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Commercial Crime Policies Cover Some Cyber Crimes

In some instances, a commercial crime insurance policy may offer coverage for money a company loses due to a cyber attack, a court has ruled.

The 11th U.S. Circuit Court of Appeals in Atlanta has ruled that an insurer must indemnify a policyholder that was scammed out of more than $1.7 million in a phishing incident under its commercial crime policy.

The decision is good news for companies who have not purchased cyber insurance but have commercial crime policies.

This is at least the third precedent-setting case in which a court has ruled that a commercial crime policy can cover losses “directly” resulting from computer fraud.

Crime insurance companies, when denying hacking claims that resulted in monetary losses, will often argue that hacks and phishing scams are “indirect” losses, which are not covered by their commercial crime policy because someone on the outside duped an employee into transferring funds to a third party.

The most recent case

In the most recent case, the controller of IT services provider Principle Solutions Group LLC received an e-mail purported to be from the company’s managing director, directing her to write $1.7 million to an account at a Chinese bank. The communication said she would receive instructions in an e-mail from an attorney, which she did and so she initiated the transfer.

Before the bank issued the wire, its fraud unit intervened and held the money transfer. The controller contacted the “attorney,” who confirmed that the managing director had approved the transaction. Upon receiving that information, the bank released the wire.  Unfortunately, it was all a fraud and the managing director knew nothing about it.

After Principal Solutions discovered that request was fraudulent, it filed a claim under its commercial crime policy with Ironshore Indemnity Inc., which denied coverage. The company subsequently sued the insurer and the local court ruled in its favor. Ironshore appealed, but the appeals court upheld the lower court’s ruling.

In rejecting the insurer’s argument that the loss did not result directly from the fraudulent instruction, the court found that the ordinary meaning of the phrase “resulting directly from” requires proximate causation between a covered event and a loss, not an immediate link. The court held that as a matter of law there was proximate cause and the intervening communications, including the bank’s hold, were not sufficient to sever the causal chain.

This decision follows two 2018 decisions by federal appellate courts — the Second Circuit in Medidata Solutions, Inc. vs. Federal Insurance Company, and the Sixth Circuit in American Tooling Center, Inc. vs. Travelers Casualty & Surety Co. — which ruled that the insurers’ policies in both cases covered losses “directly” resulting from computer fraud.

In the American Tooling case, the court wrote that the policy language did not distinguish between frauds based on how they induce a transfer.

What to do

  • Try to avoid getting hit by phishing scams in the first place by training employees to recognize suspicious e-mails.
  • Invest in the latest security measures.
  • Set up stricter protocols for paying large sums to new accounts.
  • Review your crime coverage and any policy relating to computer, business e-mail compromise or social-engineering fraud to see if you are covered. If you have concerns, feel free to call us for a review.
  • If you do suffer a breach and loss, promptly notify all potentially implicated lines of insurance coverage.

More Companies Bar Manager-Employee Relationships

The recent news of McDonald’s Corp. dismissing its chief executive for having a consensual sexual relationship with an employee reflects the hardening stance in corporate America towards inter-office romances.

Many large companies have instituted zero-tolerance policies for managers who are romantically involved with company employees. The companies are mainly cracking down to reduce their chances of being sued for the actions of one of their management team ― and for those of “skirt-chasers.”

That liability issue is just as potent for mid-sized and small businesses who have managers or supervisors on staff. With lawsuits for sexual harassment and discrimination rising, and employers paying out millions in settlements or judgments, businesses need to carefully consider how they want to handle these new risks.

And they are risks, especially now in the #MeToo era and the ramifications of a disgruntled party in the relationship taking the ship down with them if things turn sour with their paramour.

What was once an overlooked part of a company’s risk management policies, damages payouts for a manager who has gone too far can be devastating and easily run into the millions of dollars. The action by McDonald’s is not the only instance of a company’s board taking action:

  • In 2018, the chief executive of technology for Intel Corp. resigned after an internal investigation had found he had a consensual relationship with an employee, which was against company rules.
  • Best Buy Co. Inc.’s CEO resigned in 2012 after it was found that he had been in a relationship with an employee.
  • A CEO for HP Inc. quit his job in 2010 amid sexual harassment allegations, though an internal probe later cleared him of the charges.

While many companies do allow relationships among staff who are in different departments or equals, the risks of allowing the same for managers who are seeing subordinates are too great.

One main reason is that some workers may be too afraid to refuse a sexual advance by a supervisor or boss because they are scared of losing their job, or of suffering some other career-related fallout.

Unfortunately, power can go to people’s heads. The number of CEOs who are forced to leave their jobs due to ethical issues continues climbing.

In 2018, 39% of chief executives who left their jobs did so for ethical reasons, far exceeding other factors such as poor company financial performance, according to a study by PricewaterhouseCoopers. In 2017, 26% of CEOs left for ethical lapses, and in 2007 only 8% did so.

What you can do

Put a fraternization policy in place. You can consider including the following elements:

  • Prohibit romantic relationships between managers and their direct reports.
  • Bar dating between employees who are at least two levels apart in your company hierarchy. This will restrict fraternization between managers and subordinates across your company.
  • State what behavior is unacceptable in the workplace, such as public displays of affection and discussing relationship issues at work.
  • Spell out consequences for violating your company rules.
  • Establish an anonymous reporting process to make it easier for employees to report having witnessed distracting misconduct in the workplace, or to lodge complaints about perceived sexual harassment.

Also, if you have not already done so, consider purchasing an employment practices liability policy, which will step in to provide coverage if an employee is sued for sexual harassment, discrimination or other action. An EPLI policy covers:

  • Discrimination (based on sex, race, age or disability, for example)
  • Wrongful termination
  • Harassment
  • Other employment-related issues, such as failure to promote.

Depending on the size of your company, EPLI can be offered as an endorsement to a business owner’s policy or a general liability policy. Also, a specific stand-alone policy can be written in conjunction with a BOP.


The Holidays Have Their Own Workplace Perils

All year long you have been reminding your employees to “work safely … don’t take short cuts … prevent accidents.”

To do this they have to keep their minds on their work, but this time of the year as the holidays near, their minds might be everywhere else but on work.

They may be thinking “what to buy for everyone for Christmas – I hate shopping!” and “how will I pay for Christmas?” Meanwhile, relatives coming to stay add yet more distracting thoughts.

For some employees, the holiday period is a wonderful time, and for others it is dreadful, but it is stressful for most anyone. Normal routines and schedules are disrupted, and there is a lot of rushing around the town to crowded and chaotic stores and malls.

Be aware that accidents may be more likely to happen at this time of the year at the workplace, on the road or at home. Employees tend to take extra physical risks ― such as when hanging lights and lugging trees around.

And when roads and freeways are jammed, auto accidents increase.

In-office safety

When planning decorations for the office, it is important to keep holiday safety in mind.

Decorating the office helps workers enjoy the spirit of the season together, but remember that proper safety precautions should be observed at all times:

  • Be mindful of potential fire hazards when selecting holiday decorations and where you place them.
  • Be careful of stapling holiday lights, do not add too many strings of lights and make sure illuminated items are turned off.
  • Verify that all fire extinguishers are in place and fully charged and accessible.
  • Do not block exits, hang decorations on fire extinguishers, fire alarms or fire hose boxes, or obstruct the view of exit signs.
  • Do not hang decorations from sprinkler heads or electrical panels.
  • Without proper planning, holiday decorations can create tripping hazards. Extension cords should not be run through traffic areas where they pose trip hazards and, if you have to use an extension cord, use the proper one.
  • Avoid placing trees, freestanding decorations and presents in traffic areas.

Holiday party

The holidays bring office parties and, if alcohol is being served, keep in mind the liability involved.

Provide plenty of alternatives to alcohol, such as soft drinks, coffee, tea, water and cocoa. Consider non-alcoholic beers and virgin drinks at the bar.

Also, so your staff is safe on the way home, stop serving alcohol a few hours before the party ends.

It’s essential to make transportation arrangements for employees who should not drive – whether the party is held at the office, restaurant, your home or any other location.

The takeaway

If you keep in mind that the holidays put extra pressure on everyone, it may help you to keep your workplace free of accidents.

By following a few simple safety tips, it will be easy to enjoy the holiday and the events at work without dealing with injuries or damage to property.

When planning for the holidays, incorporate safety precautions into the planning process.

Need Gift Ideas for Your Christmas Party?

Give a gift of safety that just might save a life. Here are some ideas of safety items we don’t think about until we need them and/or it’s too late:

  • A smoke detector and batteries.
  • A quality fire extinguisher.
  • A flashlight and batteries, or light sticks.
  • A first aid kit.
  • An automobile safety kit including jumper cables, flares, fix-a-flat and reflectors.
  • A carbon monoxide detector.
  • An emergency kit flashlight, energy bars, batteries and first aid kit ― packed in a small travel bag.
  • A radio that runs by cranking rather than batteries.

New Overtime Exemption Regs Take Effect Jan. 1, 2020

New federal overtime regulations have finally been introduced for non-exempt workers after years of wrangling over the issue.

Under the new rule, employers will be required to pay overtime to certain salaried workers who make less than to $684 per week – or $35,568 per year – up from the current threshold of $455, or $23,660 in annual salary.

The new regulations are a midway point from Obama administration rules that would have seen the salary cap increased to $47,476, a move that was blocked by a court after protests from the employer community in December 2016.

Because the Trump administration took over after that, it decided not to pursue an appeal of the judge’s orders and instead started working on replacement regulations that appeased the employer community, which had protested the doubling of the cap as too costly for businesses.

The Fair Labor Standards Act requires that most employees in the United States be paid at least the federal minimum wage for all hours worked, and overtime pay at not less than time and one-half the regular rate for all hours worked over 40 in a workweek. However, the law includes exemptions for certain workers, as long as they satisfy a certain salary threshold.

Under the final rule issued by the Department of Labor, executive, administrative, professional, computer or outside sales employees who make more than $684 a week are exempt from the FLSA’s minimum wage and overtime pay requirements. The new regulations also allow employers to count a portion of certain bonuses (and commissions) towards meeting the salary level.

The new rule takes effect Jan. 1, 2010.

Here are the tests that must be satisfied to categorize workers as exempt if they make more than the new threshold (remember, merely giving someone a job title without these responsibilities does not make them exempt):

Executive employees

  • Managing the enterprise, or managing a department or subdivision of the enterprise;
  • Directing the work of at least two or more other full-time employees or their equivalent; and
  • Authority to hire or fire other employees, or have significant input in hiring, firing and promotions.

Administrative employees

  • Office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
  • Exercise of discretion and independent judgment with respect to matters of significance.

Professional employees

  • Work requiring advanced knowledge, that is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
  • The advanced knowledge must be in a field of science or learning; and
  • The advanced knowledge must be acquired by a prolonged course of specialized intellectual instruction.

Computer employees

This includes computer systems analysts, computer programmers, software engineers, and other similarly skilled workers in the computer field. To be categorized as exempt if making more than the new threshold, workers must be involved in:

  • Application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
  • Design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
  • Design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
  • A combination of the above.

Outside sales employees

  • Making sales or obtaining orders or contracts; and
  • Engaged away from the employer’s place(s) of business.

Highly compensated employees

The overtime threshold for “highly compensated” employees is also rising – to $107,432 per year, from the current $100,000. This means that employees who are not considered exempt as in the above occupations, and who earn less $107,432 starting next year, will be eligible for overtime if they work more than 40 hours a week.

Get current now

Here is a checklist of action items that you should address immediately:

  • Check whether your salaried employees satisfy the duties and salaries components of the FLSA white-collar exemptions (or your state law).
  • Identify all of the positions that will require reclassification under the new rule, and decide whether it is worth it to increase someone’s salary.
  • Analyze the financial impact of reclassifying employees as nonexempt.
  • Consider reassigning certain tasks to reduce the effects of the rule.
  • Make plans to conduct reviews regularly – like every three years for federal law compliance, or more frequently in California ahead of minimum wage changes.

New Booklet Helps Employers Set Up Safe Driving Programs

OSHA has published a set of guidelines to help employers reduce accidents among their driving employees.

The document is not a set of new regulations or a new standard. It is only advisory ― the federal agency describes it as “informational in content” ― and is intended to assist employers in providing a safe and healthful workplace.”

Nonetheless, the guidelines are an excellent way to establish a system that can reduce the likelihood of crashes involving your driving workers.

OSHA recommends implementing a safe driving program that includes the following:

Management commitment and employee involvement

Senior management can provide leadership, set policies and allocate resources (staff and budget) to create a safety culture. Actively encourage employee participation and involvement at all levels of the organization to help the effort to succeed. Involve workers in the planning phase of the policy.

Written policies

Create a clear, comprehensive and enforceable set of traffic safety policies and communicate them to all employees. They can cover such things as:

  • A zero-tolerance policy for using smartphones while driving and only using hands-free technology when talking on the phone.
  • A zero-tolerance policy of driving under the influence of alcohol or illegal drugs.
  • Requiring all driving staff to wear seat belts at all times.

These policies should be posted throughout the workplace, distributed to staff and discussed at company meetings. Offer incentives for sticking to the rules, and set consequences for disregarding them.

Driver agreements

Establish a contract with all employees who drive for work purposes, whether they drive assigned company vehicles or use their personal vehicles. By signing an agreement, the employee acknowledges awareness and understanding of the organization’s traffic safety policies, procedures and expectations regarding driver performance, vehicle maintenance and reporting of moving violations.

Check driving records

Check the driving records of all employees who drive for work purposes. Screen out drivers who have poor records. Review their moving violation records periodically to ensure that the driver maintains a good driving record. Clearly define the number of violations an employee/driver can have before losing the privilege of driving for work.

Crash reporting

Establish and enforce a crash reporting and investigation process. Require employees to report all accidents to their supervisor as soon as feasible after the incident. Set policies for what driving employees should do after an accident. Also, investigate all crashes and try to identify their root causes, so you can possibly help workers avoid making the same mistakes in the future.

Vehicle maintenance and inspection

Selecting, properly maintaining and routinely inspecting company vehicles is an important part of preventing crashes and related losses.

Review the safety features of all vehicles to be considered for use. Conduct routine preventative maintenance on vehicles as per manufacturer’s recommendations. Also check safety-related equipment and brakes regularly.

Disciplinary action system

Set rules for dealing with employees who are cited for a moving violation or are involved in a preventable crash while driving on the job. Options include:

  • Assigning points for moving violations.
  • Progressive discipline if a driver begins to develop a pattern of repeated traffic violations and/or preventable crashes.
  • The system should describe what specific actions will be taken if a driver accumulates a certain number of violations or preventable crashes in any predefined period.

Reward/incentive program

Develop and implement a driver reward/incentive program that includes recognition, monetary rewards, special privileges or the use of incentives to motivate the achievement of a predetermined goal or to increase participation in a program or event.

Driver training and communication

Provide continuous driver safety training and communication. Even experienced drivers benefit from periodic training and reminders of safe driving practices and skills. It is easy to become complacent and not think about the consequences of our driving habits.


Lockout/Tagout Training Essential in Any Shop with Equipment

A printing shop employee notices a piece of cardboard jammed inside a press. The first instinct is to remove it and continue the work, so he grabs the cardboard and tries to pull it out, while the press is running.

Tragically, in this real-life example, the employee’s arm got caught up in the machinery, resulting in a gruesome injury that resulted in him losing part of the limb.

By following proper lockout/tagout procedures, this employee would not have reached for the cardboard without first powering down the machinery. Unfortunately though, he had never been trained in such procedures.

What your employees need to know

Under lockout/tagout regulations, only authorized employees who have the appropriate level of knowledge and training can perform maintenance on equipment. Those that operate the equipment may not perform maintenance but are allowed to shut the machine down and place a tag on it to warn co-workers that the equipment should not be used.

Tagging the equipment is an important step because if co-workers don’t know why a conveyor belt or other piece of heavy machinery was shut down, there’s a risk one of them might start it back up not knowing there’s a problem or that someone’s performing maintenance.

What your employees need to do

Your employees serve as extra sets of eyes and ears at the workplace. They can listen for strange sounds that might indicate a machine is not working properly. They can also inspect the equipment throughout the day looking for frayed cords, jams or any other physical signs that could lead to trouble.

When a malfunction occurs or something is jammed inside a machine, the first step should be to shut it down and disconnect the power source, if possible. Next, the worker should tag the machine (tagout) and notify their supervisor, who contacts an authorized repair person.

A padlock or other locking device (lockout) is then used to further secure the machine and prevent anyone from starting it up without authorization. After that, repairs can commence.

What to tackle at your safety meetings

To prevent serious injuries, your team should be well-versed in lockout/tagout procedures, which they should learn in safety meetings. Here are some tips:

  • Make sure your team knows who is authorized to perform repairs. No matter how easy a repair or fix seems, it’s not worth the risk of injury like the one suffered in the printing machine mentioned above.
  • Train them on how to shut down equipment and disconnect the power source.
  • Train them in where the tags can be found to place on malfunctioning equipment.
  • Train them in the protocol for notifying a supervisor of any jam or malfunction.

Also, make sure to ask your workers the following to ensure they understand:

  • Do you have any questions about lockout/tagout procedures in this shop?
  • Are there times when you aren’t sure when to utilize lockout/tagout procedures?
  • How can we make sure that everyone is following our lockout/tagout procedures?

Why a Corporate Liability Shield Is Not a Replacement for Liability Insurance

Business owners who form a corporation or a limited liability company (LLC) may question the need for the business to carry insurance. A major benefit of these forms of business organization is that they shield the owners’ personal assets. Because of this, they may believe insurance is unnecessary.

A corporation is a legal entity separate from its owners. It acts as an artificial legal person. It can do the things that individuals may do, such as:

  • Enter into contracts
  • Incur debts
  • Earn income
  • Make investments
  • Sue others, and be the target of lawsuits.

It gives its owners a legal shield against many of its obligations. In other words, an individual owner of a corporation (called a “stockholder”) does not have to pay for the business’s debts out of his or her own funds.

An LLC also shields its owners (known as “members”). However, tax laws apply differently to LLCs than they do to corporations. If a corporation earns $10,000 in income, it must pay tax on that $10,000. If an LLC earns $10,000, the money is distributed to the members and they individually pay taxes on it.

Corporations and LLCs shield their owners and members from liability for the entity’s debts.

Suppose someone sues the business, claiming that its product injured them. A court orders the business to pay the injured individual $1,000,000. The business must pay that amount out of its assets. But, the individual owners or members do not have to cash in their bank accounts or homes to pay it. The most they stand to lose is the amounts of their investments in the business.

Legal shield only goes so far

The shield is not absolute. A court may hold individual stockholders and members liable in some situations. If they personally and directly injure someone, the shield does not protect them.

The court may also decide that the corporation is a sham entity. It could do this if the business has not conducted the normal activities of a corporation, such as:

  • Holding regular stockholder meetings.
  • Keeping business records separate from those of the owners.
  • Investing adequate capital in the business.

Regardless of the shield, the business should carry insurance. The shield cannot protect the time and effort that goes into building a business. An uninsured accident can wipe out all of the business’s assets. Without large additional investments, it might not survive. The stockholders’ investments in money, time and work will have been wasted.

Also, an individual acting on the business’s behalf may incur personal liability. For example, while driving on company business, a member may injure someone in a car accident. Business liability and auto insurance policies usually insure individual stockholders and members for acts they perform in their roles with the business. Without this coverage, the individual would have to hire their own lawyers and pay judgments out of pocket.

For these reasons, wise business owners buy insurance. They should insure the business’s buildings, property, and liability risks. The personal liability shield is no substitute for insurance protection.


New Pay Data Due to EEOC by Sept. 30

Employers with more than 100 workers have to meet a Sept. 30, 2019 deadline to report detailed information on how they compensate workers – broken down by gender, race, and ethnicities – to the Equal Employment Opportunity Commission.  

The data is part of the EEO-1 form that employers have been required to file for years. There are now two components to the form: 

Component 1 – This information includes the number of employees who work in a business, broken down by category, race, sex, and ethnicity. The deadline for submitting this information was May 31. This is the same information employers have been filing for years. 

Component 2 – This newly required information includes hours worked and pay data from employees’ W-2 forms, broken down by race, ethnicity, and sex. This is due by Sept. 30. 

The second component, initiated by the Obama administration, was supposed to have taken effect in 2017, but after President Trump took office, he halted the roll-out of the rule, on the grounds that reporting such detailed salary information was a burden on companies.  

Several worker-advocacy groups filed suit, challenging the hold on the pay-data collection provisions. On March 4, 2019, a federal judge lifted the stay and ordered the EEOC to start collecting the data.  

Why does EEOC want the information? 

The EEOC says the detailed information on salaries will help its investigators determine which of the discrimination complaints that it receives merit further processing.  

The EEOC uses information about the number of women and minorities that companies employ to support civil rights enforcement and analyze employment patterns, according to the agency. 

The basics of EEO-1 

Businesses with at least 100 employees, and federal contractors with at least 50 employees and a contract of $50,000 or more with the federal government must file the EEO-1 form.  

To accommodate the new rules, the EEOC has revised the form, which will require employers to report wage information from box 1 of the W-2 form and total hours worked for all employees by race, ethnicity and sex within 12 proposed pay bands (example: $24,440-$30,679 is one band) and 10 occupation bands (like professionals, technicians or salespeople). 

Component 2 data 

Here’s what you will need to include in the component 2 data: 

  • Pay data 
    Employers must identify the number of employees (based on a combination of race and sex) that fall within each of 12 compensation bands for each EEO-1 job category. Employers will not be required to submit names or Social Security numbers for any employee.  
    To identify the compensation band in which to count an employee, employers must use Box 1 of Form W-2. Employers may not use gross annual earnings instead of Form W-2’s Box 1 earnings. 
  • Hours-worked data 
    Employers must list the total number of hours worked by employees (based on a combination of race and sex) within the same compensation band and job category. 

What to do 

The EEOC has created a web-based portal for filing the EEO-1 form along with instructions and fact sheets, all of which you can find here

The portal will remain open until the Sept. 30 filing deadline. If you have not already received login information, you can do so on the portal page. 


The Costliest Claims for Catastrophic Conditions and the Drugs Used to Treat Them

A new report by Sun Life Insurance Co. highlights the top high-cost claim conditions that plague the U.S. health care system and account for more than half of all catastrophic or unpredictable claims costs.

The top 10 costliest claim conditions comprised over half (51.8%) of the $3 billion that Sun Life reimbursed to stop-loss policyholders from 2014 to 2017.

Stop-loss insurance (also known as excess insurance) is a product that provides protection against high-cost claims. It is purchased by employers that self-fund their own health plans, but do not want to assume 100% of the liability for losses arising from the plans.

The “2018 Stop-Loss Research Report,” which Sun Life has been publishing annually for the past six years, provides a glimpse into the kinds of claims that can have an outsized effect on both insured and self-insured employers’ health plans, and can drive overall expenditures.

Here are some of the other main highlights from the study:

  • Cancer treatment costs comprised 27% of all stop-loss claim reimbursements between 2014 and 2017.
  • The number of health plan enrollees that had claims costing more than $1 million increased by 87% during the four-year study period. In 2017, this group comprised 2.1% of claims but accounted for 20% of all stop-loss claims reimbursements.
  • The aggregate costs of injectable drugs that were part of claims that cost more than $1 million grew 80% from 2014 to 2017.

The most expensive catastrophic claims and the amounts Sun Life paid out in the aggregate between 2014 and 2017 are as follows:

  • Malignant neoplasm (cancer) – Total paid out: $564 million (a portion of total catastrophic claims: 19%)
  • Leukemia, lymphoma, and/or multiple myeloma (cancers) – $235 million (8%)
  • Chronic/end-stage renal disease (kidneys) – $153 million (5%)
  • Congenital anomalies (conditions present at birth) – $115 million (4%)
  • Transplant – $103 million (3.5%)
  • Septicemia (infection) – $88.5 million (3%)
  • Complications of surgical and medical care – $78 million (2.5%)
  • Disorders relating to short gestation and low birth weight (premature birth) – $74 million (2.5%)
  • Liveborn (short gestation/low birth rate, and congenital anomalies) – $69 million (2%)
  • Hemophilia/bleeding disorder – $68 million (2%)

Injectable drug costs

Injectable drugs (which include those delivered by IV or that are self-administered injectable medications) accounted for 8.5% of the total paid out for high-cost claims.

But that’s just the average for the four-year period. Injectable drugs are accounting for a greater share of overall catastrophic claims costs, reaching 9.3% in 2017.

In 2017 alone, 418 drugs contributed to the total $186.3 million that was spent on injectable medications for high-cost claims. But, 62% (or $114.7 million) of the cost was attributed to the top 20. The top five medications accounted for nearly 30%.

Please note that the injectable drugs on the high-cost list are there for different reasons. Some are on the list because of the frequency (how often they are used and how many patients are given the drugs) that they are administered, and others are there because their cost is extremely high.

As an example, the report points to the two top injectable treatments – cancer drugs Yervoy and Neulasta.

Neulasta (used to reduce the chance of infection in patients undergoing chemotherapy) was administered to 354 patients and cost on average $33,800 per dose.

On the other hand, Yervoy, used to treat melanoma that has spread or cannot be removed by surgery, was administered to just 43 patients, but the cost per dose was $323,000.


Off-the-clock Work Ban Can Save You from Legal Troubles

Wage and hour lawsuits are on the rise, usually with non-exempt employees claiming they weren’t paid either for overtime or for work they may have performed before or after their shift.

But, if you have ironclad policies in place, you can greatly minimize both the chances of being sued and also losing the case.

One California case illustrates how one employer, thanks to its policies on prohibiting work off the clock, was able to avoid a trial and payment of damages after an appeals court threw out a potential class-action suit by employees claiming they hadn’t been paid for overtime work for which their employer lacked knowledge.

The California Appellate Court dismissed the case, Jong vs. Kaiser Foundation Health Plan, finding that Kaiser could not be held liable for overtime pay because:

  • The company explicitly prohibited off-the-clock work;
  • The employee worked off-the-clock contrary to this policy; and
  • The employer had no actual or constructive notice of the employee’s unapproved off-the-clock work and, thus, could not be liable.

This case illustrates the importance of putting your off-the-clock policy in writing and following through with consistent enforcement.

The case

In 2009, Kaiser reclassified its outpatient pharmacy manager (OPMs) as non-exempt as part of a settlement of an earlier lawsuit in which it had been accused of improperly classifying OPMs as exempt.

After Kaiser had reclassified its OPMs, three OPMs filed suit, alleging that Kaiser refused to pay overtime and that it had not adjusted the responsibilities of OPMs so that they could perform their jobs in 40 hours a week.

OPMs were also required to hit budget targets and Kaiser had disciplined one of the OPMs for going over budget, partly due to overtime that he reported and was paid for. In the lawsuit, the OPM asserted that Kaiser knew or should have known about the off-the-clock hours that he worked and therefore should have paid the unreported overtime.

In dismissing the lawsuit, the court cited the plaintiff’s deposition that he was aware of Kaiser’s overtime rules, including that it would pay for overtime work even if it had not been pre-approved. The OPM had also signed an affirmation acknowledging that off-the-clock work was prohibited.

During his deposition, the OPM also said that he wasn’t sure if any of his managers knew he was working off the clock. He also had not recorded his off-the-clock work and didn’t know how many hours he’d worked off the clock.

The takeaway

This case illustrates the importance of having strong and well-documented policies, including procedures for requesting approval for overtime as well as a prohibition on off-the-clock work.

Kaiser was granted case dismissal thanks to its explicit policies on off-the-clock work and that it had required its employees to sign an acknowledgment that they would not work off the clock.

You may want to consider instituting policies and procedures that are similar to Kaiser’s if you want to avoid any off-the-clock work complaints. Its policies were:

  • All non-exempt employees will be paid overtime for all overtime hours recorded.
  • All non-exempt employees should be clocked in whenever they are working.
  • All non-exempt employees must request approval to work overtime.
  • All non-exempt employees are required to sign an attestation form acknowledging that they will not work off the clock.

You should review your wage and hour policies with an employment attorney and implement policies and procedures that can keep your firm from being sued by employees for overtime, meal break, and off-the-clock violations.

Your last line of defense should be an employment practices liability policy. For more information on such coverage, call us.


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