2017 Power Broker

Workers’ Compensation

An Indispensable Partner

Christopher Bailey
Vice President
Willis Towers Watson, Greenville, S.C.

After decades coaching college football, Dave Roberts launched a new venture — Vital Care EMS, a South Carolina medical transportation company. There was a steep learning curve at first, and the company’s experience mod went “through the roof.”

Willis Towers Watson’s Christopher Bailey stepped in and analyzed Vital Care’s program top to bottom, identifying everything from quick-fix issues to long-term improvements. Roberts, the company’s president, credited Bailey with helping him turn things around.

“[He] helped us grow from five trucks and 20 people to 100 trucks and 400 people,” said Roberts. “He’s always given me great advice — even when I don’t want to listen to him.”

Roberts said the company could never have grown so fast without Bailey.

“We’ve been approached by every person in the state to [change brokers] and I won’t even go there,” he said. “I have the highest regard for him.”

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“He is the bomb,” said Dustin Pelletier, franchise owner and operator of the Big Air Trampoline Park in Spartanburg, S.C. Pelletier said Bailey had never worked with a trampoline park before. But he learned the industry so fast and so thoroughly that he soon found better insurance solutions than even Big Air corporate could offer.

“He got me better cover with less expensive premiums — better than corporate,” he said.

In fact it’s so good, said Pelletier, that corporate is asking, “Hey, can we get that guy’s number?”

A Champion for Small Employers

Riley Holman
Insurance Consultant
Dixie Leavitt, Cedar City, Utah

Dixie Leavitt’s Riley Holman understands that often the person managing workers’ comp for a small entity wears several other hats as well. That’s why he makes it a priority to streamline and simplify coverage as much as possible, while offering expert advice on safety improvements that won’t break the bank.

He also understands that even one workplace tragedy can turn a small business upside down in a moment.

Holman saw that playing out with a sand and gravel company in a tough position. A workplace accident had led to a double fatality and a large claim payout.

Carriers were not inclined to take the company on, and they were only able to find coverage with a nonstandard carrier, paying more for less coverage than they needed.

“We were practically uninsurable,” said the company president. “Other brokers said, ‘There’s almost nothing we can do.’ “

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Holman disagreed. He knew of a standard carrier with an appetite for their business. He arranged for underwriters to do a loss control visit to better understand the actual exposures, as well as the measures the company was taking to prevent future incidents.

“Riley leveraged his relationships and brought the carriers out to see the operations and to show that the fatality didn’t tell the whole story,” said the company president.

The new program saved more than $100,000, rescuing the company from being slowly strangled by excessive premiums.

Crisis Averted

Linda Joski, CRM
Area Senior Vice President
Arthur J. Gallagher, Brookfield, Wis.

The Milwaukee Center for Independence was thrown for a loop with a substantial legislative change impacting the state’s workers’ comp law. The law specified that the entity providing financial management services would become the employer of record for workers’ comp purposes for workers providing long-term care benefits under programs administered by the state.

That put MCFI, a nonprofit, in the crosshairs, as the fiscal agent responsible for withholding income taxes for employees of one such program.

The law “would have meant we had to put 18,000 workers’ comp policies in place,” at an expense of about $2.9 million, said Rob Wedel, CFO and vice president of finance for MCFI. It’s a burden that could have buried MCFI. But Gallagher’s Linda Joski came to the rescue.

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“Linda settled everybody down and got the right people in place, connected [the carrier] United Heartland and the state and got everyone on the same page with a viable solution,” Wedel said.

Joski helped arrange one master program for all participants involved, eliminating the administrative burden of single policies. Joski also negotiated using MCFI’s experience mod of .72 rather than the typical 1.00 used for new entities — resulting in additional savings of 28 percent (about $2.3 million).

Joski’s dedication and creativity “saved the state of Wisconsin about $5 million … it was just phenomenal,” said Wedel.

Bringing the ‘Wow’ Factor

Machelle McKenzie, CRM, CIC
Managing Director
Crystal & Company, Houston

Machelle McKenzie’s clients tend to talk about her in extremes — but in a good way.

“If she ever leaves, my business goes with her,” said Cheryl Wyatt, director of human resources for Stronghold Ltd. in La Porte, Texas. “There’s nothing she can’t answer, and I never have to wait for a response. I literally send emails at 2 in the morning … and I actually get her at 2 in the morning.”

Wyatt’s company split into two entities in early 2016, a complex undertaking with a high volume of moving parts.

“We wanted all of our billing to be separate,” said Wyatt. “Machelle had to split out the cost by entity. In particular for workers’ comp, that’s not easy … we work in almost every state.”

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Wyatt was impressed with how quickly McKenzie was able to find a workable solution, not to mention how quickly she completed the project.

“She did it in a couple of weeks,” said Wyatt. “It would have taken me six months.”

Clients value McKenzie’s ability to assess every angle and identify substantive ways to help the business succeed.

For one client, McKenzie recently discovered and corrected a carrier reporting error, bringing the company’s experience mod down from .98 to a more manageable .80. For another, she got a letter of credit reduced from $990,000 to $200,000.

The Next Frontier in Claims Audits

Joe Picone, CPCU, AIC
Claim Consulting Practice Leader
Willis Towers Watson, Glen Allen, Va.

Jenny Novoa, director of risk management for The Gap, threw down the gauntlet for her broker, Willis Towers Watson’s Joe Picone: Help us find a better way to evaluate third-party administrators (TPAs). More specifically, Novoa wanted to measure TPA performance based on outcomes rather than using standard “best practice” audits.

“We had to figure out how to build a tool to do that,” said Novoa.

Picone rolled up his sleeves and dug in, recruiting additional stakeholders from Foot Locker, Saks Fifth Avenue and Corvel.

To build the new audit tool, Picone, Novoa and the team incorporated numerous factors into the claim process such as employee co-morbidities, failures in the return-to-work process and life events as well as the hiring process and performance management.

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They completed audits using both the new tool and the old tool, and compared the results, which turned out to be a revelation. Using the traditional audit tool, some claims scored high even though they had poor outcomes, while some with good outcomes had lower scores.

For example, a file that received a perfect “100” score on a best practice audit may have exceeded expected medical disability guidelines by 400 percent.

Using the outcomes-based audit tool, there was a far higher correlation between high scores and good outcomes. It’s a “very cool tool,” said Novoa — the first of its kind in the industry.

Rolling Into Claims Success

Dennis Tierney
Director of Workers’ Compensation Claims
Marsh, New York

Power Brokers love a challenge. Marsh’s Dennis Tierney got that and more when he took on Motivate International as a client. A global bike share leader, Motivate International partners with governments and brands in major cities around the world.

The company was at a crossroads after the acquisition of a troubled bike share operator. The acquired company, which didn’t have a risk management department, had amassed $10 million in claims in only three years.

“Our broker at the time was on cruise control,” said Grant Barkey, Motivate’s risk manager. “We needed somebody who was strong on claims, someone who understood our business.”

Barkey partnered with Tierney and his team at Marsh, and he is effusive when explaining how far things have come since then.

“My entire team is pretty rock star,” said Barkey. “[They] really turned around our claims and claims management.”

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One key hurdle, said Barkey, was that carriers didn’t really understand the bike share business, which is a fairly young industry, or its sometimes nuanced exposure. But Tierney got it, Barkey said, and strove to make sure that carriers could wrap their heads around it.

The company ultimately ended up with a new carrier, said Barkey, and Tierney has been instrumental in ensuring that the carrier has a solid handle on Motivate International’s exposures. The company has made incredible strides in closing out open claims and setting up special handling agreements with the carrier.

 Finalists:

Jeffrey Breskin
Director
Crystal & Company, Los Angeles

Carol Murphy
Managing Director and Casualty Growth Leader
Aon, Chicago

Thomas Ryan
Managing Director
Marsh, New York City

Teri Weber
Partner
Spring Consulting Group, Boston

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: CRACKS IN THE FOUNDATION

Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.

PART TWO: BETRAYAL

As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.

PART THREE: FALLING DOMINOES

Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.




Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]