Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

The Opioid Epidemic

More Comp Claimants Turning to Heroin

Efforts to limit opioid addiction are leading to heroin abuse.
By: | July 30, 2015 • 5 min read
Drug syringe, cooked heroin on spoon and money

An increasing number of workers’ comp patients who are addicted to opioid painkillers are now turning to heroin.

Experts talk about the growing problem, and how it could lead to more lawsuits against employers and others within the workers’ comp system. They also discuss how to spot red flags of possible heroin abuse, and ways to minimize use among workers’ comp patients — starting with more responsible painkiller prescribing to reduce opioid painkiller addiction, “the strongest risk factor for heroin addiction,” according to the Centers for Disease Control.

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Indeed, 45 percent of people who used heroin were also addicted to prescription opioid painkillers, the CDC contends. Between 2002 and 2013, the rate of heroin-related overdose deaths nearly quadrupled, and more than 8,200 people died in 2013.

Switching to heroin could “absolutely” lead to lawsuits, said Joseph Paduda, principal of Health Strategy Associates in Syracuse, N.Y. and president at the PBM consortium, CompPharma LLC.

“If an injured worker is on opioids and the workers’ comp payer cuts them off, then they might switch to heroin,” Paduda said. “Potentially the payer could find out and not cover their claim anymore, which could trigger a lawsuit for getting them addicted in the first place. I have no idea if it’s a viable case, but attorneys in many states can be quite creative.”

While utilization of opioids has dropped considerably in states like Texas that have made it more difficult for workers’ comp patients to get opioids, there is concern that some patients who had their opioid prescriptions cancelled are now resorting to heroin, he said. Other states like Ohio are now adopting a much more rigorous approval process for the initial use of opioids, with an even greater focus on patients prescribed long-acting opioids and renewals of prescriptions for longer than a few weeks.

“Ohio is doing something fundamentally different,” Paduda said. “The state is carefully planning its approach to addressing long-term opioid patients with an eye towards ensuring addiction treatment is available if and when workers’ comp patients need it.”

“Potentially the payer could find out and not cover their claim anymore, which could trigger a lawsuit for getting them addicted in the first place. … attorneys in many states can be quite creative.” — Joseph Paduda, principal, Health Strategy Associates; president, CompPharma

Andrew Kolodny, chief medical officer at New York City-based Phoenix House substance abuse treatment centers, said that people who become addicted to opioids and are having trouble maintaining a supply of painkillers are likely to switch to heroin if they live in an area where it is available. However, even though they may switch to heroin, prescription opioids are usually preferred because the medications are pure and the people are less likely to be arrested than if they were buying heroin from a drug dealer.

“Heroin use increased because the number of people who developed opioid addiction from exposure to prescription opioids increased sharply over the past 20 years,” Kolodny said. “The medical community needs to prescribe more cautiously so that we stop creating new cases of addiction.”

Mark Pew, senior vice president at Prium in Duluth, Ga., said that as it becomes more difficult for workers’ comp patients to secure opioids if they are misusing or abusing them, many of those patients switch to heroin because it’s less expensive and easier to obtain on the street than prescription drugs.

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“There is great concern, and rightfully so, that lawsuits on parties within the workers’ comp system could be forthcoming from patients claiming it was the doctor’s fault they became addicted to opioids and then heroin,” Pew said. “The liability costs associated with lawsuits and death benefits could be even greater with the addition of heroin because of its even higher possibility of abuse and misuse.”

Brigette Nelson, senior vice president, Workers’ Compensation Clinical Management Express Scripts in Cave Creek, Az. said that it’s really important to flag problematic claims, when workers “may be going off the rails before they start using heroin.”

“Physicians can monitor for medication abuse, as well as heroin use, with urine drug testing,” Nelson said. “Physicians can also check for needle tracks.”

“The medical community needs to prescribe more cautiously so that we stop creating new cases of addiction.” — Andrew Kolodny, chief medical officer, Phoenix House

Workers’ comp specialists can also check if the use of multiple medications is overly high, which can also lead to use of illicit drugs, she said. Express Scripts’ Morphine Equivalent Dose (MED) management program can help them with this, she said. The potency of various opioids can be equated to one another and to morphine. If someone is taking a strong opioid or multiple prescriptions, the values can be added to determine if the person is over a particular trigger limit.

The MED value can be calculated at the point of sale for a particular prescription, and other prescriptions coming from other pharmacies can be added, to determine if all of the prescriptions are over the recommended guidelines.

“We can flag these claims, and then the workers’ comp adjuster would need to authorize the prescription fill is it is appropriate for the patient,” Nelson said. “We also reach out to physicians to let them know the patient has exceeded the MED limit. This is also good in that it gives physicians a prescription history, as sometimes they may not know about prescriptions from different physicians.”

It’s really important that payers proactively manage opioid utilization and review concurrent therapy to ensure safe use, she said.

“The key is early intervention before it comes a problem,” Nelson said. “That’s where we come in as the PBM. Our programs can help prevent abuse or misuse of opioids, which in turn can prevent the potential for downstream addictions to illicit drugs like heroin.”

The most important thing is to prevent patients who do not have severe conditions from receiving opioids — “period,” said Gary M. Franklin, research professor in the Department of Environmental and Occupational Health Sciences at the University of Washington.

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“There is no evidence supporting the use of opioids for non-specific musculoskeletal conditions, headaches or fibromyalgia,” Franklin said. “If a prescription is needed, generally it should not go beyond 30 days. If a patient takes opoids for four to six weeks and then tries to withdraw,  they will experience physical withdrawal because they are already very likely dependent,  and that is the first step towards addiction.”

The CDC also recommends that health care providers use prescription drug monitoring programs and ask patients about past or current drug and alcohol use prior to considering opioid treatment; prescribe the lowest effective dose and only the quantity needed for each patient; link patients with substance use disorders to effective substance abuse treatment services; and support the use of FDA-approved MAT options (methadone, buprenorphine, and naltrexone) in patients addicted to prescription opioid painkillers or heroin.

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]
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Cyber Insurance

Brokers: More Interest in Cyber Cover

The expenses related to a breach as well as the increasing number of cyber targets are troubling companies in all industries.
By: | July 8, 2015 • 4 min read
Hacker

Demand for cyber security insurance ranks No. 1, slightly topping that for supply chain disruption coverage. That’s according to a survey of 135 insurance professionals by RKH Specialty, a London-based specialty lines broker, now a unit of Hyperion Insurance Group.

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Cyber coverage was the most sought-after insurance at 70 percent, followed by supply chain disruption at 61 percent, and flood at 30 percent. Other coverages in demand were product recall and drones (both 11 percent), tornadoes at 9 percent, and e-cigarettes, autonomous vehicles and telematics, all at 8 percent.

Many brokers are seeing that concern put into action, with increased purchases of cyber coverage.

“Many of these companies are particularly concerned about business interruption and dependent business interruption from cyber attacks.” — Adam Cottini, managing director, cyber liability practice, Arthur J. Gallagher Risk Management Services

Adam Cottini, managing director, cyber liability practice, at Arthur J. Gallagher Risk Management Services Inc. in New York, said his firm has seen “a really nice pickup” of cyber coverage — exceeding 50 percent year-over-year.

“Some of that growth has been achievable by streamlining our processes for clients under $100 million in sales, but a portion is also due to more business from the middle market — and not just health care, financial institutions and public entities, but a wider array of industries, including manufacturing,” Cottini said.

“Many of these companies are particularly concerned about business interruption and dependent business interruption from cyber attacks.”

David Rees, an RKH divisional director specializing in cyber, agreed that cyber policies were attracting companies across various industries as executives realize that cyber attackers do not always target theft of consumer data, but also aim to disrupt operations or supply chains.

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He said some cyber policies now cover such exposures.

“For example, a cyber attack on an energy company with an oil pipeline could cause a valve to be shut or an explosion that causes a leak,” he said.

“Policies now cover business disruption in those situations as well as any resulting environmental impact.”

Alternatively, companies can negotiate with insurers of business interruption policies to remove any exclusion for cyber attacks, though it can be a “tug of war” to accomplish that, Rees said.

Marsh is another firm that has seen the take-up of cyber insurance across all industries over the past three years.

 Robert Parisi, managing director and cyber product leader, Marsh

Robert Parisi, managing director and cyber product leader, Marsh

At this point, the firm is seeing manufacturers, and power and utility companies buying almost at the same rate as retailers, higher education and health care companies, said Robert Parisi, a managing director and cyber product leader for Marsh in New York.

“They are looking to cover losses when a cyber attack or technology glitch disrupts their manufacturing assembly lines or supply chains,” Parisi said. “This is almost now at the same level of concern as stealing personal information is to retailers, higher ed and health care firms.”

The pickup in cyber insurance purchasing via Aon has increased from less than 10 percent in 2014 to more than 30 percent through the first half of 2015, said Kevin Kalinich, global practice leader, cyber risk, at Aon in Chicago.

He said the bulk of the interest has been from larger companies in pharmaceutical, manufacturing, energy and food production.

But not all companies truly understand the threat, Kalinich said, pointing to survey results of 2,243 executives in 37 countries released in April in a “2015 Global Cyber Impact Report,” sponsored by Aon Risk Services and conducted by Ponemon Institute LLC.

While 72 percent of those respondents consider cyber risk as a top 10 business risk, 54 percent of respondents did not plan to purchase cyber insurance.

The main reasons for not purchasing coverage is that it is inadequate for their exposure (31 percent of respondents), premiums were too expensive (29 percent), property and casualty policies were sufficient (26 percent) or there were too many exclusions, restrictions and uninsurable risks (26 percent).

Rees said the interest in cyber policies has been heightened by news reports of breaches. It has made companies increasingly aware of how expensive it can be to fix such problems, including notifying potential victims of the breach and hiring forensic firms and privacy attorneys, among others.

For example, a privacy attorney can charge from $700 to $900 an hour, but with a cyber policy, companies can get preferential rates and pay from $400 or $500 per hour for that same attorney, he said.

Marsh’s Parisi has been working in the cyber sector for almost 20 years and has seen hacks from industrial espionage and state-sponsored terrorism to simple vandalism. However, particularly troubling these days is the increased sophistication, size and scope of denial-of-service attacks.

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“The past year has seen dramatic growth in high-volume denial-of-service attacks, with the largest attacks using multiple techniques concurrently — and it’s definitely not coming from some kid in a basement,” Parisi said.

“Whether it’s ‘I don’t like your company’ [or] ‘I don’t like your country,’ something is going on to cause these attacks to become stronger year after year.”

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]
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Coverage Lessons Learned

Katrina Revisited

Brokers urge policyholders to understand their policies and avoid the harsh surprises insureds faced in the aftermath of Hurricane Katrina.
By: | July 1, 2015 • 4 min read
katrina photo 700

Suffering losses from 2005’s Hurricane Katrina was bad enough for many businesses and individuals, but to make matters worse for many, certain losses were not covered by their insurance policies.

So said several Marsh experts during a June 17 webinar entitled, “Lessons from Hurricane Katrina, Looking Back, Planning Ahead,” which outlined ways in which Hurricane Katrina, which devastated New Orleans almost 10 year ago, impacted insurance underwriting, business interruption and claims handling.

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The first lesson learned: businesses should thoroughly read their commercial property policies before they purchase them, said Duncan Ellis, leader of Marsh’s U.S. property practice. However, far too many find out the hard way what’s in their policies — or not in them —  after sustaining major losses from catastrophes and other events.

“That’s the wrong time to find out that you are not covered for something, or that certain conditions do not apply,” Ellis said.

“After Katrina, many of our clients were sorely surprised to learn that despite having windstorm coverage, they weren’t covered for storm surge. Understanding what you are buying really can pay off.”

Ellis and Paul McVey, leader of Marsh Risk Consulting’s property claims consulting practice, outlined a number of “tripwires” in property policies that occurred after Katrina, for business owners to now be mindful of in case of future events.

The goal when dealing with major catastrophes is for insurers and policyholders to work as allies, McVey said. As part of a policyholder’s loss management plan, they should meet with their carrier and agree upon communication protocols and upon each party’s roles and responsibilities after an event. They should determine the appropriate carrier representative with the authority to make decisions on claims.

“After Katrina, many of our clients were sorely surprised to learn that despite having windstorm coverage, they weren’t covered for storm surge. Understanding what you are buying really can pay off.” — Duncan Ellis, U.S. property practice leader, Marsh

“What we see after Katrina, when decisions had to be made as to reinstatement, replacement, mitigation, there weren’t a lot of people involved at [carriers’] mid-management level to make those decisions,” he said. “That put the process on hold to a degree, and some of the things became confrontational. Insureds should make the effort to establish a relationship with an empowered senior claims representative.”

Other policy tripwires that caught businesses by surprise in Katrina that all businesses should now be aware of include:

  • Determining the exact definition of special high-hazard flood zones, such as a 100-year flood plain, and how damage within those zones can impact sublimits. Typically within policy sublimits are further internal sublimits for these special zones. For example, if a business has a $200 million sublimit for flood, it is probable that there is a further internal sublimit of $50 million for high-hazard flood.
  • Understanding policy definitions that determine whether an event was a named windstorm or a flood, which can impact whether the policy excludes surges from wind-driven water.
  • Determining how coverage is typically triggered by civil or military authority and ingress/egress. There have been disputes about whether Katrina claims regarding ingress/egress issues should be paid after politicians told people to stay away from New Orleans, as carriers have argued that those politicians were actually not acting with civil or military authority.
  • Determining how “wide area impact” or “idle period” impacts claims.
  • Determining whether contingent business interruption coverage extends not only to suppliers or customers, but also to suppliers of suppliers and customers of customers.
  • Determining the scope, time limits and corresponding disappearing deductibles within contingent business interruption coverage due to local utility companies’ service interruptions.
  • Determining whether deductibles apply by occurrence and/or by location, and whether there are separate deductibles for property damage and “time element.”
  • Determining whether costs, such as overtime for contractors rebuilding properties, fall under sublimits or “expediting expenses.”
  • Determining what is — and is not — covered under business interruption, and how claim costs may be calculated.
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“The property damage piece is very easy to figure out, but business interruption is probably the most misunderstood coverage and probably the most difficult in settling claims,” Ellis said.

“It’s not replacing revenues — it’s replacing profits lost and continuing expenses that the property generates when it’s not operational. For example, a continuing expense could be taxes and non-continuous expenses could be heat, light and power.”

Also often misunderstood is the indemnity period for contingent business interruption claims, McVey said. The timeframe is typically defined as the time to replace, reinstate or repair the property, but businesses should be aware that many variables could impact payment of claims. That’s why it’s so important to discuss these issues ahead of time with their broker or claims representative — particularly before renewal.

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]
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