2222222222

Risk Scenario

The Scales of Justice

Two employee injuries at the same company produce two very different outcomes.
By: | August 26, 2014 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

Frankie and Hector

“It’s a great day for the Irish!”

Scenario_ScalesJustice

Whether they loved him or found him annoying, workers in the seafood and meat departments in the Better Harvest grocery store in Boston’s Back Bay knew the meaning of that booming morning greeting very well.

It declared that boisterous fish cleaner and erstwhile fish-counter salesman Frankie Burns was at work, and he wanted everybody to know it.

Despite his sometimes jarring presence, most people loved Frankie. Frankie knew seafood, having worked on his family’s cod boat when he was younger. Now, at 55, he provided a knowledge of local fish and shellfish that was an asset in a store catering to the Back Bay’s educated, prosperous consumers.

Barrel-chested, with forearms, shoulders and biceps solidly built from years of manual labor, Frankie cheerfully and proudly unloaded the tubs of hake, pollock and flounder sold by the market.

This May morning, though, would prove to be a wake-up call for the hard-living Frankie. As he had thousands of times before, Frankie hoisted a heavy tub of iced pollock up onto the fish-cutting counter. This time, though, his back gave out.

“Whoa,” Frankie said as he clutched his lower back, wincing at the piercing, unfamiliar pain there.

Whoa indeed.

Testing revealed that Frankie had aggravated a chronic degenerative back condition. His claim was found to be compensable.

Scenario Partner

Scenario Partner

With 180 stores nationwide and close to $8 billion in sales, Better Harvest’s human resources department was well-versed in the amendments to the Americans with Disabilities Act that were enacted in 2008.

Following Better Harvest’s well-documented procedures, and at Frankie’s reluctant request, Back Bay store manager Gracie Walker granted Frankie an accommodation under the ADA.

For now, Frankie was done hoisting ice-filled fish tubs. The store would need to find another fish cutter as the heaviest thing Frankie would be permitted to lift would be paper-wrapped one pound cod fillets.

“Hey, a job’s a job,” Frankie said, as he hoisted a beer and a Fenway Frank with his brother Petey at a Sox game that summer.

————–

Hector Velasquez was the fish cutter in Better Harvest’s Brentwood, Calif. store.

At 53, Hector’s idea of a good time was to go Zydeco dancing with his latest and greatest girlfriend Vera at the Puma Club in nearby Venice Beach.

That’s exactly what Hector was doing on a steaming hot California night during a performance of his favorite Zydeco band, the Vallejo Oyster Crackers. But Hector made a misstep due to a slippery combination of spilled beer and crushed peanut shells on the dance floor of the Puma Club.

Vera tumbled to the ground with Hector but popped right back up, adjusting her hair and skirt in the process. Hector wasn’t so lucky.

“Honey, are you hurt?” Vera said.

Hector, whose love of beer, fried seafood and tortillas had left him with a stout belly, tried to get up but couldn’t.

Another dancer, seeing Hector in distress, stopped Hector from trying to move.

“Stay still, man,” the Zydeco dancer said. “You might have really hurt yourself.”

Hector’s fellow dancer put his hand on Hector’s belly to still his movements and pushed a chair cushion under his head.

“Be still a minute, man, and breathe — breathe against the pain,” the Zydeco dancer said.

Hector looked up at the man thankfully and started to breathe more deeply, his beer belly rising and falling with each labored breath.

Hector couldn’t make it to work the following Monday and filed for leave under the Family Medical Leave Act.

Tough Medicine

Hector rested for a few days, trying to dull the pain with Ibuprofen and light beer. Given that he wasn’t hurt at work, Hector didn’t go to a doctor, thinking he might end up bearing the cost of treatment that he couldn’t afford.

Scenario_ScalesJustice

On the Thursday after his injury, Hector got a ride from a buddy and came back to work. Hector is self-medicating, taking unhealthy doses of Ibuprofen in an attempt to perform his job.

He barely made it through Thursday and Friday, depending on co-workers to cover for him. Over the weekend, home resting but still in substantial pain, Hector faced the music.

“There’s no way, man,” he said, looking at his bent-over body in the bathroom mirror.

“I gotta talk to somebody.”

The following Monday, Dave Wagner, the general manager of the Brentwood Better Harvest store, got a knock on his office door.

Being the GM of this store, with its affluent and demanding customer base, was no joke. Dave Wagner was one busy man.

“Hector, what’s up?” Dave said.

“I need to talk to you, Mr. Wagner. It’s my back. I hurt it bad the other night and I can’t do any lifting, not much anyway,” Hector said.




Dave did some rapid-fire mental calculations as he gestured Hector to a chair.

“Sit down Hector, sit down,” he said.

Hector moved slowly to sit down, telling Dave everything he needed to know about how badly Hector was hurting.

“I’ll tell you what Hector, I’ll tell you what,” Dave said, as memories of Better Harvest HR emails concerning the ADA flashed through his formidable memory.

“Hold on a sec,” Dave said and popped down at his desk. In two clicks and a couple of scrolls, Dave scanned some emails from HR.

“Reasonable accommodation” is the phrase that stuck in Dave’s mind as he rapidly scanned the emails.

“You don’t have to lift,” Dave said, turning back to Hector. “You can work the counter. How does that sound?”

Hector, although in substantial pain, brightened some.

“That sounds good Mr. Wagner, thank you,” Hector said. But Hector’s feeble attempts to stand up sent Dave a message.

“Talk to Marcus and tell him what I said and I’ll talk to him too,” Dave said, as Hector made his way out.

As Hector went off to find Marcus, the manager of the seafood department, Dave engaged in professional, removed reflection.

“We’ll see what’s reasonable. I’ll give it three months,” he said to himself, before his vibrating cellphone distracted him.

“Cripe,” the harried Dave said to himself, looking at the number and picking up his phone.

“Dave Wagner,” he said impatiently to whoever was on the line.

Three months came and went, and Dave had to make a call. Hector just wasn’t that strong on the counter.

You had to have serious customer service skills to handle Brentwood and Beverly Hills customers and Hector was flailing. Complaints about him were coming at Dave from all sides, customers, co-workers, you name it.

“Reasonable means reasonable,” Dave said to himself as, worn down with complaints about Hector’s customer service shortcomings, he moved to terminate him.

The Wheel Turns

After his firing, it didn’t take long for the befuddled Hector to hook up with a gifted, ambitious employment rights attorney, Lucia Yamamoto, a graduate of Berkeley Law and a passionate defender of workers’ rights.

Scenario_ScalesJustice

This is how the pre-trial negotiations went between Yamamoto’s firm, The Workers’ Rights Center, and the firm that did defense work for Better Harvest’s employment liability carrier, Apex Insurance.

“Okay guys, this is an easy one,” Yamamoto said on the phone call with the Apex defense team.

“We don’t see it that way,” was the game response from Ed Kleindinst, the defense lead for Apex’s law firm, Kleindinst, Evans, Hale & Brown.

“Oh really?” Yamamoto said, her derision palpable.

“You got two guys, practically the same age. They’re both working the same job. I mean this is beautiful,” she said.

“You accommodate one guy, and he’s still got a job,” Yamamoto said.

“Your GM in the Boston store continues to accommodate him, according to widely disseminated company policy…,” she continued.

“I don’t think you’re in a position to know how widely disseminated it was,” Kleindinst responded.

“Like it matters,” Yamamoto shot back.

“The other guy, same company, you terminate after 90 days even though it’s not presenting an undue hardship to your business. Instead, he was terminated because the manager felt he had accommodated him for long enough, which runs contrary to the company policy,” Yamamoto says.

“Been there 20 years, married with four children. Never been disciplined in his working life. Hello? Are you guys still there?” she said.

“We’re here,” Kleindinst said, this time with a little less vigor, pushing the mute button and rolling his eyes at his co-counsel in one of the Kleindinst, Evans, Hale & Brown conference rooms.

One of the partners jotted a note on a sheet of paper and slid it in front of Kleindinst.

There was a pause — orchestrated on the part of both Yamamoto and Kleindinst.

“Well, you’re not saying anything,” Yamamoto said.

“Go on, please, counsel,” Kleindinst said.

“Oh I’ll go on, I could go on all day with this one,” Yamamoto said.

“Two million,” she said.

“Oh come on!” Kleindinst said.

“See you in court!” Yamamoto replied.

Kleindinst’s partner jerks his head at the sheet of paper, trying to focus Kleindinst.

“One million,” Kleindinst said.

“One and six or we go to court and no more of this,” Yamamoto said.

There is another pause.

“Gentlemen, are we done?” said Yamamoto.

Kleindinst looked at his co-counsel, who nodded and pulled back in his chair.

“Yes, we’re done,” Kleindinst said.

***

“I really, really don’t like her,” Kleindinst said to his partner after he hung up.

“Like it matters,” his partner said.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Sedgwick to produce this scenario. Below are Sedgwick’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance®.

1. Medical review: Make sure you request and document medical reviews of any request for leave or accommodation under the Family Medical Leave Act or the Americans with Disabilities Act as part of the overall interactive accommodation process.

2. Consistency: Different injured employees with debilitating chronic conditions should be treated with consistency under the Americans with Disabilities Act, regardless of whether their need for accommodation is due to a work-related injury, a non-occupational injury or illness or for another medical need.

3. Document, document, document: Companies need to make sure that standard procedures regarding leave or accommodation under the Family Medical Leave Act or the Americans with Disabilities Act are in place, up to date and triggering interactive process review – as well as clearly communicated to employees. Companies also need to document that they have communicated changes to those policies in a comprehensive and timely manner. A robust information management platform is key to supporting the process and necessary documentation.

4. The leave option: Although the goal of ADA/ADAAA is to keep people at work and every effort should be made to meet an accommodation request, supervisors need to keep in mind that there may be cases where a workplace accommodation isn’t possible or advisable due to the significant hardship it would place on their business; time off from work may be the only option. Shoe-horning an employee into a task they are unfit for may do more harm than good.

5. Disabled means disabled: Under the law, even if a condition is “controlled” by medication or some other treatment method, a disability is still a disability. Be very careful not to treat someone with a chronic condition differently just because they’re asymptomatic.

Additional Partner Resources

ADA Accommodation Services

Sedgwick Connection Blog

Webinar: ADA/ADAAA Challenges – Are You Compliant?

Watch Sedgwick delve deeper into ADA compliance with our sister publication, Human Resource Executive®.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

High Net Worth

To the High Net Worth Homeowner: Build a Disaster Resiliency Plan You Can Be Proud Of

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.

Advertisement




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.”

Advertisement




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.

Advertisement




“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]