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Adjuster X

Citizen Kane

By: | March 3, 2014 • 3 min read
This column is based on the experiences of a group of long-time claims adjusters. The situations they describe are real, but the names and key details are kept confidential. Michelle Kerr is the editor of this column and can be reached at

Cynthia Kane, 58, allegedly suffered shortness of breath due to breathing in petroleum fumes over a prolonged period. Kane had already “lawyered up,” so a statement was out of the question. Her file during her 15 years with Union Manufacturing raised no suspicions. Kane was a nonsmoker, and she had never complained to the company nurse about pulmonary problems.

I arranged to tour Kane’s work location. It was separated from the machine shop, where the actual manufacturing took place, by a floor-to-ceiling wall with glass windows. The assembly area was not particularly dirty, and I verified that the HVAC system was up to specifications and maintained twice annually.


Kane didn’t appear to be in any distress as she did her job.

Kane’s shift ended at 5 p.m., so I returned to the plant at 4:45 that afternoon and waited in the parking lot. I followed her as she made her way home in a fairly new two-door sports car. She stopped at a dry cleaner on the way. I parked and waited nearby for 10 minutes. When she didn’t come out, I decided to
go in.

This was a large operation with the cleaning machines in the back room. There were huge fans throughout the store, but even so there was an unmistakable kerosene-like smell from the solvents used in the dry cleaning process.

At the counter, I asked the clerk about dry-cleaning bedspreads while I strained to see into the back of the store. It was evident Kane was working.

I scratched my head. Why didn’t her attorneys name the shop as a co-defendant on the claims petition? It had far greater pulmonary exposure to airborne contaminants than Union Manufacturing.

The next day, I went back to the dry cleaner and asked to speak with Kane. The flustered counter person said they had no employee by that name. I went back to the dry cleaners three more times during the next two weeks, and each time, I saw Kane’s car there.

I arranged to have a disability evaluation by a pulmonologist, who confirmed that Kane had a mild pulmonary disability (5 percent PPD rating). After reading my report, the doctor concluded the condition was not due to her work at Union Manufacturing. Kane’s attorney had a disability report rating Kane at 25 percent PPD.

I couldn’t fault Kane for wanting a part-time job to help pay for living expenses (and her sports car), but she left me no choice but to deny the claim against Union.

I called her counsel and explained that we’d have to go to trial. He was incredulous, until I explained my findings.


“Your client didn’t tell you about her ‘under the table’ deal at Salerno’s Dry Cleaning, did she?” I asked him. “I personally observed her working there on three different occasions, and noted the smell of the dry cleaning solvent was very strong.

“I am willing to bet that exposure is the proximate cause of any pulmonary disability she has, rather than from a clean and temperature-controlled environment at Union Manufacturing Co. My examining physician agrees.”

The attorney reluctantly agreed to withdraw the petition. Kane continued to work at Union, and whether she kept her night job at the dry cleaner wasn’t my concern. A good investigation paid off and the claim against Union Manufacturing hit a snag.

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Vendor Relationships

Southwest Emphasizes Teamwork in Workers’ Comp Services

To discover and mitigate adverse claims trends, Southwest Airline’s workers’ comp program manager fosters cooperation.
By: | July 31, 2014 • 4 min read
Patti Colwell - Southwest (2)

Subject matter expertise alone is not enough when workers’ compensation service providers want Southwest Airlines’ business.

They also need to set aside any inclination to compete with other workers’ comp companies that also provide services to the airline — even when their product offerings overlap.

And they need to adopt Southwest’s customer service culture that follows from The Golden Rule’s mandate to treat others as one wishes to be treated.

“We work really hard to foster our Southwest Airlines corporate culture and spirit into the vendors that we work with because we want our claims team, and the nurses that we have in our [workers’ comp] program, and all the [other service providers] involved, to feel like they are an extension of Southwest Airlines,” said Patti Colwell, Southwest’s workers’ comp program manager responsible for on-the-job injury care of the company’s 45,000 employees.

“At Southwest we live by The Golden Rule,” she continued. “We expect our employees to treat our paying passengers with kindness and respect so why would we expect our vendor partners to treat our employees with any less kindness and respect?”

Like many other employers, the service providers Southwest partners with include third-party administrators, managed-care companies, pharmacy-benefit managers, and attorneys.

In addition to workers’ comp expertise, Colwell looks for service providers capable of working as a team with other companies servicing her program.

There can be a tendency to compete, for example, when a TPA and a managed-care company both offer managed-care services, but under an “unbundled” arrangement, the TPA provides claims-adjusting services while the other company provides the managed-care products.

“We make it very clear they are not competing with each other for our program and we expect our data and information to be shared completely among the parties because that is the only way we will know what is going on and can come to solutions,” Colwell said.

“We also look for partners willing to be accountable for results and we do that with performance guarantees.”

“We expect our employees to treat our paying passengers with kindness and respect so why would we expect our vendor partners to treat our employees with any less kindness and respect?”

After seven years, though, Southwest recently discontinued its unbundled approach, or separating managed care and bill review services from their TPA’s services. Those services are now bundled together and provided by Sedgwick Claims Management Services Inc., Colwell said.

Even when an employer obtains a bundled product from a single source, however, there may be competing interests among a single provider’s own managers who oversee different services, she added.

“Oftentimes, which has been my experience in the past, we found even within the same company they may have competing objectives, so we still foster this team approach even when they are internal to the same organization to make sure we all have the same goals,” Colwell said.

To do that, Southwest brings together a program manager from her TPA’s claims-administration side and a program manager from the managed-care side, for both quarterly partnership meetings and monthly claims-review meetings. Other service providers also join the meetings, such as pharmacy-benefit-manager representatives

In addition to reviewing specific case files, the claims-review meetings improve communications between all the service providers and Southwest, and they provide an opportunity to spot trends needing corrective action.

“We try to find solutions to wrap claims up, but we also try to find trends that we need to address because our whole goal is to get our employees early diagnostics, get them the treatment they need, and to get them back to good health as soon as possible,” Colwell said.

One adverse trend revealed in such a meeting, for example, involved second shoulder surgeries performed on employees treated by a specific doctor.

“We had all the players at the claims review and we kept hearing the same thing over and over about second shoulder surgeries,” Colwell said. “The same doctor’s name kept coming up and it was obvious there was an issue.”

Further analysis revealed the doctor referred patients to a particular physical therapist who frequently prescribed home physical therapy after just a couple of office visits. But post-shoulder surgery therapy can be painful and injured workers were not following through with their prescribed routine.

Consequently, they suffered frozen shoulder issues requiring the second operation, Colwell said.

That occurred in a state that allowed the airline to direct injured employees to medical providers known to produce better medical and return-to-work outcomes.

Spotting and correcting the trend resulted from the relationships built through the meetings, Colwell said.

“You have to have the relationships in place to be able to act quickly and mitigate circumstances,” Colwell said.

Patti Colwell will speak on Nov. 20 at the National Workers’ Compensation and Disability Conference® & Expo in Las Vegas. She will be joined by Tron Emptage, chief claims officer at Progressive Medical Inc., and Julie Fortune, senior VP and chief claims officer for Arrowpoint Capital, to discuss “Approaches to Managing Nontraditional Claims Including Unions, Legacy Claims and Co-Morbidities.”

Roberto Ceniceros is senior editor at Risk & Insurance and co-chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at Read more of his columns and features.
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Sponsored Content by ACE Group

5 & 5: Rewards and Risks of Cloud Computing

As cloud computing threats loom, it's important to understand the benefits and risks.
By: | June 2, 2014 • 4 min read

Cloud computing lowers costs, increases capacity and provides security that companies would be hard-pressed to deliver on their own. Utilizing the cloud allows companies to “rent” hardware and software as a service and store data on a series of servers with unlimited availability and space. But the risks loom large, such as unforgiving contracts, hidden fees and sophisticated criminal attacks.

ACE’s recently published whitepaper, “Cloud Computing: Is Your Company Weighing Both Benefits and Risks?”, focuses on educating risk managers about the risks and rewards of this ever-evolving technology. Key issues raised in the paper include:

5 benefits of cloud computing

1. Lower infrastructure costs
The days of investing in standalone servers are over. For far less investment, a company can store data in the cloud with much greater capacity. Cloud technology reduces or eliminates management costs associated with IT personnel, data storage and real estate. Cloud providers can also absorb the expenses of software upgrades, hardware upgrades and the replacement of obsolete network and security devices.

2. Capacity when you need it … not when you don’t
Cloud computing enables businesses to ramp up their capacity during peak times, then ramp back down during the year, rather than wastefully buying capacity they don’t need. Take the retail sector, for example. During the holiday season, online traffic increases substantially as consumers shop for gifts. Now, companies in the retail sector can pay for the capacity they need only when they need it.


3. Security and speed increase
Cloud providers invest big dollars in securing data with the latest technology — striving for cutting-edge speed and security. In fact, they provide redundancy data that’s replicated and encrypted so it can be delivered quickly and securely. Companies that utilize the cloud would find it difficult to get such results on their own.

4. Anything, anytime, anywhere
With cloud technology, companies can access data from anywhere, at any time. Take Dropbox for example. Its popularity has grown because people want to share large files that exceed the capacity of their email inboxes. Now it’s expanded the way we share data. As time goes on, other cloud companies will surely be looking to improve upon that technology.

5. Regulatory compliance comes more easily
The data security and technology that regulators require typically come standard from cloud providers. They routinely test their networks and systems. They provide data backups and power redundancy. Some even overtly assist customers with regulatory compliance such as the Health Insurance Portability and Accountability Act (HIPAA) or Payment Card Industry Data Security Standard (PCI DSS).

SponsoredContent_ACE5 risks of cloud computing

1. Cloud contracts are unforgiving
Typically, risk managers and legal departments create contracts that mitigate losses caused by service providers. But cloud providers decline such stringent contracts, saying they hinder their ability to keep prices down. Instead, cloud contracts don’t include traditional indemnification or limitations of liability, particularly pertaining to privacy and data security. If a cloud provider suffers a data breach of customer information or sustains a network outage, risk managers are less likely to have the same contractual protection they are accustomed to seeing from traditional service providers.

2. Control is lost
In the cloud, companies are often forced to give up control of data and network availability. This can make staying compliant with regulations a challenge. For example cloud providers use data warehouses located in multiple jurisdictions, often transferring data across servers globally. While a company would be compliant in one location, it could be non-compliant when that data is transferred to a different location — and worst of all, the company may have no idea that it even happened.

3. High-level security threats loom
Higher levels of security attract sophisticated hackers. While a data thief may not be interested in your company’s information by itself, a large collection of data is a prime target. Advanced Persistent Threat (APT) attacks by highly skilled criminals continue to increase — putting your data at increased risk.


4. Hidden costs can hurt
Nobody can dispute the up-front cost savings provided by the cloud. But moving from one cloud to another can be expensive. Plus, one cloud is often not enough because of congestion and outages. More cloud providers equals more cost. Also, regulatory compliance again becomes a challenge since you can never outsource the risk to a third party. That leaves the burden of conducting vendor due diligence in a company’s hands.

5. Data security is actually your responsibility
Yes, security in the cloud is often more sophisticated than what a company can provide on its own. However, many organizations fail to realize that it’s their responsibility to secure their data before sending it to the cloud. In fact, cloud providers often won’t ensure the security of the data in their clouds and, legally, most jurisdictions hold the data owner accountable for security.

The takeaway

Risk managers can’t just take cloud computing at face value. Yes, it’s a great alternative for cost, speed and security, but hidden fees and unexpected threats can make utilization much riskier than anticipated.

Managing the risks requires a deeper understanding of the technology, careful due diligence and constant vigilance — and ACE can help guide an organization through the process.

To learn more about how to manage cloud risks, read the ACE whitepaper: Cloud Computing: Is Your Company Weighing Both Benefits and Risks?

This article was produced by ACE Group and not the Risk & Insurance® editorial team.

With operations in 54 countries, ACE Group is one of the largest multiline property and casualty insurance companies in the world.
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