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Motel Management Company Denied Insurance Coverage for Sex Trafficking Lawsuit, Showing a Bigger Need for Employee Training

Motel Management Company Denied Insurance Coverage for Sex Trafficking Lawsuit, Showing a Bigger Need for Employee Training

For several years now, experts have been warning the hotel industry about the financial risks that sex trafficking increasingly poses for their business. In a defining case, a U.S. District Court in Pennsylvania ruled in May 2018 that a motel management group would not receive insurance coverage for a lawsuit brought by a victim of sex trafficking.

In the lawsuit, a female victim claimed that in 2014 when she was a minor, she was sex trafficked at a motel in Pennsylvania that was owned and operated by Motel Management Services. The victim, E.B., claims that she was “visibly treated in an aggressive manner” by her traffickers. The victim claims she was held at gunpoint and forced to engage in sex acts with buyers and her traffickers at the motel. E.B. alleges that the motel employees and manager failed to report the illegal activity, and that their negligence to report it allowed the sex trafficking to continue, and ultimately lead to E.B.’s severe physical and emotional injuries.

Not only does this case illustrate how a lawsuit of this kind can harm the reputation of a motel and its management company, but the court has determined that the motel management company’s insurance company, Nautilus Insurance Company, which is a member of W.R. Berkley Corporation, has no duty to defend and indemnify Motel Management Services under the terms of their insurance policy because, according to the court, “the claims against MMS arise from negligent conduct contributing to an assault and battery,” which is excluded from their policy. Such exclusions are common in insurance policies. The owner of the motel management company will be responsible for covering all attorney’s fees and potential financial settlements or awards to the alleged victim, exposing this motel management company to potentially devastating financial losses.

This finding could have broader ramifications for any type of commercial sex trade that occurs on a hotel property—prostitution, pornography, or sex trafficking. The commercial sex industry is inherently violent. According to a 2001 report published by the National Criminal Justice Reference Service, which studied the sex trafficking of women in the United States, many of the women studied—86 percent—had been subjected to physical violence and assault by their buyers, and 65 percent of the women studied had been threatened with weapons. If this assault and battery is happening on a hotel property and the victim brings a lawsuit, it is increasingly possible that insurers may deny claims or coverage.

The financial risks posed by commercial sexual exploitation are enormous—a case like this can bankrupt a small hotel management company. Hotel owners, managers, and brands are left wondering how to protect their assets.

A first step is to find training that will change hotel staff attitudes about prostitution. Our research at Businesses Ending Slavery and Trafficking shows that more than half of hotel staff who enter our human trafficking awareness training say that prior to training they believed most people freely choose to enter the sex trade. This mistaken belief that prostitution is a victimless crime between two consenting adults can cause hotel staff to overlook prostitution and fail to act. Shifting the attitudes about sexual exploitation will shift staff behaviors. Training for hotel staff needs to foster empathy for the people who are being exploited so that when a staff member encounters an individual, the staff member will be more likely to offer help.

A second step is to help hotel staff know what to look for and what to do if they identify a potential case of exploitation. Good training will address both sex trafficking and prostitution at hotels and will teach employees some of the warning signs to look for with guests and how to respond to suspicious activity. When hotels provide their employees with training, it allows the topic of sexual exploitation to be professionally discussed and addressed by hotel staff. When more employees feel encouraged to come forward and report potential sexual exploitation to authorities, hotels can make a much stronger case in court that the company was not negligent—that the hotel company interrupted the abuse and took steps to prevent further abuse from occurring at their property.

This court ruling and its resulting denial of insurance coverage should be setting off alarm bells across the hospitality industry that it’s time to implement comprehensive human trafficking awareness training programs for employees to help hotels address all forms of commercial sexual exploitation. This is an essential step that hotel owners and management groups can take to reduce their liability and protect their assets.

 

Mar Brettman

 

About the Author
Mar Brettmann, PhD, is the executive director and founder of the non-profit organization Businesses Ending Slavery and Trafficking (BEST). She has taught human trafficking awareness training for seven years and developed BEST’s online training for hotel employees. She is the author of the book Theories of Justice and has published numerous articles on human rights topics.


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