MVRMA - Risky Business

Risky Business

October 2005

FYI: Are You Prepared?

Counselors' Comments: Sovereign Immunity Not Available for Actions Relating to Issues of Employment

The Claims File: Preventable Accidents

Loss Control Lowdown: Improve Safety Without a Safety Budget

Brokers' Beat: SLIP and SPIP Programs

From the Board Room

Coming Events

Risky Business Main Page

FYI:

-Mike Hammond

Are You Prepared?

Hurricane Katrina could wind up as the biggest insured loss ever! As of September 12, insured losses were being estimated as high as $35 billion. One rating service called this hurricane the worst disaster to ever hit the United States, outstripping claims from 9/11 and Hurricane Andrew, which amounted to $19.5 billion and $20.3 billion, respectively. This disaster has already had a significant impact on all of us.

A loss of this magnitude causes us to ask, "Does our organization have the ability to continue operations in the event of a disaster – large or small? Have we taken stock of our essential services and business operations and built a plan to keep functioning during a crisis?"

An article in the September issue of Public Risk magazine entitled: "Stabilizing Your Entity – The Importance of a Business Continuity Plan for Public Entities," underscored how critical it is to develop a plan before a disaster strikes. The article pointed out that disaster response activities are often the responsibility of the emergency management director, the fire department or the police department. While emergency planning and response groups play an important role in an organization's business continuity plan, they are only part of the solution. Others in your organization must be aware of the scope of business continuity and the needs of the organization in order to lead it through a crisis.

According to DRI International (DRII), business continuity planning is the process of developing advance arrangements and procedures that enable an organization to respond to an event in such a manner that critical business functions continue without interruption or essential change.

Public entities must be concerned not only about the continuity of services offered to citizens, but also about the continuity of their business operations. Without revenue coming in, it is difficult to provide services. The objective of a business continuity plan is to reduce the financial and community impact of a disaster to an acceptable level. You may want to consider the plan an investment in the future.

Emergency response has traditionally focused on responding to natural disasters. But business continuity planning should also address small interruptions in the continuity of service and business operations that have the potential to become major disasters. Given today’s emphasis on technology, one such vulnerable function is an organization’s computer system. Is your system vulnerable from attacks that may disrupt operations? It doesn’t take much imagination to realize the disruption and financial impact the loss of a computer system could cause.

All of your assets need to be protected. One of the best protections is the development of a sound business continuity plan before a catastrophe strikes.

DRII offers a seven-step Continuity Planning Model, which is divided into subparts for a more manageable process. They include the following:

1. Project Initiation Phase: Addressing objectives and assumptions

2. Functional Requirement Phase: Fact gathering, alternatives and decisions by management

3. Design and Development Phase: Designing the plan

4. Implementation Phase: Creating the plan

5. Testing and Exercising Phase: Post-implementation plan review

6. Maintenance and Updating Phase: Updating the plan

7. Execution Phase: Implementing the plan

The article in Public Risk magazine stated there is no template for developing a business continuity plan. Each public entity must develop a plan based upon the entity’s own structure and activities. Now, more than ever, risk managers of public entities should take the time necessary to establish a business continuity plan so their entities are ready, should a disaster occur.

To find out more about the DRII Business Continuity Planning Model, go to www.drj.com.

Counselors' Comments

- Dinsmore & Shohl

Sovereign Immunity Not Available for Actions Relating to Issues of Employment

On July 11, 2005, the Fourth District Court of Appeals of Ohio held that an Ohio police department was not entitled to the sovereign immunity provided by Ohio Revised Code §2744 et seq. for retaliation and hostile work environment claims brought by an officer. Nagel v. Horner (4th Dist. 2005), 162 Ohio App. 3d 221.

The plaintiff, Stephen Nagel, a former police officer with the Portsmouth Police Department, claimed he was terminated for his refusal to help discredit another officer and sued the police department and the City of Portsmouth for retaliation and a hostile work environment. Although O.R.C. §2744 et seq. provides political subdivisions with a wide variety of immunity from civil lawsuits, an exception to this sovereign immunity exists for "civil actions by an employee… against his political subdivision relative to any matter that arises out of the employment relationship between the employee and the political subdivision." §2744.09(B). It is upon this exemption that the Court relied in denying the police department’s sovereign immunity based motion for summary judgment.

Ohio courts have consistently held that political subdivisions retain their cloak of immunity from lawsuits for intentional-tort claims. Furthermore, in the worker’s compensation context, the Supreme Court of Ohio has held that an employee’s intentional tort against an employer occurs outside the scope of the employment relationship. Therefore, the police department argued that because claims of retaliation and hostile work environment should be considered intentional tort claims, immunity for these claims exists pursuant to O.R.C. §2744 et seq.

The Court, however, was not persuaded that the legislature intended to use interpretations of the Ohio worker’s compensation scheme in applying the statutory provisions for sovereign immunity. Instead, the Court reasoned that for purposes of applying §2744 et seq., all claims, including intentional torts, which are "causally connected" to a plaintiff’s employment would be entitled to pierce Ohio’s sovereign immunity. As such, no immunity exists for retaliation and hostile work environment claims.

Although the exact scope of application of the "causally connected" analysis set forth in Nagel is unknown, potentially, the doors have been opened for an array of suits to be brought against a political subdivision by their employees, including those for intentional infliction of emotional distress.

The Claims File

- Craig Blair

Preventable Accidents

For MVRMA's purposes, preventable accidents are considered to be those involving one car, backing or rear-end collisions. Although coding of these accidents has not been perfect, we are constantly trying to perfect our data so we can more accurately analyze these losses.

In my recent claims audits, I reviewed not only the overall loss experience but also the preventable accidents for each member. This year just eight of our members had a significant increase in loss experience. Of the eight, six failed to meet the preventable accident benchmark (the pool average per vehicle). Only one member's increase was driven by lawsuits, and one of those lawsuits was caused by a preventable accident.

Preventable accidents can affect a member's loss experience, which in turn, affects the member's premium calculation factor. During the last five years, the two largest claims, totaling $600,000, were caused by preventable accidents.

Our members should not tolerate preventable accidents. A formal reprimand followed by some form of remedial drivers training is recommended. Preventable accidents can result in property damage and personal injury claims as well as increased insurance costs for the member city. Accountability is the first step toward controlling losses.

Loss Control Lowdown

-Starr Markworth

MVRMA encourages the sharing of effective loss control measures by member cities. Thank you to the City of Mason for sharing this article, originally printed in its newsletter Mason Matters, and for implementing this program to protect workers from falls.

Ed Smith, Mason, shown with new grate installed inside a wetwell door

COSTS REDUCED WHEN SAFETY IS FIRST

-Bruce Snell

Slips, trips and falls constitute the majority of general industry accidents. According to OSHA, they cause 15% of all accidental deaths and are second only to motor vehicle accidents as a cause of fatalities. A recent University of Florida survey found annually, more than one million people suffer a slip trip or fall injury. About 5,100 workers died from those falls.

"The average direct cost for one disabling injury now approaches $28,000," according to the survey. "Conservative estimates of indirect costs are significantly higher at $46,000. In the case of a death on the job, the average cost has recently been estimated at $940,000."

American businesses recognize OSHA's increasing emphasis on fall protection, which includes areas with a high risk potential for serious injuries due to accidental falls. Existing OSHA statutes make fall protection mandatory where workers are exposed to potential fall hazards from heights of six feet or more. Insurance industry research into the documented falls has shown serious injuries are common even from a four-foot height. Many agencies, including the City of Mason, have voluntarily tightened their in-house standards to meet the insurance industry findings. Risk evaluators believe "four-foot maximum potential falls" may become the regulated standard of the future.

One major safety concern in the Mason Public Utilities Department has been the potential for an accident around wetwell openings in the pumping stations. Wetwells, as implied by their name, have water in them. The wetwells are at points where wastewater flowing toward the treatment plant by gravity must be pumped to a higher elevation from which it can again flow by gravity. A few of the wetwells pump directly to the wastewater treatment facility.

The openings to these wetwells are three feet by three feet or more, large enough for a person to fall through. The depth of the city's wetwells varies, with some having drops of up to 30 feet. Public utilities employees work around these openings every other day checking levels, probes, pumps and motors.

To improve safety, grates to cover the openings and still allow access to the equipment were installed on all 17 of the city's wetwells. The grates fit inside the existing wetwell doors and provide protection against fall-through accidents when the cover is in the open position.

The new grates provide a better and safer work environment for the employees who must work around the wetwells. Although there is an initial up-front cost, the city benefits by reducing potential work loss claims or loss of life due to a fall into a well.

Brokers Beat

Driver Alliant would like to introduce its Special Liability Insurance Program (SLIP) and the Special Property Insurance Program (SPIP) to MVRMA members. These programs have been developed by Driver Alliant to provide group liability and property insurance for smaller public entities and nonprofit organizations with favorable terms, conditions and cost. As a broker that focuses on public entity insurance as a class of business, we realized a need ten years ago to develop a group insurance program for our small public entity and nonprofit clients. We started this process by grouping 50 of these liability accounts together as the beginning of the SLIP program. Today, that concept has grown into 500 accounts totaling more than $6 million in annual premium. We started a separate property program, SPIP, shortly thereafter.

The SLIP program offers coverage for General Liability, Automobile Liability, Directors’ and Officers’ Liability/Public Officials Liability and Employment Practices Liability under a single policy with all coverage on an "occurrence" basis. The SPIP program offers property coverage for Buildings, Personal Property, Business Income/Extra Expense, Vehicles, Contractor’s Equipment and Fine Arts under a single policy.

These two programs can be very useful to MVRMA members in providing insurance coverage for those public entity and nonprofit organizations that are not eligible for coverage with MVRMA. Examples:

1) Nonprofit volunteer organizations that support city operations

2) Independent public entities created by your city

3) Other special districts within or around your city

4) Commissions or boards that are closely aligned or created by your city

5) City divisions, departments or activities where separate coverage is desired

6) Nonprofit organizations created by your city

7) Joint public entities

More specific examples include:

1) Access Cable TV Stations

2) Library Auxiliary Groups

3) Historical Foundations

4) Joint Police or Sheriff Task Force Groups

5) Joint property or lease arrangements

6) Local citizen advisory commissions

7) Local Chambers of Commerce

Any small nonprofit or public entity organization that is not eligible for MVRMA insurance coverage is a possible candidate for the SLIP & SPIP programs. Annual policies issued under the SLIP & SPIP programs are the proper way to place coverage for these organizations that have ongoing activities and operations year around. Both programs are designed to deliver excellent coverage with competitive pricing.

In the next issue, we will cover our Special Events Liability program for activities and situations that occur over a period of a few days or less.