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

High Net Worth

Your High Net Worth Client Wants to Live in the Danger Zone? Here’s What Your Resiliency Plan Should Look Like.

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.


Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”


Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.


“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]