Vol. 129 No. 14 | September 10, 2018
Single-Payer:
UNSUSTAINABLE
Rand Study Scores Costs, Implica ons for State; Big I Steps-up Opposi on
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UNSUSTAINABLE
Contents
4 Foreword: Tom Moran, RIP; Tech Trends to Follow Steve Acunto, Publisher 6 HR Update: Establishing and Reviewing a Nonexempt Employee Timekeeping System Alfred T. DeMaria 11 MSO: Workers’ Compensation Basics Sue C. Quimby 12
On the Level: How Attractive is Your Website? Jamie Deapo
18 Guest Article: Hidden Factors that Could Cost Your Client Money Scott Diamond 20 In the News: Small Commercial Insurance Customers Highly Valued, Yet Underserved, J.D. Power Finds 22 Guest Article: Socialism, Corporatism, and Destruction of Patient-Centered Medical Care Elizabeth Lee Vliet, M.D.
24 On My Radar: Insurance Fraud to Gain Thousands of Free Cell Phones Barry Zalma 26 info@insurance-advocate.com www.insurance-advocate.com
Looking Back: September 14, 1968
28 Courtside: Passenger Opens Door Of Parked Car And Knocks
Down Pedestrian On Sidewalk: Held Not “Use And Operation” Lawrence Rogak
Vol. 129 No. 14 | September 10, 2018
14 S ingle-Payer:
[ FOREWORD ]
STEVE ACUNTO
Tom Moran, RIP; Tech Trends to Follow uSad news: Thomas J. Moran, a successful and caring insurance leader and philanthropist, passed away August 12th at the age of 65. Tom spent more than four decades with the Mutual of America Life Insurance Company, contributing significantly to its success. As Chairman, President, and Chief Executive Officer, he led with a style, strength, and care. He led LICONY and many other industry efforts and was widely honored. We came to know Tom through the industry, but also through his involvement with the College of Mount Saint Vincent, as an honoree at the 2010 Scholarship Tribute Dinner and as husband of Joan M. Squires ’73, alumna, trustee, and former Chair of the College’s Boardon which we have been privileged to serve. Tom received an honorary doctorate of law during the College’s 2006 TOM MORAN Commencement Ceremony. Tom was from Staten Island. He had a passion for all types of music, particularly New Orleans jazz and a love of Harley Davidson motorcycles of which he owned several. At age 14, he began his first job as a janitor in a high school. He followed this by working at Nathan’s Hot Dogs, as a short-order cook and a cemetery worker. While attending Manhattan College he drove a cab during the night shift. After earning his B.S. degree in mathematics in 1974, he began working at an entry-level position with Mutual of America. He had an extraordinary 43-year career and led the company to great success. He was instrumental in its growth into a Mutual Life Insurance Company with more than $20 billion in assets. He oversaw the purchase and renovation of Mutual of America’s headquarters at 320 Park Avenue. Tom played a critical role in the Irish Peace Process, transformed Concern Worldwide, the worldwide relief agency when he took over as Chairman, became Chancellor of Queens University in Belfast, was presented with the Irish Presidential Distinguished Service Award, and helped numerous charities anonymously. He has served on the not for profit boards of: The Alfred E. Smith Memorial Foundation, Archdiocesan Finance Committee, Manhattan College, American Cancer Society Foundation, United Way of New York, Medical Information Bureau, University College Dublin Smurfit School of Business, Thirteen WNET, Irish Hunger Memorial New York City, National Committee on American Foreign Policy. He also served on the Board of Directors for Aer Lingus and the Bank of Ireland.. He was awarded honorary doctorates from Manhattan College, The College of Mount Saint Vincent, Mount Mary College, National University of Ireland and Queens University Belfast. In addition, he received the following awards: Calvary Hospital Medal of Honor, New York City FDNY Humanitarian Award, NYCPD Commissioner’s Award, Ellis Island Medal of Honor. He was a proud member of The Columbus Club, New York City. And that was all in one lifetime, sadly a short one at that. We will always remember him as a man among men for his good heart and great accomplishment. Condolences to Joan and the Moran family.… The new Tech Trend is the way that Virtusa has correlated data to identify the top themes and innovations that will impact digital transformation within enterprise. The results revealed that alongside areas such as blockchain and AI, the future will see ‘emotional quotients’, ‘engineered empathy’, and ‘transcendent realties’, among others. Senthil Ravindran, EVP & Global Head, xLabs at Virtusa says: “Our focus at xLabs is wholly on innovation, so it is vital to stay on top of emerging technologies we can experiment with in the lab. However, we recognize it’s a huge struggle for businesses to stay on top of the mountain of information CONTINUED ON PAGE 8 4 September 10, 2018 / INSURANCE ADVOCATE
S I N C E
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VOLUME 129 NUMBER 13 AUGUST 20, 2018
EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Jamie Deapo Alfred T. DeMaria Lawrence N. Rogak N. Stephen Ruchman Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Gina Marie Balog-Sartario 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x111 circulation@cinn.com PUBLISHED BY CINN Global Initiatives P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 613-1595 www.cinn.com | info@cinn.com President and CEO Steve Acunto
CINN GROUP
INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in January, July, August, and December by CINN ESR, Inc., P.O. Box 9001, Mt. Vernon, NY 10552. Periodical postage pending at Greenwich, CT and additional mailing offices. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $135.00. TO ORDER Call 914-966-3180, fax 914-613-1595, email: circulation@cinn. com or write: Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2018. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.
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[ HR UPDATE ]
Establishing and Reviewing a Nonexempt Employee Timekeeping System uFederal and state laws require that employers pay employees for all hours worked. They define “hours worked” broadly to include (a) all time during which an employee is required to be on duty, on the employer’s premises, or at a prescribed workplace; and (b) all time during which an employee is permitted to work, in either express or implied permission. When employees file claims for unpaid time worked, the burden is on the employer to show that all work hours have been properly recorded and paid. Without records, no matter how much good faith is involved, the employer is subject to potentially vast liability for as much as six (6) years for all employees hired during that period including those who are no longer employed! One way to establish a record of an employee’s time worked each shift, is to use contemporaneous time records that show the precise time that the employee started and stopped work for the shift, and took extended dutyfree breaks from work, like meal breaks. Companies may want to adopt the important policies and practices below. Timekeeping Systems • Adopt a system that contemporaneously records the time worked by employees each shift; • Record the time that the employee starts work and stops work for each shift each day; • Records the time when an employee stops work to take a dutyfree meal break, as well as the time when the employee resumes work after the end of the meal break; • Record the employee’s total number of hours worked each workday and his or her total number of hours worked each workweek; - If an organization uses a rounding system; - Check the rounding interval the company is using (e.g., 6 September 10, 2018 / INSURANCE ADVOCATE
five (5) minutes, six (6) minutes, and fifteen (15) minutes). Consider switching to the smallest inter val practicable; - Ensure that the company provides a grace period for late clockins that is equal to the rounding interval for early clockins. For example, if employees can clock in five (5) minutes early, are they also able to clock in five (5) minutes late without adverse consequences? - Document the rationale for using systems that don’t record actual time worked, like autodeduction systems for meal breaks and systems that record employee’s assigned schedules.
Timekeeping Policies • Implement policies that expressly; - Require employees to accurately record all time worked; - R equire employees to accurately record all dutyfree time (e.g., when they clock out for meal breaks and clock in from meal breaks); - Prohibit offtheclock work; - Prohibit working overtime hours without the express permission of management; - Require employees to promptly report to human resources any questions or concerns regarding the accuracy of their records of their time worked and dutyfree meal breaks taken; - Prohibit employees from falsifying time records; and - P rohibit any retaliation against any employee who raises questions or concerns about the employer’s timekeeping policy.
Alfred T. DeMaria is a Senior Partner at Clifton Budd & DeMaria, LLP and is recognized as one of the preeminent management labor attorneys in the field. He has extensive experience in all areas of employment law, including advice on avoiding liability under disability, race, gender, age and related anti-bias laws. Mr. DeMaria advises on compliance with all federal, state and local laws governing the employment relationship, including the defense of lawsuits brought by employees against the companies that employ them. Prior to his work at Clifton Budd & DeMaria, LLP, he served as a trial attorney with the National Labor Relations Board.
• Consider whether certain activities qualify as compensable time, including the following: - Setting up tools or supplies; - Traveling; - Training; - Attending meetings; - Waiting for assignments; - Taking meal and rest breaks; - Onboarding; - G oing through security checks; - Logging in and out of company systems; - Using companyissued mobile technology; • Checking emails and voicemails • R e s p on d i n g t o e m a i l s a n d voicemails - Remaining oncall; - Donning and doffing required uniforms or personal protective equipment; - Completing required paperwork; and - Closing and opening procedures. CONTINUED ON PAGE 30
[ FOREWORD ] CONTINUED FROM PAGE 4
available. There are so many reports it’s almost impossible for businesses to find one single point of truth – this is what the Almanac addresses. It was evident when analyzing all the trend data that variations on the same themes and elements crop up time and again; taking a step back to consider all these reports as a collective helped us to understand which trends are most likely to shape our future view of the world.” So….the 10 Trends are these according to Ravidran: 1. ‘ Transcendent Realities’ relates to the blurring of the lines between reality and the digital realm, and the emergence of ‘mixed reality mash-ups’. It was discussed in almost all reports (11 out of 12); we are already seeing holograms in airports and banks, and in the future, it will become even more difficult to decipher virtual from reality. 2. Truth Trumps Trust was touched upon by 9 out of 12 of the leading reports. This trend relates to blockchain, but specifically how blockchain will enable businesses to share ‘incontrovertible’ truths amongst one another; potentially negating the need for trust by providing true accountability and transparency. 3. The Revolution of the Workspace was a popular topic amongst the tech elite, featuring in 8 out of 12 reports analyzed. The trend relates to the evolving relationship between humans and robots; in a future where our co-workers will be robots, how will this impact HR? 4. The Intelligence of Everything is the space where IoT and AI meet; a topic of interest for many of the high minds in tech, reported in 7 out of 12 reports. This trend will see IoT devices becoming truly autonomous, making ‘best in time’ decisions to improve their owner’s health, wealth, and happiness. 5. Engineered Empathy crops up in 6 out of the top 12 reports. Here, the report philosophizes about the current state of IT’s emotional quotient (EQ) and questions how machines will start to not only 8 September 10, 2018 / INSURANCE ADVOCATE
understand human emotion, but how they can use this to analyze sentiment and detect fraud. 6. O pen Everything featured in half of the reports. This isn’t too surprising given Open Banking and PSD2 (Directive on Payment Services 2) have grabbed the headlines, sending a cold chill down the spine of traditional banks that fear their foothold might be loosening as disintermediation creeps in. But the ripple effect will extend much farther than the banking industry alone. 7. C omputers Have Eyes, Mouths, and Ears focuses on the fact computing is becoming increasingly sensory. 5 of the reports analyzed picked up on this trend, and we are already seeing voice, for example, become a dominant channel with the growth in popularity of Alexa and the like. As we move towards our digital destination of the future, sight, voice, and touch will become increasingly employed in the fight for the consumer. 8. Digital Predestination is an interesting topic that predicts we could soon be trapped by our own preferences as we are increasingly presented with content that fits the mold of what machines ‘think’ we like. There has already been a lot of discussion about this in relation to politics and social media creating ‘echo chambers’, but this could extend to every area of digital life, an issue that 5 of the main reports analyzed also picked up on. 9. Upgrading Humans relates to digital innovation in healthcare taking place across the globe. Emerging tech is creating an ‘Internet of Patients’, helping to bring relief to a range of conditions, while giving the potential for finding news cures to long-standing illnesses such as cancer. Surprisingly, this was only highlighted in 5 of the 12 reports analyzed in depth. 10. No Strings Attached looks at the ‘post-loyalty’ world where consumers hold all the power. Instead of focusing solely on product, businesses will need to foster ongoing relationships that
go beyond that – something that 5 out of the 12 reports featured here focus on too. The 12 reports Virtusa looked at were from; McKinsey, Future Laboratory, Gartner, Forrester, Deloitte, PwC, EY, Foresight Factory, Frog, Fjord/ Accenture, Fast Co and JWT Future 100 Congrats to Ron Papa, President and Chief Executive Officer of NFA National Fire Adjustment Company, Inc. has been elected by the Better Business Bureau of Upstate New York Board of Directors to a three-year as a member of the Board of Directors. NFA is a 55 plus year BBB Accredited Business. Papa, with NFA headquarters in Amherst, New York has been President of the National Fire Adjustment Co., Inc. since 1994 and is known to have demonstrated an ability to work creatively in the insurance adjusting industry. NFA, established in 1922 by Bernard Papa, is a fourth generation public adjuster firm. SA
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Workers’ Compensation Basics By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE - Assistant Vice President/Media Editor
A SAFE WORKPLACE is a basic right of every employee. Protecting employees against injury, and ensuring that they have proper medical coverage in the event of an accident, is a primary responsibility of every business owner, from the small contractor to the multinational conglomerate. Most states allow insurance agents to purchase Workers’ Compensation and Employer’s Liability for their clients from a competitive marketplace. A handful, however - North Dakota, Ohio, Washington and Wyoming -are monopolistic states. This means that coverage must be purchased from a compulsory state fund, or the business is qualified as a selfinsurer. Helping clients understand how Workers’ Compensation differs among states is another value-added service of the professional insurance agent. In the vast majority of states, a Workers’ Compensation policy is available from a choice of insurers to offer protection to employers for their most important employee-related exposures. The National Council on Compensation Insurance (NCCI) regulates coverage, collects data, reviews industry trends, and publishes loss costs (www.ncci. com). Monopolistic state funds do not operate under the regulations of NCCI. In a standard Workers’ Compensation policy, Part I of the policy addresses statutory liability exposures, such as medical coverage and lost wages due to on the job injuries, while Part II, Employer’s Liability Coverage, applies to workrelated diseases or injuries to employees that are outside the statutes. Examples of Part II scenarios include an injured employee who sues their employer because the employer failed to properly maintain the equipment. The injuries would be covered by Part I, while the liability lawsuit falls under Part II. Employer’s Liability coverage addresses a number of events: intentional acts/torts by employer, diseases or injuries that are excluded from state workers compensation statutes, and loss of consortium and other loss of services to
In the vast majority of states, a Workers’ Compensation policy is available from a choice of insurers to offer protection to employers for their most important employeerelated exposures. family members. Third party over action claims can occur when an employee is injured by a machine and sues the manufacturer, who may then sue the employer based on the employer’s perceived negligence. In a dual capacity claim, the employer and employee have more than one relationship. This could be if the employee is injured by a product that the employer manufactured. Employer’s Liability coverage can pay for attorney’s fees, court costs, and settlements or judgements (www.insureon.com). Each monopolistic state has its own regulations, and their own way to obtain coverage. Although being self-insured is an option, the requirements to do so are extremely restrictive. Therefore, only the largest well-funded employers will qualify to self-insure (www.workcompcon-
sultant.com). Employers must contact the state directly to purchase the coverage, as insurance agents are prohibited from doing so. A key difference is that monopolistic state coverage does not include Employer’s Liability coverage. This is why Stop Gap coverage is needed. Stop Gap coverage provides the employer’s liability coverage. Employers with operations in monopolistic and non-monopolistic states can add the Stop Gap endorsement to their worker’s compensation policy covering the non-monopolistic state operations. For employers operating solely in monopolistic states, the endorsement would be added to the general liability policy. A safe workplace is the goal for all employers. Accidents happen, even to the most careful employees. Helping clients understand Workers’ Compensation coverage and how to obtain it is another sign of the true insurance professional.
R
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10 September 10, 2018 / INSURANCE ADVOCATE
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WE BELIEVE
independent insurance agents serve customers best with trusted advice and the right coverage options to protect what matters most.
DO YOU BELIEVE THIS TOO? JOIN US. Contact Jamie Deapo jdeapo@biginy.org 800.962.7950 ext. 232 BigINY.org/join IA_Ad_MissionStatement_071318.indd 1
7/13/2018 11:20:27 AM
[ ON THE LEVEL ]
JAMIE DEAPO
How Attractive is Your Website? u I visit many agency websites as part of my daily routine. Candidly I would have to say there are very few that are inviting to the consumer looking for information and possibly an agent to help them with their insurance protection. The worst are those that say very little and many times haven’t been updated in quite some time. If your website is a glorified business card of the agency with pictures you would be better off not having one. The total lack of commitment to having a decent website sends a consumer the message that you either don’t care or have very little information or knowledge to impart. You can be pretty sure they will be moving on quickly without a second thought. Then there are those websites that are loaded with information on the main page that isn’t even close to what the consumer is looking for. Droning on an on about themselves, the carriers they represent and not being specific about what types of clients they focus on. Even if your agency is a generalist your main page should tell the consumer the client type you primarily cater to. In designing a website think like a consumer surfing the internet for insurance information pertinent to their needs. They want to generally understand the types of coverage that are important for their needs. You want to highlight information but not turn them into a CPCU or CIC. Consumers want a general understanding but aren’t interested in analyzing the coverage details needed to properly protect them. It’s your job as the agent to do the detailed analysis. Something that drives me crazy on a website is a link or tab to get a quote. Having that available just perpetuates the myth that the value of insurance protection should be determined by price. It screams all coverage is the same 12 August 20, 2018 / INSURANCE ADVOCATE
The total lack of commitment to having a decent website sends a consumer the message that you either don’t care or have very little information or knowledge to impart. You can be pretty sure they will be moving on quickly without a second thought.
and so buy the cheapest protection you can. Instead of an offer for a quote why not take a few lines on the main page to make it clear to the consumer that having adequate protection that meets your needs and expectations is the key to purchasing insurance protection. Having a competitive price is a given. Isn’t that what makes having a knowledgeable and professional agent so important. You should indicate that providing the right coverage at a competitive cost is always your objective. This is what makes the independent agent the best source for buying insurance – access to multiple markets allow-
Jamie Deapo is AVP of Membership & Member Programs for Big I and is an approved CE instructor in New York. Prior to being with Big I, he was an independent agent in the Syracuse area for 15 years. Jamie started his career in 1972 working for insurance carriers, and he has held various underwriting and marketing positions with several national as well as regional companies. He is a past president of the Independent Insurance Agents of Central New York and served on the board of directors of Big I.
ing for the right coverage at the right premium. Insurance is very important but pretty boring. No one likes spending money on protection but I think everyone wants to make sure they have the right coverage if they have a loss. The best website I’ve seen uses humor to get the idea of protection for various situations through to consumers. They also used it as a way to highlight the types of clients and coverage they focused on. Honestly I can’t believe any consumer visiting their site wouldn’t stay for a fair amount of time if for nothing else than to view the humorous scenes scrolling at the top of their main page. I guess my message is take your website seriously and develop it with the consumer in mind. Make it interesting and helpful. Think about what you would want on the main page if you were someone looking for information. Things need to be easily found. Let client testimonials speak to the quality of your work – consumers value other’s opinion and experience. Be different. Be genuine. Be creative. Put some personality into your main page. If you’re going to invest time and money into your website make it a place consumers want to visit and stay for more than a minute.[IA]
IN THE MATTER OF THE LIQUIDATION OF AMERICAN MEDICAL AND LIFE INSURANCE COMPANY Supreme Court County of New York Index No.: 452041/2016 NOTICE The Superintendent of Financial Services of the State of New York and her successors in office were appointed as liquidator (“Liquidator”) of American Medical and Life Insurance Company (“AMLI”) and, as such, have been directed to take possession of AMLI’s property and liquidate its business and affairs pursuant to Article 74 of the New York Insurance Law (“Insurance Law”). The Liquidator has, pursuant to Insurance Law Article 74, appointed David Axinn, Special Deputy Superintendent (“Special Deputy”), as her agent to liquidate the business of AMLI. The Special Deputy carries out his duties through the New York Liquidation Bureau, 110 William Street, New York, New York 10038. The Liquidator has submitted to the Supreme Court of the State of New York, County of New York (“Court”) an application seeking an order: (i) approving a procedure for judicial review of the Liquidator’s classification and adjudication of claims in the AMLI proceeding; and (ii) appointing a referee to hear and take evidence on issues raised by the Liquidator’s determinations and claimants’ objections and to report thereon. A hearing is scheduled on the application on the 30th day of October, 2018, at 9:30 a.m., before the Court at the Courthouse, IAS Part 18, 111 Thomas Street, Room 731, New York, New York (“Return Date”). If you wish to object to the application, you must serve a written statement setting forth your objections and all supporting documentation (“Answering Papers”) upon the Liquidator at least seven (7) days prior to the Return Date, and the original Answering Papers must be filed with the Court on or before the Return Date. Service on the Liquidator shall be made at the following address: Superintendent of Financial Services of the State of New York as Liquidator of American Medical and Life Insurance Company 110 William Street New York, New York 10038 Attention: General Counsel The application is available for inspection at the above address and on the website maintained by the New York Liquidation Bureau at http://www.nylb.org. In the event of any discrepancy between this notice and the documents submitted to Court, the documents control. Requests for further information should be directed to the New York Liquidation Bureau, Creditor and Ancillary Operations Division, at (212) 341-6728 or ReceiverOps@nylb.org. Dated: August 20, 2018
MARIA T. VULLO Superintendent of Financial Services of the State of New York as Liquidator of American Medical and Life Insurance Company
Single-Payer Health Care System in New York “Unsustainable” RAND Corp. report shows the proposal is unworkable 14 September 10, 2018 / INSURANCE ADVOCATE
uThe battle lines are being drawn as the election nears. Some have observed that the leading Democratic candidates running for Governor are tripping over themselves to move to the left and to offer every freebie available, from healthcare to college education to home pizza delivery. “Single payer” healthcare has taken center stage and the Big I has stepped up and stated its view – one that many insurers and professionals might well find rational and sane, in keeping with their experience and practice. Louis Atti, chair of the board of Big I New York, underlined observations made by Rand Corp in a study commissioned by the New York Health Foundation. “This report confirms what we already knew - a government-run comprehensive health plan will cost too much and will be unsustainable. The state would have to collect 156 percent more in tax revenue in 2022, an increase of $139 billion, just to cover the cost of the plan. That cost will grow to $210 billion within ten years. New York’s residents and businesses simply cannot afford these crushing tax increases. Many New Yorkers already have health insurance coverage that works for “THIS REPORT CONFIRMS WHAT WE them, including employer-sponsored plans ALREADY KNEW - A GOVERNMENTand Medicare. A state-run plan would disrupt RUN COMPREHENSIVE HEALTH PLAN these successful arrangements, he stated, adding: “Big I New York and its member inWILL COST TOO MUCH AND WILL BE dependent insurance agents and brokers fully UNSUSTAINABLE. THE STATE WOULD support the goal of providing quality and HAVE TO COLLECT 156 PERCENT MORE IN affordable health insurance coverage to all New Yorkers. Rather than creating an entirely TAX REVENUE IN 2022, AN INCREASE OF new system, we believe the state should build Louis Atti, Chair of the $139 BILLION, JUST TO COVER THE COST Board of Big I New York on the success of New York State of Health, OF THE PLAN. THAT COST WILL GROW TO which today insures more than 4.3 million residents through a variety of public and pri$210 BILLION WITHIN TEN YEARS....” vate programs. The state would also do well to focus on reducing the costs of medical care and prescription drugs, as these are the factors that drive high insurance premiums. We (The Big I ) will continue to oppose the creation of a single-payer health plan in New York and work instead to enact affordable and sustainable programs that will protect our residents and businesses.” The Rand Report is worth a read. Here it is: A single-payer health care plan could expand coverage for all New York State residents, but would require significant new tax revenue, according to an analysis released today by the RAND Corporation and the New York State Health Foundation. A plan outlined by the New York Health Act is likely to increase use of health services as more people receive coverage. But overall health care costs would decrease slightly over time if administrative costs are reduced and state officials slow the growth of payments to health care providers, according to the analysis. The New York Health Act proposes progressively graduated taxes to fund the plan, but does not specify tax rates or structure. Researchers estimate that possible tax schedules imposed to support a single-payer plan would cut health care payments for most of the state’s households, while the highest-income households CONTINUED ON PAGE 16
INSURANCE ADVOCATE / September 10, 2018 15
CONTINUED FROM PAGE 15
would pay substantially more than they do today. “Our analysis finds that a single-payer plan in New York does not have to increase the amount of money spent overall on health care in the state, but it would substantially change who pays for health care,” said Jodi Liu, the study’s lead author and an associate policy researcher at RAND, a nonprofit research organization. “While we estimate the impacts of the New York Health Act across a number of reasonable assumptions, the actual effects would be subject to many future decisions that ultimately influence cost and who pays.” “There was a great need for an independent, rigorous, and credible analysis of an issue that has arrived center stage for New York State and the nation,” said David Sandman, president and CEO of the New York State Health Foundation, a private, statewide foundation. “With a fair and factual assessment in hand, the public and policymakers can make up their own minds about the merits of a single-payer approach.” About the New York Health Act The New York State Legislature is considering a bill that would create a single-payer plan providing coverage to all state residents. In addition, calls for some type of single-payer health plan have increased at the national level. As outlined in the legislation, the plan — to be called New York Health — would offer comprehensive benefits, except for long-term care benefits that may be included later. Patients would have no deductibles, copayments or other out-of-pocket costs at the point of service for covered services. The plan would be funded by a new trust fund, which would receive funding from the federal government (in lieu of federal financing for current health programs in the state, if federal waivers are approved), current state and local funding for health care, and revenue from two new state taxes. One would be a payroll tax paid jointly by employers (80 percent) and employees (20 percent). A second tax would be on income not subject to payroll taxes, such as interest, dividends and capital gains. RAND researchers used a microsimulation model to estimate the plan’s effects on health care use, spending, and payments in New York compared to what is expected under the status quo for the years 2022, 2026 and 2031. Key Findings The analysis estimates that under the New York Health Act, total health spending would be similar in 2022 as with the status quo and become 3 percent lower by 2031. The decrease reflects the assumption that provider payment rates would grow more slowly over time under New York Health than the current health system, as has been the case with other publicly financed health programs. Researchers estimate that new taxes for health care would need to be about $139 billion in 2022 and $210 billion in 2031 to fully finance New York Health. Under the status quo, the state is expected to collect about $89 billion in taxes from all sources in 2022; thus, the new taxes would be a 156 percent increase in total state tax revenue. As payments for health care shift from premiums and out-ofpocket payments to progressive taxes, most households in New York could pay less and the highest-income households could pay substantially more, suggests the RAND study. The shift in who pays more or less would ultimately depend on the design of the tax schedule. 16 September 10, 2018 / INSURANCE ADVOCATE
Estimates of New Taxes While the bill mandates only that the new taxes be graduated and does not specify the levels, RAND researchers estimate the impacts of one possible set of graduated marginal tax rates applied to three income brackets. The analyzed scenario has a payroll tax that begins at 6 percent for the lowest bracket (those earning under $27,500 in 2022), rises to 12 percent for the middle bracket, and to 18 percent for those in the highest bracket (above $141,200 in 2022). The nonpayroll tax follows the same schedule and the rates are about 6 percent, 12 percent, and 19 percent for the three brackets. Under these analyzed tax schedules in 2022, New Yorkers with household compensation (income plus employer contributions to health care) below the 90th percentile would pay an average of $2,800 less per person for health care. While payments decline for most people in this group, payments would likely increase for those people who work for employers that did not previously offer health care coverage. For New York residents in the 90th to 95th percentile of the household compensation, average health care payments would increase by $1,700 per person in 2022. The top 5 percent of New Yorkers by household compensation — a heterogeneous group with average household compensation of about $1,255,700 in 2022 — would pay an average of $50,200 more per person. The effects on employer health care payments would vary by whether the business currently provides health care to workers, according to the study. Employers that currently offer health coverage would contribute $200 to $800 less per worker on average for employee health benefits under the single-payer plan in 2022. Meanwhile, employers who do not offer coverage under the status quo would pay an estimated $1,200 to $1,800 more per worker on average in 2022 because of new payroll taxes. Researchers say that the introduction of new taxes could result in some residents and businesses leaving the state, potentially altering the financing of the plan. If even a small percentage of the highest-income residents move or find a way to shield income from the new taxes, tax schedules would need to be revised and could require increasing the financial burden on middle and lower-income residents. “The estimated effects of the New York Health Act are highly dependent on assumptions about provider payments, administrative costs, and drug prices,” said Christine Eibner, co-author of the study and the Paul O’Neill Alcoa Chair in Policy Analysis at RAND. “The actual cost of a single-payer health plan in New York would be sensitive to the extent to which state officials would negotiate or set price levels and generate efficiencies that would curb health care spending.” Other authors of the study are Chapin White, Sarah A. Nowak, Asa Wilks, and Jamie Ryan. RAND Health is the nation’s largest independent health policy research program, with a broad research portfolio that focuses on health care costs, quality and public health preparedness, among other topics. The New York State Health Foundation is a private, statewide foundation dedicated to improving the health of all New Yorkers, especially the most vulnerable. Find NYSHealth online at http://www. nyshealth.org and on Twitter at @nys_health.
[ GUEST ARTICLE ]
SCOT T DIAMOND
Hidden Factors that Could Cost Your Client Money The Importance of a Life Insurance Policy Review uAre there hidden factors that your clients are not aware of in their financial plans that could cost them and those they care about drastic amounts of money? How frequently should you be reviewing their life insurance policy with them? Although life insurance is sometimes erroneously portrayed as a ‘set it and forget it’ type of investment, the reality is that there are a variety of variables that can change along the way. We have all heard of the common changes in life events, triggering updates in coverage needs or beneficiary changes. But what if the policy is owned by an Irrevocable Life Insurance Trust (ILIT) and managed by a third-party trustee? Life insurance owned by a trust is a unique investment asset, one that requires critical attention on a regular basis. A lack of policy diligence and
18 September 10, 2018 / INSURANCE ADVOCATE
A lack of policy diligence and structured review processes can wreak havoc on policy performance, or even trigger MEC status, which causes unexpected taxation on gains when the funds are withdrawn from a policy. structured review processes can wreak havoc on policy performance, or even trigger MEC status, which causes unexpected taxation on gains when the funds are withdrawn from a policy. An advisor in our office recently shared an unfortunate series of events that occurred within his own family.
Scott Diamond advises high net worth individuals, business owners and their attorneys, CPAs, and money managers on opportunities to improve wealth accumulation, wealth transfer, preservation and charitable giving strategies. With over 20 years of experience in sophisticated financial strategies, Scott brings the strength of Schechter’s unique solutions in tax management, estate planning, and institutional quality investment advisory to his clientele in Los Angeles and around the country. Scott’s expertise includes sophisticated financial approaches to the individual life insurance market. Prior to joining Schechter, Scott was President of Roxbury Consultants.
A REAL-LIFE CASE STUDY
My father established trusts and purchased Principal Whole Life insurance policies for my niece (25) and nephew (27) at the time of their birth. With the subsequent evolu-
tion of Index Universal Life products providing collared equity returns, tax-free compounding, and transparent pricing, this was truly a nobrainer, win-win exchange to IUL. When in the final process of completing tax-free 1035 exchanges, we were first informed that these policies had been underwritten with smoker-rate charges. The policies amazingly had never been adjusted to non-smoker rates, despite annual notice to the Trust offering simplified underwriting reclassification once each had reached age 18. Worse yet, they revealed that both policies had inadvertently fallen into MEC status sometime within the first couple of years of their existence when the trust accepted an automatic policy rider that was deemed a material change. Since it had been so long since these policies had ever been looked at, combined with limited digital records, the natural reaction is let’s find out from the broker how this had occurred…. except in this case, he had been dead for years. We are still working to assess the paper trail, but with limited digital records it makes everything more difficult to uncover. This is a perfect example of why it’s essential for your client to have a trusted partner that will continue to monitor policies far beyond the time commissions are paid. Although there was good intent for setting up these policies within an ILIT, the niece and nephew in this scenario will be the ones who will suffer from a lack of proper monitoring and due diligence along the way – something over which they had no control over. While situations vary, milestones should be set in place for routine, on-going policy review. These policies ran into issues within the first couple of years affecting taxation of withdrawals and conversions, but the sub-par smoker rates were never updated at the age of 18 thereby creating additional wasted costs. The policies have lost years of compound interest crediting, which could be withdrawn tax-free for future use by the niece and nephew, if the policies had not fallen into MEC status during the first few years.
Performing consistent reviews is essential to ensure implemented structures are still meeting the intended goals and maintaining competitive pricing. Insurance products evolve, tax laws change, and there is a constant need to make sure your client’s financial plan is providing the right assets to the right beneficiaries, in the correct way at the proper time.
fact, once the trustee accepts appointment responsibility, they are expected to manage the life insurance portfolio to minimize risk to the beneficiaries. However, according to the American Bar Association, “several states have enacted statutes that relieve an ILIT trustee of liability in managing life insurance as an investment.”(1) In those states, the trustee is treated more like a custodian than a fiduciary from a liability standpoint. Therefore, it is important to appoint an individual or professional organization as trustee who is willing to communicate with the advisory team implementing the policy.
ADDITIONAL VARIABLES TO CONSIDER
Performing consistent reviews is essential to ensure implemented structures are still meeting the intended goals and maintaining competitive pricing. Insurance products evolve, tax laws change, and there is a constant need to make sure your client’s financial plan is providing the right assets to the right beneficiaries, in the correct way at the proper time.[IA]
Other factors, such as a low interest rate environment could also trigger the need for a policy review. Lower interest rates mean that the policy is receiving lower crediting rates, which could require additional premiums to be paid in order to keep the policy performing as intended. Different types of policies available today offer flexibility, and premiums are often not fixed or guaranteed, and amounts could fluctuate. Trustees in this situation are expected to act as a fiduciary, even though they are often not involved in the initial portfolio or life insurance policy selection process. In
YOUR CLIENT’S PLAN IS A PLAN FOR A REASON
(1) Warshaw, Melvin A., and David Neufeld . “The ILIT Liability Minefield: Trustees’ and Counsels’ Risks.” Www.americanbarassociation.com, ABA, Sept. 2010, www.americanbar.org/content/dam/aba/publishing/ rpte_ereport/2010/5/te_washaw_neufeld.authcheckdam.pdf. Page 12, state statutes that relieve an ILIT trustee of liability in managing life insurance as an investment.
4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 | http://zalma.com/blog
Mr. Zalma recently published on Amazon.com with links at the Zalma Books site, with the following: Non Fiction books: • “Insurance Fraud & Weapons to Defeat Insurance Fraud” In Two Volumes • “The Compact Book on Adjusting Liability Claims: A Handbook for the Liability Claims Adjuster” • “The Compact Book on Adjusting Property Claims” • “Ethics for the Insurance Professional” • “Rescission of Insurance” • “The Insurance Examination Under Oath”
• “Random Thoughts on Insurance Volumes IV and V: Digests from Barry Zalma’s Blog: ‘Zalma on Insurance’” Fiction: • “HEADS I WIN, TAILS YOU LOSE” • “Candy and Abel: Murder for Insurance Money” • “Murder And Insurance Fraud Don’t Mix” • “Murder & Old Lace”
[ IN THE NEWS ]
Small Commercial Insurance Customers Valued, Yet Underserved, J.D. Power Finds uOverall customer satisfaction remains stagnant in 2018 from 2017 (825 on a 1,000-point scale), showing that despite small businesses comprising the vast majority of businesses operating in the U.S., insurers have room to nurture this profitable market, according to the J.D. Power 2018 U.S. Small Commercial Insurance Study.SM “To remain competitive, insurers must accelerate their customer experience efforts, especially with respect to service interaction and price,” said David Pieffer, Practice Lead, Property & C asualty Insurance Practice. “Specifically, we found that if agents or insurer representatives explain rate increases to customers in person, satisfaction is 100 points higher than those who were informed via email, as they better understood the reasons why. Those simple personal touches and attention will go a long way with small commercial customers.” The 2018 Sma l l C ommercia l Insurance Study is based on responses from 2,734 small commercial insurance customers. The study, now in its sixth year, examines overall customer satisfaction among small commercial insurance customers with 50 or fewer employees. Overall satisfaction is comprised of five factors (in order of importance): interaction; policy offerings; price; billing and payment; and claims. Satisfaction is calculated on a 1,000-point scale. The study was fielded in April-May 2018. Study Rankings Nationwide ranks highest in overall customer satisfaction (844) and performs highest in policy offerings, price and claims. Auto-Owners Insurance (832) ranks second and American Family (830) ranks third. J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities 20 September 10, 2018 / INSURANCE ADVOCATE
enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power is headquartered in Costa Mesa, Calif., and has offices serving North/South America, Asia Pacific and Europe. J.D.
“TO REMAIN COMPETITIVE, INSURERS MUST ACCELERATE THEIR CUSTOMER EXPERIENCE EFFORTS, ESPECIALLY WITH RESPECT TO SERVICE INTERACTION AND PRICE.”
Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer.[IA]
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[ GUEST OPINION ]
ELIZ ABETH LEE VLIET, M.D.
Socialism, Corporatism, and Destruction of Patient-Centered Medical Care u“Medicare-for-all” medicine is the ultimate goal of progressives or “liberals,” fully embraced by Democrat candidates in the midterms. Candidates claim “single-payer” government-run medicine will “solve” all the problems of Obamacare and our “broken,” purportedly free-market system. Liberal proposals ignore or deny the massive cost burden to taxpayers of “free healthcare,” the long delays, and the limited treatment options that plague every taxpayer-funded (socialized) medical system in the world, from Canada and the UK, to Cuba and Venezuela—and increasingly to U.S Medicare and Medicaid. Some claim to have received fine medical care in such a system. But having been a patient—and had a family member as a patient—in several countries with socialized medical care, I can personally attest to the difficulty of getting proper care at all. The U.S. system has similar problems because of the flip side of the same coin: the corporatization of medicine. High cost, long delays to see specialists, limited doctor networks, “insurance” (managed care) companies dictating clinical “guidelines” to be followed, pharmacy benefit mangers (PBMs) causing harm to patients by adding another layer of costs and restricting access to optimal medications, and a deluge of prior authorizations and other administrative barriers are keeping patients from the medical care their doctors would like to provide. I see these problems daily in my own medical practice as I help coordinate care outside my field for patients from different parts of the U.S. as they struggle with getting insurance approval for the referrals, medications, and treatment they need, often from physicians treating only one organ system or body part without coordination with the patients’ other physicians. Even though I am independent of insur22 September 10, 2018 / INSURANCE ADVOCATE
Neither socialism or corporatism is about serving individual patients. The collective or the corporation comes first. “Healthcare” is simply the pretext for bringing revenue into the system.
ance contracts and able to focus on serving patients according to their individual needs, I am still restricted in testing and treatment options by what “insurance” plans and PBMs will pay for. Two behemoths control medical care around the world: socialized medicine with government-run massive bureaucracies (in Canada, UK, Europe, etc.), and corporatism, with corporate bureaucracies (Think: AetnaAnthemCaremarkHumanaUnited Healthcare) controlling most “healthcare delivery” in the U.S., including an increasing proportion of care funded by Medicare and Medicaid. The single-payer chorus has yet to acknowledge this, or to ask whether their proposal will affect it. (It won’t.) Neither socialism or corporatism is about serving individual patients. The collective or the corporation comes first. “Healthcare” is simply the pretext for bringing revenue into the system. Physicians, on the other hand, have for 2,500 years stood on the foundation of the Oath of Hippocrates to use our best abilities and judgment for the benefit of the individual patient who seeks our help. Physicians cannot effectively serve two masters—the corporate or government entity AND the patient. When inevitable conflicts arise, it is the patient who ultimately suffers. “Medicare for all” is no solution—it just perpetuates and cements the flaws
Dr. Vliet has been a leader in patient centered, individualized medical care. Since 1986, she has practiced medicine independent of insurance contracts that interfere with patient-physician relationships and decision-making. Dr. Vliet focus is medical freedom and free market approaches to healthcare. Dr. Vliet is the founder of Vive Life Center and Hormone Health Strategies with medical practices in Tucson AZ and Dallas TX, specializing in preventive and climacteric medicine with an integrated approach to evaluation and treatment of women and men with complex medical and hormonal problems from puberty to late life. Dr. Vliet has appeared on FOX NEWS, Cavuto, Stuart Varney Show, Fox and Friends, Sean Hannity and many nationally syndicated radio shows across the country as well as presented hundreds of Healthcare Town Halls addressing the economic and medical impact of the 2010 healthcare law and free market reforms, as well as seminars and radio shows on healthcare reform, Men’s Health and Women’s Health. Dr. Vliet speaks as an independent physician, not as an official spokesperson for any organization or political party. Dr. Vliet has no financial ties to any health care system or health insurance plan. Her allegiance and advocacy is to and for patients.
we already have—while destroying the prospect for genuine reform. The real answer is to get ALL the third parties out of the physician-patient relationship. We need: • Patients spending their own money as they choose, as through Health Savings Accounts. • Price transparency to allow patients to make sound choices, through CONTINUED ON PAGE 30
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[ ON MY RADAR ]
BARRY Z ALMA
Insurance Fraud to Gain Thousands of Free Cell Phones Creative Criminal Gets 57 Months in Prison uIf criminals would put in the effort and skill they use to defraud insurers they would own a multi-million dollar business. Rather, they get short term profits and then find themselves is an 8 foot by 12 foot cell in a federal prison. In United States Of America v. Carlo Michell, No. 16-16208, United States Court Of Appeals For The Eleventh Circuit (March 22, 2018) Carlo Michell, a very creative criminal, appealed his 57-month sentence imposed after he pled guilty to conspiracy to commit access device fraud.
FACTS
The indictment to which he pled guilty charged Michell and two other co-defendants with using customer identification information to fraudulently obtain wireless devices from AT&T Wireless. AT&T offers insurance that provides for a replacement wireless device if a customer’s phone is lost, stolen, or damaged. To get the replacement device, the customer pays a deductible and provides a personal identification number (“PIN”). Michell and his co-conspirators got customer information from Teleperformance USA Corp., a contractor that provides customer service for AT&T. Five employees at Teleperformance accessed the personal account information of 3,700 AT&T customers—including the customers’ names, telephone numbers, and PINs—and sold that information to Michell and his co-conspirators. Using this information, the conspirators made false claims to AT&T for replacement wireless devices. Michell used his Facebook page to coordinate the receipt of the fraudulently obtained wireless devices by other co-conspirators. In total, approximately 3,800 wireless de24 September 10, 2018 / INSURANCE ADVOCATE
By receiving the stolen customer information, recruiting accomplices, directing the shipment of wireless devices, and managing a number of participants, Michell demonstrated a leadership role in the conspiracy. vices were shipped to Michell and his co-conspirators.
THE PRE-SENTENCE INVESTIGATION
The pre-sentence investigation report (“PSR”) sets out that Michell recruited at least five people to receive shipments of wireless devices, and instructed them to send the wireless devices to him or a co-conspirator. After recruiting them to the conspiracy, he also asked two of them if they “wanted to come work for him instead” of another conspirator. Michell objected to certain portions of the PSR, including the attribution of the total loss amount of the conspiracy to him as well as a sentencing enhancement based on the number of victims. The government also objected to the PSR, arguing that Michell should receive sentencing enhancements for trafficking in unauthorized access devices and for his role in the offense. The district court sustained the government’s objections, overruled Michell’s objections, and sentenced him to 57 months in prison.
ISSUE
Michell argues the district court should not have applied a two-level enhancement under Guidelines § 2B1.1
Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www. nationalunderwriter.com/ZalmaLi brary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/ Store/ProductDetails.aspx?produc tId=214624, or 800-285-2221 which is presently available. Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.
[ ON MY RADAR ] because the only victim was AT&T. Language in the guidelines is given its plain and ordinary meaning. Ordinarily, the guidelines commentary is authoritative, unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline. The commentary to § 2B1.1 defines a “victim” as “any person who sustained any part of the actual loss” as a result of the offense. In cases involving means of identification, a victim is further defined as “any individual whose means of identification was used unlawfully or without authority.” The names and PINs of the AT&T customers are means of identification, and they were used without authorization. More than ten AT&T customers information was stolen because Michell admitted Teleperformance employees accessed 3,700 customer accounts, and admitted 3,800 wireless devices were ultimately obtained as a result of the conspiracy. Michell argued, again creatively, that he did not directly steal the identify-
ing information, but merely bought it second-hand. However, the enhancement applies when a defendant uses the means of identification. Michell does not dispute that he used the names and PINs to fraudulently obtain wireless devices. Michell and his co-conspirators used thousands of customers’ information to fraudulently obtain wireless devices, which was the clear purpose of the conspiracy. M i c h e l l a d m itt e d t o p ay i n g Teleperformance employees for customer information, which was emailed to him. He then used his Facebook page to coordinate the receipt of the fraudulently obtained wireless devices by other co-conspirators. By receiving the stolen customer information, recruiting accomplices, directing the shipment of wireless devices, and managing a number of participants, Michell demonstrated a leadership role in the conspiracy. Michell admitted to purchasing stolen customer information—including names, telephone numbers, and PINs—and using that in-
formation to file false insurance claims in order to receive replacement wireless devices. The term “traffic” means transfer, or otherwise dispose of, to another, or obtain control of with intent to transfer or dispose of. Because Michell’s offense involved the trafficking of unauthorized access devices the district court properly applied the enhancement. Michell’s final objection was to the loss amount attributed to him at sentencing. The district court is not required to make a precise determination of the loss, and only needs to make a reasonable estimate based on available information. When determining a loss amount, a defendant may be held responsible for the reasonably foreseeable acts of his co-conspirators in the furtherance of the conspiracy. Michell agreed to fully participate in the offense. The district court found the actions of his co-conspirators were reasonably foreseeable. Specifically, the district court found Michell was deeply involved with the conspiracy because he personally obtained stolen customer inCONTINUED ON PAGE 30
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LAWRENCE RO GAK
Passenger Opens Door Of Parked Car And Knocks Down Pedestrian On Sidewalk: Held Not “Use And Operation” In the Matter of the Arbitration between: Nu Age Medical Solutions, Inc. and American Transit Insurance Company Edited by Lawrence N. Rogak In this No-Fault arbitration, the claimant was a pedestrian standing on the sidewalk saying goodbye to the occupant of a car. When the occupant opened the car door to step out to speak to the claimant, she knocked him down and he was injured. The claim was denied on the grounds that it did not occur as part of the use or operation of a motor vehicle. The No Fault arbitrator agreed.—LNR
The vehicle was not closely related to the injury claimant suffered as the door was opened by an occupant into the claimant, with said claimant electing to stand directly near the door while they asked the occupant to exit and say goodbye to them…
uThe Assignor VB was injured in a motor vehicle accident that occurred on 4/15/17. VB was a 46-year-old female pedestrian at the time of accident. VB’s injuries served as the impetus for treatment. The services in dispute are comprised of durable medical equipment (hereinafter “DME”) dispensed from 6/4/177/15/17. Respondent has denied the claim asserting that the claimant’s injuries did not arise out of the use or operation of the insured vehicle. The issue to be decided is the validity of Respondent’s use or operation defense. No-fault first-party benefits are available only when the motor vehicle is the actual instrumentality that causes the injury plaintiff seeks reimbursement for. Walton v. Lumbermens Mut. Co., 88 N.Y.2d 211, 644 N.Y.S.2d 133 (Ct. App. 1996). The vehicle must be a proximate cause of the injury before the absolute liability imposed by the statute arises. Any other rule would permit recovery for claims based on back strains, slipand-fall injuries, and other similar injuries occurring while the vehicle is being used but are wholly unrelated to its use.
To be a proximate cause of the injury, the use of the motor vehicle must be closely related to the injury. Rivera v. Outstanding Transp., Inc., 39 Misc.3d 1228 (A), 971 N.Y.S.2d 74 (Sup. Ct., Kings County, May 7, 2013). Proximate cause is not established merely because injuries occurred while entering or exiting a vehicle. More than occupancy is required to establish a causal link between a motor vehicle and a claimant’s injuries. If a claimant’s injuries are not a result of a collision or movement of the vehicle, nor were they caused by a defect in or failure of the vehicle or any of its parts, then causality will not be established. In the instant matter Respondent has submitted an MV-104 and the affidavit of Felix Guerrero in support of its defense that the claimant’s injuries did not arise out of use or operation of the vehicle involved in the incident underlying this claim. Mr. Guerrero was the driver of the vehicle involved in the underlying incident. Mr. Guerrero’s affidavit makes clear that he was the driver of the vehicle, that the claimant was knocked down
28 September 10, 2018 / INSURANCE ADVOCATE
Lawrence N. (“Larry”) Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best’s Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.
when an occupant of the vehicle opened their passenger door into the claimant just before they were to leave the location of the incident, and that a police officer was called to the scene and made no report based on what had transpired. Mr. Guerrero’s affidavit further makes clear that the vehicle was not in motion when the claimant was allegedly injured, that it was a passenger Mr. Guerrero was picking up that opened the car door into the claimant and caused the knockdown, and that the claimant elected to stand directly near the door that stuck her when an occupant opened the car door. Based on the foregoing, it is clear that the claimant’s injuries did not arise out of the use or operation of the vehicle. The vehicle was not closely related to the injury claimant suffered as the door was opened by an occupant into the claimant, with said claimant electing to stand directly near the door while they asked the occupant to exit and say goodbye to them as set forth in Mr. Guerrero’s affidavit. Furthermore, the claimant’s injuries occurred while the vehicle was in use but were wholly unrelated to its use. The vehicle was at a stop, the claimant’s injuries were not a result of a defect in the vehicle CONTINUED ON PAGE 30
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Timekeeping Practices • Ensure that all employees receive the company’s timekeeping policies and provide their signed acknowledgement of receipt of the policies; • Train employees on timekeeping policies; • Train managers on the timekeeping essentials: - Always follow the company’s timekeeping polices; - Never encourage or require off-the-clock work; - Require accurate reporting of time worked; - Provide the opportunity to take meal and rest breaks as required by applicable law; - R eport all employee complaints about timekeeping to human resources or other designated management personnel; and - Never retaliate against employees for reporting concerns about timekeeping practices. • Develop and implement an effective complaint procedure through which employees can report timekeeping concerns; • Develop a regular auditing process to review time records and related edits; • Consider adding a class action waiver in arbitration agreements; and • Designate and train personnel who will handle questions and complaints from employees about the timekeeping system.
formation, filed false insurance claims, and used his Facebook page to coordinate the activities of the conspiracy. In addition to his own actions, the district court found Michell maintained frequent contact with other co-conspirators, including 820 phone calls between Michell and his cousin Kennol Placil. Michell has not shown any reason why these findings were erroneous. To the contrary, the findings were supported by the record, so the district court did not err when it determined that the entire loss amount was attributable to Michell.
or any of its constituent parts, and causality does not attach simply because an individual was exiting the vehicle when the claimant was allegedly injured. Applicant argues that the door striking the claimant is enough on its own to overcome Respondent’s asserted defense. The case law on this issue is inapposite with Applicant’s position. The vehicle cannot be said to have been closely related to the claimant’s injuries based on Mr. Guerrero’s recitation of the events leading up to the claimant’s fall and purported injury. The vehicle was not the instrumentality that caused the claimant’s injuries pursuant to the authority cited to herein. In short, the underlying incident here is not the type of motor vehicle “accident” the Legislature contemplated when the No-Fault Law was drafted and enacted. As such, Respondent’s denial will be sustained. Accordingly, Applicant’s claim is denied in its entirety.[IA]
Timekeeping Data • Learn the reporting or “flagging” capabilities of the company’s timekeeping system; • Create a list of categories of information that a company may want to audit for potential risks, including, especially, meal break compliance, early punchins, cell phone use, and excessive overtime; • D esignate and train personnel to serve as the point of contact for receiving and evaluating concerns identified by the timekeeping system; and • E stablish how long the company will maintain its timekeeping data, typically three (3) years.[IA] 30 September 10, 2018 / INSURANCE ADVOCATE
ZALMA OPINION
I thought, after dealing with insurance fraud for more than 50 years I had seen it all. I was wrong. Defrauding a cell phone insurer to get new cell phones is creative and does not include the hazards of armed robbery. The sentence for the multitudinous frauds seems small and insufficient to punish the perpetrator.[IA]
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AAA Case No. 17-17-1072-4703 Applicant’s File No. SS-51978 Ritesh Mallick, arbitrator Award date: 7/31/2018
genuine patient value-based purchasing. • True risk-based catastrophic, reasonably priced medical insurance plans, formerly called “major medical” coverage, which were outlawed by the ironically named Affordable Care Act. • Competition in the pharmaceuticals market, and removal of safe harbors for kickbacks to PBMs. • Tort reform These are the very hallmark features that Candidate Trump espoused that helped his election to President. Sadly, Congress, the FDA, and HHS have so far blocked these reforms that businessman Donald Trump proposed to cut costs and put decisions back into the hands of patients and physicians. Obstruction of true reform has been from both political parties, evidenced recently by the failure of the Republican-controlled Congress to successfully repeal costly Obamacare, a betrayal of their many campaign promises to undo damage inflicted by Democrats in 2010.
Free-market solutions have consistently worked best and served the most people at the lowest cost. Would-be reformers should be looking at places like Chile and Malaysia, which have thriving private sectors, rather than the tired, failing systems of Canada and the UK, for examples of excellent care at a fraction of U.S. prices. Free markets in medicine have not been broken, as Democrats like to say. True free-market approaches have not been allowed to work since Congress started to Impose more and more regulations and restrictions in a futile attempt to rein in the soaring costs of Medicare soon after it was implemented in 1965. More of the same socialist or corporate interference and control will have the same effect: outrageous costs and declining quality. To restore excellent affordable medical care, we must first restore medical freedom and unleash the competitive market forces that help all sectors of our economy thrive.[IA]
GUEST OPINION
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