Earth-Shaking Subrogation Recoveries

Subrogating EarthquakesMatthiesen, Wickert & Lehrer (MWL) takes pride in our efforts to constantly innovate and use creative legal theories to facilitate recoveries for our clients. Our firm has been actively involved in the pursuit of investigation and litigation of claims against oil/gas fracking companies related to their causing earthquake related damages which have historically gone unrecognized and unpursued. The recoveries in these matters have been earth shaking and unprecedented and place MWL at the top of the Subrogation Richter Scale when it comes to recovering your subrogation dollars.

Earthquakes have always been an enigma. There has been little progress in effectively predicting them and even less in subrogating them. The Richter scale has always been widely misunderstood—as far back as the days when the curious would visit Charles Richter’s office to see his celebrated scale, thinking it was some kind of machine. The scale is of course nothing more than an idea than an object—an completely and arbitrary way of making surface measurements of tremblings that occur as deep as 500 miles below the surface. The scale is exponential, so that a 7.3 quake is 50 times more powerful than a 6.3 earthquake and 2,500 times more powerful than a 5.3 earthquake, and so on. History’s largest recorded earthquake the days of Richter was one centered on Prince William Sound in Alaska in March of 1964, measuring 9.2 on the Richter scale. Compare that with the 1906 and 1989 San Francisco earthquakes, which weighed in at 8.0 and 6.9, respectively. Needless to say, earthquakes can cause a lot of damage.

Earthquake damage is usually excluded from homeowners’ insurance policies, but is available either as an endorsement or a stand-alone policy. Due to the possibility of aftershocks, many insurance companies impose a waiting period anywhere from 72 hours to 60 days after an earthquake, depending on the magnitude. Hydraulic fracturing (a/k/a “fracking”) is a process whereby the oil/gas company drills into the earth and injects high-pressure liquids (primarily water, sand, and chemicals) into rocks for the purpose of releasing the gas that exists inside, thereafter allowing the gas to flow to the well head. Significant wastewater is generated as a byproduct, which is thereafter injected deep into ground at a wastewater disposal well. There has been controversy and speculation that these fracking activities were somehow related to an attending exponential increase in seismological activity in the general region where the wells were operating. Fracking earthquakes are of recent origin. On Feb. 25, 2019, an earthquake in China’s Sichuan Province left 12 people injured and two dead. New research indicates the earthquake was likely triggered by fracking. If this is true, it would mark the first time in history that a fracking-induced earthquake has killed people.

Subrogating earthquakes is virtually unheard of. However, this past April, Farmers Insurance agreed to pay $25 million to settle allegations that it underpaid or denied over 1,000 earthquake damage claims relating to a spike in seismic activity in the wake of fracking in the Woodford Shale. MWL has developed relationships with experts who specialize in seismology and can directly relate the certain fracking activities with the increase in earthquakes—especially in states like Ohio, Pennsylvania, West Virginia, Oklahoma, and Texas. Specifically, the fluid that is injected into the ground, during the fracking process, results in fluid pressures to increase within the faults, counteracting the frictional forces on faults and thereby resulting in seismological activity, e.g. earthquakes. Most of the fracking induced earthquakes are not directly the result of the hydraulic fracking but result from the disposal of byproduct waste fluids that are pumped back into the ground. In investigating these claims, our experts must distinguish between earthquakes caused by fracking procedures and those caused by the oftentimes associated wastewater disposal.

The increase in earthquakes since the proliferation of fracking in the United States have been staggering, and so have the number of property damage claims resulting from fracking. In Oklahoma, the number of earthquakes has increased from single-digits per year to several hundred a year. Small earthquakes are occurring in Oklahoma almost on a daily basis. However, for an earthquake to be felt beyond the epicenter, the quake must be at least a magnitude 3.0. The increase of such earthquakes has been staggering, with Oklahoma surpassing California in the rate of these larger quakes for several years over the past decade. Similar increases have been experienced in other fracking states.

The fracking industry is a major employer in many states and this article is in no way meant to detract from the economical and geo-political benefits associated with domestic oil production. But it is important that the external costs associated with these activities be appropriately allocated back to the oil producers, rather than upon innocent citizens and their insurance carriers. The oil/gas companies are responsible for the damage that results from fracking related earthquakes.

All MWL clients and prospective clients are encouraged to review their claim systems and identify earthquake-related damages that could possibly be related to oil and gas activities, such as wastewater disposal operations, especially in Oklahoma . If you should have questions or need assistance in developing search terms or determining geographical specifications, please contact Ashton Kirsch at [email protected].

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Ashton T. Kirsch
Partner

Ashton T. Kirsch is an insurance litigation attorney and partner with the law firm of Matthiesen, Wickert & Lehrer, S.C., concentrating his practice on litigation of subrogation cases involving large loss casualty, commercial auto, transportation and cargo, and workers’ compensation.