Sponsored: Philadelphia Insurance Companies

Serving the Servants: Mitigating Liability for the Human Service Sector

The opioid crisis is the most significant trend impacting social service organizations’ ability to manage risk.
By: | May 1, 2018 • 6 min read

The opioid epidemic is well-recognized as one of the nation’s most pressing issues.

Widespread addiction affects not just the lives of individuals and their families but also the businesses who employ and serve them.

Human service organizations feel the effects most acutely, as they may have staff members battling with the very addictions and consequences they are supposed to help their clients escape and overcome. At the same time, the opioid crisis is driving up demand for their services and stretching their resources thin.

Counseling and addiction treatment centers, homeless shelters and foster care systems are burdened by an influx of people seeking help — an increase directly correlated with the prevalence of opioid addiction. But facing a lack of funding and chronic staffing shortages, these entities struggle to meet the need and open themselves to greater liability exposure.

“From an insurance perspective, the opioid crisis is the most significant trend impacting social service organizations’ ability to manage risk,” said Paul Siragusa, vice president, Philadelphia Insurance Companies.

“The threat of liability lawsuits looms large over this industry.”

Addiction, Social Services and the Liability Problem

Paul Siragusa, vice president, Philadelphia Insurance Companies

No company is immune from the insidious influence of addiction on productivity and performance. Employees struggling themselves or with family members take off more time from work. When they are physically present, their minds may still be distracted.

But, “organizations charged with caring for the intellectually or physically disabled, the homeless or their children cannot afford to have mentally disengaged employees,” Siragusa said. “When staff doesn’t show up, people get hurt.”

For detox and counseling centers, a flood of new clientele makes it harder for staff to adhere to supervision guidelines. Many facilities have specific protocols dictating one-on-one or two-on-one supervision at certain times. If there isn’t enough staff to maintain those levels or if workers on duty are distracted, it can create a life-threatening problem. The perils range from choking hazards to dangerous withdrawal symptoms or even violence perpetrated by angry clients against themselves or others.

“Failure to meet supervision guidelines is one of the greatest sources of lawsuits and liability claims for these organizations,” Siragusa said. “If someone is not present — physically or mentally — the people they’re meant to watch over can die.”

More adults entering addiction treatment also coincides with more children entering the foster care system.

“Some state foster care systems have seen a 20 to 30 percent increase in children being placed into foster care, and they are citing a direct correlation with the opioid epidemic. When parents are hooked on drugs, kids have to be removed from the home,” Siragusa said. “We haven’t seen a spike like this since the crack cocaine epidemic of the 1980s.”

With more children and more foster families involved, social workers have a harder time properly vetting each situation before placing children into homes.

“Sexual or physical abuse claims involving a foster child garner multimillion dollar verdicts on a weekly basis,” Siragusa said. “They usually boil down to the failure of social service providers to fully inspect and evaluate foster homes, to fully vet foster parents or to monitor children once placed in the home. None of these functions can be properly executed if human services organizations are understaffed based on the increased caseload.”

Homeless shelters experience similar issues, as homelessness and substance abuse rates are also highly correlated. According to a study published by the American Psychiatric Association, 25 percent of homeless people surveyed said drugs and alcohol were a major cause of their homelessness.

“From an insurance perspective, the opioid crisis is the most significant trend impacting social service organizations’ ability to manage risk.”
— Paul Siragusa, vice president, Philadelphia Insurance Companies

“The biggest liability risk for homeless shelters when they’re overwhelmed with entrants is client-on-client abuse. A significant percentage of the client population have severe mental health issues, and fights often break out over beds or belongings. When fights result in injuries, the injured party could secure pro bono legal assistance to bring suit,” Siragusa said.

“Lawsuits alleging the shelter did not provide a safe environment can result in verdicts or settlements in the hundreds of thousands.”

Insufficient funds and low staffing levels exacerbate these risks. Most social service organizations already operate on narrow budgets, making it difficult to hire extra staff or provide additional resources when demand is high. Counseling centers, homeless shelters and nonprofits in this space cannot offer the salaries that typically help attract and retain high-caliber workers. High turnover rates increase the risk that employees are under-trained and may not fully understand their responsibilities or workplace policies.

Risk Mitigation Solutions

More federal funding could help these providers better serve their communities. The President’s proposed budget released in February of this year included $13 billion to help fight the opioid crisis, allocating $3 billion in 2018 and $10 billion in 2019 to the U.S. Department of Health and Human Services.

In the meantime, social service entities can take some simple steps to minimize liability exposure using their existing resources.

“Drug screening and testing for employees is imperative. Workers responsible for the safety and care of people impacted by addiction cannot be afflicted with the same struggles themselves,” Siragusa said. Clear policies around supervision ratios and client monitoring, frequently communicated to staff, can also help drive home the importance of those standards.

Organizations can also utilize risk management specialists to identify ways to strengthen their defense should a claim end up in court. Proper documentation of everything from drug testing results, employee policies and training, incident reporting and response actions can help an entity argue its case in front of a jury.

With a long track record in this sector, Philadelphia Insurance has the experience and expertise to align clients with these critical resources. It has worked with social service providers since 1989, but the company’s history with underserved communities extends back to its inception in the 1960s.

“Our founder, James Maguire, attended college in Philadelphia and was first exposed to the deaf community in his senior year when he volunteered at Pennsylvania School for the Deaf to teach basketball to the students. Through the friendships established there, he later realized there weren’t many life insurance options available to them. The industry had overlooked them entirely,” Siragusa said.

“So he learned sign language, convinced his first employer (a life insurance company) to allow him to start selling personal lines coverage to the deaf, and was hugely successful.”

The ethos of helping communities that society tends to cast aside or ignore carried over to the founding of Philadelphia Insurance two decades later. Today, social service providers are the insurer’s primary clients, representing one-third of its business.

“We know the industry well and provide the best products available for the human service sector. Our underwriters and claims staff understand their needs and challenges,” Siragusa said.

The evidence lies in the longevity of its relationships. Other carriers in the space typically work with an insured for three to four years before their appetite changes. Philadelphia’s clients, on average, stick with them for 12.

To learn more about Philadelphia Insurance Companies’ solutions for human service providers, visit https://www.phly.com/nonprofit.



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.

Philadelphia Insurance Companies (PHLY) offers product-specific resources, alliances, and service capabilities to achieve a multi-faceted approach to risk management, including safety program development, site audits, and training (including interactive web-based training). We offer a wide range of products and value-added services at financial terms to be agreed upon to help you achieve your risk management goals.

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.


But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.


Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &


Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

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