The Law

Legal Spotlight

A look at the latest decisions impacting the industry.
By: | October 3, 2017 • 4 min read

Invasion of Privacy Exclusion Holds Firm

In November 2012, David Emanuel brought a class action lawsuit against the Los Angeles Lakers basketball team.

Emanuel, who had attended a Lakers game the month before, felt duped after responding to an overhead message displayed on the scoreboard. The message invited game attendees to send a text to a specific phone number with the hopes of seeing their message on the screen.

Emanuel sent a text and received an automated message in return. In the subsequent lawsuit, he alleged that the Lakers sent the response message using an automatic dialing system, which, he said, violated the Telephone Consumer Protection Act and cost him and others in text and data charge fees. They sued for $1,500 and damages.

In 2013, a California district judge dismissed the case, stating that by sending the initial text, Emanuel implicitly consented to receiving a confirmation message. The team settled with Emanuel in 2014 during his appeal.

The Lakers were insured under a ForFront Portfolio insurance policy held by Federal Insurance Co. Federal denied coverage of the suit, because the insurer claimed the TCPA fell under a policy exclusion for invasion of privacy.

The Lakers sued Federal for bad faith refusal to defend or indemnify them. A district judge ruled to dismiss the allegation, agreeing with the insurer that the policy’s invasion of privacy exclusion included the TCPA. The Lakers appealed. A divided panel affirmed the judge’s ruling.

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“The panel held that because a Telephone Consumer Protection Act claim is inherently an invasion of privacy claim, Federal Insurance Company correctly concluded that the underlying Telephone Consumer Protection Act claims fell under the Policy’s broad exclusionary clause,” read the court’s decision.

Scorecard: The Los Angeles Lakers are not entitled to coverage for class allegations that the team sent unwanted text messages to fans.

Takeaway: Insurance policies that exclude privacy-related claims should clarify whether TCPA claims fall within the exclusion.

Cyberattack Costs Insurer Millions

Nationwide Mutual Insurance Co. and its unit Allied Property & Casualty suffered a massive data breach on Oct. 3, 2012. Sensitive information of more than 1 million people was stolen from its databases.

The breach affected both existing and potential customers in 32 states and the District of Columbia. Social Security numbers, driver’s license numbers and Nationwide-assigned creditworthiness scores were made available by the hackers.

Shortly after the breach, the insurer notified the customers that their information was compromised. Nationwide offered free credit monitoring and a $1 million identity theft insurance coverage with no deductible to those affected.

In the August 2017 hearing, state attorneys general from each state alleged that the breach stemmed from a security lapse. Nationwide conceded that there was a “criminal data breach,” yet denied any liability for the exposed information. The company said it took the proper and immediate steps to contain the attack.

The two parties reached a settlement of $5.5 million, to be divided amongst the states and the District of Columbia. The settlement relieves Nationwide from most legal and civil liabilities but not from criminal, antitrust, securities or tax liabilities. A spokesperson for Nationwide said that the company’s security remains compliant with data security laws.

In the end, the settlement did not include allegations of data security law violations. “Protecting consumer data is something that we take seriously,” Nationwide said. The company said it will continue to strengthen cyber-security.

Scorecard: The data breach cost Nationwide $5.5 million, which will be given to those whose information was exposed.

Takeaway: Cybersecurity programs should regularly be updated and reviewed for any potential security risks, even when a program follows security laws.

WC Death Benefits Granted to Widower

A grocery store worker was in her office when she suffered cardiac arrest. A store manager heard her fall and rushed to her aid, but it was too late. Her husband filed for workers’ compensation death benefits, claiming his wife’s death was due in part to the stress of her job.

Probable cause of death was ruled to be cardiac arrhythmia, stemming from arteriosclerotic heart disease, likely worsened by obesity.

The emergency responders’ report stated that coworkers heard the deceased saying “her job was stressing her out,” and that she complained of chest pain shortly before collapsing.

The Workers’ Compensation Board granted the husband workers’ comp death benefits on Oct. 15, 2015. The employer and its carrier appealed.

In the 2017 court hearing, the employer alleged that the cardiac event was due to underlying heart disease. There was no way to prove that job stress caused her heart to stop.

New York workers’ comp law states that barring substantial evidence to the contrary, “an unwitnessed or unexplained death [that] occurs during the course of a decedent’s employment, Workers’ Compensation Law provides a presumption … that the death arose out of the decedent’s employment.”

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Because there was no formal autopsy performed on the deceased, the husband used the medical report as proof his wife’s cardiac arrest was related to the stress of her job. The court ruled the deceased’s work-related stress was a “significant contributing factor,” and her husband should receive death benefits.

Scorecard: The workers’ compensation carrier will pay death benefits to the deceased employee’s husband.

Takeaway: When injury or illness occurs on the job, employers must be diligent in reporting the incident and recording each step taken.

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]