Liability Limits: How Much Should Your Food Company Maintain?
Food business clients frequently want to ensure that they have sufficient liability limits in the event of an outbreak (they also want to make sure they have adequate coverage, but this is a separate discussion). Determining the amount of a business’s limits depends on the business’s possible exposures. No one-size-fits-all formula is available. Every business should have a yearly conversation with its counsel and broker to determine what makes sense.
Disclaimers aside, a few pieces of recent news should help inform the discussion of liability limits:
First, we've learned more about the food-borne illness claims filed in the peanut outbreak earlier this year. Here’s a complete list of the claims (personal injury, commercial, etc.) asserted in the PCA bankruptcy and a newspaper article about them. Most of the claims appear to be filed by Marler Clark, though other food-borne illness claims also appear. So far, I count about 100 claims filed in the PCA bankruptcy (out of a CDC-reported 714 illnesses). Of those claims, at least eight resulted in deaths. The death claims are valued by the plaintiffs' at $10 million each. The nondeath claims are valued at up to $1 million each. Total personal injury claims are approximately $150 million. Plaintiffs have probably overstated their claims, but given the national outrage against PCA, a jury might lend credibility to the bloated values and award larger sums.
The other recent news is that CDC has released some interesting statistics about food-borne illnesses. For 2006, leafy vegetables and fruits/nuts accounted for the largest number of reported cases of food-borne illness (33%). Produce and nut products that might not have been associated in the past with food-borne illness (and, therefore, liability exposure) are now frequently associated with outbreaks. As exemplified by the PCA situation, claims from a national or even a regional outbreak from produce or nuts can easily exceed $100 million.
Is It Really A Food-Borne Illness?
At a recent presentation, Dr. Alan Melnick, a public health officer in both Oregon and Washington, provided a useful list of alternative causes of symptoms to consider when someone claims a food-borne illness. Other causes of symptoms that might be confused for food-borne illness include (but may not be limited to):
- Irritable bowel syndrome (IBS)
- Inflammatory bowel disease
- Malignancies
- Antibiotic use
- Gastro-intestinal surgery or radiation
- Malabsorption syndromes
- Immune deficiency
Another practical piece of advice offered by Dr. Melnick: When assessing a food-borne illness claim, determine whether the incubation period is compatible with the illness. Incubation periods (along with other useful information) were provided by Dr. Melnick (relying upon the CDC) as follows:
|
Pathogen |
Incubation |
Symptoms |
Duration |
Source |
| Bacillus cereus |
1-6 hours (vomiting); 6-24 hours (diarrhea) |
Nausea and vomiting or colic and diarrhea | 24 hours (short form); 24-48 hours (long form) | Soil organism found in raw, dry and processed foods, e.d. rice |
| Campylobacter | 2-10 days; usually 2-5 days | Diarrhea, cramps, fever and vomiting; diarrhea may be bloody | 2-10 days | Raw and undercooked poultry, unpasteurized milk, water |
| Clostridium botulinum (botulism) | 2 hours to 8 days; usually 12-48 hours | Vomiting, diarrhea, blurred vision, double vision, difficulty swallowing, descending muscle weakness | Variable (days to months) | Home-canned food, improperly canned commercial foods |
| Clostridium perfringens | 6-24 hours | Cramps, diarrhea | 24-48 hours | Meats, poultry, gravy; foods kept warm |
| Enterro-hemorrhagic E. coli, including E. coli O157:H7 and other Shiga toxin-producing E. coli (STEC) | 1-10 days; usually 3-4 days | Diarrhea, frequently bloody; abdominal cramps (often severe); little or no fever; 5-10% develop Hemolytic-uremic syndrome (HUS) and average of 7 days after onset, when diarrhea is improving (more common in children, elderly and immune-compromised) | 5-10 days | Ground beef, unpasteurized milk and juice, raw fruits and vegetables, contaminated water, sprouts, person to person |
| Listeria | 9-48 hours for GI symptoms; 2-6 weeks for invasive disease | Fever, muscle aches and nausea or diarrhea; pregnant women may have flu-like illness and stillbirth; elderly, immune-compromised and infants infected from mother can get sepsis and meningitis | Variable | Fresh soft cheeses, unpasteurized or inadequately pasteurized milk, ready-to eat deli meats and hot dogs |
| Salmonella | 6 hours to 10 days; usually 5-48 hours | Nausea, diarrhea, cramps, fever | 4-7 days | Poultry, eggs, meat, unpasteurized milk or juice, raw fruits and vegetables (e.g., sprouts), person to person |
| Shigella | 12 hours to 6 days; usually 2-4 days | Abdominal cramps, fever and diarrhea; stool may contain blood and mucus | 4-7 days | Contaminated food or water, raw foods touched by food workers, raw vegetables, egg salads, person to person |
| Staph (toxin) | 30 minutes to 8 hours; usually 2-4 hours | Nausea, cramps, vomiting, diarrhea | 24-48 hours | Custards, cream fillings, potato or egg salad, sliced meats |
| Vibrio cholerae | 1-5 days | Profuse watery diarrhea and vomiting, severe dehydration | 3-7 days | Contaminated water and shellfish, street vended food |
| Vibrio parahaemolyticus | 4-30 hours | Watery diarrhea, abdominal cramps, nausea, vomiting | 2-5 days | Undercooked or raw seafood (fish and shellfish) |
| Vibrio vulnificus | 1-7 days | Vomiting, diarrhea, abdominal pain; more severe in patients with liver disease or who are immune-compromised; can cause invasive infection (sepsis) | 2-8 days | Raw seafood, particularly oysters, harvested from warm coastal waters |
| Yersinia | 1-10 days; usually 4-6 days | Appendicitis-like symptoms (diarrhea and vomiting, abdominal pain) | 1-3 weeks | Undercooked pork, unpasteurized milk, contaminated water |
