Cavalcade of Risk #141: Call for submissions

Jay Norris hosts next week's CavRisk. Entries are due by Monday (the 3rd).

NB: We're now using this submission tool: The BC WorkAround

Once there, you'll be asked to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post ("Remarks")

At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

Thanks!

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Professional Indemnity Insurance Cover To Protect Your Business Needs

The most sensible people it is wise to secure your valuables. And when it comes to assessing the value of each asset you own, there is no denying that his profession is the most precious of all. Like all other assets, it makes sense to buy a compensation for their profession.

Professional Indemnity is a kind of insurance that protects your business or profession for any financial loss resulting from claims by dissatisfied customers. When a customer expects a certain level of professional service and are not satisfied that it is equipped, at its discretion to prosecute and seek damages for losses incurred. The fact is that the professional can not be charged when it can not be held directly responsible for financial losses which his client. But it is always advisable to protect his people that the pronunciation of the sentence pronounced against him could cost him heavy losses. A professional can be held responsible for the appearance of the following conditions.

* Negligence: or neglect of duty and care

* Intentional violation of copyright, trademarks, customer

Loss, damage or misuse of data and important documents

* Or, dishonesty relating to the theft or forgery of money the customer

In this context, professional insurance protects the business against financial loss if it is burdened with heavy financial losses. Meanwhile, all legal fees incurred in the litigation process are also covered by your insurance provider.

Professional Indemnity insurance indemnifies doctors, lawyers, accountants, architects and other professions of prestige. The need for professional liability feels more lawyers, accountants or those whose business is more about maintaining finance and accounting. Cases are not uncommon, when the corporate giants are often land in disputes with their customers. Thus, even the slightest negligence can certainly bring your financial well-being and reputation. It is therefore advisable to pay now to protect your business, but to pay it later with hefty interest.

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Seniors Need to Pay Their Fare Share

A few weeks ago President Obama proposed a new tax on seniors that use THEIR OWN MONEY to purchase what he considers a rich Medigap plans. If you have a "first dollar" Medicare supplement plan, such as Medigap plan F, Obama believes you should pay more than anyone else for Medicare Part B.

On September 19, 2011, as part of his deficit reduction proposal, President Obama recommended charging a 30 percent surcharge on Part B premiums to new beneficiaries that purchase Medigap policies with “near firstdollar” coverage, beginning in 2017

I don't know about you but that doesn't sit well with me.

The Medicare Trust Fund Lie

Where does he think he has the right to tell me how to spend MY money? After all, they took money from us for years to pay for Medicare. Money that was supposed to be safely stored in a trust fund.

Only recently did Washington finally admit there is no trust fund, it was all a lie. They spent almost every dime we "invested" and now they want more.

I don't think so.

More Rocket Surgeon Ideas from Washington

Some of the other big ideas from DC include:

bar Medigap policies from paying the first $550 in cost-sharing liability and limit coverage to 50 percent of the next $4,950 before the plan could cover 100 percent of beneficiaries’ out-of-pocket costs.

CBO estimates this policy would achieve $53.4 billion in savings over 10 years, if implemented in 2013.

An alternate approach, described by CBO in its 2008 report Budget Options, Volume 1: Health Care, and would impose a 5 percent excise tax on all Medigap insurers

Let's think about this a moment.

If WE pay more out of pocket that will save the GOVERNMENT money.

Apparently they believe we won't go to the doctor when we are sick if we have to pay for it.

That's like saying I need new brakes on my car but I won't get them fixed because my car insurance won't pay for them.

Their second proposal is just as goofy. If the government places a 5% surcharge on Medigap carriers guess who pays that tax?

The people who buy the policies.

We believe that Medigap plan F is a good plan but there are better VALUES to be found in plan G and plan N.

We also believe Washington has no right to tell us what we can and cannot buy and how we should spend OUR money when it comes to health care and health insurance.

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Medigap F Over the Top

Medigap plan F is quite popular in Georgia, but is it a good value? Not in my opinion. Plan F is one of the highest cost Medicare supplement plans and in most cases is way overpriced.

Recently I was asked to compare an existing plan F against other carriers. This individual had a BCBSGA Medigap plan F, a very solid and competitive carrier. His current rate was $10 less than my best rate for the same plan.

But the story doesn't stop there.

BCBSGA uses a community rating system and will be increasing everyone's rates in January, 2012.

The same is true for USAA and AARP. They will be increasing rates for their policyholder in January as well. Even if you bought from them in October of 2011 your rates will increase in January.

What fun is that?

At this point we don't know how much the rates will change but they will go up.

If he bought the same plan F now (from a different carrier) his rate would hold for 12 months.

While we can't calculate the savings now for plan F vs. his new rate, I can tell him with certainty that enrolling in plan G will save him more than $300 per year vs. his current plan. Also, some Medigap carriers do not offer a plan G so they are effectively saying this is what we offer, take it or leave it.

Medigap plan F is the most popular so many carriers will price that product competitively on new business but will not be as aggressive on the value oriented plans such as G.

The spread will become more pronounced over the years as Medicare supplement plan F usually has higher rate increases than the other plans. So over time, plan F becomes increasingly more expensive while the other plans deliver more value.

Medigap plan F is a ripoff that is heavily promoted by carriers and agents that seek to take advantage of seniors.

If you have plan F, especially with a carrier such as AARP, Blue Cross, or USAA you should compare Medigap rates now and lock in a lower rate for 12 months.

Unless of course you just like paying more . . .

When you pay more you don't get more, it simply means you paid too much. That's just like pouring money down the drain.

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Kermie says: It's Health Wonk Review Time!

Joe Colucci, of the New America Foundation blog, hosts this week's Muppet-inspired collection of wonky posts. So hop to it!

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Backpain at work: Can your employer help?

Ever return home from work with a sore back? You're not the only one - and around a quarter of the UK population will suffer from back pain at some point in their lives.

Many cases of back pain can be brought on by long sitting or standing periods at work, and anything from the wrong safety equipment to the height of your chair or computer screen could contribute to these aches and pains.

But there are some things that employers can do to promote back safety in the workplace, and a number of regulations are in place to ensure these standards are upheld. Here are some of the ways your employer can help promote good backcare in the workplace:

Risk Assesment: All employers should adhere to goverment guidelines perform health and safety risk assesments, which an assesment of back safety in the workplace. Knowing about these can help ensure you know what is and isn't acceptable at work.

Handling goods: There are a number of back pain regulations surrounding the manual handling of goods at work, and a few things employers can do to make things safer for the backs of their staff members, such as putting wheels on heavy crates or implementing lifts for heavy materials. Keeping yourself up to date on these regulations mean that you will know exactly what your workplace should be providing, and enable you to make informed decisions when it comes to looking after your back at work.

Chairs and equipment: All chairs and computer equipment should be appropriately levelled so as not to harm the backs of employees when sitting for long periods of time. This NHS guide offers some more information on the chair and computer adjustments that can be made to reduce back pain.

Access to medical advice: Bigger organisations sometimes give employees the chance to seek medical advice from a company doctor or offer free or affordable business health insurance so you can get checked up if you ever have back pain. Access to this advice will make sure you know what you should and shouldn't be doing at work when your back is sore - and you can also get advice about the ways to strengthen it and keep it healthy out of the office too.

Keeping active: Staying active and not sitting or standing in the same position for too long is recommended to keep backs healthy. Employers should encourage or allow movement around the workplace at regular breaks, so you are never left in the same position for too long.

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Professional Indemnity Insurance - An Overview

You are a professional high quality for the commander in his profession, earning a good salary and more or less meets the requirements and benefits of their profession. Of course, there are many things can go wrong in this beautiful setting. But the next thing you know a client and are held responsible by a court of law. This is exactly where you have insurance professional can be helpful. It can tear yourself away from the financial turmoil that has landed you in the simple discharge of duty. No wonder people around the world consider getting an insurance professional, affordable and secure a great future.

Its name to the Professional Indemnity Insurance protects a professional future losses that may result from liability for damages. If the legal responsibility, it moves the obligation to make payments to the creditor to persuade the agency and the insured has thus saved from the financial consequences.

There are a wide variety of professions that can be insured under this coverage. Any professional who either sell their knowledge or skills to clients or are involved in giving advice can get coverage for this coverage. This includes such diverse professions such as doctors, lawyers, architects, accountants and consultants.

Coverage of professional liability insurance deals with compensation made for breach of duty or breach of duty to ensure that the professional commitment to the field to provide service to a customer. In addition, all legal costs of the combination is also covered by the insurance agency. Insurers can either choose a blanket, where he makes the payments later reimbursed by the insurance or it can go to a "pay on behalf", in which it assures the agency takes care of all payments and paperwork related.

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Welcoming 5772

As we enter a New Year, our thoughts turn to new beginnings, new possibilities, new hopes.

May you be inscribed for a blessing in the Book of Life.

L'Shannah Tovah T'kateyvu.

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HHS Powergrab: 1st Amendment be darned

Cato's Michael Cannon reports on the latest shenanigans from HHS Secretary Shecantbeserious:

"The guidelines evidently require all communications to be approved by the Assistant Secretary for Public Affairs. Also: no off-the-record communications."

Hey Kathy: this word "transparency." I do not think it means what you think it means.

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South Carolina Enacts Tort Reform Placing Limits on Punitive Damage Awards

Post by Logan Wells

Greetings from Greenville, S.C.!

I'm Logan Wells, and I would like to thank you for being a part of my first blogging experience. Thankfully, tort reform in South Carolina, the topic of my first ever blog post, is of great interest and significance to me and hopefully to you as well. This first post is about the limits now placed on punitive damage awards. If you have any questions/comments, please don't hesitate to contact me.
 - Logan.

On June 14, 2011, the South Carolina Fairness in Civil Justice Act of 2011 was signed into law. The Act will become effective on January 1, 2012, making significant changes to the law concerning punitive damage awards in South Carolina.

Caps on Punitive Damages Awards

Generally, under the Act, no award of punitive damages may exceed the greater of three times the compensatory damage awarded to each plaintiff or the sum of $500,000.00. However, the cap may be increased to the greater of four times the amount of compensatory damages awarded to each claimant or $2 million if:

(1)       the defendant’s conduct was motivated primarily by unreasonable financial gain and the unreasonably dangerous nature of the conduct and the high likelihood that injury would result from the conduct was known or approved by the managing agent, director, officer or the person responsible for making policy decisions for the defendant; OR

(2)       the defendant’s conduct which was the proximate cause of the plaintiff’s damages could subject the defendant to conviction of a felony.

Furthermore, the caps on punitive damages are subject to exceptions. Under the Act, there are no caps on punitive damages if:

(1)       at the time of the injury, the defendant had an intent to harm and did in fact harm the plaintiff; OR

(2)       the defendant has plead guilty to or been convicted of a felony and the course of conduct which is the basis of the felony was the proximate cause of the plaintiff’s damages; OR

(3)       the defendant acted or failed to act while under the influence of alcohol, drugs, other than lawfully prescribed drugs administered in accordance with a prescription, or any intentionally consumed glue, aerosol, or other toxic vapor to the degree that the defendant’s judgment is substantially impaired.

Other Changes to South Carolina Law on Punitive Damages

The Act also makes other changes to South Carolina’s law concerning punitive damages. A plaintiff now must specifically ask for punitive damages in the complaint. In addition, under the Act, a defendant has a right to a bifurcated trial if requested. In the first stage of the trial evidence the jury determines liability and the amount compensatory damages. Evidence relevant only to the issue of punitive damages is not admissible at this stage. In the second stage of a bifurcated trial, the jury shall determine if a defendant is liable for punitive damages, and if determined to be liable, the amount of punitive damages. In determining the amount of punitive damages, the jury may consider all relevant evidence including, but not limited to:

(1)       the defendant’s degree of culpability;

(2)       the severity of the harm caused by the defendant;

(3)       the extent to which the plaintiff’s own conduct contributed to the harm;

(4)       the duration of the conduct, the defendant’s awareness, and any concealment by the defendant;

(5)       the existence of similar past conduct;

(6)       the profitability of the conduct to the defendant;

(7)       the defendant’s ability to pay;

(8)       the likelihood the award will deter the defendant or others from like conduct;  

(9)       the awards of punitive damages against the defendant in any state or federal court action alleging harm from the same act or course of conduct complained of by the plaintiff;

(10)     any criminal penalties imposed on the defendant as a result of the same act or course of conduct complained of by the plaintiff; and

(11)     the amount of any civil fines assessed against the defendant as a result of the same act or course of conduct complained of by the plaintiff.

If the jury awards punitive damages, the trial court must review the jury’s decision, considering all relevant evidence including the 11 aforementioned factors. In an action with multiple defendants, a punitive damages award must be specific to each defendant, and each defendant is liable only for the amount of the award made against that defendant.

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Baby Joseph Update: Sad (but not unexpected) news

Baby Joseph, whose story captured our hearts (and enraged our sense of fairness), passed away "Tuesday night in the comfort of his own home in Windsor, Ontario."

There really wasn't a realistic chance for long-term survival, but that was never the end-goal here. Rather, it was to grant him the chance to die with dignity and grace under the loving care of his parents.

Rest in peace, Baby Joseph.

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Weird: IBD gets one wrong

Weird: IBD gets one wrong

"Despite ObamaCare, Costs Continue To Soar"

Reads the headline.

But it should read:

"Because of ObamaCare, Costs Continue To Soar"

As we've documented again, and again, and again, Obamneycare© is directly responsible for the recent increases in health insurance costs.

Of course, for its proponents, this is a feature, not a bug:

"If you get a job for 40 hours a week, you're going to pay more for your health insurance than if you don't get a job."

Yup.

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Lexis-Nexis Top 50 nominations

InsureBlog is once again nominated for the Lexis-Nexis Top 50 Insurance Law blogs, and we would really appreciate your support. . Would you please pop over (just click here) and leave a comment in support of us. You may need to register (it's easy and free), and please make sure to mention InsureBlog.

Thanks!

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This Sceptered Isle - Part CLXXIII

Last week the UK announced that it will scrap its 9-year-old Information Technology (IT) project intended to digitize all National Health Service patient records and link all parts of the enormous NHS together.

The reason? According to Britain’s department of health, the project “has not and cannot deliver to its original intent”.

What has this project cost so far? About $6.4 billion British pounds, or about $10 billion US dollars. In response to charges that this money was wasted, NHS indignantly responded that “around two thirds” has resulted in “substantial achievements.” Well, whatever those achievements may be, that response is a clear admission that the other one-third was, indeed wasted. That one-third waste is the equivalent of more than $3 billion US dollars.

Perhaps more important is the global impact on thinking about health IT. For example US policymakers hope that IT will save scads, tons, bundles, oodles of money in the delivery of medical care. That would make medical care more effective and less costly, it would make Americans healthier, make us live longer, and make all our children handsome and above average.

Perhaps now that hope needs to be re-examined. Hope, you see, is necessary when there is no evidence. In the UK contrary evidence has been accumulating.

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Disabled Economy?

From time to time, we note trends in various lines of insurance, and a recent email from the Council for Disability Awareness has information from the 2011 Long-Term Disability Claims Review.

Disability insurance replaces lost income in the event of an injury or (usually long-term) illness. It's available in both group and individual flavors.

I found these results particularly noteworthy:

1) Over half 50% of those carriers which participated "reported increased claim incidence, and most suggested the increase was impacted by the recession."

That conclusion's not as far-fetched as it may sound: these numbers track pretty well with previous recessions.

2) The number of folks covered by disability insurance actually declined, and again the economy was cited as the primary factor.

This also makes sense: if you're out of work, you don't need (and may not be able to afford) disability insurance.

3) On the other hand, applications for Social Security Disability benefits increased by almost 3 million people in '10, "the most ever."

That's the "good news." The bad news is that the percentage of these applications that were actually approved by Social Security remained pretty much "near its 25-year low."

There's much more in the report, including this interesting graphic:

Click here for the full report.

[Hat Tip: Barry Lundquist]

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Meanwhile, back in the Lab (LabCorp, that is)

If you're a United HealthCare insured and you've had any lab work done the past few years, then you're probably familiar with LabCorp. That's because they're (apparently) the largest such labs in the market, and they (again, apparently) had quite the cozy relationship with UHC.

Maybe a little too cozy for some: Andrew Baker (formerly of Unilab) has filed a suit against LabCorp, alleging a rather massive fraud at the expense of Medicare and its beneficiaries (not to mention taxpayers). In brief, LabCorp is accused of charging Medicare much more than it charged United HealthCare, which is also accused of pressuring its network doc's to use LabCorp exclusively.

I was offered, and gladly accepted, the opportunity to interview Mr Baker. Here's that interview, as well as some observations:

InsureBlog: Thanks for agreeing to speak with us, Mr Baker. Could you tell us a little about yourself, and why you brought this lawsuit?

Andrew Baker: Of course. I was President of MedPath, which was owned by Corning Glassworks. That was spun off, and I ended up buying the lab, which became Unilab. Eventually, I sold the lab to a private equity firm, which then re-sold it a short time later at a much greater price. I was a bit curious about the difference because, as far as I could tell, the market itself hadn't changed dramatically in such a short time, and I didn't understand how the value could have increased so quickly and so greatly.

As it turns out, the lab had increased its use of "pull-through" business, which I had objected to during my tenure there. This is the practice of enticing business through deep discounts and kickbacks, and I was, and continue to be, an opponent of it.

After speaking with several law firms, I decided to press forward, because it's wrong and anti-competitive to small business. as well as costly to Medicare.

IB: Your fact sheet accuses UHC of threatening to kick providers out of their network if they didn’t play ball. This seems unlikely. What proof can you offer that this occurred?

AB: We have plenty of documentation to back that up. Doctors were not happy to have their livelihood threatened, as would be the case if they were kicked out of UHC's network.

IB: The Stark Law has some pretty severe restrictions regarding this kind of activity. Why would providers risk their own licenses (insurance notwithstanding) in such a scheme?

AB: That really applies to providers steering patients to vendors in which the doctors have an ownership stake, which was not the case here. In fact, this was sort of a reverse-Stark situation, in that doctors who refused to participate could end up losing, but were actually paid nothing for the referrals.

IB: In reviewing the facts, it’s clear that Medicare was not defrauded in the generally understood meaning of the term. If LabCorp had not discounted their billed charges to UHC, Medicare would have paid the exact same amount. So who got hurt here?

AB: Medicare could have been paying less versus the capitated (insured) plans. The law says they can't charge Medicare and insurers different amounts, and yet they did, and so Medicare, and thus the taxpayer, ended up spending more than necessary [ed: here's where Mr Baker and I really part company; I'll explain why in a moment].

IB: The fact sheet and legal briefs refer to UHC’s fully insured business. Was their ASO line also involved? What did the TPA’s and plan sponsors think of this arrangement?

AB: Yes, I believe that was the case, although it wasn't consistent along all the lines. That is, some plans got the severely discounted rate, and others didn't.

IB: It appears that the folks who most benefited from this arrangement were UHC’s insureds, who will now have to pay higher costs. Is that right?

AB: Yes, that seems to be the case. But why should UHC benefit at Medicare's expense?

IB: What relief are you actually seeking here? How much do you think you’ll net from this lawsuit?

AB: I want the rules to change so that Medicare gets the same rates as UHC and others, or "Most Favored Nation" status, and I want the existing rules enforced so that this pull-through activity comes to an end.

As to what my share of any settlement might be, I really have no idea. Frankly, it's not something I necessarily count on; I have other business and income. And, of course, being in England now, half would go to taxes anyway. I do plan to donate at least a portion of any proceeds to charity.

IB: Thanks, Mr Baker, for your time and candor, and best of luck with your efforts.

I'd like to thank Co-Blogger Kelley and FoIB Nate for their help in formulating the questions and reviewing the final interview, and to Ania Kapla of Hinton Communications for making it happen.

Now, let's cast a more critical eye on this lawsuit, shall we?

Before we start, I do want to mention that I had asked Mr Baker about his standing to bring the lawsuit. He demurred (correctly) to his attorneys, who confirmed that this is a qui tam (aka "whistleblower") lawsuit, so standing is not an issue here.

Based on the facts we've been given (and which I will happily forward to interested readers), it seems pretty clear that LabCorp engaged in fraud based on Medicare's definition of fraud.

Isn't that nit-picking, you may ask?

No, it's not, and here's why: the general legal definition of fraud is "a false representation of a matter of fact ... by false or misleading allegations, or by concealment of what should have been disclosed — that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury."

Medicare fraud, though, is really more analogous to "breaking our rules." As Kelley explains:

"We would not consider this fraud since the labs billed Medicare the correct fee and collected the correct fee. However, the government states this is fraud because the lab charged Medicare more than they charged the other lab. In the business world, this is called giving discounts for volume."

The key is that "if LabCorp had not discounted their billed charges, Medicare would have still paid EXACTLY the same amount. No more or no less money was paid by the Federal Government to LabCorp than to any other labs for the same service."

As to Mr Baker's assertion that this was a sort of "reverse-Stark" scenario, in that doc's weren't remunerated for referrals, but punished for the lack of them, well, that doesn't hold water, either. As Kelley points out, he's "technically incorrect because the physician would benefit financially by keeping his United Healthcare patients, so the Stark Law could be applied in this case. The Stark Law is written such that it implies any type of compensation, be it pens and pads, or monies received from "funneled patients."

Mr Baker also avers that "the law says they can't charge Medicare and insurers different amounts, and yet they did," which serves as the crux of his Medicare fraud argument.

Kelley expands on this point:

"The law states that all patients must be charged the same amount, without differentiation based on any type of preferred status: i.e. physician courtesy discounts, discounts to people without insurance, etc. It is not that LabCorp charged a different amount, it is that they accepted a reimbursement lower than the Medicare Fee Schedule. Thus, the lawsuit stems not from the charges but the reimbursement accepted."

So who was hurt here?

Not Medicare or its beneficiaries or the taxpayer. Not United HealthCare's insureds, who benefited from lower health care costs (hey, aren't we supposed to want that?). It seems to me that the only folks who were really hurt by this activity - and I'm in no way minimizing their loss - would be the smaller labs who couldn't compete. And that's not a little thing: absent a level playing field, free markets founder.

Still, I'm having a very difficult time casting LabCorp as "bad guys" here. If anyone fits that role, it's Medicare and HHS Secretary Shecantbeserious. As we saw just two weeks ago, it's darned near impossible to get that agency to actually police its providers. Of course, it's not their money, so no harm no foul.

Right?

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Grand Rounds is up!

Doc Zubin hosts this week's humor-themed collection of great med-blog posts. Careful of your funny bone!

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South Carolina Supreme Court Decision Analyzes Insurance Coverage for Progressive Damage Cases

Post by Pete Dworjanyn

The South Carolina Supreme Court has issued an opinion holding that defective construction resulting in property damage to non-defective components may be covered by a general liability policy. On August 22, 2011, the court withdrew its January 7, 2011, opinion in Crossmann Communities v. Harleysville Mutual Insurance Company and replaced it with an opinion that is essentially a complete reversal of the withdrawn opinion.

The issue to be decided was whether a general liability policy provided coverage for progressive damage caused by water penetration which resulted from defective construction. In the initial Crossmann opinion, the court found defective construction was not an occurrence because it lacked the "accident" portion of the definition of "occurrence." In the substituted opinion, the court reversed itself. The court noted an "occurrence" was once simply defined as an "accident." However, in 1966, the definition of an "occurrence" was expanded to include "continuous or repeated exposure to substantially the same general harmful conditions." The court conceded that it had, along with other courts, struggled to discern the meaning of the expanded occurrence definition in the context of progressive damage cases. The court concluded in its August decision that the lack of a clear meaning left an ambiguity that must be construed against the insurer, stating, "In sum, we clarify that negligent or defective construction resulting in damage to otherwise non-defective components may constitute property damage, but the defective construction would not."

In the second significant holding in Crossmann, the court rejected "joint and several liability" for insurers providing coverage in a progressive damage suit,  instead adopting a "time on risk" framework. In so doing, the court overruled Century Indemnity Co. v. Golden Hill Builders, Inc., 348 S.C. 559, 561 S.E. 2d 355 (2002), and Century Indemnity's apparent adoption of the "joint and several" framework. The "time on risk" rule limits an insurer's exposure to damage that takes place during the policy period. It also requires a policyholder to bear a pro rata portion of the loss corresponding to any portion of the progressive damage during which the policyholder was not insured or purchased insufficient insurance.         

Courts adhering to the "joint and several" theory require each triggered insurer to indemnify its policyholder for the entire loss caused by progressive damage, up to the policy limit. The policyholder is often permitted to target the policy from which it will seek indemnity. That insurer may then seek partial reimbursement from other insurers. The Crossmann opinion rejected that approach as ignoring the policy language limiting the insurer's obligation to pay sums attributable to property damage that occurred during the policy period.    

The court then gave guidance to the trial courts on how to apply the "time on risk" approach. The court noted an ideal application of the approach would require the fact finder to determine precisely how much of the injury-in-fact occurred during each policy period. The court recognized this was often both scientifically and administratively impossible.

In cases where it was impossible to know the exact measure of damages attributable to the injury, courts have divided the total incurred as a result of the property damage and then devised a formula to divide that loss in a manner that reasonably approximates the loss attributable to each policy period. The formula consists of the number of years an insurer provided coverage divided by the total number of years during which the damage progressed, which is multiplied by the total amount the policyholder has become liable to pay as damages for the entire progressive injury. The court noted this is a default rule that assumed the damage occurred in equal proportions; however, if proof is available showing the damage progressed in some different way, then the allocation of losses would need to conform to that proof.

Turning to the underlying facts in Crossmann, the court noted a strict application of the "time on risk" formula might be inappropriate. In the underlying case, there were numerous buildings involved that each had their own certificates of occupancy. The parties stipulated the damage began within 30 days after the certificate of occupancy was issued for each building. Thus, as to each building, each policy may be "on the risk" for a slightly different proportion. The court left it to the trial court to determine a reasonable methodology for resolving the damages issue.       

Notably, the decision largely obviates South Carolina Code § 38-61-70, signed into law this summer, which was rushed through the legislature in response to the initial Crossmann opinion. Section 38-61-70 defines "Commercial General Liability" policies of insurance as they relate to construction professionals. The statute provides that commercial general liability insurance policies shall contain or be deemed to contain a definition of "occurrence" that includes:

1. an accident, including continuous or repeated exposure to substantially the same general harmful conditions; and
2. property damage or bodily injury resulting from faulty workmanship, exclusive of the faulty workmanship itself.

In footnote six of the opinion, the Crossmann court noted it did not address "recent legislation that seeks in part to impose a construction on existing insurance policies in pending actions." Subsequent to the passage of the legislation, Harleysville filed suit in the Supreme Court's original jurisdiction seeking a finding, among other things, that retroactive application of the legislation was unconstitutional. The Crossmann opinion likely renders the suit moot.

In conclusion, South Carolina rejoins those jurisdictions holding that general liability policies may provide coverage for resulting damage in progressive injury construction defect cases. Fortunately, an insurer's exposure is now limited to the resulting damage that takes places during the policy period. Insurers are no longer potentially liable for all of the damage simply as a result of having coverage for a limited portion of a larger period of resulting damage.

For more information, contact me at pdworjanyn@collinsandlacy.com or (803) 255-0404.  

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On The Record (Yours, that is)

Speaking of passing the bill to see what's in it, HHS Secretary Shecantbeserious gets to see what's in your medical records:

"(T)he federal government is demanding insurance companies submit detailed health care information about their patients"

And, of course, we're all confident that these records will be secured in a HIPAA-compliant manner and would never be used by, oh, Death Panels.

As Rep. Huelskamp points out, the reality is less, um, confidence-boosting. For example:

"(T)the HHS contractor who lost a laptop containing medical information about nearly 50,000 Medicare beneficiaries."

Of course, when such things happen in the private sector, there is legal recourse via the courts. But how do you sue the Fed's?

Well, it's just data, so no worries, right?

Right??

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UARS Update: Are you covered?

As we watch (not without trepidation) the descent of the UARS satellite, it's becoming increasingly likely that it will land in an American backyard or, worse, living room.

So, is that a covered exposure?

It's not an Act of War or G-d, but it's not your typical hail- or windstorm, either. So, as with most things P&C, I turned to FoIB (and P&C Guru), Bill M.

With the usual caveats (including "read your policy!") Bill's "reasonably certain they'd pay for that."

So now you know.

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CLASS Dismissed

We get results:

"The Obama administration is reassigning the workers in the office that was developing the Community Living Assistance Services and Supports (CLASS) Act long term care benefits plan."

"Reassigning," hunh?

Sounds innocuous enough, right?

Well:

"[T]he office was being “reduced.”

I bet.

Never fear, though, HHS Secretary Shecantbeserious' spokescritter assures us that "the office is not closing and that HHS is continuing its analysis of the CLASS Act program."

"Analysis."

Perhaps we can save Ms Shecantbeserious (and the taxpayers) some time and money:

"[A] plan that's guaranteed issue, with (ostensibly) no waiting or elimination period and "unlimited" benefits is not exactly a candidate for "most stable rates." In fact, the only real "certainty" is that rates will increase, perhaps quickly and dramatically, as those least able to find real long term care insurance (LTCi) flock to the government plan."

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On Balance Billing

Bob recently posted about the act of balance billing by providers.

While I would never question Bob’s expertise in the field of insurance, I would like to clarify some points about balance billing. To begin, we need to understand how we have the health care payment system that is currently in place. The insurance structure that exists today came about during World War II. At the time, there was a wage freeze on American business, so in order to attract new employees, the benefit of paying for the employee’s health insurance was introduced. As employer-sponsored health insurance become more popular, the revenue cycle of medical care changed. Instead of the patient paying for the entire service at the time of treatment, the patient would pay a small amount of the medical bill and the insurance would pay the rest. Then patients began to ask the providers to submit the bill prior to them paying. The patients were tired of doing the paperwork to be reimbursed by the insurance company. (I remember sitting at my dining room table filling in my Champus forms for reimbursement for my daughter’s treatment.) The providers agreed, which created an entire medical billing industry. Then suddenly there were no monies due at time of service, or a nominal charge of $10.00, and the patient agreed to pay the provider whatever the insurance company stated was their responsibility. These changes dramatically affected how Americans viewed health care. First, by not paying the premium, they no longer had the knowledge of the cost of premiums. Secondly, by not paying for the medical care at the time of service, they no longer had the knowledge of the cost of health care.

From this system, we now have several terms: co-pay, deductibles, out-of-pocket and co-insurance. All of these terms refer to monies owed by the patient to the provider under the insurance contract system. Co-pays are the monies paid by the patient at the time of service. The other types of monies are determined after the claim has been submitted to the carrier as the patients responsibility. These are legal monies owed to the provider by the patient.

Balance billing is not legal. Balance billing is the act by the provider of billing the patient the write off amount or the negotiated reduction between what the provider bills and what the insurance company pays. When a provider signs a contract with an insurance company, they are accepting the negotiated fee payment for the opportunity of having more patients directed to him by the insurance company. In this way the provider will make up in quantity the monies lost between the charges and the payments. This sounded like a great idea to physicians and they signed on by the bucketload. What happened was that the physicians set their charges based on the financial needs of the business and were getting paid 70% of that charge. The physicians were suddenly writing off 30% of each visit charge and finding that the increased number of patients were not bringing in the needed revenue. So what was a physician to do? The idea of balance billing was created. The reasoning was that the money was owed the provider since it was part of the original charge and since the insurance will not pay, then the patient must be obligated. However, the provider signed a contract with the insurance company that they would not seek the difference from the patient.

Non-participating (non-par) providers do not practice balance billing, as there is no contractual agreement for payment, as opposed to participating providers who do sign a contract. A non-par provider is free to charge the patient the entire charge without discounts. Additionally, there are no co-pays, deductibles, co-insurances or out-of-pocket expenses with a non-par provider. A non-par provider is one that does not have a signed contract with your insurance company, and as such the contract for payment for services rendered is strictly between you and the provider. However, you still can't negotiate prices with this non-par provider if the provider has a contract with Medicare; as a provider's contract with Medicare stipulates that the provider will treat all patients equal in regards to payment, whether they are a Medicare patient or not.

Many times patients feel that the provider is balance billing because they are receiving a bill after they already paid at time of service. The provider is actually billing the patient the difference between what the insurance paid of the negotiated rate and what is still owed. This is not balance billing, as the insurance company has determined that the patient still owes the monies, not the provider.

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Intriguing Employer Tricks

Regular readers know that we're big fans of Consumer Driven Health Care (CDHC). When consumers (insureds) have "skin in the game," they're more likely to be careful health care shoppers. After all, if it's their cash at stake, there's an incentive to become actively engaged in the process. The fly in this particular ointment has always been a lack of transparency in the actual cost of care.

When we use the buzz-word "transparency," we generally turn to the McDonald's model; that is, when I walk into a Ronnie Mac's, I can look up and see exactly what my fries and Diet Coke will cost. This isn't always applicable to health care, especially when it's an emergency, but certainly for chronic illnesses or elective procedures, it should be easy to find the cost of a given service (of course, this wouldn't take into account potential complications, but it's a starting point nonetheless).

One major benefit of this model is that cost-conscious health care consumption can have a positive effect on the cost of delivery. If providers have to compete not just on outcomes but also price, then it's a win-win for consumers.

And that's just what Prodigy Health (a health services holding company in Buffalo, NY) has decided to do with its group health benefits. Like many (most?) employers that offer (and subsidize) group health insurance, Prodigy looked around for some way to rein in skyrocketing costs. They found the answer at the drive-thru:

"Before the new program, workers' incentive to shop around was limited because they had no idea — or any easy way to find out — that prices for many types of medical treatments varied widely."

The "new program" is elegant in its simplicity: the company sets the price they'll pay for a given procedure, and then employees (or their covered dependents) call in for a list of local providers who meet that price-point. They can also opt for another provider, but would then be responsible for the cost difference.

And it's not just a wing-thing, either: on the other coast, Safeway Foods has a similar program in place.

By shifting not just the cost, but the responsibility for health care back to the insured, employers are accomplishing several things: first, of course, is a potential cost savings. But beyond that, it's a signal to folks that we need to be more actively engaged consumers - who goes and buys a car without checking the price? Look for more of this to take hold as tech and prices begin to catch up.

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Shameless Self-Promotion Bleg

We've had the honor of being a Lexis-Nexis Top Insurance Law Blog since that appellation has been in existence. And we're very proud to announce that we've been nominated as a candidate for the LexisNexis Top 50 Insurance Law Blogs of 2011.

The folks at L-N are inviting folks to comment on our worthiness, and we would certainly appreciate our readers letting Lexis-Nexis know why they find InsureBlog worthy of remaining in that Top 50.

To do that, you'll need to leave a comment; it's easy and only takes a minute. Just click here to get started. If you don't already have an account there, it's easy (and free!) to sign up.

Once you're there, please leave your comment (please mention InsureBlog by name) and you're good to go.

Thanks again for all your support - it means a lot to us!

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Welcome to the South Carolina Insurance Law Blog!

Post by Pete Dworjanyn

Greetings!

Welcome to the South Carolina Insurance Law Blog. Our goal is to provide you with timely information and updates on legal issues related to the practice of insurance coverage. We look forward to sharing out thoughts with you, and we welcome you to share yours with us.

As the first attorney to post on our site, I'd like to formally introduce myself.  I am Pete Dworjanyn, the Chair of the Collins & Lacy Insurance Coverage Practice Group. We are thrilled to be launching this new adventure and sharing our knowledge and experience with you in the "blogosphere."

For our first post, I'd like to share our Collins & Lacy Insurance Coverage website page. It details more about who we are, what we do and how we do it.

Then - as a tease to come back to our blog - our next post will be on a recent S.C. Supreme Court ruling that analyzes insurance coverage for progressive damage cases.

Until next time,

- Pete

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From the Spindle: Wednesday Link Potpourri

Here are some interesting tidbits that, for one reason or another, never made it to full-post status:

First up, healthcare in England (Olde and New).

"A leading teaching hospital faces closure as a result of the financial crisis gripping the NHS ... The health trust, one of the largest in the country, is effectively bust."

But, but, but: we've been told (ad nauseum) how much more efficient gummint-run healthcare is, and how much money it saves.

Meanwhile, in New England, RomneyCare© continues to implode:

"Five years after Gov. Mitt Romney signed Massachusetts’ groundbreaking health care legislation, it has met its chief goal of extending insurance coverage to most residents — but with costs rising faster than inflation, lawmakers face the challenge of how to pay for it all."

An unforeseen circumstance, or a feature?

You be the judge.

Just remember: ObamneyCare© is based on this model, as well.

And finally, in breaking news, a major story that will not be a surprise to regular readers. Via email:

"Medicare scam by Labcorp & Quest Diagnostics costs taxpayers billions of dollars ... The complaint accuses LabCorp, the second largest medical lab in the country, of illegal kickbacks to insurance companies that pressure their in-network doctors to send lab work to LapCorp exclusively."

I'm looking into interviewing the individual behind the lawsuit; let me know in the comments if you'd like more info.

UPDATE: Our interview with the principal litigant is here.

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