FYI:

More Than Insurance

- Michael Hammond

Occasionally, insurance agents and brokers solicit our members with the promise of lower premiums. These contacts typically occur during a soft market cycle, when insurance premiums are declining and capacity is readily available. At a time when tight budgets have resulted in reduced services and staff, these offers sound tempting. However, once our members consider the benefits of membership in MVRMA, there is rarely any further consideration of opting for something different.

MVRMA has slowly and very selectively expanded its membership from the original six to 20 qualified municipalities. Unlike other insurance programs, MVRMA does not randomly solicit cities for their business. With the approval of the MVRMA Board, we approach only those municipalities that demonstrate a commitment to the concepts of risk management and loss control and have exposures and loss experience consistent with current members.

This approach is important because members are pooling their funds to pay losses. The loss experience of the entire group is considered when establishing the loss funding contribution for subsequent years. The loss experience also determines how much or how little will remain for distribution to the members when a loss year is declared closed.

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. As a member of MVRMA, your community is participating with municipalities that have demonstrated a commitment to the concepts of risk pooling, risk assumption and risk sharing. With the MVRMA program, your city benefits from the following:

- Reduced costs due to a large self-insured retention and tax exempt status

- Extensive internal control over claims settlement and litigation

- Greatly enhanced, occurrence based insurance coverage

- Significantly lower administrative costs

- Reduced costs due to group purchase of excess insurance and lower broker commissions

- Enhanced control over service providers

- Additional savings from investment income

One of the biggest advantages of membership in MVRMA is the return of surplus funds. At the end of each fiscal year, unused operating funds, less any reserve, are returned to the members as a credit against their next year’s contributions. And, as each loss year is closed, all remaining loss funds, including investment income, are returned to the members in the same proportion they were originally contributed. To date, MVRMA has closed 12 of its 19 loss years and has returned nearly 48% of the funds originally contributed to pay losses! The return of $4,104,878 represents a substantial benefit not offered by other pooling organizations or insurance companies.

As "owners" of this self-insurance pool, MVRMA’s members have a vested interest in its success.

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Counselors' Comments

 - Dinsmore & Shohl

Will employee fault now preclude a claimant from participating in the Ohio workers’ compensation fund for an injury sustained at work? That is the million dollar question surrounding a significant case recently decided by the Ohio Supreme Court, Gross v. Industrial Commission.1 The Court’s decision in Gross is attracting media hype, questions and confusion. But to interpret the case as freedom to fire an employee who is injured due to fault of his own is faulty in itself.

In Gross, the employer, a Kentucky Fried Chicken franchise, presented the 16-year old employee a handbook at orientation. The handbook made it clear boiling water in a cooker to clean it was a "critical violation," which, in turn, meant the employee could lose his job instantly for the violation of a safety procedure. In addition, the employer had placed a warning label on the top of the cooker to remind employees they should not close the lid with water or cleaning agents in the cook pot.

Despite both sets of warnings, the employee in Gross made an attempt to clean the cooker with water not once but twice. The first time, a supervisor observed the employee putting water inside the cooker to clean it. He confronted the employee and explained the proper cleaning procedure and the extreme safety risk cleaning the cooker with water presented. However, subsequent to this verbal warning, a co-worker witnessed the employee again putting water in the cooker to clean it. A second co-worker warned him not to open the cooker’s lid but he ignored the warnings and opened the lid, which resulted in his injuries.

Three months after the injury, the employer completed the accident investigation and issued a letter to the employee terminating him for the workplace violation. The letter stated the employer "cannot and will not tolerate employees who pose a danger to themselves and others based upon their refusal or failure to follow instructions and recognized safety procedures."

Based on the employer’s argument that the employee had voluntarily abandoned his employment pursuant to Louisiana Pacific, the Industrial Commission of Ohio terminated temporary total disability compensation as of the date of the letter of termination. The employee then filed a complaint in mandamus and the appellate court reversed the Industrial Commission’s decision finding the employee was actually discharged because he had been injured in the workplace. The court of appeals, therefore, found the separation from employment to be involuntary.

The Ohio Supreme Court, however, overturned the appellate court’s decision and found temporary total disability compensation was properly denied. In issuing its opinion, the Court distinguished the Pretty Products line of cases. The employee relied on this line of cases and argued if an employee is already disabled when the separation from employment occurs, there can be no abandonment of the job. The Court declined to apply this reasoning to the facts of this case, finding the employee’s disability and the misconduct that was the basis for voluntary abandonment occurred simultaneously, rather than sequentially as in the Pretty Products line of cases. In distinguishing Pretty Products, the Court found significant the fact the employee in this case was fired because "he directly and deliberately disobeyed repeated written and verbal instructions not to boil water" in the cooker to clean it. It also found significant the fact the employee willfully ignored the warnings.

It appears to be the "willful" reasoning of the Court that has caused the hype. But what it really boils down to is a Louisiana Pacific analysis to determine voluntary abandonment and nothing else. The employee in this case was 1) presented an employee handbook with a written policy that cleaning the cooker with water was a safety violation that could result in immediate termination; 2) aware that cleaning the cooker with water was a safety violation that could result in immediate termination; 3) terminated, in writing, for violating this specific safety violation.

The Court simply took the next step in distinguishing the Pretty Products cases by explaining when the misconduct and the injury occur simultaneously, claimants cannot rely on the Pretty Products reasoning to argue there is no job abandonment if the claimant was already disabled when the separation occurs. In the Gross case, while the termination letter came several months after the injury, the actual misconduct occurred simultaneously with the injury and, therefore, opened the door for the voluntary abandonment argument. What it did not do is open the door for fault-based claims.

The Supreme Court heard oral arguments in May 2007 to decide whether to reconsider its decision in this case. There is no decision whether they will reconsider it at this point.

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The Claims File

- Craig Blair

I recently conducted my periodic review of the association's "loss drivers." This analysis focuses on frequency of claims rather than dollar amount and is helpful in determining what loss control practices need to be implemented or enhanced.

A review of the losses for the last three years revealed auto accidents constituted nearly 47% of all reported losses and 33% of the total dollars incurred. More importantly, of that 47%, more than half were considered preventable accidents (i.e., veering off roadway, backing, rear-end collisions, etc.), and those preventable accidents constituted 56% of the total auto incurred losses!

Fortunately for MVRMA, Ohio (unlike most states) has protections under the Ohio Revised Code which allow municipalities the offsets of available coverage. In other words, even when a MVRMA member is at fault for an auto accident, the other party's insurance will pay the damages up to the limits of his policy. MVRMA pays only the claimant's out of pocket expenses, which on average are about $2,300. Because of the offsets, there are significant dollars never reflected in MVRMA's loss history.

According to the Bureau of Labor Statistics and the National Institute for Occupational Safety and Health, motor vehicle accidents are the leading cause of deaths on the job. They account for 2000+ deaths per year, which is more than 30% of annual work-related fatalities. Running off the roadway and failing to stay in the proper lane lead the causes for these accidents (46%).

One can see why MVRMA's Loss Control Manager emphasizes the need for defensive driver training and recently implemented a computer driver training program through Target Safety.

For more information about the programs offered by MVRMA, contact Starr Markworth.

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Loss Control Lowdown

EPA Contact Hours, Anyone?

-Starr Markworth

The Ohio Environmental Protection Agency informed MVRMA its application has been approved, and we are now officially a "Contact Hour Training Provider." With this approval, MVRMA is able to certify training courses, videos, CD ROM programs and on-line training for EPA contact hours.

The Ohio EPA requires licensed water and wastewater employees with Class I designations to complete 12 hours and Class II designations to complete 24 hours of continuing education courses. MVRMA's video library may now be used to earn these hours. The process for obtaining contact hours from video usage is as follows:

1. The video/videos must be at least 30 minutes to be approved for one contact hour. More than one video can be combined to equal the 30 minutes.

2. A facilitator must be present during the video training to administer a sign-in sheet and monitor attendance.

3. The facilitator must also conduct a question and answer session and provide supplemental information addressed in the video that is specific to his/her city.

4. Copies of the sign-in sheet and completed EPA Form E - Certificate of Course Completion must be sent to MVRMA following the training for MVRMA 's provider signature. Signed certificates will be returned to the employees for their files after MVRMA has made copies for the official audit file.

The complete up-to-date MVRMA video listing is available at www.mvrma.com by clicking the "Training and Loss Control" link at the top right of the page and then accessing the "MVRMA Video Listing By Category" link.

For further information, please contact Starr Markworth by email at smarkworth@mvrma.com,

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Brokers Beat

In this article, we will address the Commercial General Liability Insurance requirements your city uses in contracts with vendors and contractors. When specifying Commercial General Liability Insurance requirements, we encourage you to use the following language:

The Insurance Services Office, commonly referred to as "ISO" or the "Bureau," is an organization representing a large number of insurance carriers and is responsible for developing premium rates and standard policy forms on behalf of these carriers. The policy forms the organization publishes are the standard by which most other forms are compared. By specifying an ISO policy rather than "General Liability Insurance," you establish a very broad set of minimum requirements that your contractor or vendor must meet.

Note the occurrence limit required is $1,000,000. However, for large construction projects, you might require limits as high as $5,000,000 or $10,000,000, and for small vendors that present little or no exposure to the city, you may require as little as $500,000.

Note the use of "including products and completed operations" language. The Commercial General Liability Insurance form has four different coverages; 1) Premises Operations, 2) Contractors Liability, 3) Limited Contractual Liability and 4) Products and Completed Operations Liability. The Products and Completed Operations Liability is an optional coverage under the ISO form and therefore the additional requirement in your specifications is necessary.

For Commercial General Liability Insurance, it is very important to specify aggregate limits. Aggregate limits are the maximum the carrier will pay in an annual policy term, and the Commercial General Liability coverage (occurrence Form CG 00 01) contains a General Aggregate limit along with a separate aggregate limit for Products & Completed Operations. By not specifying an aggregate limit, you run the risk your vendor will use a low limit creating the possibility of exhausting the limit before the contract is executed and work commences.

The term "Comprehensive General Liability" was phased out by the industry in the mid 1980s and replaced by "Commercial General Liability." Several other terms such as Broad Form Property Damage, Broad Form PD, Explosion, Collapse, Underground or XCU hazards were also phased out in the mid 1980s. If these terms are in a contract, it should give you cause to question the insurance expertise of the party that has drafted the contract.

By using the approach outlined in this article, you will put your city in a favorable position should a dispute arise.

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2006 Safety Award Winners Announced

The Safety Awards Program was designed to recognize MVRMA members and individual departments with low losses in any given year. Each May, the Awards Committee meets to determine the Risk Management/Safety Award winners for the loss year completed the previous December. The overall award is given to the city with the lowest dollar losses per full-time employee. For 2006, the OVERALL WINNER is the Village of Indian Hill, which as of 3/31/07, had losses of $12.66/employee. The City of Bellbrook was RUNNER-UP in this category with losses of $22.44/employee.

Departmental winners are determined by the zero-loss department with the most employees. However, when there are no zero-loss departments for a specific category, the winner is determined by the department with the lowest dollar losses per full-time employee.

The department winners for 2006 (all with zero losses) are:

Police - Mason

Fire & EMS - Piqua

Water & Wastewater - Troy

Parks & Recreation - Vandalia

Streets & Refuse - Vandalia

Police: Montgomery (4 years)

Fire: West Carrollton (5 years)

Water & Wastewater: Vandalia (13 years), Wyoming (3 years)

Parks & Recreation: Madeira (12 years), Montgomery (6 years), Wilmington (4 years), Wyoming (4 years)

MVRMA would also like to recognize this year's AWARD OF EXCELLENCE recipients, those cities with 50% less than the expected average dollar losses per employee ($100 or less). The Trustees for this year's recipients were awarded plaques at the June Board Meeting. Pictured from left to right are Tom Moeller, Madeira; Dave Helling, Bellbrook; Sue Knight, Troy; Gary Lucas, Piqua; Mike Hammond, MVRMA Executive Director and Derrick Parham, Springdale.

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2006 Special Achievement Award

As part of the Safety Awards Program, member cities are asked to submit nominations for the Special Achievement Award. This award recognizes a special program or activity related to risk management, safety or loss prevention. Nominations this year included the formation of a city-wide safety committee, from the City of Wilmington, the Fire Department Safety Officer Program, from the City of Mason, and the Policy Review Process, from the City of Montgomery. We recognize and appreciate the efforts of all three cities, but only Montgomery was selected for the SPECIAL ACHIEVEMENT AWARD. The following is a summary of MONTGOMERY'S POLICY REVIEW PROCESS.

After recognizing the majority of its most costly claims came from employee practices liability issues, the City of Montgomery instituted a regular cycle to review its personnel policies. This review involves employees at all levels: the executive level, senior staff level and department level. The results of this process were designed to be two- fold. First, the City would develop a more informed work force by improving the employees' understanding of the policies. Secondly, it would institute a regular and consistent review cycle for addressing necessary adjustments to the policies governing operations within the City.

The City's review is a dynamic process that involves every member of staff. It is coordinated through the City's Employee Advisory and Safety Team (EAST) in concert with the City Manager, Assistant City Manager and Law Director.

Since a primary focus of EAST is the reduction of liability and management of risk, this group was a natural choice to coordinate and manage the City's review process. Its responsibilities include ensuring the City's policies and practices are current, that employees are effectively following the established policies and procedures, and educating and training all employees on the proper application of the policies.

The first level of the review process is at the department level. Each of the City's departments is required to review policies as a part of their regular departmental staff meetings. This review is intended to address areas where there might be confusion or misunderstanding about a policy or its application; where non-compliance may be occurring; where adjustments to the wording might be required or where policies need to be updated. This forum allows departments to communicate on any issues associated with their interpretations of City policy and promotes interaction and awareness amongst entire departments. Feedback resulting from these meetings is shared at the senior staff level via the department head and is added to a file for potential changes.

The second level of review is performed at senior management staff meetings. The schedule for these reviews is laid out to closely follow the progress being made at the department level, but also to meet the schedule developed by the EAST committee. Proposed changes are filed and maintained with other modifications from the departmental reviews.

A third level of policy review occurs at least once annually at the City's monthly staff meeting, EAST Meets Best, or EMB. At this meeting, which also serves as monthly training for all City staff, some of the more significant policies (ADA, Staffing and Hiring, Equal Employment Oportunity, Sexual Harassment and FMLA) are reviewed by the Law Director. This approach allows for a question and answer format with open discussion regarding legal interpretation, understanding and application of the policy.

The feedback from the various reviews is coordinated through the Assistant City Manager's office and will be used as part of the final review and update at year's end. The City Manager, Assistant City Manager and Law Director maintain the ultimate responsibility for the annual review and update of policies and procedures. This team is responsible for ensuring all

suggested changes are considered for inclusion in the Personnel Policies Manual, and distributing updated policies throughout the City.

The Policy Review Process was developed to ensure all employees are given exposure to the policies and procedures of the City and an opportunity to contribute to the development of those policies. However, when new policies must be created outside this process, the City will produce and distribute such policies as needed.

The schedule for the review at the department level is determined by the departments as long as they meet the schedule developed by EAST. The three-year cycle for the review of policies is as follows:

2007

By June 1: Chapter 1 - Employment Status; Chapter 2 - Employment Policies

By September 15: Chapter 3 - Standards of Conduct; Chapter 4 - Compensation and Performance

2008

By June 1: Chapter 6 - Health and Safety

By September 15: Chapter 7 - Other

2009

By June 1: Chapter 5 - Benefits

For more information about Montgomery's Policy Review Process or the formation of EAST, please contact Wayne Davis, Montgomery's Assistant City Manager at 513/792-8315 or wdavis@ci.montgomery.oh.us.

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From the Board Room...

Unbelted backseat passengers risk injury or death to themselves and to the driver seated in front of them in a head- on crash, say researchers at the University at Buffalo - The State University of New York.

In the study, head-on crashes were simulated between two vehicles and used crash-test dummies. Researchers found there was the likelihood of severe head and chest trauma for the driver and passenger caused by an unbelted passenger slamming into the seat of the belted driver.

When both the driver and the backseat passenger were belted, the risk of severe injury was not evident.

"The tests show clearly that unrestrained rear-seat passengers place themselves, as well as their driver, at great risk of serious injury when involved in a head-on crash," says lead researcher James Mayrose, adjunct assistant professor of mechanical and aerospace engineering in the School of Engineering and Applied Sciences.

Further tests, using a backseat, unbelted crash dummy approximating the size and weight of a six-year-old child showed similar results: severe chest and head trauma for both passenger and belted driver.

"It doesn't matter if it's an adult-sized person seated behind you, a small child or even if you have packages or luggage placed in the seat behind you, if they are not belted or safely secured, they can inflict fatal injuries to the driver," Mayrose warns.

The results of the study were published in the Journal of Trauma.