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.

Risk Management

The Profession

The risk manager for Boyd Gaming Corp. says curiosity keeps him engaged, and continual education will be the key to managing emerging risks.
By: | May 1, 2018 • 4 min read

R&I: What was your first job?

I was trained as an accountant, worked in public accounting and became a CPA. Being comfortable with numbers is helpful in my current role, and obviously, the language of business is financial statements, so it helps.

R&I: How did you come to work in risk management?

Working in finance in the corporate environment included the review of budgets and the analysis of business expenses. I quickly found the area of benefits and insurance — and how “accepting risk” impacted those expenses — to be fascinating. I asked a lot of questions. Be careful what you ask for — I soon found myself responsible for those insurance areas and haven’t looked back!

R&I: What is the risk management community doing right?


I have found the risk management community to be a close-knit group, whether that’s industry professionals, risk managers with other companies or support organizations like RIMS and other regional groups. The expertise of the carriers and specialty vendors to develop new products and programs, along with the appropriate education, will continue to be of key importance to companies going forward.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

As I’m sure many in the insurance field would agree, Hurricanes Katrina and Rita in 2005 changed our world and our industry. It was a particularly intense time and certainly a baptism by fire for people like me who were relatively new to the industry. This event clearly accelerated the switch to the acceptance of more risk, which impacted mitigation strategies and programs.

Bob Berglund, vice president, benefits and insurance, Boyd Gaming Corp.

R&I: What emerging commercial risk most concerns you?

The fast-paced threat that cyber security represents today. Our company, like so many companies, is reliant upon computers, software and IT expertise in our everyday existence. This new risk has forged an even stronger relationship between risk management and our IT department as we work together to address this growing threat.

Additionally, the shooting event in Las Vegas in 2017 will have an enduring impact on firms that host large gatherings and arena-style events all over the world, and our company is no exception.

R&I: What insurance carrier do you have the highest opinion of?


With the various types of insurance programs we employ, I have been fortunate to work with most of the large national and international carriers — all of whom employ talented people with a vast array of resources.

R&I:  How much business do you do direct versus going through a broker?

We use brokers for many of our professional coverages, such as property, casualty, D&O and cyber. We are self-insured under our health plans, with close to 25,000 members. We tend to manage those programs internally and utilize direct relationships with carriers and specialty vendors to tailor a plan that works best for team members.

R&I: Who is your mentor and why?

I have been fortunate to have worked alongside some smart and insightful people during my career. A key piece of advice, said in many different ways, has served me well. Simply stated: “Seek to understand before being understood.”

What this has meant to me is try everything you can to learn about something, new or old. After you have gained this knowledge, you can begin to access and maybe suggest changes or adjustments. Being curious has always been a personal enjoyment for me in business, and I have found people are more than willing to lend a hand, offer information and advice — you just need to ask. Building those alliances and foundations of knowledge on a subject matter makes tackling the future more exciting and fruitful.

R&I: What have you accomplished that you are proudest of?

Our benefit health plan is much more than handing out an insurance card at the beginning of the year. We encourage our team members and their families to learn about their personal health, get engaged in a variety of health and wellness programs and try to live life in the healthiest possible way. The result of that is literally hundreds of testimonials from our members every year on how they have lost weight, changed their lifestyle and gotten off medications. It is extremely rewarding and is a testament to [our] close-knit corporate culture.

R&I: What’s the best restaurant you’ve ever eaten at?


Some will remember the volcano eruption in Iceland in spring of 2010. I was just finishing a week of meetings in London with Lloyd’s syndicates related to our property insurance placement when the airspace in England and most of northern Europe was shut down — no airplanes in or out! Flights were ultimately canceled for the following five days. Therefore, with a few other stranded visitors like myself, we experimented and tried out new restaurants every day until we could leave. It was a very interesting time!

R&I: What is the riskiest activity you ever engaged in?

I am originally from Canada, and I played ice hockey from the time I was four years old up until quite recently. Too many surgeries sadly forced my recent retirement.

R&I: What do your friends and family think you do?

That’s a funny one … I am a CPA working in the casino industry, doing insurance and risk management, so neighbors and acquaintances think I either do tax returns or they think I’m a blackjack dealer at the casino!

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