Public Risk NovDec 2012

Published by the Public Risk Management Association

www.primacentral.org

NOV/DEC 2012

FLEET SAFETY

A CRITICAL PART OF KEEPING EMPLOYEES SAFE AND COSTS DOWN GET SMART! 9 High-Tech Tools for Intelligent Claims Management

BACKGROUND CHECKS Helping Employers Navigate the Battle Between Negligent Hiring and Discriminatory Hiring Practices

Going Above and Beyond “Sometimes I have to go above and beyond—literally.

“Traveling the Alaskan bush to over 150 cities, boroughs and school districts is daunting, but I love what I do.

Helping our members is hugely rewarding. They aren’t just risk partners, they’ve become personal friends.

“To protect them from risk and losses, we rely on Genesis for reinsurance. When we encounter a little turbulence — or worse— it’s comforting to know we can trust their specialized expertise and top notch security.

“With Genesis, we can always count on safe landings no matter what risks cross our path.”

Visit our website at www.GenesisInsurance.com

— Kevin Smith, Executive Director Alaska Municipal League Joint Insurance Association

Genesis Management and Insurance Services Corporation, 120 Long Ridge Rd, Stamford, CT 06902

A.M. Best A++ XV

S&P AA+

A Berkshire Hathaway Company

Volume 28, No. 10 | Nov/Dec 2012 | www.primacentral.org

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.

PRESIDENT Dan Hurley, CSP, ARM-P, MS Senior Director, Risk Management & Safety Norfolk Public Schools Norfolk, VA

CONTENTS

PAST PRESIDENT Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager City of Gainesville Gainesville, GA PRESIDENT-ELECT Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC

6

10

Dean Coughenour, ARM Risk Manager City of Goodyear Goodyear, AZ

6 FLEET SAFETY:

A Critical Part of Keeping Employees Safe and Costs Down

By Mark Woodward

Michael Fann, ARM-P, MBA Director of Loss Control TML Risk Management Pool Brentwood, TN Matt Hansen, MPA Director, Risk Management Division City & County of San Francisco San Francisco, CA

10 GET SMART!

9 High-Tech Tools for Intelligent Claims Management

By Jose Tribuzio

DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL

Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX

16 BACKGROUND CHECKS

EXECUTIVE DIRECTOR Marshall W. Davies, Ph.D.

Helping Employers Navigate the Battle

EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

Between Negligent Hiring and Discriminatory Hiring Practices

ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com

By John DiCaro and Michele Molinario

16

Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year.

Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine.

POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314.

IN EVERY ISSUE

Copyright 2012 Public Risk Management Association Reprints: Contact the Reprint Outsource at 717.394.7350.

4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

1

PRIMA PODCASTS ARE HERE!

PRIMA’s Podcasts are a quick and convenient way to learn on-demand and on your own time!

Meant to provide you with information on specific topics important to the public risk management sector and hot topics, PRIMA Podcasts are the perfect way to fit in education and training into your busy schedule.

Check www.primacentral.org for new Podcasts!

CURRENT PODCAST SERIES INCLUDE: Claims Contract Review Fleet Management TULIP Policies AND MORE!

Message from PRIMA President Dan Hurley

BEING A PROFESSIONAL MEANS YOU NEVER STOP LEARNING

O

ne of the great things about being a member of a professional organization in your field is having the opportunity to continually expand your education. In spite of having experience, certifications and degrees, there is never a time to stop learning, particularly as the world of risk changes around us. In the words of motivational speaker and writer Denis Waitley, “Never become so much of an expert that you stop gaining expertise. View life as a continuous learning experience.”

PRIMA provides many opportunities for continuous education. Our primary mission is “to advance the knowledge and practice of public risk management” and this fall has provided many learning opportunities. PRIMA Institute returned this November 5–7 with more than 70 attendees (and even included three risk managers from the state of Alaska). The PRIMA Institute faculty was made up of outstanding individuals with extensive experience not only in the field of public entity risk management, but also with outstanding experience in instruction. This educational experience was exceptional not only because of the depth of the topics, but because it included interactive sessions. These gave the attendee the unique opportunity to participate, which created a much more meaningful learning experience. In addition, the participants also had the opportunity to interact with faculty socially outside the classroom, to get to know them personally and gain even more insight into their field. I attended PRIMA Institute myself as a student and felt very fortunate to have the opportunity to go, as I learned some things I didn’t know, re-learned what I may have forgotten and corrected what I learned wrong.

Also this fall, the committee planning the 2013 Annual Conference met to review more than 160 submitted conference sessions.

The committee was divided into track subgroups and spent the day with the very difficult task of looking at each session and selecting the best sessions for the conference. After making their selections, each group presented to the committee as a whole for feedback, further discussion and possible realignment of selected sessions. The conference planning committee also determined whether a topic was missing, yet necessary, for 2013.

The committee, composed of board members and corporate partners and assisted by PRIMA staff, has put forth an excellent collection of sessions that will make the Tampa conference an excellent venue to get updated on current trends and challenges.

This year will again include sessions from IPMA-HR, ALARM, as well as conference newcomers, the State and Local Government Benefits Association (SALGBA).

Being a professional does mean a commitment to continuous learning. According to the educator Horace Mann, “The education already given to the people creates the necessity of giving them more.” PRIMA continues to fulfill its mission for its members, to advance the knowledge and practice of public risk management and provide the opportunity to stay up-to-date.

PRIMA provides many opportunities for continuous education. Our primary mission is “to advance the knowledge and practice of public risk management” and this fall has provided many learning opportunities.

Sincerely,

Dan Hurley, CSP, ARM-P,MS 2012–2013 PRIMA President Senior Director, Risk Management and Safety Norfolk (VA) Public Schools

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

3

News Briefs

NEWS

BRIEFS HEY, @SEATTLEPD: WHAT’S THE LATEST? The business of policing, as cops have known since at least the first bobbies on the beat, is partly about being seen on the job, having a local presence, even if it is just twirling a baton down the avenue.

Seattle officials have promised to give the public more information about the department, and have turned to Twitter to help, reports The New York Times.

But does “local” mean the same thing in the disembodied chatter of social media? The Seattle Police Department, which presides over one of the nation’s more tech-savvy — if not saturated—cities, is diving in to find out, in a project that began with 51 hyper-local neighborhood Twitter accounts providing moment-to-moment crime reports.

The project, called Tweets-by-beat, is the most ambitious effort of its kind in the nation, authorities in law enforcement and social media say, transforming the pen and ink of the old police blotter into the bits and bytes of the digital age. It allows residents — including, presumably, criminals—to know in almost real time about many of the large and small transgressions, crises, emergencies and downright weirdness in their neighborhoods.

“More and more people want to know what’s going on on their piece of the rock,” said the chief of police, John Diaz. “They want to specifically know what’s going on in the areas around their home, around their work, where their children might be going to school. This is just a different way we could put out as much information as possible as quickly as possible.”

Not everything that happens in a neighborhood will automatically pop up in 140 characters or fewer. Sex crimes were excluded, on the theory that Web attention could discourage people from reporting a rape or sexual assault, and domestic violence cases will remain off the Twitter list as well for similar reasons. Drawing attention to a private matter and alerting neighbors, department officials said, could make things worse for the victim.

The reports are also structured with an automatic one-hour delay, aimed at preventing people from learning about an investigation in progress and swarming over to gawk and perhaps interfere.

“This is trailblazing stuff,” said Eugene O’Donnell, a professor of police studies at John Jay College of Criminal Justice in Manhattan. “It shows a willingness I haven’t seen in large supply to really affirmatively make available, warts and all, a clear picture to people of what’s going on.”

4

PUBLIC RISK | NOVEMBER/DECEMBER 2012

W W W.PRIMACENTRAL .ORG

PUBLIC WORKERS BID FOR THEIR JOBS If you want to work on a project for the city of San Diego, you may be required to submit a bid—even if you’re already a city employee. In a twist on the way municipalities have traditionally done business, more public employees across the country are being required to participate in a bid process for project work, reports Governing.com. The idea, known as “managed competition,” has been around for about 15 years. But as cities seek new ways to save money, the idea is gaining renewed attention.

In San Diego, the program was approved by a 2006 ballot vote (although it wasn’t fully implemented until 2010). Under the program, city leaders identify operations they think can be performed for less money. Workers help write the solicitation for bids, while another team—along with private-sector contractors—responds.

City landfill employees recently won a bid that will save the city $2.7 million annually, in part by cutting 11 full-time positions. Interestingly, all four managed competitions completed in San Diego so far have been won by city workers. “They won because they found ways to operate more efficiently,” says Wally Hill, the city’s assistant chief operating officer.

Meanwhile, in Chicago, managed competition has taken a more literal meaning: the city’s recycling operations have been split between public workers and private companies, and both are being evaluated for a future contract. Already, city officials say, the publicsector workers have reduced costs from $4 per cart of waste to $2. Tom Alexander, a spokesman for Mayor Rahm Emanuel, says employees have found more efficient ways to route their trucks, are using fewer sick days and have renegotiated the labor deal for new hires. “We were hoping there would be a robust competition, and that’s exactly what happened,” he said.

Charlotte, Phoenix, Indianapolis and other cities have pursued managed competition as well. For some, the idea is a no-brainer. “The city and the government­—we’re not in the employment business,” said Arizona state Sen. Frank Antenori, who sponsored a bill last year that would have required the state’s largest cities to solicit private-sector bids for services. “We’re a service provider. If we can provide that service cheaper and more efficiently, we should.”

KANSAS CITY STREAMLINES FIRE HYDRANT INSPECTION Fire hydrant inspection takes place annually in cities across the country and can be a time-intensive process to complete. In an effort to streamline the process, the Water Services Department (WSD) and the Kansas City Fire Department (KCFD) have completed a pilot series of inspections using an iPad equipped with Geographic Information Systems (GIS) software, reports Governing.com. The device allowed inspection crews to easily locate hydrants, complete and send any necessary forms electronically. The use of the iPad also allowed inspectors to take and attach photographs of maintenance issues with their reports. In 2013, the electronic system will be used by all 50 of the KCFD’s trucks to inspect their 23,000 hydrants, saving the city $20,000. In the future the department will be looking into syncing the inspection data with their dispatch unit so that crews responding to emergencies will have access to the data.

STATES BRISTLE AT REID’S PUSH TO LEGALIZE ONLINE POKER IN LAME-DUCK SESSION A push by Senate Majority Leader Harry Reid (D-Nev.) to legalize online poker in Congress’s lame-duck session could run into a buzz-saw of opposition from state legislatures and governors.

State officials are bristling at the possibility of being preempted by the federal government in their own efforts to legalize some forms of online gaming, and are particularly concerned about how Reid’s bill could affect their lotteries.

James Ward, a committee director at the National Conference of State Legislatures (NCSL), said his members were frustrated by Reid’s proposal.

“It’s frustrating because they are overseeing a successful stewardship of the gaming industry,” Ward told The Hill. “It’s not clear why any federal intervention is necessary… It’s a sensitive topic for the states any time you talk about preemption.”

States aggressively defended their turf last year as the Democratic leader and the failed “supercommittee” considered online gaming legislation, and could go on offense again if Reid moves legislation that they see as threatening their plans.

Delaware and Nevada have authorized some form of online gaming, and legislatures in at least seven other states have introduced bills to legalize in some shape as well, according to the NCSL. The push to legalize online gambling comes after the Justice Department found last year that the Wire Act only prohibits online gambling on sports, which opened up avenues for other games of chance, including state lotteries.

A spokeswoman for Reid said the Senate leader is aware of the states’ concerns and is open to more input from legislatures and governors.

“We have consulted extensively with a variety of stakeholders about the bill —including many states.

We have indicated to all that our door is open to continuing conversations,” said Kristen Orthman, the Reid spokeswoman.

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

5

A CRITICAL PART OF KEEPING EMPLOYEES

By Mark Woodward Did you know that the number one way to die on the job in the United States is in a vehicle crash?

Vehicle crashes plague public and private organizations causing unnecessary damage, financial waste, increased liability and employee fatalities. All employees that drive need to fully understand vehicle safety expectations.

An effective fleet safety program means going above and beyond compliance. It’s a global look at your program and keeping your city, county or state employees safe.

If you haven’t taken fleet safety seriously, take a look at these statistics: • Motor vehicle-related incidents are consistently the leading cause of work-related fatalities in the United States. Centers for Disease Control and Prevention • 35 percent of occupational fatalities are associated with motor vehicles. Bureau of Labor Statistics • 32 percent of work-related fatalities are vehicle crash-related. California Department of Workers Compensation • 49 of work-related fatalities are vehicle crash-related. Ohio Department of Workers Compensation • 49 of work-related fatalities reported are transportation-related. Iowa Department of Workers Compensation • 42 percent of fatalities handled since 1995 are vehicle-related. Missouri Employers Mutual What is fleet safety? Any strategy an organization uses that effectively reduces crashes, damage, injuries and fatalities.

Fleet safety is often misinterpreted to include only organizations like trucking companies, or only vehicles subject to Department of Transportation regulation. A fleet is defined as any vehicle that an employee drives or operates while on company time or business. Exposure can also include personal vehicles, unregulated cars and pickups. Vehicles used for company business, even every-once-in-a-while trips, make the employer responsible for the safe operation of the vehicle.

Utilize the following Ten Steps to Minimize Crash Risk, created by the Network of Employers for Traffic Safety as a checklist to evaluate your current fleet safety program.

Step 1—Management Commitment It’s a moral and ethical responsibility to keep workers safe and management must insist on safety policy adherence.

Managers should not be focused solely on production. It is important that they take time to make sure jobs are done safely.

Modeling safe behavior from the top down shows employees that the organization expects safe work. Do your managers enforce safety best practices, like seat belts? Does the city manager require safe work, and set the expectation that injuries and incidents within the organization are wasteful and unacceptable? Knowingly ignoring safety best practices causes

6

PUBLIC RISK | NOVEMBER/DECEMBER 2012

W W W.PRIMACENTRAL .ORG

SAFE AND COSTS DOWN

additional risk of liability and waste of human and financial resources that public sector organizations cannot afford in this economic climate.

Step 2—Written Policies and Procedures Safety rules keep workers safe and prevent injuries. Put safe driving expectations in writing and have employees sign them, indicating that they understand the policies and will comply with them. The single most important policy for a driver is a seat belt policy. Consider documenting additional policies including substance abuse, cell phone/distracted driving and safe driving expectations. Signed documentation creates a personal responsibility for safety.

Know your state workers compensation laws. In Missouri, when a known and enforced safety rule is broken and a worker sustains an injury, workers compensation benefits may be decreased by up to 50 percent (Section 287.120.5 RSMo). Written and signed policies are also important as your insurer will most likely expect to see physical examples of your fleet safety documentation.

Step 3—Driver Agreements Driver agreements supplement policies and procedures created in Step Two. They’re another layer of documentation that reiterates safe driving expectations. It can also require vehicle cleanliness, use of vehicles as marketing tools and public perception rules.

Step 4—Motor Vehicle Record Checks If Motor Vehicle Record (MVR) checks were performed on all of your drivers, how many would have suspended or revoked licenses? Perform MVR checks annually at a

minimum, randomly throughout the year and always after a vehicle-related incident. Or, if budgets do not allow for the cost of these checks, require that employees submit their own MVR each year. Perform a MVR check on new hires, or have them bring their MVR in during orientation. Outline your criteria for what citations would disqualify a driver. The best indicator of future performance is past performance.

Step 5—Crash Reporting and Investigation A best practice for incident reporting is to have workers notify management in writing about any injury, incident or damage immediately. Make sure employees know about your incident reporting policies and scene conduct.

Upon notification of an incident, management must respond promptly and perform an incident investigation.

Investigations are important for many reasons, including scene documentation and ruling out or minimizing liability.

Witness and employee statements should be documented and corrective actions planned. Investigations yield information that can be used to improve safety and show employees you’re serious about safety.

Step 6—Vehicle Selection, Maintenance and Inspection Inspections are important because unsafe conditions can be identified and addressed before they cause an incident.

Drivers and management should perform documented safety inspections of fleet vehicles on a regular basis. Select the vehicle that’s safest for the work that will be done including pulling or towing. Require an annual motor vehicle inspection be submitted for personal vehicles used for company business.

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

7

Fleet Safety: A Critical Part of Keeping Employees Safe and Costs Down

Even if your fleet is compliant with federal and local regulations, you can still have backing accidents, shoulder injuries and falls. …

Compliance is a step that reduces risk, but it alone isn’t enough.

To really improve the safety of your drivers, public entities must go above and beyond compliance by implementing all of the 10 Steps.

Step 7—Disciplinary Action Safety policies are worthless unless they’re enforced. In the event a worker disobeys a policy, disciplinary action should result. When was the last time your organization disciplined an employee for a safety violation, much less a seat belt violation? Document all disciplinary action and track trends to improve your safety program.

Step 8—Rewards and Incentive Programs Many organizations don’t typically reward employees for safety at work because they argue that incentives cost too much, or that employees will come to expect them. Rewards aren’t expensive compared to accidents. When you witness an employee working safely, thank them. They will remember it.

There are ways to create an incentive or rewards plan that is affordable. Write down 10 ways to thank an employee for less than $1, and make this your incentive program!

Step 9—Training and Communication Train all employees on a regular basis and document it. To keep training manageable and effective, train in groups and keep it short—15 minutes or less when possible.

Communicate with drivers using the same technologies you do with your family and friends. Send safety messages to drivers before they leave for the day. Use two-way radios to dispatch a safety message. Put safety information on your website or email. Get the message out!

Step 10—Regulatory Compliance Anyone operating a fleet should understand that distracted driving increases incidents and liability. For example, commercial drivers must now use hands-free devices when

8

PUBLIC RISK | NOVEMBER/DECEMBER 2012

the vehicle is in use. However, using cell phones equipped with hands-free devices is still seen as distracted driving. In the case of hands-free cell phone use, compliance with the federal law can still result in civil liability if the cell phone was in use at the time of a crash.

Many organizations know federal, state and local fleet safety regulations, and knowingly ignore them. Does your organization enforce the use of seat belts? Are your firefighters wearing seat belts during emergency responses to fire calls, or are they removing seat belts in order to put on fire gear and air packs?

Are your law enforcement officers wearing seat belts, or do they feel that it impedes their quick exit from the vehicle, or restricts a quick draw of a sidearm? Address these industryspecific issues with seat belts, instead of ignoring them?.

Even if your fleet is compliant with federal and local regulations, you can still have backing accidents, shoulder injuries and falls. Compliance is necessary and but it is only part of the solution. Compliance is a step that reduces risk, but it alone isn’t enough. To really improve the safety of your drivers, public entities must go above and beyond compliance by implementing all of the 10 Steps.

Every day is an opportunity to improve safety. Start with a back-to-the-basics approach. Work with your workers compensation insurance carrier and utilize the safety tools available to you or check out www.worksafecenter.com.

For more about the 10 Steps listed above visit www.trafficsafety.org.

Mark Woodward is the senior loss prevention trainer for Missouri Employers Mutual.

W W W.PRIMACENTRAL .ORG

PRIMA’s 2013 Annual Conference

HOLDING RISK

JUNE 2–5, 2013 | TAMPA, FLORIDA

Registration Opens in January!

For more information, visit http://conference.primacentral.org.

GET SMART

9 HIGH-TECH TOOLS FOR INTELLIGENT CLAIMS MANAGEMENT

By Jose Tribuzio

F

or public risk managers, the rising cost of claims is an ongoing concern.

Claim payments represent the single greatest expense for insurance programs—with an estimated 70 to 80 percent of premiums allocated

toward claim expenditures. The U.S. property and casualty insurance industry pays over $200 billion in claim losses each year and spends nearly $40 billion just to process claims.

In many cases, public agencies are managing claims using technology that is 10 years old or older. Although these entities believe a new system could help to identify areas to reduce costs and improve claims-handling efficiency, they have postponed outlays in IT until they can justify the expense with a reasonable return on investment.

10

PUBLIC RISK | NOVEMBER/DECEMBER 2012

W W W.PRIMACENTRAL .ORG

Since outdated platforms do not provide workflow automation and are often difficult to adapt to an everchanging claims environment, public entitles have taken a “wait and see” approach—hoping newer, more flexible solutions would become available. In the meantime, they have resorted to costly, labor-intensive workarounds to process claims and get the data they need.

In this article, we discuss high-tech strategies and tools that can positively impact not only claims costs and outcomes, but also the bottom line of insurance programs.

1. THE NEW “MODERN” PLATFORM With the rise of the Internet and Web-based applications, many software providers rushed to introduce browser-based applications. However, these first-generation solutions grew out of legacy counterparts, which meant the underlying infrastructure was still based on old technology that would inevitably lead to performance issues.

Many were not truly native to the Internet; they simply possessed a browser-based front-end. They looked modern, but users quickly realized that in a high-volume claims environment, these systems were sluggish and frequently crashed.

In other situations, new systems used modern architecture but they lacked out-of-the-box functionality resulting in a lengthy and costly implementation, as organizations were forced to build claims capabilities from the ground up.

Today, a second generation of browser-based solutions is on the rise. They represent a new “modern” platform that empowers organizations with a combination of advanced architecture coupled with smart design and robust functionality. Organizations benefit from streamlined workflow, intuitive navigation, electronic connectivity and in-depth analysis so they can manage cases with more power, speed and intelligence.

2. NEW BUSINESS RULE TRENDS: ASYNCHRONOUS & COMPLEX A primary component of any claims system is its rules engine. Today, public entities understand that business rules can be configured to automate tasks, trigger workflow and send reminders.

The problem with traditional business rules is they slow a system down. For example, if a business rule was configured to generate a diary, notepad and email when a new claim’s payment was made, then the system would have to complete all those tasks before it finished saving the claim and before users would regain control of the system. This adversely affected system performance.

A modern solution utilizes the next-generation business rules, which are executed in an asynchronous (or independent) fashion. When the same rule mentioned above is triggered, a next-generation business rule communicates via a messaging system that says, “There is a rule associated with this transaction.”

The rule is then performed when the system has a free opportunity—usually within a second or two after the event—but it’s an independent process, so overall performance is enhanced.

Another trend affecting business rules is sophistication.

Rather than simple if-then statements, public entities now require complex rules that execute only when several specific conditions are met.

Due to the constraints of traditional rules and inflexibility of legacy systems, complex rules had to be hard-coded and delivered as a patch or in the next version of the software.

Public entities often had to wait months or years to receive complex rules.

Next-generation business rules enable public entities to deploy complex rules more quickly, since they are developed as components that can be configured and implemented right away—without having to wait for new software—and which leverage the same rules engine for centralized rules management.

A modern solution utilizes the nextgeneration business rules, which are executed in an asynchronous (or independent) fashion.

When the same rule mentioned above is triggered, a nextgeneration business rule communicates via a messaging system that says, “There is a rule associated with this transaction.”

3. REPORTING TOOLS ENABLE BROAD & DEEP CLAIMS ANALYSIS Today, public risk managers are struggling to take claims data and turn it into actionable information.

New technology enables organizations to dig deep into data and perform more thorough analysis to help prevent claims, contain costs and reduce losses.

A modern claims system should allow organizations to dynamically “slice and dice” data to identify loss trends.

Multi-dimensional cubes in a data warehouse enable various dimensions (such as claims, policies, dates, users, etc.) and facts of financial information (such as payments and reserves) to be used in analysis. The data can be sorted by the various dimensions and ultimately, cubes deliver the most relevant and accurate reporting across a public entity’s various systems.

In addition, multi-dimensional cubes provide pre-aggregated totals that allow organizations to instantly assess top-level claims management metrics. Since all financial transactions are saved with a corresponding date and time, it’s easy to aggregate financials by week, month, quarter or year—without having to define and generate new reports.

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

11

Get Smart! 9 High-Tech Tools for Intelligent Claims Management

A cloud-hosted solution means a vendor performs the system maintenance, upgrades and support. As a result, public entities have access to the latest claims-handling capabilities without having to make a large upfront IT investment.

4. DASHBOARD-DRIVEN MANAGEMENT & PROCESSING For some time now, dashboards have provided a quick snapshot of an organization’s insurance program. They can be configured to meet specific risk management needs to quickly review claims inventory, closing ratios, new claims per month and litigated cases. Dashboards along with in-depth reporting enable claim supervisors and managers to make informed decisions faster, but they are also evolving to allow for more action-oriented management and processing.

With the popularity of graphic interfaces and apps, software users expect dashboards to act as a visual command center, from which they can oversee operations and even process claims. For example, dashboards not only provide a snapshot of information, but also drag-and-drop functionality. Supervisors and managers can drag and drop a set of claims to more evenly distribute workload among staff members, or drill down with a simple click of the mouse to assess a specific examiner’s caseload. This type of dashboard-driven processing enables executives to engage in more powerful management with a fewer number of steps.

5. INTELLIGENT CLAIMS MANAGEMENT TOOLS Many claim departments realize that older claim systems contribute to overworked examiners. As the main users of these systems, claims professionals are now demanding a more elegant user experience and interaction with the claims system as their core application.

For example, many examiners want a “claims summary” tool that provides them an overview of the claim. They

12

PUBLIC RISK | NOVEMBER/DECEMBER 2012

can quickly familiarize themselves with key points from the file. Organizations configure the summary to compile various data elements. As a result, from a single vantage point, examiners can view all essential data.

Another useful tool is the ability to manage a “plan of action” for each claim. As examiners work on different cases, they can return to a claim and quickly refocus on the next steps, activities and priorities most important to advance that case toward good outcomes, exemplary service and ultimately, closure.

6. MOBILE APPS Advances in mobile technology have forced many organizations to rethink their e-business strategy in order to encompass a growing mobile workforce and new consumer expectations. For example, to provide satisfactory service during the claims process, it’s helpful to have examiners work remotely or in the field—and be equipped with mobile claims capabilities.

Remote access is not a new concept, but mobile devices are the latest frontier. Today, many field and remote claims adjusters use smartphones and computer tablets. As a result, they benefit from mobile apps that search and view claims, access reports, submit data and upload related files—all in real-time.

In addition, mobile broadband is available virtually everywhere—more broadly and conveniently than Wi-Fi access—and mobile devices are much easier to carry than laptops. Many of these devices have the ability to shoot photo and video and record claimant and witness statements. Staff can directly upload these digital photo, video and audio files from the field. Integrated mobile

W W W.PRIMACENTRAL .ORG

capabilities eliminate the need to carry extra equipment— such as a camera or recorder—and avoid the extra step of transferring files to a computer or laptop before uploading them to the organization’s core system.

7. CLAIMS IN THE CLOUD In an environment of constrained budgets and limited IT resources, the cloud has provided public entities with much needed relief in the form of reduced IT costs and outsourced IT services.

A cloud-hosted solution means a vendor performs the system maintenance, upgrades and support. As a result, public entities have access to the latest claimshandling capabilities without having to make a large up-front IT investment. Organizations do not have to acquire new hardware, software, or additional IT staff or skill sets. In fact, IT professionals spend little to no time on installation or dealing with downtime and they’re freed up to spend more time on the organization’s core competencies.

Recognizing that public entities need a system that is always up and running, they should ensure that a hosted solution utilizes a premier cloud infrastructure with guaranteed uptime, industry-leading service levels and solid data security.

8. END-TO-END CONNECTIVITY Today, public risk managers want to create an end-to-end electronic claims process—from the initial report of a claim to transferring information to other stakeholders.

The first step was to utilize scanning and document management to achieve paperless processing. Now using pre-built interfaces, Web services and other custom integration, a claims system can share electronic data and documents with other applications and service providers.

Integration must also extend to standard go-to desktop products, such as Microsoft Word, Excel and Outlook.

Claims examiners are familiar and comfortable with these applications and can use them to easily manipulate data. For example, examiners may schedule depositions on litigation calendars and should be able to easily transfer appointments to their Outlook calendars.

They should also be able to export data from anywhere in the claims system—including diaries and notepads—to Excel and with original formatting.

This provides significant benefits, as users don’t have to spend additional time reformatting documents to make them presentable.

9. AGILE IMPLEMENTATION METHODOLOGY Today’s “new” modern platform is designed to optimize performance and efficiency. With powerful data management, these systems empower organizations with both a big-picture and granular view of claims—enabling them to understand where expenses occur and where opportunities exist to control costs. Needless to say, once an organization has proven the business case for a new system, they want to immediately reap the benefits.

Using an agile implementation, organizations can expedite delivery of system requirements and reduce the risk of project delays. Many organizations attest to the fact that agile implementations occur on time and within budget and enable their teams to more easily accommodate changes to system and risk management requirements. In the end, agile implementation ensures deployment of modern technology faster than ever before, so organizations can more quickly leverage a return on their investment.

Jose Tribuzio is CEO of Systema Software.

As a result, various stakeholders can more promptly and effectively initiate their respective roles in the claim process. This connectivity also enables organizations to virtually eliminate redundant data entry, saving significant administrative time.

Many organizations are getting creative in terms of the types of systems they connect to. For example, an organization may choose to connect claims to phone systems. With each incoming call, a window automatically opens on the examiner’s desktop, so they can look up a claim. At the same time, the conversation is recorded as a testimony or statement and automatically attached to the claim as an audio file.

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

13

PRIMA 2012

WEBINAR SERIES FREE FOR PRIMA MEMBERS! Looking for a cost-effective way to train your staff while avoiding the frustration of budget cuts and travel expenses? The Public Risk Management Association’s Webinar series is designed to help risk management professionals like you excel in the field without leaving your office.

WEDNESDAY, NOVEMBER 14 | 12 PM – 1:30 PM EST Making Generational Differences Work for You Presenters: Abe Kane, CPCU, ARM-P, ARe, Second Vice President Public Entity Division of Genesis Management and Insurance Services Corporation Lauren Oliver, Second Vice President, Public Entity Division Public Entity Division of Genesis Management and Insurance Services Corporation For the first time in history, four generations are represented in the workplace at once. These demographics present a significant challenge as miscommunication and conflict across these generations can negatively affect productivity, morale and even increase turnover. If left unaddressed, your division, department or entity’s long-term viability may be in question.

With this challenge comes a tremendous opportunity. If managed correctly, the diversity of viewpoints represented by the four generations can lay the groundwork for a dynamic and rewarding work experience for all.

However, in order to take advantage of this opportunity, one needs to spend some time learning a bit more about what drives each of these groups.

This session will outline what motivates each generation, detail some of the events that helped shape who they are and offer strategies for managing a multigenerational workforce.

During this Webinar, participants will: • Identify the four distinct generations currently populating the workforce, each of whom have different goals, values and sources of motivation.

• Develop actionable strategies on how the strengths of each generation can be used to create a truly dynamic workforce.

• Identify strategies to retain and recruit members of each generation.

REGISTER TODAY!

S E R I ES S P O N S O R :

Visit www.primacentral.org to register.

PUBLIC RISK MANAGEMENT ASSOCIATION

YOUR

RISK MANAGEMENT JOURNEY BEGINS HERE

Are you taking advantage of all that PRIMA has to offer?

Professional Development

Networking

• PRIMA Annual Conference • Online education opportunities including PRIMA’s Webinar Series and the industry’s only Associate in Risk Management and Risk Management for Public Entities online tutorials.

• PRIMA Podcasts

• Leadership Opportunities: Get Involved! Join a committee, task force or even become a director on PRIMA’s board and provide input in what PRIMA does and how we do it.

• PRIMA Chapters: Make contacts on your local level, share what you know, and learn from experts and innovators in meetings, workshops, and seminars in your area.

• Online Membership Directory: A members-only resource where you can locate and contact PRIMA members in various risk management fields.

Information Resources • PRIMA Cybrary • PRIMA Job Bank • PRIMAtalk: Member-only listserv that provides access to more than 500 industry specialists.

• RiskWatch: Weekly e-news service for public risk managers

AND MUCH MORE!!!!

For more information on any of PRIMA’s member benefits, visit our Web site: www.primacentral.org.

BACKGROUND

CHECKS Helping Employers Navigate the Battle Between Negligent Hiring and Discriminatory Hiring Practices

By John DiCaro and Michele Molinario

16

PUBLIC RISK | NOVEMBER/DECEMBER 2012

W W W.PRIMACENTRAL .ORG

W

ith quick and easy electronic access to personal information at an employer’s fingertips, employers must learn how to

BEST PRACTICES TIPS:

properly utilize such information in the hiring process. The

• Conduct a thorough background check by accessing public record sites that would reveal an applicant’s criminal background.

failure to perform adequate background checks can open an employer up to liability for claims based on negligent hiring. These claims can have a negative impact in the marketplace, adversely affect employee morale and be costly to defend. On the other hand, improper use of background

• Develop narrowly tailored written policies and procedures for screening applicants and employees for criminal conduct.

checks during employee screening can expose employers to civil rights

• Identify essential job requirements.

violations. These opposing pitfalls require employers to perform a precarious balancing act and to understand the liability to which they

• Identify the specific criminal offenses that may demonstrate unfitness for performing such jobs.

are exposed. Employers need to develop a hiring process that effectively

• Record the justification for the policy and policies.

insulates them from both negligent hiring and civil rights claims.

• Document consultations and research considered in drafting the policies and procedures.

• Eliminate policies or practices with blanket exclusions of applicants based on any criminal record.

Employers understand that they bear a certain amount of liability for the actions of their employees during working hours. What some fail to realize is that hiring someone who is incompetent or unfit for the job can expose the employer to a negligent hiring claim based on harm that employee causes, even if the employee’s conduct is outside the employer’s control.

For instance, one court found the owner of an apartment complex liable for a handyman’s assault on a tenant outside of working hours.2 Liability existed because the owner failed to investigate the handyman’s background, which included a laundry list of violent crimes.

The first step in avoiding liability for negligent hiring is to understand the elements of the claim. To prevail on a negligent hiring claim, a plaintiff must show that (1) an employment relationship existed, (2) the employee was unfit for the position, (3) the employer knew or should have known the employee was unfit, (4) the employee negligently or intentionally caused the injury, and (5) the employee’s conduct proximately caused the injury.3 Regarding the first element—employment relationship—employers cannot assume they can escape liability through artful contract language or independent contractor relationships.4 Courts will look at the totality of the facts when determining employment status rather than simply reviewing the language of an employment contract. Second, when determining if an employee is unfit, courts will examine both the nature of the position and the risk the employee posed to those with whom he came in contact.5 A job applicant cannot be deemed unfit solely because of a criminal conviction.6 The third element—requiring an employer to have knowledge that the employee was unfit—can be satisfied by showing that the employer should have discovered information showing the employee was unfit.7 For instance, in the example of the apartment owner above, the owner should have discovered the handyman’s history of violent crimes by simply checking his references and performing a public information search. Under the fourth element—the employee’s tortious conduct—an employer is liable only for an employee’s torts. Therefore, if the employee’s actions were not negligent or intentional, a claim for negligent hiring would fail.8 Finally, on the issue of proximate cause, a plaintiff must show that the injuries were caused by a characteristic of the employee that the employer knew might cause harm.9

• When asking questions about criminal records, limit inquires to those records related to the job in question, consistent with business necessity.

• Keep information about applicants’ and employees’ criminal records confidential. Only use it for the purpose for which it was intended.

• Train managers, hiring officials and decision makers about Title VII and its prohibitions on employment discrimination.

While applicants with criminal records are legally barred from holding certain positions, there are many others for which they still may be hired. To comply with federal law, a policy cannot blindly reject candidates based on their criminal record. For instance, as arrest and incarceration rates for African Americans and Hispanics exceed those of the general population,1 a hiring policy that rejects any applicant with a criminal history might have a disparate impact on those two protected classes and might violate Title VII of the

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

17

Background Checks

CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-to-date schedule, visit www.primacentral.org.

WEBINARS 2012 • November 14: Generational Differences in the Workplace (session presented by Genesis Management and Insurance Services Corporation)

Civil Rights Act of 1964. Liability can be minimized by fully researching an employee’s criminal background and applying that information to the standards set forth under a properly developed hiring policy. An employer should develop a hiring policy that relies on factors that are job related. In order to show that an exclusion based on criminal history is a business necessity, the employer must take into account (1) the nature and gravity of the offense, (2) the time that has passed since the conviction or completion of the sentence and (3) the nature of the job sought.10 Even if a hiring policy does have a disparate impact on a protected group, it might still be legally valid if the requirement is job related and consistent with business necessity.11 For instance, employees of Entity A process credit card information. Therefore, during its hiring process, Entity A screens applicants for convictions involving credit card fraud.

However, employees of Entity B do not have access to customer credit card information. In fact, Entity B’s employees provide landscaping services and its landscapers do not collect customer payments. As such, Entity B would have a difficult time arguing that credit card fraud convictions are related to a business necessity. Thus, while both of the processes for screening applicants can result in a disparate impact on a protected group, only Entity A’s policy meets the business necessity requirement.

PRIMA ANNUAL CONFERENCES June 2–5, 2013 PRIMA 2013 Annual Conference Tampa, FL Tampa Convention Center June 8–11, 2014 PRIMA 2014 Annual Conference Long Beach, CA Long Beach Convention Center June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center

OTHER MEETINGS November 5–7, 2012 PRIMA Institute 2012 Charlotte, NC

In the above example, Entity A considered “conviction” records rather than “arrest” records. An arrest does not necessarily establish that a criminal act has been committed. In fact, many arrests do not result in criminal charges, or the charges are dismissed for a variety of reasons. Even if an individual is charged and prosecuted, he or she is presumed innocent unless proven guilty in a court of law. Therefore, an adverse employment action based on an “arrest,” in itself, is generally not job related or consistent with business necessity. But, in some circumstances, even without a conviction, the conduct underlying an arrest may make the individual unfit for the position in question. In those circumstances, the conduct, not the arrest, is relevant for employment purposes. Employers should consider seeking legal advice before taking any adverse employment action based on the conduct underlying arrest to ensure compliance with federal law.

An employer’s potential liability under the doctrine of negligent hiring requires employers to weigh the potential disparate impact of their hiring policies. This should not discourage employers from investigating the backgrounds of their employees and implementing an appropriate application process. To the contrary, by implementing a strong background investigation policy and using that policy in conjunction with a carefully tailored applicant screening process, employers can protect themselves from negligent hiring claims while still meeting the standards set forth under Title VII. John DiCaro is a partner at Jones, Skelton & Hochuli.

Michele Molinario is an associate at Jones, Skelton & Hochuli.

UPCOMING CHAPTER MEETINGS Chapter meetings are listed on a space-available basis. For a complete list of PRIMA chapter meetings, visit www.primacentral.org. For information on a specific meeting, please contact the chapter directly.

Kansas

November 16

Tennessee Texas

November 14–16

November 11–14

To have your chapter meeting listed on the PRIMA Web site, contact Bles Dones at bdones@primacentral.org.

18

PUBLIC RISK | NOVEMBER/DECEMBER 2012

FOOTNOTES 1

EEOC Enforcement Guidance, No. 915.002, at FN 10, dated 4/25/2012.

Ponticas v. K.M.S. Invs., 331 N.W.2d 907 (Minn. 1983).

3 Rodolfo A. Camacho, “How To Avoid Negligent Hiring Litigation,” 14 Whittier L. Rev. 787, 794 (1993).

4 Santiago v. Phoenix Newspapers, 164 Ariz. 505, 508, 794 P.2d 138, 141 ( 1990).

5 Ponticas v. K.M.S. Invs., 331 N.W.2d 907, 912 (Minn. 1983).

6 See Green v. Missouri P. R. Co., 549 F.2d 1158 (8th Cir. 1977).

7 Stricklin v. Parsons Stockyard Co., 192 Kan. 360, 388 P.2d 824 (1964).

8 Di Cosala v. Kay, 91 N.J. 159, 173, 450 A.2d 508, 516 (N.J. 1982).

9 Ponticas at 915.

10 Green v. Missouri P. R. Co., 549 F.2d 1158, 1160 (8th Cir. 1977).

11 EEOC Enforcement Guidance, 915.002 (April 25, 2012).

2

W W W.PRIMACENTRAL .ORG

Advertiser Index

ADVERTISER INDEX DriveCam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Back Cover Genesis Underwriting Management Company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Munich Reinsurance America.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover

Has your entity launched a successful program? An innovative solution to a common problem? A money-saving idea that kept a program underbudget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

FIND US ON FACEBOOK!

Keep up with what’s happening at PRIMA and connect with your risk management peers!

Visit us at www.facebook.com/primacentral.

NOVEMBER/DECEMBER 2012 | PUBLIC RISK

19

Member Spotlight

POOL BONUS PROGRAM CUTS COSTS AND PROVIDES MEMBER INCENTIVES Each month, Public Risk features a member who has gone above and beyond in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession?

If so, we’d like to hear from you for this exciting column, as PRIMA shines the spotlight on its members.

To be considered for the Member Spotlight column, contact Jennifer Ackerman at jackerman@primacentral.org

L

ike many pools, Citycounty Insurance Services (CIS) of Oregon was facing an increase in the cost of claims.

“CIS needed to take action,” said Scott Moss, MPA, CPCU, ARM-E, ALCM. “An analysis of high-cost claims made it very apparent that in most cases, members did not have the infrastructure to mitigate the most expensive claims.

Fundamental policies were shown to be non-existent or outdated. Additionally, member staff were not effectively trained or given ownership in managing risks.”

Moss and the team at CIS created a bonus program to attack high claims costs by giving members incentives to build the policy and training infrastructure necessary to prevent those claims.

The CIS Bonus Program gives each pool member the chance to earn a one percent discount from their pool contribution for each part of the program implemented. There are six parts to the bonus program, which give members up to a six percent reduction in their contributions, up to $6,000.

or 703.253.1267.

 Enact a safety manual. CIS provides safety program templates to members that have workers’ compensation with CIS, for the purpose of enacting an OSHAacceptable safety manual.  Adopt a sewer maintenance policy. CIS provides a sample sewer policy and requires mapping and maintenance of sewer lines.  Law enforcement best practices. CIS dedicates a public safety staff member to coordinate law enforcement best practices and provide grants to establish CIS-endorsed police programs.

“At the core of risk management is risk identification and risk ownership,” said Moss. “As a result of our program, CIS provided the fundamental policies and financial incentives for 350 members to implement critical risk management policies. Prior to establishing these policies, members were forced to review and evaluate their current programs and practice.”

Moss said this review rekindled awareness of the importance of risk management practices at a departmental and organizational level.

The program components include:  Appoint a risk management coordinator/owner. The member appoints a staff member to be its point person for risk management. CIS provides a free, two-day training where the coordinator gleans an understanding of the importance of risk ownership and gains tools to successfully perform the coordinator role.  Adopt an updated personnel handbook. CIS provides a sample manual and partners with a sister organization to review manual at no charge to the member.  Adopt a fleet policy. CIS provides guidance and sample policies for member use in developing a fleet policy that holds employees accountable for driving behaviors.

20

PUBLIC RISK | NOVEMBER/DECEMBER 2012

So far, the feedback on the program has been overwhelmingly positive.

“We have heard comments from our members that this is the best risk management program they have ever participated in,” said Moss.

Moss said that CIS’ program could be implemented by any public sector pool.

For more information on the CIS Bonus Program, contact Scott Moss at smoss@cisoregon.org.

W W W.PRIMACENTRAL .ORG

Risk credibility

Capital credibility

Street credibility

word on the street is we know risks.

Credibility is important, especially in complex times when it is essential to partner with an expert who has all risks in view. Our global knowledge network is ready to work with you to create reliable solutions. Face any challenge with a market leader who knows their way around.

Find out how at www.munichreamerica.com

Not if, but how Products and services provided by Munich Reinsurance America, Inc. Princeton, New Jersey

Are Your Drivers as Safe as They Could Be? No public fleet is immune from drivers taking risks in their vehicles. Drivers can be distracted, lose sight of driving fundamentals and exhibit any number of behaviors that can cause risk to your fleet.

DriveCam saves you money and protects your drivers and your community.

Read how one innovative community addressed safety throughout its 2,200-vehicle fleet and join your colleagues at more than 500 companies and communities who have already made the decision to use DriveCam.

To learn more, click here or call or visit DriveCam. 866.419.5861

www.drivecam.com