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Getting the Management Spotlight on EPL Risk Ruth Kilduff, Moderator – Integro Insurance Brokers Jessica Flinn – Integro Insurance Brokers Becky Havlish.

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Presentation on theme: "Getting the Management Spotlight on EPL Risk Ruth Kilduff, Moderator – Integro Insurance Brokers Jessica Flinn – Integro Insurance Brokers Becky Havlish."— 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) Bullet points enter picture Verdict:$168,000,000 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

4 THE CHALLENGES Melting pots –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

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

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

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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