ADAAA Obligations Further Defined in Courts
Standing, interacting with others, and temporary vision loss due to a blood pressure spike may be considered “major life activities” and warrant accommodations under the Americans with Disabilities Act.
Federal Circuit Courts are increasingly expanding the definition of “protected disabled persons” since Congress passed the ADA Amendments Act in 2008, emphasizing that the definition of what constitutes a disability should be construed broadly to cover individuals to the maximum extent permitted by the terms of the ADA without requiring extensive analysis.
Employers may want to rethink their decisions to reject reasonable accommodations since they are finding themselves on the losing end of cases that previously might have been considered overreaching among their employees. A sampling of recent cases reveals how court decisions are trending.
Jacobs v. North Carolina Administrative Office of the Courts
Social anxiety disorder is defined as a condition that “interferes significantly with the person’s normal routine, occupational … functions, or social activities or relationships,” said the 4th U.S. Circuit Court of Appeals. The court reversed a District Court’s ruling in the case of a deputy clerk who was terminated after she requested not to work at the court’s service counter.
The employee had argued that interacting with the public exacerbated her anxiety symptoms. The case, Jacobs v. North Carolina Administrative Office of the Courts, is just one example of a federal court reversing a lower court’s decision in favor of the worker.
Cannon v. Jacobs Field Services North America, Inc.
A recent decision by the 5th U.S. Circuit Court of Appeals illustrates that federal courts continue to struggle with the definition of disability under the ADAAA. In Cannon v. Jacobs Field Services North America, Inc., the court reversed a District Court’s ruling, concluding that the lower court had “ignored Congress’s expansion of the definition of disability when it amended the ADA in 2008.”
A mechanical engineer who could not lift his right arm above shoulder level due to unsuccessful rotator cuff surgery was offered a job with a construction company as a field engineer. At his preemployment physical, he revealed his injury to the doctor, who cleared him for the position with accommodations — no driving company vehicles, no lifting, pushing, or pulling more than 10 pounds, and no working with his hands above shoulder level.
The construction company disagreed with the accommodations and rescinded the engineer’s job offer, concluding that he would “not be able to meet the project needs and required job duties,” which included “driving, climbing, lifting, and walking.” The engineer sued, claiming discrimination and failure to accommodate. The District Court granted summary judgment to the company, finding that the engineer’s rotator cuff injury was not a disability under the ADA because his “injured shoulder did not substantially impair his daily functioning.” The 5th Circuit found this conclusion “at odds with changes brought about by the ADA Amendments Act of 2008.” The court concluded that there was ample evidence that the engineer’s injury qualified as a disability, given that “lifting” is a major life activity and the engineer and his doctor both stated that he was unable to lift his arm above shoulder level and had considerable difficulty lifting, pushing, or pulling objects.
Mazzeo v. Color Resolutions International LLC
In Mazzeo v. Color Resolutions International LLC, a salesman had a herniated disk and torn ligaments in his back. The day after informing his employer that he was having back surgery, he was terminated. The salesman sued, alleging discrimination. The District Court held that he failed to show that he was disabled and granted summary judgment to his employer. On appeal, the 11th U.S. Circuit Court of Appeals said that in light of the ADAAA the salesman submitted sufficient evidence that he was disabled.
The salesman’s doctor stated that his back problems intermittently affected his ability to walk, sit, stand, bend, sleep, and lift objects weighing more than 10 pounds and that his pain would increase with prolonged sitting and standing. The 11th Circuit explained that major life activities now include sleeping, walking, standing, lifting and bending, and since the doctor stated that the salesman was substantially and permanently limited in these areas, “given the new standards and definitions put in place by the ADAAA, that evidence was enough for [the salesman] to present a prima facie case.”
Gogos v. AMS Mechanical Systems, Inc.
In Gogos v. AMS Mechanical Systems, Inc., a welder with vision and circulatory problems caused by high blood pressure was terminated when he left work due to a blood pressure spike that caused temporary vision loss in one eye. He sued, alleging discrimination.
The District Court dismissed the action, reasoning that his medical conditions were “transitory” and “suspect” and therefore did not qualify as disabilities under the ADA. In vacating the ruling, the 7th U.S. Circuit Court of Appeals held that the welder’s blood pressure spike and resultant vision loss were covered disabilities.
The court explained that “under the 2008 amendments, a person with an impairment that substantially limits a major life activity … is disabled even if the impairment is ‘transitory and minor.’” The court stated that the relevant inquiry was whether “despite their short duration,” the welder’s high blood pressure and vision loss substantially impaired a major life activity “when they occurred.” The welder alleged that his episode of very high blood pressure and intermittent blindness substantially impaired two major life activities: his circulatory function and eyesight. Accordingly, the 7th Circuit held that he had plausibly alleged a covered disability.
Keep Head Trauma in Mind- Part 2
This is part two of a two-part Risk Insider post by Allied World’s president of North America Casualty Joe Cellura on the dangers of scholastic athletic head injuries.
Part One can be seen here.
In last week’s post I detailed the breadth of the athletic head injury program and talked about how substantial legal settlements with the National Football League could become.
One question now before us is can municipalities be liable for student injuries that occur on the sports fields, or even those that arise years later when students’ time playing at their alma mater has become a blurred memory?
While team sports are a huge part of school cultures, the coverages in place today are unlikely to address this risk.
Municipalities and risk managers alike must ask, is being reactive the right strategy here? Is education and response enough or do we need to do more in terms of prevention?
Do waivers cover any responsibility in this regard? Contact sports, football especially, are deeply embedded in American culture, core to the identity like apple pie or Uncle Sam.
While team sports are a huge part of school cultures, the coverages in place today are unlikely to address this risk. As a result, municipalities could be on the hook. For such a critical topic, the insurance industry to date has taken very little proactive action to address very real concerns.
Insurers need to immediately start treating this emerging risk with focused underwriting, engineering and appropriate coverage terms. The exposure is upon us and remaining silent could ultimately become a recipe for expensive litigation and loss.
Underwriters should have exposure specific questionnaires targeted to sports related head injuries. An example could include questions regarding history of incidents, training, injury documentation and tracking.
Loss control and engineering services could be provided focusing on appropriate preventative measures and safeguards, which could include everything from appropriate liability waivers to on-site medical staffing, injury identification and treatment protocols.
Finally, exposure specific coverages will need to be developed. These coverage’s could address the date of, as well as the number of, occurrences, how to address pre-existing injury and defense obligations.
Long-term monitoring costs could also be considered along with policy conditions for notification and liability waiver warranties. The public entity sector has seen similar advances in underwriting, loss control and coverage in the wake of the increased incidence of sexual abuse cases.
It’s time for the industry to consider similar advances in the area of sports related head injury.
The growing trend of concussions at the municipality level, and the rise of attention given to research and settlements at a collegiate and professional level, presents insurance carriers and risk managers with an opportunity to address this issue head on – pun intended – and be more proactive in thinking about how to address the serious risks associated with contact sports at all levels.
As the number of concussions grows among student athletes, perhaps the number of conversations among insurers will grow as well. And that’s a good and necessary thing.
7 Questions to Answer before Choosing a Captive Insurance Domicile
Risk managers: Do your due diligence!
It seems as if every state in America, as well as many offshore locations, believes that they can pass captive legislation and declare, “We are open for business!”
In fact, nearly 40 states and dozens of offshore locations have enabling captive insurance legislation to do just that.
With so many choices how do you decide who is experienced enough to support the myriad of fiscal and regulatory requirements needed to ensure the long term success of your captive insurance company?
“There are certainly a lot of choices,” said Mike Meehan, a consultant with Milliman, an actuarial firm based out of Boston, Massachusetts, “but not all domiciles are created equal.”
Among the crowd, there are several long-standing domiciles that offer the legislative, regulatory and infrastructure support that makes captive ownership not only a successful risk management tool but also an efficient entity to manage and operate.
Selecting a domicile depends on many factors, but answering these seven questions will help focus your selection process on the domiciles that best fit your needs.
1. Is the domicile stable, proven and committed to the industry for the long term?
The more economic impact that the captive industry has on the domicile, the more likely it is that captives will receive ongoing regulatory and legislative support. The insurance industry moves very quickly and a domicile needs to be constantly adapting to stay up to date. How long has the domicile been operating and have they been consistent in their activity over the long term?
The number of active captive licenses, amount of gross premium written in a domicile and the tax revenue and fees collected can indicate how important the industry is to the jurisdiction’s bottom line. The strength of the infrastructure and the number of jobs created by the captive industry are also very relevant to a domicile’s commitment.
“It needs to be a win – win situation between the captives and the jurisdiction because if not, the domicile is often not committed for the long term,” said Dan Kusalia, Partner with Crowe Hortwath LLP focused on insurance company tax.
Vermont, for example, has been licensing captives since 1981 and had 589 active captives at the end of 2015, making it the largest domestic domicile and third largest in the world. Its captive insurance companies wrote over $25 billion in gross written premiums. The Vermont State Legislature actively supports an industry that creates significant tax revenue, jobs and tourist activity.
2. Are the domicile’s captives made up of your peer group?
The demographics of a domicile’s captive companies also indicate how well-suited the location may be for a business in a particular industry sector. Making sure that the jurisdiction has experience in the type and form of captive you are looking to establish is critical.
“Be among your peer group. Look around and ask, ‘Who else is like me?’” said Meehan. “Does the jurisdiction have experience licensing and regulating the lines of coverage for other businesses in your industry sector?”
3. Are the regulators experienced and consistent?
It takes captive-specific expertise and broad experience to be an effective regulator.
A domicile with a stable and long-term, top-tier regulator is able to create a regulatory environment that is consistent and predictable. Simply put, quality regulation and longevity matter a lot.
“If domicile regulators are inexperienced, turnaround time will be slower with more hurdles. More experience means it is much easier operating your business, especially as your captive grows over time,” said Kusalia.
For example, over the past 35 years, only three leaders have helmed Vermont’s captive regulatory team. Current Deputy Commissioner David Provost is one of the longest tenured chief regulators and is a 25-year veteran in the captive insurance industry. That experienced and consistent leadership enables the domicile to not only attract quality companies, but also to provide expert guidance on the formation process and keep the daily operations running smoothly.
4. Are there world-class support services available to help manage your captive?
The quality of advisors and managers available to assist you will have a large impact on the success of your captive as well as the ease of managing the ongoing operations.
“Most companies don’t have the expertise to operate an insurance company when you form a captive, so you need to help build them a team,” Jeffrey Kenneson, a Senior Vice President with R&Q Quest Management Services Limited.
Vermont boasts arguably the most stable and experienced captive infrastructure in the world. Many of the leading captive management companies have their headquarters for their Global, North America and U.S. operations based in Vermont. Experienced options for captive managers, accountants, auditors, actuaries, bankers, lawyers, and investment professionals are abundant in Vermont.
5. Can the domicile both efficiently license and provide on-going support to your captive as it grows to cover new lines of coverage and risks?
Licensing a new captive is just the beginning. Find out how long it takes for the application to get approved and how long it takes for an approval of a plan change of your captive’s operations.
A company’s risks will inevitably change over time. The captive will need to make plan changes which can include adding new lines of business. The speed with which your domicile’s regulatory branch reviews and approves these plan changes can make a critical difference in your captive’s growth and success.
The size of a captive division’s staff plays a big role in its speed and efficiency. Complex feasibility studies and actuarial analyses required for an application can take a lot of expertise and resources. A larger regulatory team will handle those examinations more efficiently. A 35-person staff like Vermont’s, for example, typically licenses a completed application within 30 days and reviews plan changes in a matter of days.
6. What are the real costs to establishing and managing your captive?
It is important to factor in travel costs, the local costs of service providers, operating fees, and examination fees. Some states that do not impose a premium tax make up for it in high exam fees, which captives must be prepared for. Though Vermont does charge a premium tax, its examination fees are considered some of the least expensive options in the marketplace.
It is also important to consider the ease and professionalism of doing business with a domicile in the ongoing operations of your captive insurance company.
“The cost of doing business in a domicile goes far beyond simply the fixed cost required. If you can’t efficiently operate due to slow turn-around time or added obstacles, chances are you have made the wrong choice,” said Kenneson.
7. What is the domicile’s reputation?
Make sure to ask around and see what industry experts with experience in multiple domiciles have to say about the jurisdiction. Make sure the domicile isn’t known for only licensing certain types of captives that don’t fit your profile. Will it matter to your board of directors if your local newspaper decides to print a story announcing your new insurance subsidiary licensed in some far away location?
Are companies leaving the jurisdiction in high numbers and if so, why? Is the domicile actively licensing redomestications — when an existing captive moves from one domicile to another? This type of movement can often be a positive indicator to trends in a domicile. If companies of a particular size or sector are consistently moving to one state, it may indicate that the domicile has expertise particularly suited to that sector.
Redomestications made up 11 of the 33 new captives in Vermont in 2015. This trend is a positive one as it speaks to the strength of Vermont. It reinforces why Vermont is known throughout the world as the ‘Gold Standard’ of domiciles.
Asking the right questions and choosing a domicile that meets your needs both today and for the long term is vital to your overall success. As a risk manager you do not want surprises or headaches because you did not ask the right questions. Do the due diligence today so that you can ensure your peace of mind by choosing the right domicile to meet your needs.
For more information about the State of Vermont’s Captive Insurance, visit their website: VermontCaptive.com.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with the State of Vermont. The editorial staff of Risk & Insurance had no role in its preparation.