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Injury Reporting

U.S. Steel Lawsuit Could Impact Reporting Policies

If the Department of Labor wins the case, all companies may have to revise rules for immediate reporting of injuries.
By: | March 23, 2016 • 4 min read

It’s commonly known that the earlier a work injury is reported, chances are better that claim costs will be controlled and the worker’s absence will be limited.

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But strictly enforced policies that require workers to report an injury in 24 hours or face disciplinary action are being deemed too rigid.

In February, the U.S. Department of Labor filed suit against U.S. Steel for disciplinary action the company took against two employees.

The Pennsylvania-based workers reported injuries several days after they occurred and were suspended without pay for violating U.S. Steel’s policy that required reporting of an injury within 24 hours.

The employees filed complaints with the Occupational Safety and Health Administration (OSHA), alleging the suspensions were retaliatory.

“The reliability of witness statements can degrade significantly over time.” — Joseph Freeman, managing director, risk control, Beecher Carlson

DOL’s lawsuit charges that U.S. Steel’s action violates the anti-discrimination provision of the Occupational Safety and Health Act.

In announcing the lawsuit, Richard Mendelson, OSHA regional administrator in Philadelphia, said the company’s policy “discourages employees from reporting injuries for fear of retaliation.”

“Because workers don’t always recognize injuries at the time they occur, the policy provides an incentive for employees to not report injuries once they realize they should, since they are concerned that the timing of their report would violate the company’s policy and result in some kind of reprimand.”

Joseph Freeman, managing director, risk control, Beecher Carlson.

Joseph Freeman, managing director, risk control, Beecher Carlson.

The suit demands that U.S. Steel rescind the disciplinary actions, and pay the workers lost wages and damages. It also wants the company’s policy to be changed so that employees can report workplace injuries or illnesses up to seven days after becoming  aware of them.

Workers’ compensation experts say that there is nothing wrong with asking employees to report an injury immediately, in theory anyway.

“Many companies have a rule that you must report workplace injuries immediately, and it is not designed to be a ‘gotcha’ opportunity,” said Joseph Freeman, managing director, risk control at Beecher Carlson.

Prompt reporting of workplace injuries lowers costs and improves outcomes, experts said.

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“The insurance companies have statistics on the amount of money paid depending on how late the claim is reported,” said Robert Phelan, president and CEO of TriPoint.

“If you miss a week in reporting, you get killed. And it goes downhill from there.

“What’s really critical in workers’ comp today is to get the injured employee the right medical treatment from the beginning. Conditions worsen when treatment is delayed, which can happen if the wrong treatment is sought from the start.”

Phelan said that delays can cause medical-only claims to become lost-time claims.

Delays also impede efforts to investigate — and remediate — the causes of injury or illness.

“Conditions at a workplace can change very rapidly,” Freeman said. “If the employer isn’t given the opportunity to investigate immediately, when they do conduct their investigation, the environment could be completely different from when the incident actually occurred.”

“Workplace safety is all about communication, and communication is what creates the culture.” — Robert Phelan, president and CEO, TriPoint

He added that injured workers often don’t see the injury occur, making co-workers’ accounts important.

“The reliability of witness statements can degrade significantly over time,” Freeman said.

Immediate reporting policies help companies gather statements while they are as accurate as possible, he said.

Fraudulent claims, while rare, do occur, and delays, particularly over a weekend, not only make it harder to determine a claim’s validity, but can also spark employer suspicions, harming workplace culture, experts said.

Longer delays can also trigger exclusions to coverage.

“In every insurance policy there is an obligation to report a claim in a timely manner,” Phelan said.

“If you get outside of 30 days, an insurance company could say … ‘We’re not going to pay for it.’ … because your ability to understand what really happened is compromised.

“The [insurance] premium is going to increase on its own, because if you have this late reporting, the statistics prove it will make your claims values higher, and if the claims are higher … your premium goes up,” Phelan says.

Implications of Lawsuit

The suit could have implications beyond U.S. Steel’s policy and procedures.

“If OSHA wins the case, I think many companies will have to revise their policies and retrain people to say, ‘We would appreciate you reporting these immediately so we can investigate in a timely manner, but you have seven days, per OSHA,’ ” Freeman said.

Robert Phelan, president and CEO, TriPoint

Robert Phelan, president and CEO, TriPoint

While Phelan doubts U.S. Steel intended to discourage reporting, he said punitive policies are a bad idea.

Strict disciplinary action, he said, could make workers wary of filing safety reports and damage the collaborative workplace culture that is the most powerful tool in reducing reporting times.

“Workplace safety is all about communication, and communication is what creates the culture. You can’t just send out an email or put something in their pay envelope — it’s got to be continuously communicated. We tell our employees to get everyone to report everything, because if it doesn’t amount to anything, you just throw the paperwork in the trash.’”

Freeman agreed.

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“Careful communication between employers and employees is absolutely critical,” he said; the wrong tone can put employees on the defensive.

“When those policies are communicated with greater care, the employees will adhere to them more frequently and you end up having a better culture because of it, which sets all parties up for success.”

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

More from Risk & Insurance

More from Risk & Insurance

Pharma Under Fire

Opioids Give Rise to Liability Epidemic

Opioids were supposed to help. Instead, their addictive power harmed many, and calls for accountability are broadening.
By: | May 1, 2018 • 8 min read

The opioid epidemic devastated families and flattened entire communities.

The Yale School of Medicine estimates that deaths are nearly doubling annually: “Between 2015 and 2016, drug overdose deaths went from 33,095 to 59,000, the largest annual jump ever recorded in the United States. That number is expected to continue unabated for the next   several years.”

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That’s roughly 160 deaths every day — and it’s a count that’s increasing daily.

In addition to deaths, the number of Americans struggling with an opioid disorder disease (the official name for opioid addiction) is staggering.

The National Institute on Drug Abuse (NIDA) estimates that 2 million people in the United States suffer from substance use disorders related to prescription opioid pain relievers, and roughly one-third of those people will “graduate” to heroin addiction.

Conversely, 80 percent of heroin addicts became addicted to opioids after being prescribed opioids.

As if the human toll wasn’t devastating enough, NIDA estimates that addiction costs reach “$78.5 billion a year, including the costs of health care, lost productivity, addiction treatment, and criminal justice involvement.”

Shep Tapasak, managing principal, Integro Insurance Brokers

With numbers like that, families are not the only ones left picking up the pieces. Municipalities, states, and the federal government are strained with heavy demand for social services and crushing expenditures related to opioid addiction.

Despite the amount of money being spent, services are inadequate and too short in duration. Wait times are so long that some people literally die waiting.

Public sector leaders saw firsthand the range and potency of the epidemic, and were among the first to seek a legal reckoning with the manufacturers of  synthetic painkillers.

Seeking redress for their financial burden, some municipalities, states and the federal government filed lawsuits against big pharmaceutical companies and manufacturers. To date, there are more than 100 lawsuits on court dockets.

States such as Ohio, West Virginia, New Jersey, Pennsylvania and Arkansas have been hit hard by the epidemic. In Arkansas alone, 72 counties, 15 cities, and the state filed suit, naming 65 defendants. In Pennsylvania, 16 counties, Philadelphia, and Commonwealth officials have filed lawsuits.

Forty one states also have banded together to subpoena information from some drug manufacturers.

Pennsylvania’s Attorney General, Josh Shapiro, recently told reporters that the banded effort seeks to “change corporate behavior, so that the industry can no longer do what I think it’s been doing, which is turning a blind eye to the effects of dumping these drugs in the communities.”

The volume of legal actions is growing, and some of the Federal cases have been bound together in what is called multidistrict litigation (MDL). These cases will be heard by a judge in Ohio. Plaintiffs hope for a settlement that will provide funding to be used to help thwart the opioid epidemic.

“From a societal perspective, this is obviously a big and impactful issue,”  said Jim George,  a managing director and global claims head with Swiss Re Corporate Solutions. “A lot of people are suffering in connection with this, and it won’t go away anytime soon.

“Insurance, especially those in liability, will be addressing this for a long time. This has been building over five or six years, and we are just now seeing the beginning stages of liability suits.” 

Basis for Lawsuits

The lawsuits filed to date are based on allegations concerning: What pharma knew or didn’t know; what it should have known; failure to monitor size and frequency of opioid orders, misrepresentation in marketing about the addictive nature of opioids; and false financial disclosures.

Opioid manufacturers, distributors and large drugstore chains together represent a $13 billion-a-year industry, meaning the stakes are high, and the pockets deep. Many have compared these lawsuits to the tobacco suits of the ’90s.

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But even that comparison may pale. As difficult as it is to quit smoking, that process is less arduous than the excruciating and often impossible-to-overcome opioid addiction.

Francis Collins, a physician-geneticist who heads the National Institutes of Health, said in a recorded session with the Washington Post: “One really needs to understand the diabolical way that this particular set of compounds rewires the brain in order to appreciate how those who become addicted really are in a circumstance where they can no more [by their own free will] get rid of the addiction than they can get free of needing to eat or drink.”

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk.” — Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

The addiction creates an absolutely compelling drive that will cause people to do things against any measure of good judgment, said Collins, but the need to do them is “overwhelming.”

Documented knowledge of that chemistry could be devastating to insureds.

“It’s about what big pharma knew — or should have known.  A key allegation is that opioids were aggressively marketed as the clear answer or miracle cure for pain,” said Shep Tapasak, managing principal, Integro Insurance Brokers.

These cases, Tapasak said, have the potential to be severe. “This type of litigation boils down to a “profits over people” strategy, which historically has resonated with juries.”

Broadening Liability

As suits progress, all sides will be waiting and watching to see what case law stems from them. In the meantime, insurance watchers are predicting that the scope of these suits will broaden to include other players in the supply chain including manufacturers, distribution services, retail pharmacies, hospitals, physician practices, clinics, clinical laboratories and marketing agencies.

Litigation is, to some extent, about who can pay. In these cases, there are several places along the distribution chain where plaintiffs will seek relief.

Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

Nancy Bewlay, XL Catlin’s global chief underwriting officer for casualty, said that insurers and their insureds need to pay close attention to this trend.

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk,” she said.

“We, as insurers who identify emerging risks, have to communicate to clients. We like to be on the forefront and, if we can, positively influence the outcome for our clients in terms of getting ahead of their risks.”

In addition to all aspects of the distribution chain, plaintiffs could launch suits against directors and officers based on allegations that they are ultimately responsible for what the company knew or should have known, or that they misrepresented their products or signed off on misleading financial statements.

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Shareholders, too, could take aim at directors and officers for loss of profits or misleading statements related to litigation.

Civil litigation could pave the way, in some specific instances, for criminal charges. Mississippi Attorney General Jim Hood, who in 2015 became the first state attorney general to file suit against a prescription drug maker, has been quoted as saying that if evidence in civil suits points to criminal behavior, he won’t hesitate to file those charges as well.

Governing, a publication for municipalities and states, quoted Hood in late 2017 as saying, “If we get into those emails, and executives are in the chain knowing what they’ve unleashed on the American public, I’m going to kick it over to a criminal lawsuit. I’ve been to too many funerals.”

Insurers and insureds can act now to get ahead of this rising wave of liability.

It may be appropriate to conduct a review of policy underwriting and pricing. XL Catlin’s Bewlay said, “We are not writing as if everyone is a pharma manufacturer. Our perception of what is happening is that everyone is being held accountable as if they are the manufacturer.

“The reality is that when insurers look at the pharma industry and each part of the supply chain, including the pharma companies, those in the chain of distribution, transportation, sales, marketing and retail, there are different considerations and different liabilities for each. This could change the underwriting and affect pricing.”

Bewlay also suggests focusing on communications between claims teams and underwriters and keeping a strong line of communication open with insureds, too.

“We are here to partner with insureds, and we talk to them and advise them about this crisis. We encourage them to talk about it with their risk managers.”

Tapasak from Integro encourages insureds to educate themselves and be a part of the solution. “The laws are evolving,” he said. “Make absolutely certain you know your respective state laws. It’s not enough to know about the crisis, you must know the trends. Be part of the solution and get as much education as possible.

“Most states have ASHRM chapters that are helping their members to stay current on both passed and pending legislation. Health care facilities and providers want to do the right thing and get educated. And at the same time, there will likely be an uptick in frivolous claims, so it’s important to defend the claims that are defensible.”

Social Service Risk

In addition to supply chain concerns, insurers and insureds are concerned that even those whose mission it is to help could be at risk.

Hailed as a lifesaver, and approved by the Food and Drug Administration (FDA), the drug Naloxone, can be administered to someone who is overdosing on opioids.  Naloxone prevents overdose by blocking opioid receptor sites and reversing the effects of the overdose.

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Some industry experts are concerned that police and emergency responders could incur liability after administering Naloxone.

But according to the U.S. Department of Justice, “From a legal standpoint, it would be extremely difficult to win a lawsuit against an officer who administers Naloxone in good faith and in the course of employment. … Such immunity applies to … other professional responders.”

Especially hard hit are foster care agencies, both by increased child placements and stretched budgets. More details in our related coverage.

While the number of suits is growing and their aim broadening, experts think that some good will come of the litigation. Settlements will fund services for the addicted and opioid risk awareness is higher than ever. &

Mercedes Ott is managing editor of Risk & Insurance. She can be reached at [email protected]