FYI:

- Michael Hammond

From time to time, insurance agents and brokers will solicit our members with the lure of lower costs. When federal and state cutbacks have created a burden on many local governments, resulting in reduced services and staff, these offers are indeed tempting. However, when reviewed and compared with the services and coverages offered by MVRMA membership, the scales are definitely tipped in our favor!

When MVRMA was formed in December, 1988, the 6 original charter members took the steps necessary to ensure MVRMA members, rather than an insurance company, would receive the benefits of pooling their risk. You might ask, "How does this work, and what are the benefits to my city?"

The first ingredient of a successful risk pool is its members. In 15 years of operation, MVRMA has slowly and carefully expanded its membership to the current 17 members. Unlike other insurance agents and brokers, we do not randomly solicit municipalities for their business. With the approval of our membership, we approach only those municipalities that demonstrate a commitment to the concepts of risk management/loss control and have exposure and loss experience consistent with MVRMA members. This premise is very important since all members are sharing and paying for losses within the pool's self insured retention. The experience of the group not only determines the level of loss funding in subsequent years but, more importantly, how much money remains when all claims have been satisfied. Thus, MVRMA members are participating with a very select group of municipalities.

Not all governmental risk pools and municipal insurance programs are as selective as MVRMA. Additionally, not all insurance and risk financing programs are created equal. However, MVRMA’s experience and reputation for delivering high quality services at a very reasonable cost speaks for itself.

Through risk pooling, MVRMA offers the following benefits to meet your city's risk financing needs:

Since MVRMA is member owned and member controlled and is organized as a not-for-profit association, surplus funds, including investment income, are returned to the members in the same proportion that it was originally contributed. This is done in two ways:

1) At the end of each fiscal year, the unused operating funds, less any reserves, are returned to the members as a credit against their next year’s contribution.

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Counselors' Comments

 - Dinsmore & Shohl

Ohio Supreme Court Rules - Employees Receiving Temporary Total Benefits Cannot be Terminated

In a decision that has serious ramifications for Ohio employers, the Ohio Supreme Court unanimously ruled that employees receiving temporary total disability payments under the state’s workers’ compensation laws cannot be terminated under facially neutral attendance policies. Coolidge v. Riverdale Local School District, 100 Ohio St. 3d 141, 2003-Ohio-5357 (Oct. 22, 2003). In Coolidge, the Plaintiff, a school teacher, was assaulted and seriously injured by a student. She then began receiving temporary total disability ("TTD") compensation under Ohio’s workers’ compensation system. After exhausting her paid leave, she was placed on an unpaid leave pursuant to her employer’s leave of absence policy, which provided employees up to one year’s time of unpaid leave. Once the Plaintiff exhausted this one year of leave and remained unable to return to work, the school board voted to terminate her on September 18, 2000, which was twenty-three months after the date of her injury.

The Plaintiff then sued, claiming that terminating her while she was receiving temporary total disability compensation was a wrongful discharge in violation of the public policy of the state of Ohio. Surprisingly, the Court unanimously found for the Plaintiff. It held:

An employee who is receiving temporary total disability compensation pursuant to [the workers’ compensation statutes] may not be discharged solely on the basis of absenteeism or inability to work, when the absence or inability to work is directly related to an allowed condition.

The Court went on to state that an employee who is receiving TTD compensation may not be discharged for failing to complete required forms to request a leave of absence, or for failing to notify his or her employer as to the length of the absence, where the employer is otherwise on notice of the employee’s condition or status. The Court noted that while it did not excuse or condone an absent employee who refuses to provide his employer with information about his condition, it would not permit an employer to circumvent the Court’s holding by phrasing an absenteeism based discharge in terms of non-cooperation by the employee.

The Court’s opinion calls into question Ohio employers’ leave of absence policies, in particular those that provide for a maximum amount of leave, at which point the employee is considered a "voluntary quit" or is automatically terminated. In addition, the opinion calls into question employer attendance policies that use a point system or other method that counts days missed due to a compensable injury against an employee. Finally, the Court left many questions unanswered. For example:

· What rights do employees have after being off indefinitely, sometimes more than a year, on TTD leave when and if they are able to return to work?

· Must the employer hold the employee's previous position open indefinitely?

· Can an employer terminate an employee as soon as the employee is off TTD leave or reaches maximum medical improvement? A narrow reading of the opinion arguably supports this interpretation. In contrast, this opinion also could be interpreted in a broad fashion, similar to the federal Family & Medical Leave Act, where absences cannot be counted against the employee and the employee is entitled to his or her former job (or a substantially equivalent one) upon return from leave.

· Finally, how does this opinion impact collective bargaining agreements in unionized settings that contain specific leave of absence and seniority provisions?

At this point, the only thing clear is that employees currently absent from work receiving TTD compensation cannot be terminated solely due to their compensable absence or inability to work. Employers should review their policies and consider making changes so the policies do not run afoul of the Coolidge decision.

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The Claims File

- Craig Blair

Most member municipalities have numerous requests for the use of their facilities. These requests range from softball or basketball leagues to festivals and concerts. During the holiday season, a city may even receive a request for a Christmas tree lot. Allowing such groups to use city facilities is good exposure for the city and a benefit for its residents. However, as you know, exposure has two very different meanings, and it is the "risk exposure" associated with the event that concerns MVRMA.

There are generally three types of event sponsors: the city, and non-profit or profit-making organizations. With city-sponsored events, employees and/or volunteers are involved in all aspects, from planning and set-up to managing and clean-up. Usually, no fee is charged, and most precautions for safety have been considered. If, however, the city charges a fee for the event, it will be held to a different standard of negligence if a loss occurs. In either example, MVRMA coverage would apply.

For events sponsored by profit or non-profit organizations, member cities should have a policy in place with criteria designed to reduce their risk exposure. This policy should require a detailed explanation of the event to determine if the city facilities are adequate. Questions concerning electrical capabilities and traffic control should be addressed. Other considerations include adequate space between booths for the safe flow of participants and walkways free from obstructions. The city should require a contract between the parties, which includes a "Hold Harmless" agreement. A certificate of insurance naming the city, its employees, agents and volunteers additional insured should also be provided. Being named additional insured means the city is provided the same coverage as the event holder, if a loss occurs. If a claim or lawsuit is filed related to the event, the event holder's insurance would protect the city and handle the claim or defense of the lawsuit.

It may seem inappropriate to ask the local Rotary Club or other charitable group for a certificate of insurance, but a loss can occur at even the most mundane event. A few years ago, a child was struck by a vehicle in a city lot being used by a local organization to sell Christmas trees. There was no certificate of insurance required, and even though the city had nothing to do with the event, MVRMA had to defend the lawsuit.

Remember, MVRMA is here to pay or handle any insurable claims, but it's the members' duty to protect the association from liability whenever possible.

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Loss Control Lowdown

-Starr Markworth

MVRMA Provides Contact Hours

According to the Ohio Administrative code 3745-7-15, after January 1, 2003, all certified wastewater treatment plant, wastewater collections, water treatment plant and water distribution system operators must provide proof of Ohio Environmental Protection Agency Director approved contact hours prior to having their certification renewed. This renewal process must be completed in a two-year period preceding the certification expiration date.

What exactly does this mean to our cities? In order for water, wastewater or water distribution operators to maintain their licensure, they must complete continuing education credits. For example, a person holding a certification as a public water system operator I must complete not less than 12 hours of director-approved contact hours. Depending on the level of certification, the number of contact hours could either increase or decrease. For specifics on contact hour requirements, see OAC 3745-7-15 or the Ohio EPA website at www.epa.state.oh.us.

Several times this year I was approached by operators from our member cities and asked if MVRMA could provide courses that are approved for contact hours. So far, MVRMA has been able to get three courses approved through the EPA. These courses are:

l Work Zone Safety and Traffic Control offered by LTAP for 1.5 contact hours

l NAPD Heavy Vehicle Driver Training sponsored by MVRMA for 12 contact hours

Also, MVRMA is working cooperatively with the Miami Valley Communications Council's Municipal Training Academy to explore other opportunities for obtaining these necessary contact hours.

All three of the MVRMA approved contact hour courses will be offered several times in 2004. Please watch for our announcements or contact me for further information at 937/438-8878 or by email at smarkworth@mvrma.com.

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Brokers' Beat

Surety 101 - The Basics

Surety is an agreement that provides for monetary compensation in the event of the failure to perform specified acts within a stated period. For example, the surety company becomes responsible for the fulfillment of a contract if the contractor defaults. Unlike insurance, surety bonds are contracts that include three parties – the party needing the bond (principal), the person protected (obligee) and the insurer (surety). Under the Miller Act of 1935, federal contracts require performance bonds on contracts over $100,000 and payment bonds on contracts over $250,000. State and local governments have "Little Miller Acts" that also require performance and payment bonds on public works projects. Banks will also require surety bonds to protect the construction lending on a project.

There are two types of surety: contract surety and non-contract or commercial surety. Contract bonds are used in the construction industry and include performance and payment bonds which guaranty a company awarded a project/contract will actually complete the service agreed to in the contract. These services can include capital construction projects, outside service contracts or completion/improvement projects. Non-contract or commercial surety bonds by definition are required by courts and government entities to ensure compliance with applicable laws.

General types of bonds:

Bid Bonds guarantee that a bidder (the contractor) will actually complete his work at the agreed upon bid price.

Performance Bonds protect an owner from loss in the event a contractor fails to complete a project within the contract terms and guarantee payments to cover the cost of completion.

Payment Bonds guarantee that a contractor will pay bills within the contract terms and provide coverage for laborers, suppliers and other contract-related costs owed third parties.

License and permit bonds are required by statutes or ordinances for a number of purposes including guaranteeing the payment of certain taxes and fees. They provide consumer protection as a condition to granting licenses related to selling real estate or motor vehicles and contracting services.

Surety bonds, through the surety companies’ rigorous pre-qualification of contractors, protect the owner and offer assurance to the lender, architect, and everyone else involved with the project. Before issuing a bond, the surety needs to be fully satisfied that, among other criteria, the contractor is of good character, has experience matching requirements of the contract, has or can obtain the equipment necessary to do the work, has the financial strength to support the desired work program, has an excellent credit history and has established a banking relationship and line of credit.

With a surety bond, the owner can be satisfied that a risk transfer mechanism is in place. The risk of construction is shifted away from the owner to the surety. If the contractor defaults, the surety may pay for a replacement contractor, finance the existing contractor or provide technical and/or financial assistance.

To bond a project, the owner includes the bonding requirement in the plans and specifications for the project. Obtaining bonds and delivering them to the owner is the responsibility of the contractor.

Contact Marsh if you have any questions with respect to surety bonds.

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Coming Events

MVRMA Board Meeting

9:00 AM

MVRMA Offices

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Have a Slip-proof Winter

Many of the falls recorded at workplaces each year are due to weather related conditions. As winter's ice and snow begin to coat the outdoors, heed these tips to keep yourself safe and slip-free to and from work:

1. Plan ahead. Check weather and traffic conditions before you head to work so you can get ready accordingly.

2. Go slowly. Perform this simple test before you step out of your car: stick a foot out to check for a slippery surface in the parking lot. Don't rush into work; use handrails on your way into the building if they're available.

3. Wear proper shoes. Shoes with flat or low heels are the safest. In slippery weather, it's even better to wear a rubber-soled, wide-tread shoe because the wider the tread the more traction.

4. Think "cleats." If you walk during your lunch breaks or work outside, think about buying shoes with cleats, or cleats to slip onto your shoes or boots.

5. Beware of wet floors. When you step into a building, scrape off any ice or snow on your shoes and begin to walk carefully because hard floors will likely be slippery and wet from other traffic.

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