March 2021: Topics include COVID-19 vaccine questions, new OSHA guidelines for the workplace, medical marijuana, and discrimination legislation.

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Scenario

The employee fell on the ramp outside the house and injured his leg. The insured disputed the employee’s injury because he was working the next day and was not limping. The injured employee then told the insured he would be off work because the doctor did not know the full extent of his injury without an MRI. Despite the concerns of the insured, the claim was accepted. The employee was released to work, but with restrictions with which the insured could not comply. The doctor requested surgery on the employee’s knee, which the employee wants to do; however due to the employee being overweight, he could not find a surgeon who would operate. The issue is whether the carrier is liable for the injured employee’s gastric bypass surgery, which the employee looked into before the injury. The carrier submitted their opinion to panel doctors, and they found the carrier is liable for the bariatric surgery. The injured worker’s knee surgery is on hold until the bariatric surgery is completed, and the employee is a better candidate for knee surgery.

Result

In summarization, there was an admitted knee injury but due to non-industrial health issues (obesity), the employee’s attorney and adjuster agreed to an Accredited Medical Exam specifically on need for bariatric surgery on industrial basis. The report confirmed the liability on the carrier to provide surgery, which is scheduled soon. The workers’ compensation carrier has paid $59,757 thus far and has set aside an additional $78,884 in reserves (what the carrier expects to pay additionally).

Issues to Discuss

  1. What procedures do you have in place to prevent slips and falls?
  2. What policies could have been in place to prevent a claim like this from happening in the first place?
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Scenario

The Chapter’s Vice President of Finance became aware of unusual purchases such as gift cards on the chapter’s account. The Chapter Advisor then noted that the chapter was exceeding their food budget, which led to an audit being conducted. The audit revealed that the House Director was using chapter checks to purchase gift cards for herself. The House Director then purchased personal items under the chapter’s account using the gift card. The House Director purchased approximately $7,000 worth of personal items. The House Director later admitted to purchasing the gift cards and had planned to reimburse the chapter.

Issues to discuss

  1. What procedures do you have in place to avoid this type of incident?
  2. Do you require two signatures on your checks?
  3. Do you conduct regular audits?
  4. Do you segregate duties between volunteers who write checks and those who reconcile the accounts?
  5. Are receipts reviewing monthly?

Some Important Information Regarding Embezzlement Claims

Embezzlement claims are on the rise. We often see more frequent and more severe embezzlement claims during economic downturns. Because of the increase in claims, we wanted to remind you of the importance of reporting embezzlement claims as soon as you suspect that an embezzlement claim may have occurred. According to the policy language, it is a condition of coverage that the organization must

  1. Give written notice to the insurance company at the earliest practicable moment, and in no event later than 90 days after the initial discovery
  2. Furnish affirmative proof of loss with full details to the insurance company at the earliest practicable moment, and in no event later than six months after initial discovery

We have had a recent claim that was not reported within 90 days of it being discovered, which jeopardizes the coverage available to the client in this situation. Unlike homeowner’s insurance, there is no penalty under your organization’s insurance program for submitting an incident, even if you’re unsure whether or not it will arise to the level of a full-blown claim. It is in your organization’s best interest to call us at any time that you suspect any type of embezzlement activity because of the strict reporting guidelines under the embezzlement coverage.

Embezzlement claims are often very difficult and costly to investigate, which is why we have negotiated with the insurance company on your behalf to add expense coverage to the policy. The expense coverage affords the client with $25,000 to spend to document the embezzlement for the purposes of the claim (e.g. moneys spent on forensic accountants, time to procure documents, etc.).

Refer to your Insurance Overview for your location’s specific limits and deductibles for all of the coverages afforded under the insurance program, including embezzlement.

In the event that you suspect an embezzlement claim has occurred, do the following as soon as possible:

  • Notify Heather Cox at MJ Insurance as soon as possible.
  • Remove all financial responsibilities from the individual immediately.
  • Begin the process of developing the details to the loss.
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Scenario

The new House Corporation Officer discovered discrepancies in their accounts which led the House Corporation to complete an audit of their financial records. It was discovered that the former House Corporation Treasurer embezzled approximately $30,000. The former Treasure wrote numerous checks to herself with no receipts or explanations supporting to the payments.

Issues to discuss

  1. What procedures to you have in place to avoid this type of incident?
  2. Do you require two signatures on your checks?
  3. Do you conduct regular audits?
  4. Do you segregate duties between volunteers who write checks and those who reconcile the accounts?

Some Important Information Regarding Embezzlement Claims

Embezzlement claims are on the rise. We often see more frequent and more severe embezzlement claims during economic downturns. Because of the increase in claims, we wanted to remind you of the importance of reporting embezzlement claims as soon as you suspect that an embezzlement claim may have occurred. According to the policy language, it is a condition of coverage that the organization must

  1. Give written notice to the insurance company at the earliest practicable moment, and in no event later than 90 days after the initial discovery
  2. Furnish affirmative proof of loss with full details to the insurance company at the earliest practicable moment, and in no event later than six months after initial discovery

We have had a recent claim that was not reported within 90 days of it being discovered, which jeopardizes the coverage available to the client in this situation. Unlike homeowner’s insurance, there is no penalty under your organization’s insurance program for submitting an incident, even if you’re unsure whether or not it will arise to the level of a full-blown claim. It is in your organization’s best interest to call us at any time that you suspect any type of embezzlement activity because of the strict reporting guidelines under the embezzlement coverage.

Embezzlement claims are often very difficult and costly to investigate, which is why we have negotiated with the insurance company on your behalf to add expense coverage to the policy. The expense coverage affords the client with $25,000 to spend to document the embezzlement for the purposes of the claim (e.g. moneys spent on forensic accountants, time to procure documents, etc.).

Refer to your Insurance Overview for your location’s specific limits and deductibles for all of the coverages afforded under the insurance program, including embezzlement.

In the event that you suspect an embezzlement claim has occurred, do the following as soon as possible:

  • Notify Heather Cox at MJ Insurance as soon as possible.
  • Remove all financial responsibilities from the individual immediately.
  • Begin the process of developing the details to the loss.

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We have received several questions from our clients regarding coverage for an individual on staff serving as in-house counsel. I have approached this question from two different angles:

  • Individual serving as an employee
  • Individual serving as an independent contractor

The first issue to resolve is whether either status of “individual” is covered by the insurance policy. To that end, the following statements describe how individuals are covered under the General Liability, Umbrella and Excess Umbrella policies:

  • Employees are covered, but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business.
  • Volunteers are covered, but if they are compensated in some way they do not qualify as insureds.
  • Coverage applies to a “leased worker,” which is defined as a person leased to you by a labor leasing firm under an agreement.
  • Coverage does not apply to an independent contractor.

Secondly, there is no exclusion for professional services under the Bodily Injury, Property Damage and Personal Injury provisions of the policies. Thus, the current policies would provide coverage for liability allegations if the individual is an employee or leased worker of your organization.

We have to look separately at the Directors and Officers and Employment Practices Liability policies. These policies contain the following provisions:

  • Employees are defined as insureds under the policy.
  • There is no exclusion for professional services in the coverage language.

We are confident that any employee while acting within the scope of his/her duties would be covered under all of the insurance policies that are secured by the organization. Should the status of the individual be something other than an employee, that situation is less conclusive. Should you have further questions or concerns, please do not hesitate to contact us.

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Acting fast when you have a claim is always important, but especially so when an employee’s health is concerned. Use our First Report of Injury form to get started, and get in touch right away with Heather Cox if you have questions.

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A major retailer faces a lawsuit from a prison ministry organization and a job applicant who allege the employer’s application process discriminates against individuals with a criminal history.

According to the lawsuit, the retailer applies an overly-strict process of eliminating any individual with a criminal history, regardless of the nature of the crime or when it occurred. As a result, the screening policy “disproportionately disqualifies Black and Latinx applicants and employees from job opportunities.”

The case involves one qualified applicant who received a job offer, only to have the retailer rescind the offer when her criminal background check revealed a traffic-related misdemeanor conviction from 10 years prior. Brianna Smith “Macy’s Hit with Discrimination Lawsuit Over Criminal History Screening Policy” www.legalreader.com (Jun. 28, 2019).

Commentary and Checklist

A thorough screening process is a best practice for any employer hoping to hire a new employee. This can include credit checks (depending on the job position); interviews with personal references; interviews with professional references; skills testing; medical testing (post-offer); and a criminal history background check.

Criminal background reports will disclose both arrests and convictions of felonies and misdemeanors. They also reveal court records, warrants, sex offenses and incarceration records. However, employers need to tread carefully when using this information to make employment decisions.

The Equal Employment Opportunity Commission (EEOC) encourages employers to avoid blanket practices that exclude people from employment based on criminal record, and instead manage each applicant on a case-by-case basis. Employers should consider the nature and gravity of the crime, when it occurred and the nature of the job. Also, employer should give the applicant an opportunity to respond to the report and their past criminal offense.

Also, keep in mind that many states have passed “Ban the Box” laws that prohibit inquiring about criminal records on a job application form. This is to enable an applicant to make it through the interview process, perhaps as a finalist, and then to have their past offense evaluated for any relevancy to the job under consideration now.

Here are further considerations to help employers limit the discrimination risk associated with criminal background checks in the hiring process:

  • Train managers, hiring officials, and decision-makers about Title VII and its prohibition on employment discrimination.
  • Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct using the EEOC’s Enforcement Guidance and individualized assessments. https://www.eeoc.gov/employers/smallbusiness/facts/tips_criminal_records.cfm; https://www.eeoc.gov/laws/guidance/arrest_conviction.cfm
  • Identify essential job requirements and the actual circumstances under which the jobs are performed and determine the specific criminal offenses that may demonstrate unfitness.
  • Determine the duration of exclusions for criminal conduct based on all available evidence.
  • Document any determinations made regarding an applicant’s criminal record, and the justification for your employment decisions.
  • When asking questions about criminal records, limit inquiries to records for which exclusion would be job-related and consistent with business necessity.
  • Keep information about applicants’ and employees’ criminal records confidential and only use the information for the purpose for which it was intended.

Written exclusively for ChubbWorks, the employment practices liability carrier for MJ Sorority, January 21, 2020.

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Whether or not to quarantine sick members or employees at the chapter house is up to each individual chapter and house corporation to decide based on their organization’s guidance, their campus and local health department guidance, and the structure and layout of their individual facilities.

Many of our clients are feverishly preparing for their members to return to campus, both resident and non-resident. We can only imagine the stress and anxiety that you are facing as you navigate the opening of your chapter house. We appreciate you and your leadership as you face this challenge, you need to be confident in knowing that your organization has secured a comprehensive insurance policy to cover the entities and your exposure to liability. 

As we have urged, we are confident that you will implement the COVID-19 CDC guidelines, you will have trained your staff on the procedures, and you will have educated all your collegiate members on the safety guidelines. Having done so and doing your best to get compliance, your liability will be significantly reduced. The standard is “what a prudent and reasonable person would do.”

During these chaotic times, the comprehensive insurance coverage that your organization has purchased hopefully gives you the freedom to make the best business decisions for your chapter or house corporation.

Safety measures are being implemented for not only your collegiate members, but just as importantly, for your employees. We recently had a question that we wanted to address for reference. The question was what should be done if the house director becomes ill with the COVID-19 virus. 

Below are some points to consider:

  • If the house director has a private entrance and bath, it can be much easier to quarantine an individual in this space. If the chapter house is her only home, you can have her stay at the house. Safety measures must be considered during her quarantine time (see our Things to Consider Before Reopening resource for further guidance).
  • If there is no private entrance and bath, your options become more limited and must be carefully considered.
  • In quarantine, she will not be able to perform her usual duties, so a temporary employee will need to be hired that would not necessarily need to live in the chapter house who could assume these duties.
  • Should you hire an additional employee, we would ask that you contact us to discuss any insurance implications which are doubtful. Workers’ compensation laws are very strict, and we don’t want you being at odds with these conditions.
  • The insurance company does not require that the person who is doing the traditional house director functions live in the chapter house, so this gives you more options to consider.
  • We would encourage you to look to your university as they may have graduate students or past RAs that could be used for this temporary period.

As always, please do not hesitate to contact your Client Executive should you have additional questions or need further guidance.

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Risk control doesn’t start when an employee begins work – it starts with the job itself. View Travelers’, the insurance company for MJ Sorority clients, collection of resources to help you attract and hire employees in your organization.

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We are seeing an increase in an exposure that is not as we had previously presented to the insurance company regarding the type of the individuals who are serving as House Directors. The conventional understanding has been that the individual is a single female performing this function of overseer of the property on behalf of the house corporation and the chapter.

We are now uncovering an environment which is quite contrary to this scenario. We have seen examples of the following:

  • Single Female with a child
  • Husband and Wife Couple
  • Single Male
  • Husband and Wife Couple, expecting a child

The role of the House Director is to be the one individual who can be responsible for the management of the chapter house which includes, but is not limited to, the safety and security of the members and the physical property. This is a 24-hour job and this individual plays a substantial role in minimizing the exposure in the liability and property risks. This is indeed a big job that needs the time and attention given to it that only a single person can do. Having a husband or worse yet, a child on the property is, in our opinion a huge distraction, just on the issue of work performance alone, let alone the increased liability exposure.

The liability exposure is severe for the following reasons based on the type of exposure:

Male:

  • Security issues with 18-21 year old women. A male house director, presumably, would have constrained use of the facility just as any other male.
  • Potential for this individual to be considered an “employee” of the chapter or house corporation, and be eligible for what is 24 hour Worker’s Compensation coverage.
  • Potential for the fraternity or sorority’s general liability policy to be responsible for any injury while on the premises. Unlike the volunteers and members of the fraternity/sorority, they can not recover both the medical payments and the bodily injury benefits. This becomes a huge issue for us because, in essence, we are taking a general liability policy which has been priced accordingly and turning it into a “health insurance” policy for the individual. The rate increases of health insurance coverage over the last five-six years could also become what we see in the General Liability area.
  • Potential exists that he could be construed as an “agent” (both as an employee and/or as a volunteer) of the fraternity/sorority and your policy would have to defend his actions.

Child:

  • Chapter property does not contemplate infants/children and all those associated concerns about safety of the child.
  • Potential for the fraternity/sorority policy to become a health insurance policy for the child should he/she be injured while on the property. We have had such a claim already from one of our clients who had a four-year-old in residence.
  • Injuries to children are especially detrimental to a client’s loss ratio because the insurance company keeps claims involving children under eighteen open until the child reaches the age of maturation (typically either 18 or 21) for the state in which the injury took place.

The insurance underwriters do not support the presence of single male House Directors. In the case of a married House Director whose husband wants to live in the chapter house, we ask that you use the sample employment contracts on our website. We have one in which the House Corporation/Chapter is hiring both the husband and wife, and one in which the House Corporation/Chapter is only hiring the woman. Employing a House Director’s husband has not only far-reaching liability ramifications and workers’ compensation concerns, but it is also a matter of tax implications.

In addition, we cannot allow any children of House Parents/House Directors to live in the facility. We ask that no exceptions be made for this exposure.

We welcome your comments and hope to continue to keep our policy “contemporary” to the collegiate landscape as it changes. The above guidelines will be further refined after we have had an opportunity to gain some additional insight from our clients on this important matter.

We understand that this is a difficult issue to tackle, and we want to help you determine how best to manage this risk. Should you have any further questions, please do not hesitate to contact us.

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Non-Owned Automobile Liability is the most commonly misunderstood coverage in the Sorority Book of Business. Non-Owned Automobile Liability is designed to protect the organization for the risk of being named in a lawsuit involving an automobile. It does not protect individuals who are driving on behalf of the Sorority/Fraternity.

Non-Owned and Hired automobiles are automatically covered under the organization’s Automobile Liability policy. 

Hired Autos:  Autos you lease, hire, rent or borrow; except autos from your employees and members (for example, vehicles you rent from Avis, Hertz, etc.).  When you are renting an automobile on behalf of the organization, there is no need for you to purchase the physical damage coverage for the automobile from the rental car company.  Hired Automobile Physical Damage coverage is provided subject to the policy deductibles.

Non-owned Autos:  Autos you do not own, lease, hire, rent or borrow that are used in connection with your organization.  This includes autos owned by your employees and members but only while used in your organization.

Provides coverage for sums you legally must pay as damages because of bodily injury or property damage caused by an accident and resulting from the use of a covered auto. 

It is important to note that the Hired Automobile Physical Damage coverage extends to direct damage or theft of a rented automobile and operates for the benefit of the insured, which is the fraternity/sorority.  Automobile rental agreements, therefore, should always be executed in the name of the fraternity/sorority, rather than an individual’s name.

Any Named Insured using a non-owned or hired auto is an insured, except:

  • The owner or anyone else from whom you hire or borrow a covered auto.
  • Your employee – if the covered auto is owned by that employee or a member of his/her household.

Non-Owned Automobile Liability coverage does not provide coverage for someone who is driving their personal automobile to or from Sorority/Fraternity events. This coverage is designed only to protect the organization, not the volunteer, member, officer, etc. who is driving their own vehicle on the organization’s behalf. Any volunteers, members, officers, etc. who choose to drive their personal automobiles on behalf of the organization need to rely on their own personal automobile coverage in case of an accident.

Individuals who use their own vehicles to drive to/from a sorority event must look to their own automobile insurance for protection should they be involved in an automobile accident.

The exposures associated with the Non-Owned Automobile Liability coverage are particularly concerning from a risk management perspective because of the vast number of personal automobiles that are driven to and from Sorority/Fraternity events at any given time that expose the organization to a Non-Owned Automobile Liability claim.

Further exacerbating the sheer exposure issue with non-owned autos is the number of members, volunteers and third-party individuals who only carry the state minimum automobile liability limits, which are woefully inadequate for accidents involving even minor injuries. For their own protection and fiduciary stability, we recommend that all volunteers and members of your organization carry at least a combined single limit of $300,000. Higher automobile liability limits are marginally more expensive than the state minimum limits, and the higher the limit, the less likely you are to suffer long-term financially consequences to an automobile accident.  

Even in situations in which the organization was not negligent in causing the accident, plaintiff attorney’s often use the “deep pocket” mentality when it comes to automobile accidents involving even minor injuries, meaning that the Sorority/Fraternity is seen as the “deep pocket” in the situation. Accordingly, in many of the examples listed below, the organization was brought into the lawsuit because they were seen as having more money and/or higher insurance limits to pay for the cost of lengthy litigation and judgment.

Over the last ten years, under the MJ Sorority Book of Business, the insurance company has paid out over $3.7M in automobile-related claims on behalf of our clients. With the potential for one accident (see examples below) to wipe out ten or more year’s worth of an organization’s Non-Owned Automobile Liability premium, the non-owned automobile exposure is quite disturbing.

Clearly the Non-Owned Automobile Liability exposure is an uncontrollable one, which is what makes it so concerning for our clients. The most important risk management tool in attempting to limit your Non-Owned Automobile Liability exposure is to encourage your members and volunteers to have a minimum combined single personal automobile liability limit of $300,000. In addition, we do not support designated driver programs that are not held in conjunction with an official sorority event (see this position paper on our website for more information). Finally, it is important that the chapter and sorority/fraternity leadership educate their members and volunteers as to how this coverage operates, so that they are aware of the exposure to their personal insurance coverage when they drive to/from any sorority/fraternity event or activity.

The following claim examples are real-life examples of how the Non-Owned/Hired Automobile Liability coverage responds when an incident occurs:

Example #1

Several chapter members were driving to a regional conference together in a member’s personal automobile. The vehicle swerved off the interstate in a single-vehicle accident, and one of the chapter member occupants was killed and another chapter member occupant was severely injured. The families of the killed and injured chapter members sued the driver and the Sorority for damages. The driver of the vehicle only carried the state minimum insurance limit of $25,000, which were quickly exhausted. The organization’s insurance policy settled with both families for a total of $740,000. The sorority was brought into this lawsuit because the driver’s limits were so low and the families of both women felt that someone (i.e. the Sorority) should pay for their loss. In addition, the Sorority’s policies stated that sisters driving vehicles in “official sorority capacity” were doing so as agents of the Sorority, which further hurt the Sorority’s defense.

Example #2

An officer was involved in an automobile accident in a rental car while attending a Leadership Conference. The officer failed to yield the right-of-way in traffic and struck another vehicle, injuring the two passengers in the other vehicle. The insurance company, on behalf of the organization, paid out $252,000 in settlement to the claimant and defense costs and $13,000 in property damages to the rental car company. The insurance company, on behalf of the organization, settled this claim because the officer was driving a rental car, and all cars rented for sorority purposes are covered under the insurance policy.

Example #3

A chapter advisor was driving a few members to the chapter house after a philanthropic event in her personal automobile. She ran a red light and severely injured two people riding on a motorcycle. The advisor’s personal automobile insurance limit was only $100,000, which was exhausted immediately. The total cost of the claim was $2,385,000. The insurance company settled this claim on behalf of the organization because of the deep pocket theory. In addition, the insurance company was unwilling to take the claim to court and risk the jury ruling in favor of two young people with severe injuries.

Example #4

A chapter member’s personal automobile was vandalized during the middle of the night in the chapter’s parking lot. The member’s personal automobile policy will need to pay for the repairs because the organization was not negligent in causing the damage, and the member had signed the housing agreement, which holds the organization harmless when personal property is damaged. The organization’s Non-Owned Automobile Liability does not cover property damage to individual’s personal automobiles.

Example #5

A “sober sis” program on a random Friday night led to a claim that cost the organization and the automobile driver’s family nearly $1M. For more information, check out our Position Paper on Sober Sis/Designated Driver programs. A chapter-sponsored “sober sis” program implies that the chapter will put in place proper safety guidelines and have some control over the transportation safety; however, the chapter has little control over an individual driving their personal vehicle and has even less control over the other drivers on the road.

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Check out the Insurance Summary for more detailed information about your organization’s automobile policy, but the below graphic has the top three things to remember:

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