||The RISC eNews Blast is intended to provide relevant and timely news information from a number of sources to member pool staff. If you see articles in the journals, email and sources you subscribe to that may be of interest to the RISC membership, please feel free to forward them to Erin Rian for inclusion in the eNews Blast.
In this week's edition of the RISC eNews Blast:
DATA SECURITY & CYBER RISK
Israeli Tunnel Hit by Cyberattack, Experts Say (ABC News, 10/27/2013): Civilian infrastructure may be increasingly a target of cyberterrorism, as evidenced by the attack ion an Israeli tunnel in September. The attack targeted security cameras in the tunnel and resulted in shutdowns during rush hour, causing massive congestion, and is believed to come from a hacking group similar to Anonymous, rather than from a state enemy such as Iran. Israel’s military chief says that this type of infrastructure attack could become more common, and target the infrastructure that supports citizens’ daily lives. Israel’s essential systems including its water system, electronic grid, trains and banks have been targeted in the past. This is something for communities on the US to consider when evaluating the risks of infrastructure they operate, or even infrastructure operated by others that serves their citizens.
Supreme Court Declines Privacy Claim Against Resale of Driving Records (Insurance Journal, 10/22/2013): The U.S. Supreme Court has declined to consider a ruling by the 8th Circuit Court of Appeals that refused to permit a class action based on the Drivers Privacy Protection Act to proceed. The class action was filed against West Publishing Corp. for acquiring data on drivers from state agencies and reselling it. West’s position was that it re-sold data only for purposes permitted under the DPPA.
A Buyer’s Guide To Cyber Insurance (Mondaq, 10/7/2013): This is an overview of third party and first party coverages for cyber losses. It is a good introduction for pools beginning to investigate what types of cyber coverage they may want to offer.
Rock County driver-data snooping settlement: $2 million (Star Tribune, 10/4/2013): The Minnesota Counties Insurance Trust has paid $2,000,000 to settle a potential class action suit under the Drivers Privacy Protection Act, which alleges more than 4,000 inappropriate photo queries of the Driver and Vehicle Services database. The settlement amounts to $500/query, despite the apparent lack of any nefarious intent. A presentation by the League of Minnesota Cities Insurance Trust on the DPPA at the NLC-RISC Staff Conference in Portland is available here.
Opening The Flood Gates? California Voters May Create Presumption Of Harm In Privacy Breach Cases (Mondaq, 10/2/2013): A potential ballot initiative could change the California constitution to create a presumption of harm when personal information is shared without the owner’s express opt-in. This would enable those whose information has been released without their permission to successfully bring a case for damages, even if they cannot prove any associated losses. If this passes in California and makes its way across the nation, it will provide potential litigants with the remaining element they need to prove their claims for damages, putting pools and their members who suffer a data breach at higher risk of litigation.
Insider Threats Get More Difficult To Detect (Information Week, 9/27/2013): Firewalls are increasingly irrelevant as network protection as an increasing number of breaches are caused by users gaining legitimate access privileges, including the increasing number of employees, contractors and business partners who have access. The use of the cloud and the growing volume of network activity make detection and prevention more difficult. In the wake of the Edward Snowden leak, organizations are increasingly focusing on insider threats. Suggested means for addressing this threat include:
• Identify important data and know where it is stored and how it is protected.
• When sensitive data is to be transferred onto removable media, require that two persons be present.
• Limits the data IT administrators can access to that required for their jobs.
• Use data encryption.
• Continually monitor access to sensitive data.
• Implement automated alerts that are triggered when suspicious or malicious data is suspected.
District Court Rejects Supervisor Liability For State Employee’s Motor Vehicle Record Data Breach (Mondaq, 9/26/2013): The Federal District Court for Minnesota has found that a state agency whose employee engaged in unauthorized viewing of drivers’ license records is not liable under the Drivers’ Privacy Protection Act. The court held that the agency to be liable only if it granted the employee access to the database with the knowledge he would use it for unauthorized purposes. The court also dismissed a 42 USC Section 1983 action alleging that the defendants deprived the plaintiff of his statutory rights under the DPPA and violated the plaintiff’s constitutional right to privacy. The court held there was no constitutional right to privacy for drivers’ license information. It also held that the private cause of action created by the DPPA precludes a DPPA based Section 1983 action because the DPPA private cause of action is more restrictive than a Section 1983 claim. There is a link to the decision in the article.
HHS proposal would exempt some health plans from ACA reinsurance fee (Business Insurance, 10/25/2013): HHS has said that proposed rules scheduled to be released soon would exempt certain self-insured, self-administered plans from the transitional reinsurance fees. The fee has been criticized by some groups who say employers, especially those that self-insure, will receive no direct benefit. This has been a concern expressed by many RISC member health pools. While many self-insured plans contract with third parties to administer their plans, RISC staff will monitor the proposed rules to gauge opportunities to receive clarification and possible relief on this issue for member health pools.
Illinois pot law presents hazy legal situation for employers (Chicago Tribune, 10/27/2013): The underlying tension between legalized marijuana and drug-free workplace policies is expected to be playing out soon in Illinois, where medical marijuana use will become legal in 2014. Although employers will not be able to discriminate against employees based on the use of medical marijuana, they are not prohibited “from enforcing a policy concerning drug testing, zero-tolerance, or a drug free workplace provided the policy is applied in a nondiscriminatory manner.” They are also not prohibited from “disciplining a registered qualifying patient for violating a workplace drug policy.” The crux of the problem is that THC, the active chemical in marijuana, remains in users’ systems for weeks after use, unlike opioid pain medications. Thus an employee who has not used marijuana on the job may still fail an employer’s drug test and face disciplinary action.
Religious-Discrimination Claims on the Rise (Wall Street Journal, 10/27/2013): Increasing diversity in the workplace and willingness of employees to bring charges are resulting in an uptick of religious discrimination claims. Charges include dress codes, scheduling conflicts with religious obligations, and even the use of biometric devices to record employee presence on the job.
A Risk Manager's Essential Guide to Avoiding EPL Claims (Property Casualty 360, 10/22/2013): Excerpts from a best practices guide for avoiding employment practices liability claims.
Employee Has No Duty To Mitigate Emotional Damages In Harassment Case (Mondaq, 10/2/2013): The U.S. District Court for the District of Oregon has ruled that unlike its treatment of other back pay damages, Title VII does not require a plaintiff to mitigate emotional damages resulting from sexual harassment. Congress specifically required mitigation for back pay losses in the legislation, and the court interpreted Congress’ failure to require mitigation for other compensatory damages to mean that there is no mitigation requirement for those damages. There is a link to the full decision in the article.
Staffing Agency Employee May Sue Multiple Employers For Wrongful Discharge, Federal Court Rules (Mondaq, 9/25/2013): A federal court in New York has found that companies that use staffing agencies are not necessarily isolated from discrimination claims by agency employees. A contract with the agency stating that the employee is only an employee of the agency is not sufficient to isolate the employer from liability. The four factors considered are:
• Whether the joint employer selected or hired the agency employee;
• Whether the joint employer pays the agency employee
• Whether the joint employer had the ability to dismiss the agency employee
• Whether the joint employer had the power to control the agency employee’s conduct.
In this case, the court ruled that the third and fourth factors in this list alone were sufficient to consider the employer as a joint employer at this stage of the case. This is an exposure worth considering for pools or their members that use staffing agencies, as these factors are likely to be present in most temp employee relationships.
PROPERTY & CASUALTY
Catastrophes, Climate Change and Competition: Reinsurance Execs Outline Top Challenges for 2014 and Beyond (Property Casualty 360, 10/22/2013): Executives of several reinsurers identify climate change, the influx of alternative capital providers into the catastrophe reinsurance space, the low interest rate environment, increasing competition, and the expiration of TRIA in 2014 as their top challenges.
Sixth Circuit Highlights the Importance of Policy Definitions (Claims Journal, 10/2/2013): The Sixth Circuit Court of Appeals has determined that a pedestrian who is struck by a car and lands on it can be considered to be an “occupant” for purposes of the driver’s medical payment coverage. The court looked at the policy definition, which defined “occupying” as “in, on, entering or alighting from” the vehicle, and determined that she met the definition because she ended up “on” the vehicle. It did not consider her relationship to the vehicle or why she was there.
Lessons on Debarring Contractors from Bid Process (Municipal Minute, 9/24/2013): In its decision in Blackout Seal Coding v. Terry Peterson, the Seventh U.S. Circuit Court of Appeals has identified potential theories of liability a contractor might assert in state court against a public entity that debars it from bidding on contracts. The court mentioned that the plaintiff could try to assert not only breach of contract, but also libel, if there was evidence that the public announcement of debarment operated as an effective blackball from the industry.
F.D.A. Urging a Tighter Rein on Painkillers (New York Times, 10/24/2013): The F.D.A is recommending reclassification to Schedule II of prescription pain medications that combine hydrocodone with an over the counter pain reliever like acetaminophen. The new requirements would reduce to 90 days the number of days of medication patients could receive before seeing their doctor again, and would require that prescriptions be taken to a pharmacy. This may increase a patient’s doctor visits, but won’t prevent a patient with a compliant doctor from continuing to receive these medications. Secondary effects are another consideration. Workers’ compensation insurers are concerned about responsibility for patients who harm themselves by taking too many opioids for a work related injury. Will there be any allegations of liability if an injured worker who cannot obtain prescription painkillers moves on to illegal drugs?
NIOSH Study of Firefighters Finds Increased Rates of Cancer (Centers for Disease Control and Prevention, 10/17/2013): A research study by the National Institute for Occupational Safety and Health, in collaboration with the National Cancer Institute and the Department of Public Health Sciences at UC Davis, has found higher than average rates of certain cancers in firefighters, as compared to the U.S. population as a whole. The primary cancers implicated were cancers of the respiratory, digestive and urinary systems. The subjects also had a rate of mesothelioma twice as high as the U.S. population. The study was supported in part by the U.S. Fire Administration.
Questionable Workers’ Comp Claims Increase: NICB (Property Casualty 360, 9/25/2013): Although the total number of claims in the Insurance Services Office ClaimSearch Database is decreasing, the number of questionable claims referred to the National Insurance Crime Bureau is increasing, and was up 28% in 2012. Medical claims were 62% of the questionable claims. California, Illinois and New York generated the largest number of questionable claims.
Gallup: Depressed workers miss four extra days of work annually (Risk & Insurance, 9/9/2013): A report based on data from a Gallup Healthways Well-Being Index concludes that workers who have been diagnosed with depression miss about four more days of work annually than do other workers. Because one in eight Americans have been diagnosed with depression, this connection with lost time from work supports pre-existing depression as a red flag in workers’ compensation claims.
Legal weed creates disconnect, confusion for WC system, experts say (Risk & Insurance, 9/9/2013): Although 18 states and the District of Columbia have legalized marijuana, primarily for medicinal purposes, that legalization does not necessarily extend to those states’ workers’ compensation systems, and marijuana remains illegal under federal law. Some of the issues include:
• Whether an employer is responsible under workers’ compensation for a work related injury caused by use of medical marijuana for another condition.
• Whether an employer is responsible to pay for medical marijuana for treatment of work related injuries, which extends the concept beyond traditional medical uses related to glaucoma and cancer.
Among the suggested strategies for addressing these issues are:
• Consult with your attorney to determine whether it is feasible to deny payment for medical marijuana treatment of work related injuries.
• In a state where marijuana has been legalized for some purposes, revise policies to address legal medical marijuana, not just illegal drug use.
• Consider and address the safety implications of medical marijuana use in occupations where workers operate heavy machinery, drive or engage in other dangerous activities.
• Consider whether pre-hiring and post-accident drug testing can help improve the employer’s position in determining whether medical marijuana played a role in causing an accident.
OTHER TOPICS OF INTEREST
Pensions Muscle Into Reinsurance in Wagers on Catastrophe (Bloomberg, 10/27/2013): This is an interesting follow-up to the session on the Florida Municipal Insurance Trust’s use of catastrophe bonds at the NLC-RISC Staff Conference. In search of better return, the global pension fund industry is venturing into insurance-linked investments and is now driving down the pricing of some catastrophe risk coverage, according to Guy Carpenter. This decrease in pricing is to the disadvantage of traditional reinsurers, who are seeking higher premiums due to increasingly extreme weather events.
Supreme Court Considers Cases Impacting States & Localities (Governing, 10/15/2013): A review of several cases to be considered by the U.S. Supreme Court this session that may have implications for state and local governments. Additional information is available in the conference materials for the NLC-RISC Staff Conference, under the session on the 2013 U.S. Supreme Court & Government Liability which can be found here.
Excess Liability Policy Not Triggered Until Actual Payment Of Underlying Limits: Mere Liability Insufficient (Mondaq, 10/8/2013): The U.S. Court of Appeals for the Second Circuit has held that primary insurance must be exhausted by payment of a claim before excess layers of coverage are triggered. Liability extending into excess layers does not trigger that coverage absent actual payment.
QE Uncertainty Hurting Insurers' Income Streams and Driving Them into Riskier Assets, Says New BlackRock Study (MarketWatch, 9/26/2013): A BlackRock study confirms that the federal government’s Quantitative Easing policy is driving insurers to riskier investments in order to generate the return they need.
Simplifying the Claims Systems Selection Process (Claims Journal, 9/24/2013): When selecting a claims management system (or any other new technology, for that matter) it is important to have a systematic process that permits comparison of competing products. Some of the variables to consider are the following:
• How well does each function of the product work in an actual claims environment, as opposed to a demonstration environment?
• How long does the system take to perform tasks?
• Does the system allow bundling of transactions into batches for greater efficiency?
• How secure is the system?
• How experienced is the vendor?
• How adaptable is the system to changing needs?
• Is the pricing structure easy to understand?
Insurers Only Scratching the Surface When it Comes to Mobile Apps (Property Casualty 360, 9/18/2013): Focus groups held in the summer of 2013 concluded that mobile devices are an essential component of communication between insurers and insureds. Two challenges were identified: creating greater awareness and usage of existing apps, and developing apps that make the insurer a part of the insured’s daily routine. The second challenge is the more difficult but potentially more rewarding. If apps are not used on a regular basis, they become irrelevant. But what can a pool app do that would make its members want to come back to the app regularly? Possibilities include communicating with a live pool representative via mobile app; offering drivers the opportunity to use telematics as an app that would track driver behavior for purposes of providing premium discounts as well as provide useful information such as road hazards and weather events; and using telematics to host a virtual competition where members are rewarded for performance.
How Generations Fare on Key Workplace Traits (Baseline, 9/13/2013): A survey by E&Y shows that the three generational groups participating in today’s workplace, Boomers, Gen X and Millenials, are perceived by respondents as having very different workplace characteristics. The survey looked at technology sophistication, entitlement, productivity, team cooperation, work effort, ease to work with, adaptability, enthusiasm, relationship building, and use of social media. This is an interesting overview not because it is necessarily accurate, especially for individuals, but because it reflects how people are willing to categorize different generations as having traits specific to their generation. This can become a source of discrimination risk for pools and their members if these generalizations become the basis for employment action.