2222222222

Risk Focus: Professional Liability

Incivility’s Growing Risk

Increasing levels of incivility in society are leaching into the workplace and bruising employers’ bottom lines.
By: | October 12, 2017 • 5 min read

Workplace incivility is on the rise.

Workplace violence — a frequent outcome of incivility — is reported to cost $4.2 billion dollars a year and claims 1,000 lives annually. The Journal of Nursing Administration reports incivility is often responsible for lost productivity, high turnover, low morale, reputational damage, workers’ compensation claims and lawsuits.

Advertisement




Toronto-based Bar-David Consulting, which helps firms create civil work environments, finds a direct connection from incivility to harassment and bullying and finally physical violence. That link constitutes “a big risk management worry,” said Lori Severson, health care loss control consultant, Lockton Companies.

In 1998, 49 percent of workers reported rude treatment at least once a month. In 2016, 62 percent said the same, according to research conducted by Christine Porath, associate professor, McDonough School of Business, Georgetown University, and Christine Pearson in the Harvard Business Review.

Michigan State University research found incivility is spreading, racking up an average annual impact of $14,000 per employee in lost production and work time.

Increasingly, Severson said, organizations are adopting strategies from the health care industry, generally considered the “gold standard of workplace safety.”

Some insurance products are adapting to a broader spectrum of risks. For example, some employment practice liability coverage will respond to bullying allegations, said Paul Marshall, managing director, McGowan Program Administrators. And some workplace violence policies added threat protections. “Now it will respond to just a threat,” he said.

Daniel Gugala, executive vice president and general counsel, Crisis Prevention Institute

All organizational change, including zero tolerance for uncivil behavior that can escalate into violence and lawsuits, begins at the top, wrote Valerie Keels, head of DC office services, Gavi, and member of the Society for Human Resources Management’s HR Disciplines Expertise Panel, in an e-mail interview.

“The CEO, president or other high-level authority figure in the organization must not only practice this behavior but also advocate for it publicly and often,” then follow up with organizational policies and procedures.

“Then the line managers and employees must be educated and trained about what civil behavior does and does not look like,” Keels wrote.

Uncivil behavior can often be subtle and unconscious. “Think of the manager who sends emails during a presentation … or the team leader who takes credit for good news but points a finger at team members when something goes wrong,” wrote Porath.

A Not-So-Hidden Liability Risk

Workers get on each other’s nerves, bringing personal habits into the workplace. They decorate their workspaces with photos of wives in bikinis, religious articles and political paraphernalia.

Most companies already have anti-harassment policies in place that define which personal items employees can and can’t have in the workplace, said Allison West, Esq., principal, Employment Practices Specialists, LLC, which might cover the issues of swimsuit photos and religious articles.

“You can reduce the risk with training, but you’ll never eradicate it. You can’t force people to be civil.” —Daniel Gugala, executive vice president and general counsel, Crisis Prevention Institute

A complete ban on personal items would be overkill, said West. But private employers have legal grounds to take that draconian step, since first amendment rights do not apply in the private workplace except for collective actions under labor laws, according to Katherine Stone, distinguished professor of law, UCLA School of Law.

Advertisement




Then there are snubs, unreturned emails and unacknowledged efforts.

If incivilities relate to gender, religion, race or any constitutionally protected groups, “that raises serious HR concerns and some liability exposure for the company,” said Stone.

Cases that “go beyond rolled eyes into marginalizing or excluding a co-worker because of race or gender can be a liability if the behavior is interfering with the person’s ability to do the job and succeed in the workplace.”

In those cases, she said, “there can be liability if the company knows about it and does nothing to stop it.”

The Equal Employment Opportunity Commission Task Force on the Study of Harassment in the Workplace recommends civility training and bystander intervention training as part of a holistic harassment prevention program.

Most large employers understand the importance of safety, said Sam Estreicher, professor of law, New York University School of Law and director of its Center for Labor and Employment.

Sam Estreicher, director, Center for Labor and Employment, New York University School of Law

“An organization that’s willing to commit resources to how people communicate — both how they deliver and receive messages — may keep in check those who don’t have the propensity to follow the right path,” said Daniel Gugala, executive vice president and general counsel, Crisis Prevention Institute, an international training organization specializing in the safe management of disruptive and assaultive behavior.

“You can reduce the risk with training,” he said, “but you’ll never eradicate it. You can’t force people to be civil.”

You’re Fired

Employers have a legal obligation to run a safe workplace. Social media lifted the veil of privacy from off-duty behaviors, and sometimes those behaviors result in termination.

For example, at least four white nationalists who demonstrated in Charlottesville, Va., lost their jobs after being identified through Twitter.

This poses the question: Are legal but unsavory activities with a controversial group outside the office grounds for dismissal?

For public sector employees, no, said Stone, because of first amendment protections. However, employment in the private sector is “at will,” giving employees fewer protections.

The law varies by jurisdiction, but in general, private employers do not monitor employees’ behavior outside the workplace, said Estreicher. “Policing behavior outside the workplace is generally counterproductive.” Overzealous employers, he said, “will be clobbered in litigation.”

Advertisement




Again, there are exceptions, Estreicher said, especially where employers perceive potential harm to their brand. Say an employee identified as attending a white supremacy rally is a supervisor, not “just a guy on the line,” the employer should bring him in for a talk. “You say, ‘You’re acting as my agent and you’re putting my company in a bad light.’ That would be consistent with a reasonable civility policy,” said Estreicher.

Civility, Stone said, “is in the eyes of the beholder” and some types of employee activities that might appear uncivil can trigger the protection of labor laws.

“The law allows employees to criticize their employer about working conditions, sometimes loudly and profanely. Some might consider those protests to be uncivil, disruptive or inappropriate.”

To merit legal protections, those kinds of behaviors would rise above “one disgruntled person griping, but trying to get colleagues to join the conduct as a protest,” Stone said. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Pharma Under Fire

Opioids Give Rise to Liability Epidemic

Opioids were supposed to help. Instead, their addictive power harmed many, and calls for accountability are broadening.
By: | May 1, 2018 • 8 min read

The opioid epidemic devastated families and flattened entire communities.

The Yale School of Medicine estimates that deaths are nearly doubling annually: “Between 2015 and 2016, drug overdose deaths went from 33,095 to 59,000, the largest annual jump ever recorded in the United States. That number is expected to continue unabated for the next   several years.”

Advertisement




That’s roughly 160 deaths every day — and it’s a count that’s increasing daily.

In addition to deaths, the number of Americans struggling with an opioid disorder disease (the official name for opioid addiction) is staggering.

The National Institute on Drug Abuse (NIDA) estimates that 2 million people in the United States suffer from substance use disorders related to prescription opioid pain relievers, and roughly one-third of those people will “graduate” to heroin addiction.

Conversely, 80 percent of heroin addicts became addicted to opioids after being prescribed opioids.

As if the human toll wasn’t devastating enough, NIDA estimates that addiction costs reach “$78.5 billion a year, including the costs of health care, lost productivity, addiction treatment, and criminal justice involvement.”

Shep Tapasak, managing principal, Integro Insurance Brokers

With numbers like that, families are not the only ones left picking up the pieces. Municipalities, states, and the federal government are strained with heavy demand for social services and crushing expenditures related to opioid addiction.

Despite the amount of money being spent, services are inadequate and too short in duration. Wait times are so long that some people literally die waiting.

Public sector leaders saw firsthand the range and potency of the epidemic, and were among the first to seek a legal reckoning with the manufacturers of  synthetic painkillers.

Seeking redress for their financial burden, some municipalities, states and the federal government filed lawsuits against big pharmaceutical companies and manufacturers. To date, there are more than 100 lawsuits on court dockets.

States such as Ohio, West Virginia, New Jersey, Pennsylvania and Arkansas have been hit hard by the epidemic. In Arkansas alone, 72 counties, 15 cities, and the state filed suit, naming 65 defendants. In Pennsylvania, 16 counties, Philadelphia, and Commonwealth officials have filed lawsuits.

Forty one states also have banded together to subpoena information from some drug manufacturers.

Pennsylvania’s Attorney General, Josh Shapiro, recently told reporters that the banded effort seeks to “change corporate behavior, so that the industry can no longer do what I think it’s been doing, which is turning a blind eye to the effects of dumping these drugs in the communities.”

The volume of legal actions is growing, and some of the Federal cases have been bound together in what is called multidistrict litigation (MDL). These cases will be heard by a judge in Ohio. Plaintiffs hope for a settlement that will provide funding to be used to help thwart the opioid epidemic.

“From a societal perspective, this is obviously a big and impactful issue,”  said Jim George,  a managing director and global claims head with Swiss Re Corporate Solutions. “A lot of people are suffering in connection with this, and it won’t go away anytime soon.

“Insurance, especially those in liability, will be addressing this for a long time. This has been building over five or six years, and we are just now seeing the beginning stages of liability suits.” 

Basis for Lawsuits

The lawsuits filed to date are based on allegations concerning: What pharma knew or didn’t know; what it should have known; failure to monitor size and frequency of opioid orders, misrepresentation in marketing about the addictive nature of opioids; and false financial disclosures.

Opioid manufacturers, distributors and large drugstore chains together represent a $13 billion-a-year industry, meaning the stakes are high, and the pockets deep. Many have compared these lawsuits to the tobacco suits of the ’90s.

Advertisement




But even that comparison may pale. As difficult as it is to quit smoking, that process is less arduous than the excruciating and often impossible-to-overcome opioid addiction.

Francis Collins, a physician-geneticist who heads the National Institutes of Health, said in a recorded session with the Washington Post: “One really needs to understand the diabolical way that this particular set of compounds rewires the brain in order to appreciate how those who become addicted really are in a circumstance where they can no more [by their own free will] get rid of the addiction than they can get free of needing to eat or drink.”

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk.” — Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

The addiction creates an absolutely compelling drive that will cause people to do things against any measure of good judgment, said Collins, but the need to do them is “overwhelming.”

Documented knowledge of that chemistry could be devastating to insureds.

“It’s about what big pharma knew — or should have known.  A key allegation is that opioids were aggressively marketed as the clear answer or miracle cure for pain,” said Shep Tapasak, managing principal, Integro Insurance Brokers.

These cases, Tapasak said, have the potential to be severe. “This type of litigation boils down to a “profits over people” strategy, which historically has resonated with juries.”

Broadening Liability

As suits progress, all sides will be waiting and watching to see what case law stems from them. In the meantime, insurance watchers are predicting that the scope of these suits will broaden to include other players in the supply chain including manufacturers, distribution services, retail pharmacies, hospitals, physician practices, clinics, clinical laboratories and marketing agencies.

Litigation is, to some extent, about who can pay. In these cases, there are several places along the distribution chain where plaintiffs will seek relief.

Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

Nancy Bewlay, XL Catlin’s global chief underwriting officer for casualty, said that insurers and their insureds need to pay close attention to this trend.

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk,” she said.

“We, as insurers who identify emerging risks, have to communicate to clients. We like to be on the forefront and, if we can, positively influence the outcome for our clients in terms of getting ahead of their risks.”

In addition to all aspects of the distribution chain, plaintiffs could launch suits against directors and officers based on allegations that they are ultimately responsible for what the company knew or should have known, or that they misrepresented their products or signed off on misleading financial statements.

Advertisement




Shareholders, too, could take aim at directors and officers for loss of profits or misleading statements related to litigation.

Civil litigation could pave the way, in some specific instances, for criminal charges. Mississippi Attorney General Jim Hood, who in 2015 became the first state attorney general to file suit against a prescription drug maker, has been quoted as saying that if evidence in civil suits points to criminal behavior, he won’t hesitate to file those charges as well.

Governing, a publication for municipalities and states, quoted Hood in late 2017 as saying, “If we get into those emails, and executives are in the chain knowing what they’ve unleashed on the American public, I’m going to kick it over to a criminal lawsuit. I’ve been to too many funerals.”

Insurers and insureds can act now to get ahead of this rising wave of liability.

It may be appropriate to conduct a review of policy underwriting and pricing. XL Catlin’s Bewlay said, “We are not writing as if everyone is a pharma manufacturer. Our perception of what is happening is that everyone is being held accountable as if they are the manufacturer.

“The reality is that when insurers look at the pharma industry and each part of the supply chain, including the pharma companies, those in the chain of distribution, transportation, sales, marketing and retail, there are different considerations and different liabilities for each. This could change the underwriting and affect pricing.”

Bewlay also suggests focusing on communications between claims teams and underwriters and keeping a strong line of communication open with insureds, too.

“We are here to partner with insureds, and we talk to them and advise them about this crisis. We encourage them to talk about it with their risk managers.”

Tapasak from Integro encourages insureds to educate themselves and be a part of the solution. “The laws are evolving,” he said. “Make absolutely certain you know your respective state laws. It’s not enough to know about the crisis, you must know the trends. Be part of the solution and get as much education as possible.

“Most states have ASHRM chapters that are helping their members to stay current on both passed and pending legislation. Health care facilities and providers want to do the right thing and get educated. And at the same time, there will likely be an uptick in frivolous claims, so it’s important to defend the claims that are defensible.”

Social Service Risk

In addition to supply chain concerns, insurers and insureds are concerned that even those whose mission it is to help could be at risk.

Hailed as a lifesaver, and approved by the Food and Drug Administration (FDA), the drug Naloxone, can be administered to someone who is overdosing on opioids.  Naloxone prevents overdose by blocking opioid receptor sites and reversing the effects of the overdose.

Advertisement




Some industry experts are concerned that police and emergency responders could incur liability after administering Naloxone.

But according to the U.S. Department of Justice, “From a legal standpoint, it would be extremely difficult to win a lawsuit against an officer who administers Naloxone in good faith and in the course of employment. … Such immunity applies to … other professional responders.”

Especially hard hit are foster care agencies, both by increased child placements and stretched budgets. More details in our related coverage.

While the number of suits is growing and their aim broadening, experts think that some good will come of the litigation. Settlements will fund services for the addicted and opioid risk awareness is higher than ever. &

Mercedes Ott is managing editor of Risk & Insurance. She can be reached at [email protected]