Among the well-settled rules for interpreting insurance policies is one requiring courts to apply a policy according to what it says, not what regulators or individual insurers thought it said. While ambiguities in policy language generally are settled in favor of consumers, the ambiguity must be present in the policy itself, not from extraneous considerations such as other policies, an agency’s interpretation, or the fact that the harm in dispute is part of a broader "crisis." All of which is to say that consumers need to understand and agree to all of the language in their insurance policies, and that it is folly to assume that in a dispute the policy language will always be given a loose reading in favor of coverage.

This lesson was demonstrated in a case in which insured homeowners sought coverage under their homeowners policy for mold contamination that was caused by small roof and window leaks in their home. The policy did cover "water damage," so the homeowners argued that there was coverage for the mold because it resulted from water getting into the house. Yes, mold is caused by water, but it is not a loss from "water damage," as that term was used in the policy.

The even bigger problem with their argument lay with another provision that expressly excluded coverage for "loss caused by mold." The court was hard-pressed to find any ambiguity that would warrant ignoring this clear exclusion: Mold does not grow without water; if every leak and drip is "water damage," then it is hard to imagine any mold, rust, or rot excluded by this policy, and the mold exclusion would be practically meaningless.

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Six times a day, for 6 to 10 minutes each time, workers at a chicken processing plant were required to put on, take off, and clean safety and sanitary clothing that they had to wear while on the job. The special gear consisted of smocks, hairnets, gloves, earplugs, and safety glasses. When a dispute arose between the workers and their employer over whether the employees were entitled to be paid during this time, the workers claimed a right to compensation under the federal Fair Labor Standards Act (FLSA).

An appellate court disagreed with the "exertion" standard and ruled in favor of the workers. Under the FLSA, it is not appropriate to focus on whether an activity requires a certain level of exertion in deciding whether it is "work." Instead, the key for treating an activity as "work" is finding that it is an integral and indispensable part of the primary activities undertaken for the employer’s benefit, and that it is controlled or required by the employer.

Even though the dressing, undressing, and cleaning jobs done by the poultry workers were, in a sense, peripheral to the main tasks, they still were an essential part of the job, for which the workers had a right to compensation. (Do not expect a similar result if you are a white-collar worker hoping to be paid for the time taken to put on a coat and tie in the morning.)

OBT announces the creation of the Lone Star Nursing Scholarship to underwrite the cost of tuition for a nursing student at one of the colleges in the Lone Star College System. David Fisher, the Managing Partner of the firm, remarked that "our firm has a long history of representing doctors, hospitals and other health care providers. It is only fitting that we give back to the medical community through the creation of this scholarship."

The Lone Star Nursing Scholarship will help meet the critical nurse shortage. This year the firm will award a one-year scholarship. But with the help of the community, the firm intends to grow the program to provide at least 10 annual scholarships. The annual tuition for a nursing student is about $3,000.00 a year. If only 9 more law firms, companies, or doctor groups participated at the $3,000.00 level, the goal could be achieved in 2008!

The scholarship will be administered by the Lone Star College System. The selection of recipients will be controlled by the System and will be primarily based on need.

Underwriting an annual scholarship is an excellent way to recognize an outstanding or retiring employee. The firm’s contribution this year will be given in memory of John Tucker who died this year at age 100 and was the last surviving named partner in Orgain Bell & Tucker, LLP.