Overbearing Costs of Bed Bugs in the Legal World – Why Leave it to Chance?
Bed Bugs are an increasing and growing threat to hoteliers throughout the United States. Hotels are faced not only with recurring costs associated with bed bug control but mounting legal costs and resulting loss of revenue.
It is critical to note that the existence of a bed bug in a hotel property will not always give rise to financial liability. Lawyers who specialize in bed bug related cases are looking to see whether the hotel acted in a proactive or preventative manner through inspection and control of the pest. This means preventing the mere introduction of bed bugs from becoming an infestation (self-sustaining population) thereby minimizing guest encounters.
Once a bed bug encounter is verified, the hotel often begins to lose their revenue stream. This occurs when rooms are taken out of service until an exterminator can “clear” the room (and adjoining rooms in many instances). Depending on the treatment approach, this can range from a few days to weeks before the room(s) can be rented. Hotels have traditionally weighed the price tag of employing periodic inspection-based protocols in favor of reacting to the problem after a guest complaint. In years past, the hotel could justify this reactive approach based on financial considerations.
Today, guests are more sophisticated. The expectation of staying in a bed bug free environment is greater given the widespread use and impact of social media. With the advance of preventative measures that are readily available to hotels, there is little excuse for a severe bed bug infestation to occur. Products available such as ActiveGuard® Mattress Liners, CimeXa™ insecticidal dust and inspection techniques for housekeeping staff trained by a licensed pest management professional are key elements in a bed bug preventive strategy. Implementing these tools make it unlikely that a couple bed bugs will grow into an infestation capable of wreaking legal havoc. A recent verdict in a hotel litigation case resulted in $500,000 payouts – enough to destroy a hotel.
It is bad enough that hotels are having to address bed bug concerns on social media as highlighted by bed bug incident reporting websites. Many published complaints depict an unsympathetic hotel employee who either denies the existence of a bed bug encounter or refuses to address the situation in a professional manner. These types of incidents accentuate the need for staff awareness on bed bugs and their impact. Social media posts are usually only the first step in a painful, costly process for the hotel. At the outset, hotels incur significant remediation costs, suffer loss of revenue from rooms out of service, and issue guest compensation only to be often confronted with subsequent legal issues.
The cost of defense for a bed bug case can easily exceed $30,000 for legal fees. Typically, an insurance carrier is afforded a preferred rate for hiring, commonly referred to as panel counsel (an attorney chosen from their list of defense counsel who charge a preferred contractual rate for volume work). The legal encounter will almost certainly result in higher premiums for a hotel due to the loss generated by the bed bug claim. This does not include some lofty deductibles a hotel must pay, which can run from $5,000 to $25,000 depending on the policy. Some hotels are covered by “self-pay” policy provisions (often in excess of $25,000) which means a hotel is responsible for all attorney fees even if a verdict is rendered in their favor. If a hotel is ultimately subject to a large verdict, the consequences can be devastating in terms of verdict costs, possible appeal expenses and loss of public confidence and reputation.