Public Sector Risk

Opioid Addiction Strikes Just as Hard at the Social Services Sector

Opioids have increased demand for treatment center beds, addiction specialists and foster families to critical levels. Providers are feeling the pinch.
By: | May 1, 2018 • 5 min read

In 2016, 11.5 million people misused prescription opioids, 2.1 million had an opioid abuse disorder, and 42,249 died from opioid overdose, according to the National Survey on Drug Use & Health and the National Center for Health Statistics.


The opioid epidemic is driving an influx of people into counseling and addiction treatment. It’s breaking apart families and funneling more children into foster care. Human service organizations are under immense pressure to meet increased demand without receiving additional resources. The need for counselors, social workers, psychiatrists, available beds and foster families is outpacing supply, increasing safety risk and professional liability exposure.

Medically-Assisted Treatment and Professional Liability

The risk profile of a treatment facility depends on the services it provides. Talk-based approaches (counseling and support groups) carry less risk than residential centers providing medically-assisted treatment. Psychiatrists and other medical professionals who dispense medications need more robust coverage and higher limits than social workers.

The Drug Addiction Treatment Act of 2000 permits qualified physicians to treat opioid addiction using FDA-approved Schedule III, IV or V narcotic medications outside traditional sites like methadone clinics. Buprenorphine is currently the only such medication. Physicians who qualified for a waiver to prescribe buprenorphine could only treat 30 patients at a time until recently. Now, physicians who have had their waiver for at least one year can apply to increase their limit to 100 patients; after another year, they can extend that to 275.

“There’s been some deregulation here to try to meet the increasing demand of people seeking medication-assisted treatment, particularly in rural areas,” said Brad Storey, VP of risk management, Irwin Siegel Agency Inc.

Mike Liguzinski, president, specialty human services division, Great American Insurance Group

Facilities providing medically-assisted treatment should not only have professional liability programs to protect their clinicians but should also require medical professionals to carry their own coverage to pick up the primary layer of risk.

“Professional liability cover is usually built into insurance programs for social service providers, but it’s typically not robust enough to cover medical services. The cover is geared more toward social workers and counselors rather than medical professionals. An entry into substance abuse treatment could open the door to medical professional risk as a behavioral healthcare provider,” said Scott Konrad, SVP and Not-for-Profit Practice leader, HUB International. “Make sure your contracted medical providers can show proof of third party medical malpractice coverage, and that your own insurance is built to cover your employed practitioners.”

Non-medical staff may be trained in administering the overdose-reversing drug Naloxone. Some states allow Naloxone to be dispensed without a prescription, while others have yet to enact laws surrounding the medication.

“It’s important to be aware of the regulatory environment in your state,” Storey said. “Running afoul of the law may nullify any coverage that would have been available to indemnify the facility should something go wrong.”

“A traditional professional liability policy [may] contain exclusionary language for the administration of medication without a prescription. This is a clear gap when it comes to life-saving Naloxone,” said Mike Liguzinski, president, specialty human services division, Great American Insurance Group.

“Fortunately, there is Good Samaritan law protection in most states protecting the insured from errors made in administering Naloxone. In states which have allowed the administration without a prescription, it is common to enact a statute that grants civil and criminal immunity to the administrator as long as such administrator is acting in good faith.”

Staffing and Safety Issues

Facilities take on greater safety risk due to higher frequency of patient encounters. Patients can become violent while detoxing or can threaten safety if they relapse. Relapse situations may grow more common as centers adopt a ‘harm reduction’ approach.


“Harm reduction programs are gaining more traction,” Storey said. “Treatment centers won’t automatically kick patients out of the program if they relapse. The concept of safe consumption sites and needle exchange programs are also examples of harm reduction. However, having an individual relapse in a residential facility presents risk to both staff and clients.”

Staffing ratios dictate the number of patients each worker supervises. Sticking to ratios can limit dangerous encounters and reduce a facility’s safety and liability risk, but the pressure of a wait list may push organizations to relax the ratios and increase the workload.

“Failure to meet supervision guidelines is the biggest driver of lawsuits and liability claims against detox and counseling centers,” said Paul Siragusa, vice president, Philadelphia Insurance. “But an influx of people seeking treatment combined with high employee turnover in the social service sector makes it tough to stick to the proper ratios.”

To adhere to supervision guidelines, these facilities might have no choice but to turn people away, said Kevin Glennon, VP of clinical programs, One Call.

“As long as the practitioner-to-patient ratio is maintained, organizations shouldn’t have an issue. Similar to skilled nursing or rehab facilities, it’s based on bed availability,” he said.

Impact on Foster Care

Addiction epidemics coincide with a rising population of children placed in foster care. A 2015 study found two out of every thousand children were removed from their homes due to parental neglect, constituting a 129 percent increase from 2012.

According to the U.S. Department of Health and Human Services, the number of children in foster care has increased steadily since 2012. The number of foster families has not.

“More children are entering the system, but the state agencies aren’t getting bigger budgets. In the claims we see, it appears the agency tried to cut corners, most likely due to a lack of funding,” said Phil Hawley, president, Hawley & Associates LLC.

“In states which have allowed the administration without a prescription, it is common to enact a statute that grants civil and criminal immunity to the administrator.” — Mike Liguzinski, president, specialty human services division, Great American Insurance Group

“Social workers are burnt out. They’re having a harder time … properly vetting each situation before placing children,” Siragusa said. “As a result, we’ve seen instances of physical or sexual abuse against foster children.”


According to Hawley, the cost of care per foster child can range from $100 to $400 per day, or $36,000 to $70,000 per child per year. Costs are higher for kids with special needs.

Siragusa said mistreatment claims garner multimillion dollar verdicts. They boil down to social services’ inability to evaluate foster homes.

Carrying professional liability coverages for both medical professionals and human service providers can mitigate legal liability for treatment facilities and foster care agencies. Unfortunately, problems like provider burnout, understaffing and lack of bed availability can only be solved with more funding.

In the interim, social service organizations can implement thorough screening protocols for employees, staff, third party providers and patients and foster families. Because not every incident is preventable, “have a response plan,” Konrad said. &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Manufacturing

More Robots Enter Into Manufacturing Industry

With more jobs utilizing technology advancements, manufacturing turns to cobots to help ease talent gaps.
By: | May 1, 2018 • 6 min read

The U.S. manufacturing industry is at a crossroads.

Faced with a shortfall of as many as two million workers between now and 2025, the sector needs to either reinvent itself by making it a more attractive career choice for college and high school graduates or face extinction. It also needs to shed its image as a dull, unfashionable place to work, where employees are stuck in dead-end repetitive jobs.


Added to that are the multiple risks caused by the increasing use of automation, sensors and collaborative robots (cobots) in the manufacturing process, including product defects and worker injuries. That’s not to mention the increased exposure to cyber attacks as manufacturers and their facilities become more globally interconnected through the use of smart technology.

If the industry wishes to continue to move forward at its current rapid pace, then manufacturers need to work with schools, governments and the community to provide educational outreach and apprenticeship programs. They must change the perception of the industry and attract new talent. They also need to understand and to mitigate the risks presented by the increased use of technology in the manufacturing process.

“Loss of knowledge due to movement of experienced workers, negative perception of the manufacturing industry and shortages of STEM (science, technology, engineering and math) and skilled production workers are driving the talent gap,” said Ben Dollar, principal, Deloitte Consulting.

“The risks associated with this are broad and span the entire value chain — [including]  limitations to innovation, product development, meeting production goals, developing suppliers, meeting customer demand and quality.”

The Talent Gap

Manufacturing companies are rapidly expanding. With too few skilled workers coming in to fill newly created positions, the talent gap is widening. That has been exacerbated by the gradual drain of knowledge and expertise as baby boomers retire and a decline in technical education programs in public high schools.

Ben Dollar, principal, Deloitte Consulting

“Most of the millennials want to work for an Amazon, Google or Yahoo, because they seem like fun places to work and there’s a real sense of community involvement,” said Dan Holden, manager of corporate risk and insurance, Daimler Trucks North America. “In contrast, the manufacturing industry represents the ‘old school’ where your father and grandfather used to work.

“But nothing could be further from the truth: We offer almost limitless opportunities in engineering and IT, working in fields such as electric cars and autonomous driving.”

To dispel this myth, Holden said Daimler’s Educational Outreach Program assists qualified organizations that support public high school educational programs in STEM, CTE (career technical education) and skilled trades’ career development.

It also runs weeklong technology schools in its manufacturing facilities to encourage students to consider manufacturing as a vocation, he said.

“It’s all essentially a way of introducing ourselves to the younger generation and to present them with an alternative and rewarding career choice,” he said. “It also gives us the opportunity to get across the message that just because we make heavy duty equipment doesn’t mean we can’t be a fun and educational place to work.”

Rise of the Cobot

Automation undoubtedly helps manufacturers increase output and improve efficiency by streamlining production lines. But it’s fraught with its own set of risks, including technical failure, a compromised manufacturing process or worse — shutting down entire assembly lines.


More technologically advanced machines also require more skilled workers to operate and maintain them. Their absence can in turn hinder the development of new manufacturing products and processes.

Christina Villena, vice president of risk solutions, The Hanover Insurance Group, said the main risk of using cobots is bodily injury to their human coworkers. These cobots are robots that share a physical workspace and interact with humans. To overcome the problem of potential injury, Villena said, cobots are placed in safety cages or use force-limited technology to prevent hazardous contact.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them.” — David Carlson, U.S. manufacturing and automobile practice leader, Marsh

“Technology must be in place to prevent cobots from exerting excessive force against a human or exposing them to hazardous tools or chemicals,” she said. “Traditional robots operate within a safety cage to prevent dangerous contact. Failure or absence of these guards has led to injuries and even fatalities.”

The increasing use of interconnected devices and the Cloud to control and collect data from industrial control systems can also leave manufacturers exposed to hacking, said David Carlson, Marsh’s U.S. manufacturing and automobile practice leader. Given the relatively new nature of cyber as a risk, however, he said coverage is still a gray area that must be assessed further.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them,” he said. “Therefore, companies need to think beyond the traditional risks, such as workers’ compensation and product liability.”

Another threat, said Bill Spiers, vice president, risk control consulting practice leader, Lockton Companies, is any malfunction of the software used to operate cobots. Then there is the machine not being able to cope with the increased workload when production is ramped up, he said.

“If your software goes wrong, it can stop the machine working or indeed the whole manufacturing process,” he said. “[Or] you might have a worker who is paid by how much they can produce in an hour who decides to turn up the dial, causing the machine to go into overdrive and malfunction.”

Potential Solutions

Spiers said risk managers need to produce a heatmap of their potential exposures in the workplace attached to the use of cobots in the manufacturing process, including safety and business interruption. This can also extend to cyber liability, he said.

“You need to understand the risk, if it’s controllable and, indeed, if it’s insurable,” he said. “By carrying out a full risk assessment, you can determine all of the relevant issues and prioritize them accordingly.”

By using collective learning to understand these issues, Joseph Mayo, president, JW Mayo Consulting, said companies can improve their safety and manufacturing processes.

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it.” — Joseph Mayo, president, JW Mayo Consulting

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it,” Mayo said. “They can also use detective controls to anticipate these issues and react accordingly by ensuring they have the appropriate controls and coverage in place to deal with them.”


Manufacturing risks today extend beyond traditional coverage, like workers’ compensation, property, equipment breakdown, automobile, general liability and business interruption, to new risks, such as cyber liability.

It’s key to use a specialized broker and carrier with extensive knowledge and experience of the industry’s unique risks.

Stacie Graham, senior vice president and general manager, Liberty Mutual’s national insurance central division, said there are five key steps companies need to take to protect themselves and their employees against these risks. They include teaching them how to use the equipment properly, maintaining the same high quality of product and having a back-up location, as well as having the right contractual insurance policy language in place and plugging any potential coverage gaps.

“Risk managers need to work closely with their broker and carrier to make sure that they have the right contractual controls in place,” she said. “Secondly, they need to carry out on-site visits to make sure that they have the right safety practices and to identify the potential claims that they need to mitigate against.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]