Investing August 6, 2001

July Markets in Doldrums – FTSE

August 6, 2001 (PLANSPONSOR.com) - Returns were negative nearly across the board in July amid increasing concerns on the direction of the global economy, according to data from index-group FTSE.
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Argentina, on the brink of default faired worst, falling 22% in US dollar terms as investors, fearing a recurrence of a liquidity crisis similar to that recently observed in Turkey, fled the market in droves.

Emerging markets in other areas were affected by contagion, and beaten lower by increased risk aversion and fears of a recession. In China, the market fell by 15.9%, closely followed by Turkey, which tumbled 15.4%.

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Elsewhere, markets in Emerging Europe lost 10% of their value, making the region July?s worst performer.

Ambivalent Asia

And in Asia, Singapore, one of the previous month?s better performers, released data showing that the city-state had slipped into a recession in the first half of 2001.

The gloom lifted slightly in Indonesia, which after months of political turbulence saw the market lift by 24.3% following President Wahid?s departure from office. Malaysia also performed well in July – the equity market lifted 12.2% by bargain-hunters.

By Sector

On a sector basis, technology performed poorly once again, with new economy stocks taking three of the bottom five slots, specifically,

  • electronic and electrical equipment, which fell by 11%
  • information and technology hardware, which fell be 9.7%
  • software and computer services, which dropped by 9.6%

In addition, the mining sector fell by 11.3%, while returns across the investment company sector fell by 8.7%

In contrast, the month?s better performing sectors were:

  • personal care and household products, up by 6.3%,
  • the transport sector, which rose by 3.38%, and
  • diversified industrials, which increased by 1.9%.

By Stock

Marconi was the worst performing share in the FTSE Eurotop 300, dropping by 61.3% following the suspension of its shares ahead of a profit warning. South Africa’s Dimension Data fell by a massive 52%, and Invensys PLC tumbled by 38.4%.

The month’s better performers were Dampskin Svenborg, Sky Broadcasing and Fiat, which increased by 14.8%, 13% and 12.6% respectively.

Compliance August 5, 2001

Pa. Court Shields ADA Recovery From Subrogation

May 8, 2001 (PLANSPONSOR.com) - A worker's damage recovery under the Americans With Disabilities Act (ADA) is not subject to subrogation by his employer or its insurance carrier, according to the Pennsylvania Commonwealth Court.
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The court ruling in Brubacher Excavating Inc. v. Workers’ Compensation Appeal Board found that the alleged discrimination was not directly related to his original work injury, according to the Legal Intelligencer.

Case History

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James Bridges worked for Brubacher as a master mechanic, injuring his back on Sept. 17, 1992, while he was lifting a cylinder head from an engine. Bridges gave his employer Brubacher notice of the injury the following day.

From then until November 1993 Bridges received $455 per week in total disability benefits. He then began working for Diesel Services Inc. as a service writer/adviser, earning $400/week. Thereafter he continued to receive partial disability benefits of $245/week. However, Diesel’s workers’ compensation insurance carrier refused to cover Bridges, and he was terminated after just two weeks.

Bridges’ total disability benefits were reinstated on Nov. 22, 1993, and he has remained on total disability since that time, according to the report.

Court Case

In 1995, Bridges filed a suit against Diesel under the ADA, requesting $50,000 in compensatory and punitive damages. Brubacher and its workers’ comp insurance carrier asserted a right to subrogation against any recovery Bridges might get.

However, a workers’ compensation judge said they were not entitled to subrogation because the injury alleged in the civil action was unrelated to the work injury. The Workers’ Compensation Appeal Board affirmed that judgment and Brubacher appealed.

The Bridges court found that the state supreme court has addressed a similar issue in a 1980 decision, Dale Manufacturing Co. v. WCAB. In that situation, a worker sued a doctor who left a cotton pad inside her during surgery for her work-related injury. The employer tried to enforce its subrogation rights on the recovery she received, arguing that the doctor’s negligence aggravated the work injury. However, the court said the employer had not offered enough evidence.

Subrogation Clause

The court said in order for an employer to successfully assert its subrogation right must show:

  • it is compelled to make payments by reason of the negligence of a third party
  • the recovery was for the same compensable injury for which it was liable under the act

In Bridges, the court found that the plaintiff in Bridges sustained two separate injuries, the first to his back, and the second an act of employment discrimination from Diesel.

– Nevin Adams                            editors@plansponsor.com

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