Effects of Jensen charges ripple through industry - The Packer

Effects of Jensen charges ripple through industry

10/15/2013 03:49:00 PM
Coral Beach

Courtesy University of California-DavisRegardless of the outcome of the criminal case against Eric and Ryan Jensen, the first instance of criminal charges against growers in a foodborne illness outbreak has the fresh produce industry buzzing with concerns about a range of issues.

Some have said the charges are a signal that the Food and Drug Administration and federal government in general plans to be more aggressive in placing blame and seeking criminal punishment in food-related outbreaks. Others wonder whether they will continue to have access to insurance for their growing and shipping operations.

“I was talking to a group of microbiologists at an event (recently) put on by Earthbound Farm and one guy asked me if I thought the Jensen charges were an opening salvo,” said Seattle attorney Bill Marler. “I told him I seriously doubt it.”

Marler said he thought the misdemeanor criminal charges against the Colorado cantaloupe growers are more about the number of deaths linked to the outbreak — at least 33 according to the Centers for Disease Control and Prevention — than the FDA adopting a new approach.

Officials with the FDA have not been able to provide comment since the beginning of October because of staff furloughs related to the government shutdown.

Growers fear they will be next

A lawyer on the other side of the coin, Brad Sullivan, of the Hollister, Calif., office of the firm L+G LLP, agreed that the government’s decision to file criminal charges in the Jensen case is probably not a sign of a more aggressive FDA.

However, Sullivan said the industry should take the charges seriously. Sullivan represents growers and has handled defenses in civil cases related to recalls. His clients range from a backyard grower of specialty greens to large produce companies with international reach.

“The growers are all thinking ‘that could have been me’ and they are right,” Sullivan said. “And there is the perception that Wal-Mart and others should be in that case.”

Sullivan said one reason he believes retailers should be included is that the Jensens would not have been using a wash system for their cantaloupe except that it was required by customers, such as Wal-Mart, who have started mandating food safety measures.

“Everyone knows that the dart of randomness could land in their field next,” Sullivan said of the potential for outbreaks and litigation.

Insurance availability

Growers can take pre-emptive action, said Michael Lieberman, an insurance broker at Capitol Risk Concepts Ltd., White Plains, N.Y.

“From an insurance perspective, the criminal charges brought against the Jensens have not directly impacted the insurance market in a negative way as liability policies do not respond to criminal acts,” Lieberman said.

However, Lieberman said the charges should be a reminder to grower-shippers to make sure their insurance is adequate. He said the insurance landscape has changed in recent years as more food-related outbreaks have been detected.

“In my mind the big issue is the availability of coverage,” Lieberman said. “Insurers, particularly on the product liability side, are pulling away from food exposures. On the flip side, the contamination/recall insurance marketplace remains quite competitive as insurers compete for market share.”

Lieberman said he is seeing fresh produce companies meet challenges related to food safety with a head-on approach. He said companies are accounting for higher risk management costs and working with food safety experts to reduce risks.

“Due to the incredibly selective nature of liability coverage underwriters and the ease in which they can walk away from food-related businesses, produce companies need to be working closely with their insurance agents or brokers.”

Lieberman said produce companies that share all of their food safety programs and protocols with their insurance brokers will likely get better deals from underwriters because the brokers can explain what the grower-shipper is doing to reduce food safety exposure.

Tips on taking charge of your insurance coverage

Insurance brokers and attorneys familiar with the fresh produce industry offered growers and shippers these suggestions to help them actively manage their insurance coverage:
•    Don’t blindly renew, review coverage and make changes when necessary.
•    Negotiate for the specific coverage you need. Walk away from one-size-fits-all pitches.
•    Ask about trigger events and exclusions.
•    Make sure if you have some say in what attorney represents you if there is legal action.
•    Tell your broker or agent everything about your food safety program.



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