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