Litigation Risk

Liberty! Fraternity! Liability!

Universities, fraternities and their local chapters, and individuals may face liability for sexual assault, alcohol abuse or other actions.
By: | April 13, 2015 • 4 min read

Recent incidents alleging alcohol abuse, sexual assault and other bad behaviors at America’s college fraternities have drawn national attention. Much of the discussion has focused on causes and prevention, but with litigation inevitable in some of these incidents, questions of liability are sure to arise.

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Individuals directly involved in such incidents face potential liability, but claims can also extend to the local and national fraternity organizations, to the universities and colleges with which they are affiliated, and even to the local chapters’ officers and their families.

“It all depends on how the claim or the complaint that is filed in court is framed. What are the allegations in that litigation? Who are the named defendants, and what are the circumstances of how it happened and can it be corroborated?” said Michael Liebowitz, senior director of enterprise risk management and insurance at New York University.

The local and national fraternities may face liability for incidents that  occur during fraternity events, especially on fraternity premises. Most local chapters have liability coverage purchased by their national organizations through a handful of companies that specialize in insuring fraternities and sororities. The largest of these, James R. Favor & Co., was actually acquired by a group of national fraternity organizations in 2006.

But just because a fraternity has general liability insurance, doesn’t mean a particular incident will be covered.

But just because a fraternity has general liability insurance, doesn’t mean a particular incident will be covered.

“Insurance policies typically exclude any criminal violations. So if it’s considered a crime, the policy is not going to cover it,” said Leta Finch, leader of Aon Risk Solutions’ national higher education practice.

In March 2014, “The Atlantic” reported that most fraternities have stringent, but largely unenforced, alcohol policies in place. The vast majority of fraternity-related injuries, assaults and other incidents involved violations of alcohol policies, which effectively provide liability protection for the fraternities while placing the individual members outside the coverage.

Lisa Zimmaro, assistant vice president for risk management and treasury at Temple University in Philadelphia, said that “fraternity insurance carriers have huge exclusions for alcohol-related events and sexual assault. … If the insurance carrier for the fraternity excludes certain acts, then the victim would have to look elsewhere for compensation for damages.”

One place they might seek compensation is from the university or college with which the fraternity is affiliated — and the nature of that affiliation can help determine what liability the institution might face.

Institutions that provide fraternities with space on campus, security, financial support or other resources could be perceived as having greater liability.

Closer relationships mean greater liability. Institutions that provide fraternities with space on campus, security, financial support or other resources could be perceived as having greater liability. Those with more distant and less structured affiliations would face fewer liability issues.

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Institutions should also be aware of exclusions to their coverage.

“If it is excluded on the policy and there is a finding in a civil action, the university would end up paying out of pocket. Just because there is an insurance exclusion doesn’t get them off the hook,” said Zimmaro, who added that institutions should also be aware of sub-limits.

“There maybe sub-limits, even if there’s not an outright exclusion, maybe coverage up to $5 million instead of $25 million. Know the limits of what your policy is going to pay,” she said.

The best way to avoid liability may be to prevent fraternity incidents from occurring, but ironically, codes of conduct and prohibitions on behaviors can increase liability if they lack adequate follow through.

“The minute colleges and universities start to dictate policy on fraternities and sororities, they are vicariously picking up liability, because then they are going to be forced to police it.” — Michael Liebowitz, senior director of enterprise risk management and insurance, New York University

“The minute colleges and universities start to dictate policy on fraternities and sororities, they are vicariously picking up liability, because then they are going to be forced to police it.

“[If] something bad happens because someone broke the rules, then the question is, ‘Why didn’t you have surveillance in place to monitor what was going on?’ So it is very much a double-edged sword,” said Leibowitz.

Finch pointed out that enforcing codes of conduct that lack clear consequences can also leave institutions exposed to liability from violators who feel they have been disciplined unfairly, treated inconsistently or been denied due diligence rights.

Parents of fraternity members can also face liability — and not just the parents of those directly involved in incidents.

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Leibowitz said that while primary liability lies with the fraternity member who committed the acts in question, “the rest of it lies with the officers of the chapter, from the president straight on down, because they’re the ones that set the tone, they’re the ones that are supposed to control what goes on. … If you want to be an officer, it comes with responsibility, and responsibility comes with liability.”

Zimmaro agreed. “Families are sued all the time for the acts of their students who are involved in incidents involving any kind of organization where someone gets hurt. An attorney is going to look for a compensation source, and if it’s mom and dad, then it’s mom and dad.”

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

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]