This Is the Most Important Thing for Avoiding EEOC Disability Claims

Expansion of the types and range of accommodations requested calls for better communication between employees who have a disability and their employers.

By: Nina Luckman | April 25, 2019

Since the Americans with Disabilities Act Amendments Act (ADAAA) was passed and took effect a decade ago, the landscape of disability accommodation has changed to include a range of new benefits.

Third-party administrators and benefits experts are seeing trends in several areas, including expanding special equipment and leave requests, but these come with particular challenges on both sides of the accommodation equation.

The ADAAA ushered in a number of important changes for employers and employees versus the landmark Americans with Disabilities Act of 1990. Namely, it sought to clarify what qualifies as a disability and effectively remove the burden of recognition of a disability from employees.

New Challenges

Over the first 15 years of the ADA’s existence, the courts had narrowed the definition of disability to the extent that discrimination claims were often never discussed in the opinion. Rather, judicial bodies were assessing whether or not the person had a disability at all that entitled them to ADA protection and potential monetary penalties.

The 2008 ADAAA was a bipartisan Congressional effort to address these interpretations and required the courts to construe the definition of “disability” more broadly, address discrimination claims as the primary focus and further, summarily reject two Supreme Court decisions that did not meet this standard.

Any private employer with 15 or more employees is governed by the ADAAA, which is enforced by the Equal Employment Opportunity Commission (EEOC) by its rules and regulations.

The most popular types of accommodations are generally agreed upon by experts in the field of benefits management.

“Accommodations including modified schedules, non-essential reduction of work with intentional and paced reintegration to work help better acclimate those who face these conditions.” — Julie Degenhardt, senior vocational rehabilitation consultant, Unum Benefits Operations

“The ADA Amendments Acts opened a can of worms to some extent in that employees are aware of accommodations happening in their organization and might request something that they think they need without really following the interactive process with the employer,” said Karen English of Spring Consulting and co-author of the latest Disability Management Employer Coalition’s (DMEC) survey report.

“Leave and obtaining equipment like sit/stand desks are the hottest things over the last five to 10 years. The leave is really just additional time off for something like recovery from an injury. What’s not easy there is that leave isn’t well defined; there’s an element of the unknown, because two weeks can easily turn into four and there’s not any clarification in the law for how long it can be.”

The other co-author, Terri Rhodes, DMEC CEO, concurred with English, adding that leave can be problematic on a philosophical level as well.

“The ADA was intended to be an accommodation law to return people to work,” Rhodes said.

“Because of that, it’s counterintuitive to the premise of the law to provide indefinite leave — leave obviously doesn’t return people to work.”

The Leave Accommodation Process

Regardless of its challenges, leave is here to stay as an accommodation in American workplaces, which are increasingly taking advantage of flex scheduling and telecommuting options. The “interactive process” to which both English and Rhodes referred can help manage the unknown aspects of accommodated leave.

Karen English, partner, Spring Consulting

According to Rhodes, engaging in the interactive process earlier rather than later is key to reducing the friction that can come with the accommodation process. Additionally, she explained, “It’s important for employers to remain engaged in the interactive process of accommodation even when they use an outside company, because ultimately the relationship exists between the employer and the employee.”

Rhodes’ and English’s DMEC survey bears this out. This year, it showed that about 9 percent overall, and up to 18 percent for larger size (1,000+) employers, are partnering with a vendor to manage ADA leave, with employers handling the interactive process and the vendor managing intake, document gathering and tracking.

The report notes this outsourcing, while certainly not the majority, is up from 6 percent overall and up from 12 percent for larger employers in 2017 and 3 percent in 2014.

As the employer moves to engage in the interactive process after receiving a request, experts suggest a range of activities to increase trust and reduce the risk of the worst-case scenario — a discrimination claim with the EEOC. It cannot be overstated how dire those claims can become.

Improving Accommodation Communication

According to enforcement data published on the EEOC website, monetary benefits assessed for fiscal year 1997 came to $41,300,648 over 4,007 beneficiaries. By fiscal year 2017 (the latest year for which data is available) monetary benefits were up to $135,245,586 spread across 6,683 beneficiaries.

This means that while the number of people whose claims resulted in fines increased 66.8 percent, the monetary penalties themselves increased 227.4 percent over the same period — a trend indicating individual claims are becoming a serious financial liability for employers found to be in violation.

Kevin Sauers, who leads the ADApt program at Concentra, puts the most common issue matter-of-factly:

“A lot of communication makes the accommodation process much smoother. A lot of times people just throw it out there and don’t explain what their viewpoint is and what they’re looking to achieve with the accommodation,” he said.

“And the employers sometimes don’t do such a good job communicating what they want the employee to be able to do with that accommodation.” Once confusion ensues, it can be difficult to maintain the order of operations.

Terri Rhodes, CEO, Disability Management Employer Coalition

However, according to Nanesha Courtney, area manager for the field case management/return to work services section of Broadspire Services, “If you really listen to [employees’] issues and have an open discussion with them about what they see as their needs, you are more likely to receive their ‘buy-in,’ even if the modification is not what they wanted, but rather something a little cheaper.”

What’s changed in work cultures, according to Zack Craft, vice president, national product leader, One Call, is that things such as sit-to-stand desks, which five years ago were fairly rare, are much more common. This leads to injured and recovering workers to ask for that kind of accommodation with greater ease and less fear of being stigmatized.

“You are now within the norm in that environment,” Craft said.

From that perspective, it’s especially vital to be sensitive to invisible disability as well. Julie Degenhardt, senior vocational rehabilitation consultant at Unum Benefits Operations, spoke to this special consideration.

“Behavioral health and psychiatric conditions are becoming less taboo,” she explained.

“Accommodations including modified schedules, non-essential reduction of work with intentional and paced reintegration to work help better acclimate those who face these conditions. And that’s great for the employee as well as the employer looking to retain tenured and talented staff.”

Degenhardt also noted that, as long as medical documentation and unambiguous restrictions from the treating physician are in place, these types of accommodations are relatively uncomplicated. This is in contrast to long-term leave, with its requisite fluidity and the possibility an employee may never return to work in a significant capacity.

Creating a Path to Success

Ultimately, the success of any accommodation (especially for large employers) depends on the success of the partnerships involved. For Kelsy Holliday-Schiavon, manager of ADA support services at Unum, accountability fosters the type of effective communication that her colleague Degenhardt described.

“We encourage clients to clearly outline the accommodation process and set expectations with each communication touchpoint,” she said.

“You are working together toward the same goal, after all … you should designate personnel to be responsible for making decisions about accommodations and in a timely manner. A third-party vendor should regularly provide training to support the employer and review and analyze results.”

As the industry looks forward to those results — and the next decade of accommodations under the ADA and ADAAA —the deft among them are filling the gap between the sparse existing EEOC guidance and the lived experience of the American workforce on both sides of the paycheck.

In the end, precision communication just may be the salve that tends all wounds in this mobile, evolving sector. &

Nina Luckman is a business journalist based in New Orleans, focusing primarily on the workers' compensation industry. Over the last several years, Nina has served as Editor of Louisiana Comp Blog, a news site she started in 2014 under the auspices of a group self-insurance fund. She can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

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.