Insurance Implications of Ebola
Dealing with an Ebola patient at your health care facility presents many risks. There are a few that stand out like employee safety, safety to the general public and patient population, environmental exposures, and even risk to your company’s directors and officers.
All of these could be tied together with one Ebola case, especially if the case isn’t properly handled.
First and foremost, update all your policies and procedures relating to infectious diseases. Stay current with the Centers for Disease Control and their requirements. Appoint a response team.
Train all those in your facilities to spot a potential Ebola patient and the proper procedures for isolation, treatment, and transfer. It’s likely your emergency department will be the front line and most exposed.
A general liability policy insures against third-party liabilities. In this case, third parties could claim they were infected at your facility and you failed to provide a safe environment in which to conduct regular business.
Your policy should have a duty to defend, however. I would suggest reviewing your coverage, paying close attention to wording associated with expected bodily injury and other policy exclusions.
Workers’ Comp Implications
Employee safety in treating infectious diseases is paramount to delivering effective care to patients. Have your employees practice taking on and off all appropriate protective gear.
In the event a health care worker contracts the virus, workers’ compensation would likely provide coverage. Review your policy and tie it to any umbrella or excess liability coverage. This is crucial because your work comp policy most likely has a disease limit, per claims and disease per policy limit.
An infected employee may also elect to file suit against an employer alleging negligence. If you have workers that work or volunteer outside the U.S. then you may want to look into foreign voluntary workers’ compensation and couple it with an accident and disability policy.
The hospital that treated the first casualty in the United States, Thomas Eric Duncan, and also had two nurses contract the virus is currently dealing with reputational loss and lost revenues.
The first place to look is your facility’s business interruption coverage. Be cautious, as coverage is typically triggered only when there is direct physical damage. Even more so, most contain a communicable disease exclusion or a severely sub-limited amount of coverage and require a governmental agency requiring limited or no access.
Allegations of Negligence
A directors’ and officers’ policy provides defense and protection for allegations of executive mismanagement. These claims can arise from a variety of sources: the state attorney general, financial donors, even employees.
Allegations could include failure to follow CDC protocol, not properly safeguarding the institution’s assets, or lack of proper training. A situation handled incorrectly could cause negative publicity thus leading to declining revenues and admissions as well as a loss of reputation.
In summary, updated procedures and training is crucial to avoiding the pitfalls of such high profile infectious disease situations. Check with your broker to ensure what, if any, coverage is available under your current program and what triggers the coverage.
Lightening the Burden of Proof
The Occupational Safety and Health Administration is working to ease the burden of proof for whistleblowers, according to Assistant Secretary of Labor for Occupational Safety and Health David Michaels.
“The memo will change the burden of proof to be based on a ‘reasonable cause’ that a violation occurred, which is a lesser burden to prove than a ‘preponderance of the evidence,’ ” Michaels said. “OSHA and the office of the Solicitor of Labor are working on this policy memo, and it should be completed shortly.”
From 2009 through June 30, 2014, OSHA issued 3,726 merit determinations on whistleblower cases, recovering more than $119 million in damages for the complainants, and reinstating 389 whistleblowers to their positions.
“In 2013, we more than doubled the number of merit determinations we issued in 2009, from 450 in fiscal year 2009 to 934 in fiscal year 2013,” Michaels said.
“These 934 merit determinations included 74 merit findings, 860 settlement agreements and awards of [more than] $25 million in total damages to whistleblower complainants, an 89 percent increase from the $13.25 million in damages awarded in fiscal year 2009.”
While the memo has yet to be published, an OSHA spokesperson said the change will not involve lowering the burden of proof.
“The agency is clarifying its policy on determining if a violation of a whistleblower-protection statute has occurred,” said the spokesperson, who added that the “reasonable cause” standard is found in many of OSHA’s whistleblower statues.
Others, however, believe the proposed change could lead to serious consequences for both employers and employees.
“I would brace for the worst. The agency is clearly going to lower the bar for claimants to establish a successful claim. The question is how low they will go.” – John F. Martin, shareholder, Ogletree Deakins
Gregory C. Keating, a Boston-based shareholder at Littler Mendelson, said Michaels and OSHA “believe that Sections 11(c) of the Occupational Safety and Health Act, which prohibits retaliation for complaining about safety problems, is outdated and needs sharper teeth. Lowering the burden of proof makes it easier for OSHA to establish liability for alleged retaliation.”
He is a member of OSHA’s Whistleblower Protection Advisory Committee (WPAC), which makes recommendations to the Secretary of Labor on ways to improve the fairness and effectiveness of whistleblower protections.
John F. Martin, a Washington-based shareholder at Ogletree Deakins, said Michaels “subjectively believes that the vast majority of whistleblower claims have merit, notwithstanding the fact that OSHA’s own internal investigators dismiss most whistleblower claims.”
“Out of 1,947 cases last fiscal year,” he said, “OSHA only reached a ‘merits’ finding 47 times. Even if you take out the settlements and withdrawals, that still means OSHA finds merit in only about 5 percent of the remaining claims.”
Martin said he thinks “Michaels is mystified by these statistics, and he blames the ‘preponderance of the evidence’ burden of proof itself as too high a hurdle,” adding that Michaels’ “attack” on the agency’s current burden of proof is “misguided.”
“The ‘preponderance of the evidence’ standard is a long-standing, well-established burden of proof,” he said. “It practically means ‘more likely than not,’ and it is recognized as fair and used in the vast majority of civil actions in the United States.
“Imagine the Attorney General complaining that the Department of Justice is not securing enough criminal convictions,” he said, “and wanting to lower the burden of proof from ‘beyond a reasonable doubt’ to something easier.”
But, according to OSHA, the proposed change is not a new policy: “It is a clarification of an existing policy. There should be no significant impact on employers.”
Litigation Will Increase
Keating and Martin both disagree.
“This could conceivably open the floodgates to much more litigation,” said Keating. “Justice Kennedy himself noted this when considering this exact issue in the recent Nassar decision, which rejected a lower burden of proof to establish retaliation under the discrimination statutes. Retaliation claims have seen a rocketing rise, and are now the No. 1 employment claim in the United States.
“Lowering the burden of proof will lead to more claims and will require much more scrutiny … ,” he said.
Martin said the potential impact to employers “will depend on how OSHA defines ‘reasonable cause.’ ”
“However,” he said, “I would brace for the worst. The agency is clearly going to lower the bar for claimants to establish a successful claim. The question is how low they will go.
“In the short term, it will impact employers’ evaluations on whether to litigate or settle whistleblower claims. If claimants see that the bar is lower, the number of claims filed could dramatically increase.”
On the other hand, Martin said, the change may encourage employers to appeal more whistleblower claims against them.
“OSHA cannot change the burden of proof that courts must apply under each statute with whistleblower provisions,” he said. “So, while Michaels’ proposal may lead to more merits findings at the administrative investigation stage, OSHA may find itself in trouble if and when the cases reach the courts.”
The proposed change, said Keating, means that organizations “must understand the critical roles they play in managing litigation risk for retaliation claims. They must foster awareness through training and communication with front-line managers regarding what is protected activity.”
Officials must also coordinate and communicate with managers “whenever a decision is looming that could reasonably be considered an adverse action,” he said, “and they must insist that front-line managers practice fundamentals such as documentation and communication to properly manage performance.”
The result may be increased frustration. A company may know that a claim is not credible and that the purported whistleblower has an ulterior motive, Martin said.
“Yet, under [a] lower burden of proof, OSHA gives the claimant the benefit of the doubt and makes a merit finding and damage award. How frustrating is that?”
Six Best Practices For Effective WC Management
It’s no secret that the professionals responsible for managing workers compensation programs need to be constantly vigilant.
Rising health care costs, complex state regulation, opioid-based prescription drug use and other scary trends tend to keep workers comp managers awake at night.
“Risk managers can never be comfortable because it’s the nature of the beast,” said Debbie Michel, president of Helmsman Management Services LLC, a third-party claims administrator (and a subsidiary of Liberty Mutual Insurance). “To manage comp requires a laser-like, constant focus on following best practices across the continuum.”
Michel pointed to two notable industry trends — rises in loss severity and overall medical spending — that will combine to drive comp costs higher. For example, loss severity is predicted to increase in 2014-2015, mainly due to those rising medical costs.
Debbie discusses the top workers’ comp challenge facing buyers and brokers.
The nation’s annual medical spending, for its part, is expected to grow 6.1 percent in 2014 and 6.2 percent on average from 2015 through 2022, according to the Federal Government’s Centers for Medicare and Medicaid Services. This increase is expected to be driven partially by increased medical services demand among the nation’s aging population – many of whom are baby boomers who have remained in the workplace longer.
Other emerging trends also can have a potential negative impact on comp costs. For example, the recent classification of obesity as a disease (and the corresponding rise of obesity in the U.S.) may increase both workers comp claim frequency and severity.
“The true goal here is to think about injured employees. Everyone needs to focus on helping them get well, back to work and functioning at their best. At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep.”
– Debbie Michel, President, Helmsman Management Services LLC (a subsidiary of Liberty Mutual)
“These are just some factors affecting the workers compensation loss dollar,” she added. “Risk managers, working with their TPAs and carriers, must focus on constant improvement. The good news is there are proven best practices to make it happen.”
Michel outlined some of those best practices risk managers can take to ensure they get the most value from their workers comp spending and help their employees receive the best possible medical outcomes:
1. Workplace Partnering
Risk managers should look to partner with workplace wellness/health programs. While typically managed by different departments, there is an obvious need for risk management and health and wellness programs to be aligned in understanding workforce demographics, health patterns and other claim red flags. These are the factors that often drive claims or impede recovery.
“A workforce might have a higher percentage of smokers or diabetics than the norm, something you can learn from health and wellness programs. Comp managers can collaborate with health and wellness programs to help mitigate the potential impact,” Michel said, adding that there needs to be a direct line between the workers compensation goals and overall employee health and wellness goals.
Debbie discusses the second biggest challenge facing buyers and brokers.
2. Financing Alternatives
Risk managers must constantly re-evaluate how they finance workers compensation insurance programs. For example, there could be an opportunity to reduce costs by moving to higher retention or deductible levels, or creating a captive. Taking on a larger financial, more direct stake in a workers comp program can drive positive changes in safety and related areas.
“We saw this trend grow in 2012-2013 during comp rate increases,” Michel said. “When you have something to lose, you naturally are more focused on safety and other pre-loss issues.”
3. TPA Training, Tenure and Resources
Businesses need to look for a tailored relationship with their TPA or carrier, where they work together to identify and build positive, strategic workers compensation programs. Also, they must exercise due diligence when choosing a TPA by taking a hard look at its training, experience and tools, which ultimately drive program performance.
For instance, Michel said, does the TPA hold regular monthly or quarterly meetings with clients and brokers to gauge progress or address issues? Or, does the TPA help create specific initiatives in a quest to take the workers compensation program to a higher level?
4. Analytics to Drive Positive Outcomes, Lower Loss Costs
Michel explained that best practices for an effective comp claims management process involve taking advantage of today’s powerful analytics tools, especially sophisticated predictive modeling. When woven into an overall claims management strategy, analytics can pinpoint where to focus resources on a high-cost claim, or they can capture the best data to be used for future safety and accident prevention efforts.
“Big data and advanced analytics drive a better understanding of the claims process to bring down the total cost of risk,” Michel added.
5. Provider Network Reach, Collaboration
Risk managers must pay close attention to provider networks and specifically work with outcome-based networks – in those states that allow employers to direct the care of injured workers. Such providers understand workers compensation and how to achieve optimal outcomes.
Risk managers should also understand if and how the TPA interacts with treating physicians. For example, Helmsman offers a peer-to-peer process with its 10 regional medical directors (one in each claims office). While the medical directors work closely with claims case professionals, they also interact directly, “peer-to-peer,” with treatment providers to create effective care paths or considerations.
“We have seen a lot of value here for our clients,” Michel said. “It’s a true differentiator.”
6. Strategic Outlook
Most of all, Michel said, it’s important for risk managers, brokers and TPAs to think strategically – from pre-loss and prevention to a claims process that delivers the best possible outcome for injured workers.
Debbie explains the value of working with Helmsman Management Services.
Helmsman, which provides claims management, managed care and risk control solutions for businesses with 50 employees or more, offers clients what it calls the Account Management Stewardship Program. The program coordinates the “right” resources within an organization and brings together all critical players – risk manager, safety and claims professionals, broker, account manager, etc. The program also frequently utilizes subject matter experts (pharma, networks, nurses, etc.) to help increase knowledge levels for risk and safety managers.
“The true goal here is to think about injured employees,” Michel said. “Everyone needs to focus on helping them get well, back to work and functioning at their best.
“At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep,” she said.
To learn more about how a third-party administrator like Helmsman Management Services LLC (a subsidiary of Liberty Mutual) can help manage your workers compensation costs, contact your broker.
Debbie discusses how Helmsman drives outcomes for risk managers.
Debbie explains how to manage medical outcomes.
Debbie discusses considerations when selecting a TPA.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Helmsman Management Services. The editorial staff of Risk & Insurance had no role in its preparation.