Presentation on theme: "Getting the Management Spotlight on EPL Risk"— Presentation transcript:
1Getting the Management Spotlight on EPL Risk Ruth Kilduff, Moderator – Integro Insurance BrokersJessica Flinn – Integro Insurance BrokersBecky Havlish – Banner HealthParesh Purohit - Trideo
2Getting the Management Spotlight on EPL Risk IntroductionsOur AgendaSetting the StageEmployment 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.
3THE RISK: Sampling of EPL Settlements & Verdicts in Excess of $2M (June 2009 – June 2014) Defendant: A Large West Healthcare SystemAllegation: Sexual Harassment and RetaliationMisc.: $66 million Punitive & Compensatory DamagesVerdict: $15,000,000Defendant: A New York Medical CenterAllegation: Sexual HarassmentMisc.: $1.5 million in Punitive DamagesVerdict: $11,441,559Defendant: A Southern California Medical GroupAllegation: Retaliation and DefamationVerdict: $7,600,000Defendant: An Illinois Health and Hospital SystemAllegation: RetaliationMisc.: $400,000 in Punitive DamagesSettlement: $7,000,000Defendant: A Massachusetts Academic Medical CenterAllegation: Sex Discrimination and RetaliationSettlement: $4,650,000Defendant: A New Jersey Health Sciences InstitutionAllegation: Gender DiscriminationVerdict: $3,600,000Defendant: A Texas Academic Medical CenterAllegation: National Origin Discrimination & RetaliationSettlement: $3,100,000Defendant: A Managed Care CompanyAllegation: Whistleblower RetaliationBullet pointsenter picture
4THE CHALLENGES Melting pots Demanding and stressful work May create misunderstandings and lead to claims of discrimination or harassment.Demanding and stressful workManagement preoccupation with other duties may not be present to receive complaints or monitor disputes.Politically charged atmosphereMay lead to an ‘us versus them’ mentality.Highly regulatedLabyrinth of complex statutes, regulations and guidelines determine obligations.High profile employerPublic image and prejudice issues.
5THE RESULTS Higher retentions Mass/Class retentions Higher Premiums Non-renewalsExclusionary language
6Management Liability: Captive-Bound Heightens awareness of coverage termsReality of coverage optionsPremiumCopays, coinsurance, sub-limitsExclusionsEvolution of insurance programPhilosophy of integrated programDesire/need to purchase less insuranceRisk tolerance of organizationDevelop on other lines of insurance with more defined risk mitigation strategiesEvolve retention in captive/reinsurance levelsWhy do you put anything in captiveSignificant 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 philosophyAllows 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
7Management Liability: Excitement about Claims Mitigation Frequency and type of claimsEvolution of risk mitigation strategiesCommon board and/or governance documentsCommon peer review practicesRobust contract oversight: IT; common contract provisions; required process for contract review and terminationHR Infrastructure: robust HRIS; centralized processes and management; standardized tools; audit capabilitiesGrants focus on management liability risk mitigationJust CultureExternal peer reviewLeadership developmentCollaboration with General CounselHow 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 processesAcuteAmbulatoryRelationship to employment Central hiring of attorneys—avoids off the reservation contract dealsRelationship to employment
9Management Liability: Communication to Sustain Engagement Do:Review of captive meeting messages with key leadersClarify role of board members in the context of claim informationCreate context for claim information with industry claim and coverage trendsBe prepared to share information that is both appropriate and comprehensive on individual claims, anticipate questions, and know the answers to those questionsConsider:Captive meeting should not be first time claim information is provided to executives/board membersRelationship between allegations in a specific lawsuit and decisions/ actions of Captive Board members wearing another hatFirst time report claim is not at board meeting—should not be first timeReview Board materials with key executives for strategy for those who may hear for first time—general counsel, my boss, and CEORoleNot 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 downBoard is not claim manager or problem solverMore 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.
10Data is Key! Current data challenges: Lack of system wide data Data stored in organizational silos – H.R./Firms/CarriersLack of historical data – inability to identify trends in frequency, severity and aggregate exposuresData aggregation is cumbersome…if not impossibleImpact to Captives:Inability to convey facts through data on frequency, severity when negotiating retentions with carriersInability to segregate white noise v. material exposures and trendsInability to monitor and inform Boards of emerging trends
11Data is Key! Strategies to overcome data challenges Ideal: Migrate and manage all claim data on single platformDo:Establish and communicate Top-Down strategy for KPIs that need to be tracked/reported“Tomato v. Tomahto” – establish a consistent nomenclatureActively reassess data/metrics needsStandardize/”codify” data to compare Apples to ApplesDon’t:Take an “All or nothing” approach to data/metricsCollect data at the expense of data qualityLimit yourself to your dataStop