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Getting the Management Spotlight on EPL Risk

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Presentation on theme: "Getting the Management Spotlight on EPL Risk"— Presentation transcript:

1 Getting the Management Spotlight on EPL Risk
Ruth Kilduff, Moderator – Integro Insurance Brokers Jessica Flinn – Integro Insurance Brokers Becky Havlish – Banner Health Paresh Purohit - Trideo

2 Getting the Management Spotlight on EPL Risk
Introductions Our Agenda Setting the Stage Employment Practices Liability is a brewing coverage storm. Merger and acquisition activity, mingling of 'for profit' and 'not for profit' entities, rightsizing organizations and integrating diverse HR practices and diverse organizational cultures has resulted in significant increase of frequency and severity of high cost claims. Healthcare organizations are being forced or electing to take significant self insured retentions.

3 THE RISK: Sampling of EPL Settlements & Verdicts in Excess of $2M (June 2009 – June 2014)
Defendant: A Large West Healthcare System Allegation: Sexual Harassment and Retaliation Misc.: $66 million Punitive & Compensatory Damages Verdict: $15,000,000 Defendant: A New York Medical Center Allegation: Sexual Harassment Misc.: $1.5 million in Punitive Damages Verdict: $11,441,559 Defendant: A Southern California Medical Group Allegation: Retaliation and Defamation Verdict: $7,600,000 Defendant: An Illinois Health and Hospital System Allegation: Retaliation Misc.: $400,000 in Punitive Damages Settlement: $7,000,000 Defendant: A Massachusetts Academic Medical Center Allegation: Sex Discrimination and Retaliation Settlement: $4,650,000 Defendant: A New Jersey Health Sciences Institution Allegation: Gender Discrimination Verdict: $3,600,000 Defendant: A Texas Academic Medical Center Allegation: National Origin Discrimination & Retaliation Settlement: $3,100,000 Defendant: A Managed Care Company Allegation: Whistleblower Retaliation Bullet points enter picture

4 THE CHALLENGES Melting pots Demanding and stressful work
May create misunderstandings and lead to claims of discrimination or harassment. Demanding and stressful work Management preoccupation with other duties may not be present to receive complaints or monitor disputes. Politically charged atmosphere May lead to an ‘us versus them’ mentality. Highly regulated Labyrinth of complex statutes, regulations and guidelines determine obligations. High profile employer Public image and prejudice issues.

5 THE RESULTS Higher retentions Mass/Class retentions Higher Premiums
Non-renewals Exclusionary language

6 Management Liability: Captive-Bound
Heightens awareness of coverage terms Reality of coverage options Premium Copays, coinsurance, sub-limits Exclusions Evolution of insurance program Philosophy of integrated program Desire/need to purchase less insurance Risk tolerance of organization Develop on other lines of insurance with more defined risk mitigation strategies Evolve retention in captive/reinsurance levels Why do you put anything in captive Significant issues with overlap of coverage between D & O and HPL coverage; levy case at Hopkins—didn’t privilege, didn’t supervise; Fata –is it still professional or does it evolve to D & O; if have comprehensive program, alerts to potential disputes; heightens awareness of coverage terms; that comprehensive approach and alerts you to overlap; with 35M, D & O carriers going one step further—if HPL policy 123 applies, this does not and will not contribute; must know what terms and conditions in all your policies—that is what a comprehensive captive program does for you—keeps aware. Forces you to look at it; complex line of coverage; if in captive, aware of coverage overlaps/synergies, Forces you to attend to more robust processes; enterprise risk philosophy Allows you adopt to more sophisticated model in market; can negotiate more effectively because we are willing to take in house; then insurers more willing to negotiate

7 Management Liability: Excitement about Claims Mitigation
Frequency and type of claims Evolution of risk mitigation strategies Common board and/or governance documents Common peer review practices Robust contract oversight: IT; common contract provisions; required process for contract review and termination HR Infrastructure: robust HRIS; centralized processes and management; standardized tools; audit capabilities Grants focus on management liability risk mitigation Just Culture External peer review Leadership development Collaboration with General Counsel How do we get board to engage? Not PL/GL; this is the Board’s risk; want to make sure not getting sued; what this means to them—self interest because directly relates to their activity and to overall organization. Not different from engaging docs in PL exposure. Common peer review processes Acute Ambulatory Relationship to employment Central hiring of attorneys—avoids off the reservation contract deals Relationship to employment

8 I Know Nothing

9 Management Liability: Communication to Sustain Engagement
Do: Review of captive meeting messages with key leaders Clarify role of board members in the context of claim information Create context for claim information with industry claim and coverage trends Be prepared to share information that is both appropriate and comprehensive on individual claims, anticipate questions, and know the answers to those questions Consider: Captive meeting should not be first time claim information is provided to executives/board members Relationship between allegations in a specific lawsuit and decisions/ actions of Captive Board members wearing another hat First time report claim is not at board meeting—should not be first time Review Board materials with key executives for strategy for those who may hear for first time—general counsel, my boss, and CEO Role Not an executive of company during the meeting; fiduciary of insurance company; but, they can’t help themselves; engage resources—general counsel, compliance officer, etc. to help; expect will have to calm people down Board is not claim manager or problem solver More difficult because dealing with administration of organization; real concern Captive is fiduciary; must be careful provide board with information it is accused of doing; be cognizant of different hats, different duties, be sure protecting litigation interests; may be related to decisions made.

10 Data is Key! Current data challenges: Lack of system wide data
Data stored in organizational silos – H.R./Firms/Carriers Lack of historical data – inability to identify trends in frequency, severity and aggregate exposures Data aggregation is cumbersome…if not impossible Impact to Captives: Inability to convey facts through data on frequency, severity when negotiating retentions with carriers Inability to segregate white noise v. material exposures and trends Inability to monitor and inform Boards of emerging trends

11 Data is Key! Strategies to overcome data challenges
Ideal: Migrate and manage all claim data on single platform Do: Establish and communicate Top-Down strategy for KPIs that need to be tracked/reported “Tomato v. Tomahto” – establish a consistent nomenclature Actively reassess data/metrics needs Standardize/”codify” data to compare Apples to Apples Don’t: Take an “All or nothing” approach to data/metrics Collect data at the expense of data quality Limit yourself to your data Stop

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