The Law

Pay Disparity Case Not Covered by Insurer Due to Insufficient Notice

National Casualty Company will not be responsible for the more than $18 million settlement between Fulton County and its attorneys who claimed pay disparity.
By: | June 1, 2018 • 2 min read

Fulton County, Georgia, employed numerous attorneys between July 2013 and July 2015. Of those attorneys, 338 brought seven lawsuits and one grievance against the County, alleging unfair wages and pay disparity.

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The County employed attorneys in the Public Defender’s Office, the Solicitor’s Office, the District Attorney’s Office, the Child Advocate’s Office and the Superior and State Courts. A number of attorneys claimed the County failed to pay each office “equal wages for equal work,” opening up a pay disparity dispute.

In their lawsuit, the employees alleged they sustained financial damage, because they did not receive the proper payment amounts required during their tenure. Additionally, they claimed the County breached its employment contracts by not paying salaries required by personnel regulations set up by the County in the first place.

These regulations set attorney and other employee pay rates. When all was said and done, the total cost to settle all cases was $18,362,100.

During the period in question, Fulton County held a liability policy with insurance carrier National Casualty Company. The policy was a retained limit liability insurance policy specifically for public entities, which provided “employment practice wrongful act” coverage limited to $7 million per occurrence.

When the County approached National for payment on the settlements, National declined, stating it had not received sufficient reports for the claims.

The County relied on its risk management team to communicate with National. While the team did send notice and updates during the settlement cases, it was sending those updates through the Willis Group, which acted as the County’s broker. The Willis Group sent the notices to Civic Risk Underwriting Managers, National’s underwriter.

Instead of sending the claims to National, Civic Risk reviewed the applications. When finally presented with the settlement amount, National claimed its policy would not cover the amount owed to the attorneys in the underlying case.

The County and National found themselves battling it out in court. In the Georgia Court of Appeals, the court granted in part and denied in part Fulton County’s motion, stating that the policy says it would provide coverage, yet the County did not provide proper notice.

Scorecard: National will not have to pay for Fulton County’s underlying suits, because the County didn’t provide sufficient notice to the insurer.

Takeaway: Direct contact between an insurer and their insureds is best practice when it comes to claims. Having third parties involved can muddle the message like a bad game of Whisper Down the Alley. &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]