agencies, residential care facilities, organizations working with minors, internet companies and companies with migrant workers.
Indentured servitude, forcing people to do a certain job, was also addressed. The assault and battery exclusion is asserted on hospitality policies in response to these Indentured servitude claims. The criminal acts and expected and intended exclusions can also be asserted but there is no case law on the issue.
Insurers should be aware of these claims when buying a book of business and be aware of targeted industries that are especially susceptible to trafficking claims. The risk factors to consider when writing business for targeted industries were reviewed in detail. Insurers need to really understand the risk they are writing when considering targeted industries. Location, characteristics of the hotel, policies and procedures of the insured, staffing, security, etc. are all items that should be scrutinized before underwriting.