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Risk Management User Group October 18, 2007. WELCOME Michael L. Hay, CRM, CGFM, CPPM.

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Presentation on theme: "Risk Management User Group October 18, 2007. WELCOME Michael L. Hay, CRM, CGFM, CPPM."— Presentation transcript:

1 Risk Management User Group October 18, 2007

2 WELCOME Michael L. Hay, CRM, CGFM, CPPM

3 MEETING AGENDA 8:30 – 9:00Legislative Update Jonathan Bow 8:30 – 9:00Legislative Update Jonathan Bow 9:00 –10:00 Claims Update Gordon Leff 9:00 –10:00 Claims Update Gordon Leff 10:00 – 10:15 BREAK 10:00 – 10:15 BREAK 10:15 – 11:00 Document Restoration Tom McGuire, Munters 10:15 – 11:00 Document Restoration Tom McGuire, Munters 11:00 – 11:15 Training System Erin Thompson 11:00 – 11:15 Training System Erin Thompson 11:15 – 12:00 Cyber Risk Neeraj Sahni 11:15 – 12:00 Cyber Risk Neeraj Sahni AIG AIG

4 LEGISLATIVE UPDATE Jonathan Bow Executive Director

5 CLAIMS UPDATE Gordon Leff Deputy Director Claims Operations Claims Operations

6 Bills may be obtained from the Texas Legislature Online Website at:

7 H.B. 34 By: Solomons, Leibowitz The bill amends the Labor Code to prohibit certain payments or inducements regarding a workers' compensation claim and provide an administrative violation for such a payment or inducement.

8 H.B. 34 By: Solomons, Leibowitz cont. ADMINISTRATIVE VIOLATION BY PERSON PERFORMING CERTAIN CLAIM MANAGEMENT SERVICES. (a) This section applies to an insurance adjuster, case manager, or other person who has authority under this title to request the performance of a service regarding the management of a workers' compensation claim, including peer review, performance of a required medical examination, or case management.

9 H.B. 34 By: Solomons, Leibowitz cont. For purposes of this section, a violation is committed if the adjuster, manager or other person offers to pay, pays, solicits, or received an improper inducement relating to the delivery of benefits to an injured employee; or improperly attempts to influence the deliver of benefit to an injured employee, including through the making of improper threats.

10 S.B This bill provides that a person who commits an offense of fraud under the Texas Labor Code Chapter 418 (Criminal Penalties) may be prosecuted under that chapter or any other applicable state law, including the Texas Penal Code. These changes became effective June 15, 2007.

11 SB 458 by: Senator Watson If an orthotic or prosthetic device is damaged in a workers' compensation injury, the insurance carrier must repair or replace that device.

12 H.B. 472 By: Solomons The bill prohibits a third-party administrator from knowingly referring a claim or loss for adjustment to a person acting as or claiming to be an insurance adjuster without the appropriate license and prohibits an insurer from referring a claim or loss for administration to a person acting as or claiming to be an administrator without the appropriate certificate of authority. It sets out an insurer's responsibilities when using an administrator's services and requires the insurer to conduct regular reviews and on-site audits of the administrator's operations.

13 H.B. 473 BY: Solomons Voluntary or Informal Networks Voluntary or informal networks are now regulated until January 1, 2011 when they will be eliminated and forced to operate only as a certified workers' compensation health care network This bill outlines certain contractual duties under a voluntary network.

14 H.B. 473 BY: Solomons cont. Oh and by the way…House Bill 473 requires that the benefit review officer presiding at a benefit review conference, rather than other division staff designated by the workers' compensation commissioner, consider a request for an interlocutory order and give the opposing party the opportunity to respond before issuing such an order.

15 H.B. 724 By: Solomons Allows for CCH Allows for CCH regarding determination of the retrospective medical necessity for a health care service for which the amount billed does not exceed $3,000; and 3) an appeal of an independent review organization decision regarding determination of the concurrent or prospective medical necessity for a health care service. (1) a medical fee dispute in which the amount of reimbursement sought by the requestor in its request for medical dispute resolution does not exceed $2,000; (2) an appeal of an independent review organization decision

16 H.B. 724 By: Solomons Cont. Allows for SOAH A party to a medical dispute, other than a medical dispute regarding spinal surgery subject to Subsection (l) and a dispute subject to Section , that remains unresolved after a review of the medical service under this section is entitled to a hearing. A party to a medical dispute, other than a medical dispute regarding spinal surgery subject to Subsection (l) and a dispute subject to Section , that remains unresolved after a review of the medical service under this section is entitled to a hearing. A hearing under this subsection shall be conducted by the State Office of Administrative Hearings not later than the 60th day after the date on which the party notifies the division of the request for a hearing. The hearing shall be conducted in the manner provided for a contested case under Chapter 2001, Government Code.

17 H.B. 724 By: Solomons Cont. If an accident or health insurance carrier or other person obligated for the cost of health care services has paid for health care services for an employee for an injury for which the workers' compensation insurance carrier or the employer has not disputed compensability,

18 H.B. 724 By: Solomons Cont. the accident or health insurance carrier or other person may recover reimbursement from the insurance carrier in the manner described by Section or , as applicable. the accident or health insurance carrier or other person may recover reimbursement from the insurance carrier in the manner described by Section or , as applicable.

19 H.B. 724 By: Solomons Cont. The health insurance carrier failed to seek reimbursement from the health care provider or the insured, the-health care provider does not have to seek- preauthorization from the workers' compensation carrier, and the-health care provider does not have to seek- preauthorization from the workers' compensation carrier, and the health care provider did not bill the workers compensation carrier within 95 days of the date of service. (

20 H.B. 724 By: Solomons Cont. A surviving parent, under certain conditions, to be eligible for death benefits in a workers' compensation case for a benefit period not to exceed two years.

21 H.B. 886 By: Giddings Instituted a pre authorization program for the return-to-work pilot program for small employers

22 HB 1003 by Giddings House Bill 1003 amends the Labor Code and the Insurance Code to provide that an independent review organization using doctors to review health care services relating to workers' compensation claims may use only doctors licensed to practice in this state

23 HB 1006 by Giddings House Bill 1006 amends the Labor Code and the Insurance Code to limit the performance of such reviews to doctors licensed to practice in this state, to specify that the reviews include utilization and retrospective reviews, and to extend these requirements to an insurance carrier. The bill also amends the Insurance Code to provide that the limit on the amount a health care provider can charge for providing medical information to a utilization review agency is the cost of copying records relating to a workers' compensation claim.

24 H.B By:Giddings Amends the Labor Code to provide for reimbursement if the claim is filed in a timely manner but is erroneously filed with the wrong insurer or if the commissioner of workers' compensation determines that the failure to submit a timely claim was due to a catastrophic event that substantially interfered with the provider's normal business operations. The bill also allows for an extension of the deadline for submission upon agreement of the parties.

25 S.B By: Janek require the subsequent injury fund to reimburse an insurance carrier for any overpayment of benefits made by the insurance carrier under Subsection (f) based on an opinion rendered by a designated doctor if that opinion is reversed or modified by a final arbitration award or order, or decision of the commissioner of workers' compensation (commissioner) or a court

26 S.B By: Janek cont Interlocutory Orders: Requires the benefit review officer who presides at the benefit review conference to consider a written or verbal request for an interlocutory order for the payment of benefits and, if the benefit review officer determines that issuance of an interlocutory order is appropriate, to issue the interlocutory order not later than the third day after the date of receipt of the request

27 HB 2004 by: Giddings Amends the Labor Code to require certain health care professionals who review a workers' compensation case to hold a professional certification in a health care specialty appropriate to the type of health care that the injured employee is receiving. The bill includes similar provisions applicable to dentists and chiropractors who review services provided in a workers' compensation case, requiring them to be licensed to engage in their respective practices as a condition for performing a peer review, utilization review, or independent review of a case. Amends the Labor Code to require certain health care professionals who review a workers' compensation case to hold a professional certification in a health care specialty appropriate to the type of health care that the injured employee is receiving. The bill includes similar provisions applicable to dentists and chiropractors who review services provided in a workers' compensation case, requiring them to be licensed to engage in their respective practices as a condition for performing a peer review, utilization review, or independent review of a case.

28 S.B. 908 By: Brimer Senate Bill 908 amends the Labor Code to continue the State Office of Risk Management to September 1, 2019, to incorporate various new and revised across-the-board sunset provisions relating to the office, and to provide for the confidentiality of state employees' workers' compensation claim files. Senate Bill 908 amends the Labor Code to continue the State Office of Risk Management to September 1, 2019, to incorporate various new and revised across-the-board sunset provisions relating to the office, and to provide for the confidentiality of state employees' workers' compensation claim files.

29 Whats Hot In Comp ?

30 Medical Fees for Hospitals Supplemental Income Benefits (SIBs) Medical Disability Rules Return to work

31 BREAK See you in 15 minutes

32 Document Recovery: Ensuring Success Presented By: Tom McGuire: Catastrophe Operations Manager – Document Recovery Manager – Munters Corp. Region Americas

33 Introduction Introduction We create 30% more than we discard! Nearly 4.5 billion boxes of files stored in North America Alone! Paperless society? Introduction Paperless society? We create 30% more than we discard or digitize! There nearly 4.5 billion boxes of documents stored in North America Alone!

34 Introduction Youll learn how to ensure success by understanding: The different types of media. How to Evaluate situations How to set the proper expectations Different Drying Techniques

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45 Records need to be accessible. Records need to remain onsite.

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50 All books!

51 Phase Transition Diagram – H 2 O Temperature ( o C) Pressure (torrs) Solid Liquid Gas Sublimation Curve Evaporation Curve Fusion Curve Vacuum Freeze Drying Desiccant Air Drying Thermal Vacuum Drying Triple Point Sublimation occurs at 4.5 torr

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55 Books : Blast freeze, the colder the better Film Keep: cold and wet for restoration

56 Remove High Humidity Damaged materials

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59 Helpful Notes: Documents - Documents will expand by 10 – 15% if Thermal or Desiccant Air dried. However there is no expansion if Vacuum Freeze Dried. - There are approximately 2,000 pages per cube

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62 Control Ambient conditions Documents – Freeze ASAP Remove documents from damage Inventory and discard Quick Recap Water Damage

63 Water damaged X Rays and film Keep the film Cold. Keep the film Cold. Freezing is not necessary, (only for long term storage). Freezing is not necessary, (only for long term storage). Keep the film Wet. Keep the film Wet. Best dried with desiccant Air. Best dried with desiccant Air. Quick Recap…

64 Water damaged files Stabilize (freeze) ASAP. Inventory and discard. Can be Vacuum Freeze dried or Desiccant Air dry. Normal moisture content for paper is 6-8% Quick recap…

65 Quick Recap.. Are the Books Clay coated? How long have they been wet? What is the status of the environment? Water damaged Books

66 Garbage in Garbage Out Garbage in Garbage Out Underwater for more than 24hrs. = questionable Underwater for more than 24hrs. = questionable Rebinding and re-casing? Rebinding and re-casing? How many books are affected by high humidity? How many books are affected by high humidity? Quick Recap… Water damaged books

67 Desiccant Drying MOST EFFECTIVE WAY TO DRY: Paper Files Stock paper Film Media Electronic Media Quick recap..

68 Vacuum Freeze drying MOST EFFECTIVE WAY TO DRY: ALL Books Clay coated papers Some Art Work Quick recap..

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70 Risk Management: Network Security Privacy Risks Neeraj Sahni AIG Executive Liability Insurance underwritten by member companies of American International Group, Inc. Any description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for complete details of coverages and exclusions. Coverage may not be available in all jurisdictions. Issuance of coverage is subject to underwriting.

71 Identity Theft In the News… Data Breach Computer Hacking Lost Backup Tapes Stolen Laptop Insurance underwritten by member companies of American International Group, Inc. Any description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for complete details of coverages and exclusions. Coverage may not be available in all jurisdictions. Issuance of coverage is subject to underwriting.

72 Common Causes Insurance underwritten by member companies of American International Group, Inc. Any description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for complete details of coverages and exclusions. Coverage may not be available in all jurisdictions. Issuance of coverage is subject to underwriting. *Source of Data: June

73 Key Exposures Insurance underwritten by member companies of American International Group, Inc. Any description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for complete details of coverages and exclusions. Coverage may not be available in all jurisdictions. Issuance of coverage is subject to underwriting. 1. Credit card information 2. Healthcare information 3. Personally identifiable information - customers - employees 4. Business information of others - Trade secrets

74 Typical Claim Costs Costs to notify consumers: $1 to $2 per individual Credit Monitoring Services: $10 to $20 per person per year approx 20% of individuals accept Defense Costs: Typical class action defense costs: $XXX,XXX+ Legal Liability?

75 Hospital System: target of class action suit CDs containing as many as 260,000 patient records lost as a result of alleged contractor negligence Suit seeks $1,000 in damages for each class member Allegations include failure to take reasonable corrective actions as well as a failure to notify Source: Man sues hospital system over security lapse October 31, 2006 Associated Press Specific Incidents

76 Cost of Incidents… Major Retailer: $16 Million Charge Banks and credit unions sue to recover costs of re- issuing cards and fraud losses resulting from a theft of credit card information Sources: Breaches of customers' data trigger lawsuits July 21, 2005 The Wall Street Journal Big-time ID theft symptom of database culture August 9, 2004 Associated Press

77 Fast Food Chain: $5.6 Million The company loses 91% of 2004 profits, & experiences bad publicity as a result of a data leakage incident. Source: Private Data Leakage Costs Chipotle $5.6M April 11, 2005 Denver Post Cost of Incidents…

78 National Retailer: $6.5 Million Data stolen from computers systems results in charges of $6.5 million Source: Private Data Leakage Costs DSW Shoe Warehouse $6.5M June 20, Cost of Incidents…

79 $715,000: Wrongful release of trade secrets (customer list) $2,400,000: theft of personal credit information by employee $9,400,000: Wrongful access to database records (class action settlement) $5,000,000: Theft of credit card information from server (policy limits loss) ???: FACTA Class Action Litigation Other Incidents

80 Risk Management Risk Assessment Risk Control Risk Financing Golden Rule of Risk Management: For each exposure to loss, an organization should employ at least one risk control, and at least one method of risk financing. Risk Management

81 Risk Assessment Information Inventory & Classification Policy: What is our policy? –Elements of a good policy… What information is maintained? Why do we collect this information? –Have a business need for what you collect! Where/how is it maintained? Who is authorized to use it? How is the information controlled? –Dont treat all information the same! Tools: Compliance Audits and Checklist Risk Management

82 Risk Controls POLICY! –Implement a comprehensive policy –Assign responsibility for enforcing policy –Train employees on how the policy applies to them IT-Security –Firewalls –Anti-virus –Encryption –System Access Policy –Passwords Risk Management

83 Risk Controls (continued) Physical Security –Access cards/badges –Visitor procedures –File Storage Vendor Management –Responsibility –Hold harmless/indemnification –Contract Termination Rights Record Disposal Procedures Risk Management

84 Risk Controls Incident Response Planning –Incident Reporting Human Controls –Hiring –Training –Clean Desk Policy Risk Management

85 Risk Financing: Goal: avoidance of unplanned retention! Retention: –Cash on hand –Accounting Reserves Funded or unfunded Contractual Transfer –Vendor Indemnify Insurance Risk Management

86 Security & Privacy Insurance: Third party liability coverage resulting from a disclosure or breach of private or confidential data, including: A failure of an insureds computer network security; Wrongful release or disclosure of information by the insured, the insureds employee or another third party; Failure to protect personally identifiable information from misappropriation and; A violation of any federal, state or local privacy statute - HIPPA Privacy Rule

87 Risk Management Security & Privacy Insurance (Continued) Crisis Management Expenses Costs to notify consumers of a data breach to maintain customer goodwill. Costs to provide credit monitoring Reasonable and necessary printing, advertising, mailing of materials

88 Conclusions: Significant claims, loss and incident activity Increasing public concerns Frequency of class action claims is increasing Plaintiff attorneys focusing on proof of damages Minor damages for large groups = significant potential loss $1,000 X 260,000 = $260 million!!! Risk Management – 3 critical steps Risk Assessment, Risk Control & Risk Financing

89 Thank you Neeraj Sahni Insurance underwritten by member companies of American International Group, Inc. Any description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for complete details of coverages and exclusions. Coverage may not be available in all jurisdictions. Issuance of coverage is subject to underwriting.

90 Risk Management User Group Thank you for attending Happy Holidays!!


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