In an episode of the hit television show "The Big Bang Theory," leading character Dr. Sheldon Cooper, in admonishing his friends over his correct assumptions as to when they should depart for a movie and thus avoid a long line, decided not to say "I told you so." Instead, he opted for the much more refined, "I warned you thusly." I plan to emulate Dr. Cooper and make liberal use of that phrase today. While pundits and legal experts have been carefully watching major RICO cases and other test cases around the country that threaten the sanctity of "exclusive remedy" within workers' compensation, out of the legal swamps of Florida an unexpected ruling from a previously undiscussed case has surged forth to consume the topic in its entirety. A Miami judge on Wednesday declared Florida workers' compensation, as an exclusive remedy, unconstitutional based on the continued erosion of benefits from when the system was established. While the final act on this play has yet to take the stage, it is a potential wake up call for the industry. After all, most of us didn't see this coming. Most of us, that is. I, however, warned you thusly. More than two years ago I wrote about a case in Tennessee that denied an electrical lineman workers' comp benefits because he had "willfully" defied established safety rules and was severely shocked as a result. He had removed protective safety gloves to attach a small nut that was very difficult to handle when the gloves were in use. The court essentially assigned blame to him in the case and found he was not entitled to benefits for his injuries, because he had violated established safety protocols that otherwise would have prevented the accident. While insurance professionals and employers around the country were taking a victory lap over this decision, I assumed a position that put me at direct odds with many. I warned that the continued erosion of the no-fault doctrine of comp was a two-edged sword and that eventually employers would get cut by the same instrument they were championing at the time. Specifically, I wrote: "While this decision might be a short-term victory for employers and perhaps a strong reinforcement of safety protocol, I am concerned that it fundamentally undermines the notion of workers' comp at its core, and ultimately threatens the benefits offered those same employers; namely the concept of exclusive remedy. Employers cannot have their cake and eat it, too. The employee made a mistake. That is quite often how these accidents happen. While there are exceptions for horseplay, drug use and extreme negligence in some jurisdictions, largely comp pays these claims because, quite frankly, that was the deal. This company has other avenues with which to deal with this if it so chooses. It can document, demote, even terminate the employee for failing to follow required procedures. But by refusing to pay his claim, and successfully getting the courts to agree, the door is open for any accident, any "willful" mistake to be used in the denial of all claims. That might be logical on the surface, but it is entirely contradictory to the no-fault precept that workers' comp is based on. It threatens the future of comp as it was envisioned and followed. Once the "blame game" begins, employers may not have to wait long to find that it is a two-edged sword." I warned you thusly. I so warned you thusly. While the case in Florida is not related to our Tennessee lineman, the corrosive principles that led to the decision share a lineage; a line that leads to reduced benefits and coverage in exchange for cost reductions. They are both cases dealing with erosion of the "Great Compromise" that created workers' comp to begin with. The case in Florida hinges largely on 2003 reforms that eliminated benefits for permanent partial disability. The court found that eliminating those benefits violated injured workers' rights and determined that workers are therefore free to pursue tort claims for work-related injuries. Two other challenges to the Florida comp statutes and 2003 reforms are already scheduled for review by the Florida Supreme Court, so the entire cost-reducing effort is currently at peril. Employers that celebrated the specific reduction in benefits and cost are now likely panicked at the prospect of a new and looming liability. You cannot say I did not warn you thusly. At a bloggers panel at the National Workers' Compensation Conference in Las Vegas last year, we touched on this topic and were discussing cases that threatened exclusive remedy. One employer in the audience stated out loud, in response to the concept of denying benefits based on culpability, "but it is their fault." I responded by reminding them of the "no-fault" concept of workers' comp and the Great Compromise that brought it about in the first place. I then asked the audience which of them would like to be held personally liable, evenly criminally liable, when their company is found "at fault" for a worker's injuries. Would employers willingly accept tort claims when it is shown they were negligent or at fault for an accident? Not a single person in the crowd of 300 responded in the affirmative. Boy, were you warned thusly. We are rapidly approaching a point where societal changes and entitlement expectations will require major overhauls in the thought processes within our industry. We need an attitude shift within workers' comp. We can no longer manage claim cost and severity rating by legislative fiat. We, both the industry and the employers it serves, need to embrace a new philosophy for dealing with these challenging issues. A return to more personal claims management within a system geared for workers' recovery is the only path that will accommodate the needs of all parties, while preserving the intent and scope of the original Great Compromise. In the interim, we will continue to struggle with balance and reforms. I do not necessarily agree with the Florida court decision, but I understand what led us to this point. The legislature, depending on appeal activity, will no doubt address the issue if needed and restore certain benefits to preserve the exclusive remedy portion of its law, but I fear this will leave a lesson not yet learned. We must understand our history, or we will be bound to repeat it at some point in the not-too-distant future. You cannot say you were not warned thusly.

Workers' compensation is one more area where death and taxes must be considered. DEATH The death of an injured worker who has not previously entered into a Compromise and Release settlement for the indemnity part of the workers' compensation claim stops all benefits. Per California Labor Code 4700, “Neither temporary nor permanent disability payments shall be made for any period of time subsequent to the death of the employee.” Life expectancy is uncertain, so an injured worker who is concerned about his family’s future welfare may want to get the value of those benefits now. The way to do this is by entering a Compromise and Release settlement. An injured worker can create a potential estate for his family by cashing out the value of future indemnity benefits. The question then becomes how to value those benefits. Rather than a dollar-for-dollar payment, it may be appropriate to apply a discount for present value. In other words, a dollar in hand today is worth more than the promise of one to be paid years in the future. The reason is that today’s dollar can grow with proper investment. Parties may differ on the proper discount rate to use. In cases where payments are due for the lifetime of the injured worker, disagreements can arise about the injured worker’s life expectancy. TAXES All payments made pursuant to a workers' compensation claim, both medical and indemnity, are being paid because of a physical injury. Therefore, these payments are excluded from gross income for income tax purposes under Internal Revenue code section 104. Settling the claim for a lump sum does not change the tax-free character of the payment. Beware, however, that, once that money is invested, the income is treated like any other income. The injured worker can choose to invest some of the settlement in a structured settlement that pays return of principal and tax-free investment income according to a schedule the injured worker chooses at time of settlement.

If you are running an insurance claims operation, and your boss or the board brings in outside consulting experts to evaluate it, chances are you have a problem. Not just the problem the consultants are being called in to examine but a pricklier, more personal problem--a perception problem. Someone with some clout in your organization apparently doesn't believe you are capable of doing whatever it is the consultants are going to be doing. That puts you in a tricky situation, one that demands thoughtful action. First off, don't try to convince your boss or the board that you are an expert and that you don't need outside assistance. Don't waste time arguing that your training and years of experience managing claims qualify you for the challenge. Do understand that the decision has already gone the other way, and any attempt you make to reverse it looks like resistance, concealment, perhaps even cluelessness. Think about it. If you argue that there is no problem, or the problem is outside of claims, or that every claims operation has the same problem, you risk being classified as stubborn and averse to change. Don't protest that you have already diagnosed the problem and designed a solution; others don't see things that way. They want another opinion, another perspective. Maybe they don't like your plan, or perhaps it conflicts with some other course of action they want to pursue. It could be they don't quite know what the problem is, but there's something troublesome in the loss numbers, and they want to understand why it is happening and what to do about it. Or, worst case for you, they might just be looking for evidence and justification for overhauling your organization and escorting you out the door. The reason really doesn't matter, but your response does. As activist and author Jerry Rubin once said: "The power to define the situation is the ultimate power." You have the power to assist in framing the inquiry and shaping the outcome by being visible and playing an active, cooperative role with the experts during the engagement. Take advantage of that power. First, welcome the consultants and make arrangements to provide them with whatever help and information they need. Brief them fully on your organization, your strategy and your operating procedures. Impress them with the dashboards and controls you use to manage risks and results. Talk to them about process efficiency, effectiveness and loss-cost management techniques. Show them how you establish and monitor key performance indicators and how you interact and communicate with your stakeholders. Demonstrate how you identify and incorporate best practices in your claims handling processes. If some of the consultants lack industry knowledge and have no background in claims--don't be dismayed. Instead, patiently take the time to make sure they fully grasp how your company functions and how your operation contributes to results. In other words, do whatever you can to provide the experts with plenty of evidence supporting the proposition that when it comes to running an insurance claims operation: 1) you know what to do, 2) you know how to do it and 3) you are doing it, quite well. The consultants' job is to identify performance gaps and root causes and propose actions to close those gaps. Your objective should be to provide them with the information, the insights and the support they need to do that job well. People who hire consultants usually believe the consultants will bring very high levels of knowledge, objectivity, credibility and perceptiveness to the engagement. While that belief might not always be accurate, the reality is that consultants' findings are accepted as authoritative in most cases. That means their recommendations will affect you and your organization, so it makes sense for you to invest your time and effort into framing the inquiry and shaping the outcome. Give it your best shot--you might even learn something in the process. The downside is that in tricky, prickly situations like this there is no guarantee things will turn out well even if you do everything right. Sometimes there are hidden operating agendas, foregone conclusions and predetermined outcomes underlying the consulting engagement, and unless you know about those factors going in, there's not much you can do to manage their impact.

On Monday, Aug. 11, 2014, we lost Robin Williams. He was a brilliant actor and comic…a man most of us grew up with. We knew him as a funny guy, an alien, a genie, a nanny, an inspirational teacher and so much more. We also knew he struggled with depression, addiction and possibly bipolar disorder. Collectively, we grieve for his loss. Williams had an uncanny ability to make us smile. Even when playing more dramatic roles, he brought light, laughter and inspiration to our lives. We grieve, too, for thousands of other people who have died by suicide. Fathers, mothers, sisters, daughters, sons, brothers…suicide isn’t just about the person who dies. Its painful ripples spread far and wide, affecting every one of us. We believe every suicide death is preventable, that not another person should die in desperation and alone. Those with behavioral health challenges like major depressive disorder, bipolar disorder and schizophrenia have suicide rates 10 to 15 times greater than the general population. Yet, millions survive, and many find a way to thrive. Recovery is possible! The bitter irony of Williams’ death was the support he gave for another disease that takes lives: cancer. Williams was a strong backer of St. Jude’s Research Center and Stand Up to Cancer. He would visit cancer patients, sometimes in their own homes, bringing joy into lives that would invariably be cut short, just as Williams’ was. The cancer prevention movement has been so effective in getting people involved – in prevention, in fundraising, in advocacy.  Now many people – whether or not they’ve been directly affected by cancer – Stand Up in solidarity to help fight the battle. They stand shoulder to shoulder with people who are fighting for their lives? They stand to honor those who’ve passed with dignity. They got people like Robin Williams to lean in, and say, “I care. What can I do to help?” The suicide prevention movement can learn a lot from the successes of the cancer prevention movement. How has the cancer prevention movement achieved its goals? It advanced science and promoted stories of hope and recovery. Those who want to stand up for suicide prevention can do this, too. As Dr. Sean Maguire in the movie “Good Will Hunting,” Williams counsels Matt Damon’s Will Hunting on life, love and grief before telling him, “Your move, chief.” Now it’s our move. Let’s honor Williams' memory, and that of every person who has died by suicide, by making suicide a thing of the past.  What can you do to Stand Up for suicide prevention?

• Reach out and ask others who may be going through difficult life challenges, “Are you okay? What can I do to support you?” Let them know they are not alone and that you can help them link to resources.
• Promote the National Suicide Prevention Lifeline (800-273-8255) everywhere – schools, workplaces, faith communities, neighborhoods.
• Volunteer and participate in suicide prevention work like community walks, town hall meetings, crisis line support and more.
• Donate to suicide prevention organizations.
• Learn about the real facts about suicide and the strategies that have been shown to prevent it.
• Then bring others into the circle – your healthcare providers, your employer, your educators and so on. Elevate the conversation and make suicide prevention a health and safety priority.
• Ask your healthcare plan and provider to join you.

As a society, we’ve stood up for so many other important things. It’s time for us to stand up to suicide. When we all stand up and move together, we create a movement. Together, our voices can create significant change in systems, in policy, in funding and in the general view of suicide. We can restore dignity and offer hope and empowerment and save lives. This article was written by Sally Spencer-Thomas with four other members of the National Action Alliance for Suicide Prevention:

• David Covington, LPC, MBA, Recovery Innovations and Zero Suicide Advisory Group
• John Draper, National Suicide Prevention Lifeline and The Way Forward Suicide Attempt Survivors Task Force
• Mike Hogan, Hogan Health Services and Zero Suicide Advisory Group
• Eduardo Vega, Mental Health Association of San Francisco and The Way Forward Suicide Attempt Survivors Task Force

#standup2suicide #zerosuicide #wayforward

New York Times senior economic correspondent Neil Irwin did great public service in his Upshot column provocatively titled, “Why Can’t the Banking Industry Solve Its Ethics Problems?” While Irwin addressed the issue for investors in general, his column should hold particular interest for those in the insurance business because insurers are such large investors and generate such a high percentage of their operating profit from investments. In terms of commercial and multifamily real estate mortgages alone, insurers hold more than $900 billion of investments, according to the Mortgage Bankers Association’s Q4 2013 report. (That’s $343 billion in commercial and multifamily mortgage debt plus $567 billion in commercial mortgage-backed securities, collateralized debt obligations and asset-backed securities.) The Federal Reserve tallies life insurance companies' holdings of residential mortgage-backed securities (RMBS) at $365 billion as of the end of the first quarter, 2014. Insurers need the investment industry to clean up its problems if they are to get maximum value from these huge investments. Why does fraud occur so repeatedly? Irwin ponders. The answer: gamed markets. Since the Great Depression, investments systems have relied on enforcement after the fact. If companies were investigated, prosecuted and found to have done something wrong, they were punished. Typically, this is now done through fines and stricter monitoring, meaning that current and future staff – not those in place at the time of the fraud – and shareholders bear the costs. Sometimes, individual perpetrators are forced to retire (with pensions). Only in the past few years have the Department of Justice, Federal Housing Finance Administration and Securities and Exchange Commission begun extracting hefty fines and settlements with the largest banks, such as: Citigroup's $7 billion, JPMorgan Chase's $13 billion and Bank of America's $6.3 billion with FHFA and the reported $17 billion with DOJ in connection with residential mortgage-backed securities. As Irwin notes, fraud continues to occur despite extensive efforts to address the problems that led to the near-collapse of the financial system that spawned the Great Recession. Gaming the system through high-speed trading remains legal. As long as there is no insider trading, traders can greatly increase the speed of their transactions with network equipment, software and advantageous location of their computers. Insider trading is illegal but hard to root out. Successful prosecution almost always entails a whistleblower coming forward to provide regulators with precise information. And coming forward as a whistleblower entails consequential career risks. Two innovations address these systemic challenges by providing better information for the market in real time and creating a feedback loop that improves that information – rather than waiting until after the fact to police bad guys. The innovations are interactive finance and confidence accounting. First, Interactive finance rewards institutions and individuals with financial or strategic advantage for revealing information that details risk. That information could be, for instance, about the changing value of a house, about the payment history of the mortgagee, other financial information about the borrower, etc. That information would stay with the mortgage even if it became part of a pool that was sliced and diced into mortgage-backed securities, so that a potential buyer could probe and could track changes in real time, rather than rely on a single-point-in-time evaluation by a ratings agency. Interactive finance – not enforcement – would keep agencies from giving their highest ratings to securities whose underlying assets were suspect, as happened with sub-prime mortgages in the buildup to the Great Recession. Marketcore, an intellectual property firm I advise, offers such interactive finance technology. It supports the determination of risk for financial products, continuous revaluation and analysis of components of pooled securities, among other capabilities that make markets and clear them. Its technology diminishes incentives for fraud by making opacity and concealment anachronistic and replacing them with transparency. The IP also charts effective pathways to employ crowd data and meta data for timely detection of risk, building on the growing availability of information in a “big data” world and allowing for a generational improvement in detecting risk and rating credit. Second, confidence accounting yields greater transparency and accuracy than traditional, prudential valuation. In confidence accounting, you don’t just set a value for an asset. You say there is an xx% chance that the valuation will fall within a certain range. You then roll up all the assessments and have a probability-based understanding of the likely range of total value. You can also use the estimations as a feedback loop and identify people or institutions that consistently overstate value – if someone says asset values will fall within a certain range 95% of the time, do those values, in fact, fall within that range 95% of the time? As risk expert David M. Rowe explains in a current Risk blog (citing work by Ian Harris, Michael Mainelli and Jan-Peter Onstwedder) confidence accounting can illuminate “the degree of uncertainty around valuation estimates…including how to partition uncertainty surrounding current valuation from the more familiar concept of risk from uncertain future events, and the messy issue of how to aggregate valuation uncertainty for specific positions into the implied uncertainty of net worth.” Through these two innovations, interactive finance and confidence accounting, banks would have much easier times detecting rogues and suppressing rascals. In the process, banks would not only increase their own wellbeing but that of their shareholders, employees and the investing public, including insurance companies. Going forward is now a simple business decision for us all. We must pick up the pieces of what we have learned and refashion and rebuild data-refreshing business models in which everyone can participate as an information merchant. We must deliver a common architecture in which data is consistently revalued, in a system that continually rewards disclosures about risks and values. Interactive finance and confidence accounting are emergent technologies poised to  play key roles shaping and defining smarter, faster, ethical trades in 21^st century finance.

Jeremy Hunt, secretary of state for health in Britain, recently toured the Virginia Mason Medical Center in Seattle. He said the visit was “inspirational” and announced plans to have the British National Health Service (NHS) sign up “heart and soul” to a similar culture of safety and transparency. Hunt wants doctors and nurses in NHS to “say sorry” for mistakes and improve openness among hospitals in disclosing safety events. I had a similar reaction to my tour of Virginia Mason. The hospital appears impressive—and truly gets impressive results. My nonprofit, the Leapfrog Group, annually takes a cold, hard look at the hospital’s data and named Virginia Mason one of two “top hospitals of the decade” in 2010. Every year, it ranks near the top of our national ratings. Virginia Mason’s success is rooted in its famous application of the principles of Japanese manufacturing to disrupt how it delivered care, partly at the behest of one of Seattle’s flagship employers, Boeing. There are numerous media stories and a book recounting the culture of innovation Virginia Mason deployed to achieve its great results, so I won’t belabor the point here. But at its essence is Virginia Mason’s unusual approach to transparency. Employees are encouraged to “stop the line” – that is, report when there’s a near miss or error. Just as Toyota assembly workers are encouraged to stop production if they spot an engineering or safety problem, Virginia Mason looks for every opportunity to publicly disclose and closely track performance. It is not normal for a hospital to clamor for such transparency. Exhibit A: the Leapfrog Hospital Survey, my organization’s free, voluntary national survey that publicly reports performance by hospital on a variety of quality and safety indicators. More than half of U.S. hospitals refuse the invitation of their regional business community to participate in Leapfrog, suggesting that transparency isn’t at the top of their agenda. But for Virginia Mason and an elite group of other hospital systems, not only is the transparency of Leapfrog a welcome feature, but they challenge us to report even more data, faster. I hope the British health care system takes Virginia Mason’s model and runs with it, but, more than that, I hope the model takes hold here in the U.S. Too many hospitals in the U.S. avoid disclosing their performance instead of welcoming transparency as an opportunity to build trust with the patients in their care. The movement toward transparency has a long way to go. We do not have publicly disclosed accreditation reports, even though those reports are tickets for hospitals to obtain public funding through Medicare. We do not yet know enough about infection rates, sentinel events, medication errors and outcomes including death rates from many common (or uncommon) procedures. Price transparency is also rare, according to a report by the Catalyst for Payment Reform. The ultimate example of our tendency toward non-disclosure came last week, when USA Today reported that CMS quietly removed from public disclosure the incidence of certain "never" events, like objects left in after surgery. Experts disagree on the merits of how CMS counts these "never" events, and CMS—no doubt influenced by lobbyists—believes that they aren’t fair to hospitals. Yet, in a culture of transparency, CMS would do the opposite: first err on the side of reporting the "never" events, then let the experts refine the measure over time. Indeed, as the Virginia Mason experience demonstrates, the very act of reporting can accelerate improvement and transformation. It’s time for the U.S. to ignite its passion for free speech and lead the world in applying it to health care.

A boomerang kid lost his job and moved back home with his parents. While driving his mother’s car, he negligently struck another vehicle, causing several thousand dollars in property damage. The mother’s insurer denied the claim on the basis that the driver’s residency was not reported to the carrier within 30 days of his return home. Fifteen minutes can save you 15%, anyone? Actually, the latest online ads say you can get a car insurance quote in only 7 ½ minutes. Buying insurance may not be a pleasant task for most people, but neither is getting a root canal, and you wouldn’t choose a dentist based on how fast he or she can complete a procedure where your health is at stake. Yet consumers routinely risk everything they own and much of what they might earn in the coming years by choosing the fastest, lowest-cost insurance with the cleverest advertising campaign. The denial of the boomerang kid’s claim arose from an exclusion in the insurer’s policy for accidents involving undisclosed household residents, unless the insurer had been notified within 30 days of the residency. What insured would think to report something like this to his or her auto insurer? If an “ISO-standard” policy had been in place, that wouldn’t be necessary. At a rapidly accelerating rate via TV advertising, online “ease of use” promotion and proliferating media articles, consumers are being duped into believing that personal lines insurance is a commodity, with the only significant difference being price. Nothing could be further from the truth. While a lower price doesn’t necessarily imply lesser coverage, that is often the case. In the words of sales legend Morty Seinfeld, “Cheap fabric and dim lighting. That’s how you move merchandise.” What Does the Caution to Compare ‘Apples to Apples’ Really Mean?  (Hint: Nothing.) Recently published studies by firms like McKinsey, A.M. Best, Nomura Equity Research and Gartner proclaim that auto insurance is now officially a commodity. Some of their conclusions predict the demise of the insurance agent, as the direct sales model wins the commodity war. Have any of these researchers ever read their own auto policies, much less compared the coverages in multiple policies? The media perpetuate the myth. The typical “How to Save Money on Car Insurance” article cautions consumers to make sure they compare “apples to apples.” Translation: Make sure you’re getting quotes on premiums for the same liability, uninsured motorist and medical payments limits and physical damage deductibles. It’s as if broad coverage categories, limits and deductibles were the only differences between auto insurance policies. A Wall Street Journal article, “Car Insurance Rate Shopping Can Pay Off,” says, “The Consumer Federation recommends consumers shop around to get quotes from insurers that don’t use agents, such as Amica Mutual Insurance and USAA (for families with military ties), and then ask an agent to beat the best price.” Not a word about any coverage differences—only the price. More Proof That the ‘All Car Insurance Is the Same’ Mantra Is an Illusion A Florida insured’s auto was in the shop, so she rented a car and later loaned it to someone, who loaned it to someone else, who had an at-fault accident that killed a child and seriously injured other children. The claim against the operator and named insured was denied by the insurance company on the premise that the vehicle was not a “temporary substitute” and that the operator was not a “permissive” user, as defined in this insurer’s personal auto policy. The son of a friend of an agency owner was street racing when he crashed, seriously injuring himself and his passenger. The claim was denied by the insurance company based on its interpretation of its personal auto policy’s “racing” exclusion. A church allowed a member to park his car in its heated “bus barn.” While exiting, he wrecked the car, causing structural damage to the building. The claim was denied by the insurer, citing the “care, custody or control” exclusion in the personal auto policy. What do these claims have in common, other than denial from the insurance company? Each of them would have been covered if the policyholder had purchased an “ISO-standard” personal auto policy rather than the policy in question. With regard to the Florida claim, the ISO personal auto policy defines “temporary substitute” and “permissive use” much less restrictively than the policy that was in force. The named insured might have saved 15% in 15 minutes when she purchased her auto policy, but it proved to be a bad deal when she had to take her claim to the Florida Supreme Court to recover. The Supreme Court did reverse the Court of Appeals ruling that favored the insurer, but the rationale was less about the policy language and more about Florida’s unusual dangerous instrumentality doctrine. In the street racing example, the ISO personal auto policy excludes injury that arises from accidents that take place “inside a facility designed for racing,” while the auto policy in question excluded almost any racing activity, including on a public street. Fortunately, the father of the injured child had a Trusted Choice independent agent to aggressively advocate on his behalf by pointing out to the insurer that the exclusion applies only to organized racing activities, not impromptu street racing. More than a dozen coverage opinions from the Big “I” Virtual University Ask an Expert service supported the agent’s efforts. Do you think someone who purchased insurance online from “a guy in khakis” would enjoy the same advocacy? Like the ISO personal auto policy, the “bus barn” claim also involved a “care, custody or control” exclusion. But the ISO policy makes an exception for damage to a private garage. The policy in question has no such exception—not to mention the fact it’s unlikely that the barn was actually in the driver’s care, custody or control. So both the policy itself and the insurer’s interpretation of the exclusion were faulty from the insured’s perspective—rendering the carrier’s slogan, “same coverage, better value,” untruthful. 12 More Nails in the Coffin of the ‘Insurance Is a Commodity’ Myth Here are a dozen auto insurance exclusions or limitations you won’t find in the “ISO-standard” personal auto policy:

1. Undisclosed household residents are excluded.  How many families have “boomerang” kids living at home whom they have not told their auto insurer about? An exclusion of this type was just recently added to the auto policy of one of the major TV advertisers.
2. Business use of autos you don’t own is excluded.  Have you ever borrowed a neighbor’s car or made a business stop in a dealer loaner or rental auto?
3. Business use of ANY auto is excluded.  Do you ever run to Staples or the post office on business for your employer?
4. Use of ANY auto you don’t own is excluded.  Better not drive anyone’s car but your own.
5. Vehicles weighing more than 10,000 pounds are excluded.  Have you ever rented a U-Haul truck or an RV for personal use thinking your liability coverage extended to the rental? With an “ISO standard” policy, it does; with some auto insurance policies, it doesn’t.
6. Any type of delivery is excluded.  Denied claims include pizza, newspapers, Mary Kay cosmetics and, yes, even the delivery of insurance policies to customers by an agency producer. Google pizza delivery auto accidents and take a look at the catastrophic nature of some of them. Was that $50 you saved to buy a policy a good deal?
7. Permissive users only get minimum limits.  This can apply to people who borrow your car or even unlisted household drivers.
8. “Street racing” is excluded.  Google “street racing” and see how often people are killed or critically injured in the process. Does the auto policy covering your testosterone-fueled teenage son cover street racing? The “ISO standard” auto policy does.
9. Criminal acts are excluded or limits reduced.  DUIs or even speeding tickets may preclude coverage.
10. Medical payments only include licensed physician fees.  One insured incurred a $25,000 “life flight” helicopter fee that would not be covered, even in part, by a policy with this exclusion.
11. Theft without evidence of forced entry is excluded.  One insured had a four-figure vehicle theft loss denied because he left his keys in the car. No such exclusion exists in the “ISO standard” personal auto policy.
12. Sales tax is not covered under loss settlement.  This cost one “You get the SAME COVERAGE, often for less” insured more than $2,000 out of pocket for sales tax on a replacement auto.

Do you still believe what you’re told on the TV ads that the auto policy you’re getting a quote on is just like every other auto policy in the marketplace? Accept the Challenge and Dispel the Myth The differences between auto insurance policies are many, varied and potentially catastrophic. As insurance educator John Eubank, CPCU, ARM, says, “The bitterness of no coverage is remembered long after the sweetness of low price has been forgotten.” Don’t be sold a bill of goods by TV advertising and consumer articles that state or imply that the only material difference between insurance policies is the price. It is time for insurance professionals to dispel this destructive myth. Innocent consumers experience catastrophic uninsured losses every day because they bought into the illusory proposition that their risk exposures can be identified and addressed cheaply and within 7 ½ to 15 minutes. Failure to get this message to the consuming public is likely to lead to increasingly stripped-down insurance products that enable competitive pricing. Arm yourself with the information necessary to educate your clients, and bust the myth that insurance is a commodity.

I have a whiz bang idea for solving that pesky investigation issue that surrounds every workers' compensation claim. This idea will clearly get me that Nobel or Pulitzer Prize. Either one. I’m not fussy. It came to me while I was reading an article about the NFL boosting its statistics tracking and accuracy with the use of RFID tags in the players' shoulder pads. It seems these amazing little chips will allow NFL statisticians to know "real-time position data for each player," as well as "precise info on acceleration, speed, routes and distance." This is part of the NFL's "Next Gen Stats" initiative for fans. For those who are unaware, RFID (radio frequency identification) technology is the hot new thing. Essentially, an RFID tag contains a passive ID chip that can be activated by receivers as it passes near them. The tag requires no battery power and is highly reliable. Stores like Walmart now use them extensively to track and monitor inventory changes. Even my Florida SunPass tag uses one. The small sticker on my windshield allows me to zip through tolls and access parking at Tampa International Airport without talking to anyone or even rolling down my window. Of course, the tag also allows the state to bill me for that activity and serves to notify the NSA that I am on the move again. But the NSA probably already knew that. The complete loss of privacy is a small price to pay for not having to chat up a friendly toll taker. I am so glad the NFL has gone with RFID. It is a much more reliable technology than those old scanner barcodes. That was a disaster -- having to get the player to run into the end zone six times before the scanner could capture the touchdown -- but I digress. . . . While the article on the NFL and RFID was prattling on about all the useless stats fans could now have access to, I was thinking in an entirely different direction. I recognized that the NFL has inadvertently invented the personal "black box" for workplace accidents. Think about it. This is a technology that could be employed in offices and factories all over the country. Employers could easily monitor "real-time position data for each employee," as well as "precise info on acceleration, speed, routes and distance" as employees move throughout the day. An RFID-enabled wearable could tell accident investigators if an employee was running when he slipped and fell down the stairs, as well as how many rotations he took as he progressed to the bottom.  The tag could determine that an employee was idle in the break room at the time she claimed to be straining her back on the loading dock.  And biometric sensors added to the RFID wearable could actually cross reference stress levels and physiological indicators to the time and location of the accident, giving a clearer view of events than ever before possible. It is just like data used from airplane black boxes to reconstruct what actually happened to cause an accident. I am telling you, this technology could be a tremendous boon for risk managers and accident investigators everywhere. But why should they have all the fun? Safety professionals could leverage the same technology to prevent accidents in the first place. Restaurant servers would no longer have to yell “corner” or “door” when traversing areas with visual limitations. Their RFID-enabled monitors would send real time location updates of other employees in the vicinity to heads-up displays located within employees' Google Glass. The system would issue potential collision warnings similar to those in today’s aviation industry.  I’m telling you, Big Brother really may have all the answers after all. Unless, of course, all the employees were watching internet porn on their Google Glass heads-up displays, and no work would get done anywhere. On the plus side, biometric sensors should pick up signs of unauthorized porn viewing, so it may be controllable after all. The remaining challenge will be the design and implementation of the RFID biometric wearable devices. Will they be embedded in the work clothes or uniforms, in bracelets, necklaces or other accessories or simply implanted in our skulls? For the record, I do not recommend the skull implant method. My wife tells me my skull is so thick, the signal could never get out. Also, multiple sensors may need to be deployed on every employee, such as in shoes and on the head. This would be helpful for a truly accurate rotation count on those extended fall injuries. In the end, we may all be wired to the hilt, with no more need to verbally communicate in the workplace. But we will have our personal black boxes. We’ll all end up as fat people in our little floaty chairs. But if we over-sensored tubbos have a collision, our wearable technology will give investigators a much clearer idea of what went tragically wrong. Even though the idea is somewhat creepy, and I am largely joking, I think we may actually have something here: black box wearables. Coming soon to a workplace near you.

Everywhere we look today, data is on the move. The downside:  When personal information and data are being moved electronically, they’re more vulnerable to identity theft. At the Identity Theft Resource Center,  a crucial part of our analysis when we track data breaches is to look for emerging trends.  Unfortunately, one trend has become evident: The number of breaches linked to “data on the move” in the healthcare industry is up significantly.  In fact, these types of data breaches – say, when a laptop or flash drive is stolen or back-up tapes are lost in the mail – have risen above other industries quite dramatically. But there’s hope. Companies and organizations can take steps to reduce these data breaches. They can provide more robust employee training and stricter controls over what devices are allowed to leave the premises. Organizations can also review what data is stored on devices and how the devices are protected. Adding encryption to laptops that contain sensitive data – and that must leave the premises – will also improve the situation without busting the bottom line. Breach incidents because of data on the move have been trending downward as a percentage of all breach incidents, from 20% in 2008 to 12% in 2012. Although the percentage increased slightly to 13% in 2013, most industry sectors have seen a payoff from preventive measures. The medical sector is not having a similar experience. More than half of the breaches because of data on the move occurred in the health/medical sector. For instance, in California, Palomar Health recently experienced a data breach when an encrypted laptop and two unencrypted flash drives were taken from a staff member's car. The devices exposed the personal health information of 5,000 patients. In Michigan in late January, a laptop computer and flash drive were stolen from an employee of the state Long Term Care (LTC) Ombudsman’s Office. Information on the laptop was encrypted, but data on the flash drive was not. The flash drive contained personal information about 2,595 living and deceased individuals, including names and addresses and, for some individuals, dates of birth. Either a Social Security number or a Medicaid identification number was included with 1,539 records. Data breaches pose a significant risk to consumers because of the correlation between breaches and identity theft. According to Javelin Research, one out of three people whose information was breached fell victim to fraud in the same year. When medical records or personal health information (PHI) are compromised, consumers are not only  facing an increased risk of medical identity theft. The risk for all types of identity theft is increased. (For more information on medical identity theft and its impact on the community, see the Medical Identity Theft and Fraud article on ITL). The information entrusted to medical providers and insurance companies is often the same information that can be used to steal a person’s identity and commit financial identity theft, government identity theft and even criminal identity theft. In addition to receiving medical goods and services or prescriptions in the victim’s name, a thief could obtain loans or new lines of credit, apply for government benefits or file a false tax return. The perpetrator could even use the victim’s name if caught while committing a crime. “Whether sensitive data is at rest or in transit, it should have appropriate risk-based controls and policies applied to its governance,” says Ann Patterson, program director with Medical Identity Fraud Association, which unites all the stakeholders and helps to convey the importance of these best practices. “The same judicious enterprise-wide data protection principles that you apply to your data at rest should also be considered for your data in transit and your mobile data. Particularly for mobile, BYOD policies (Bring Your Own Device) are essential.” According to MIFA, many organizations are feeling the impact of shrinking budgets and may be tempted to reduce costs by limiting financial resources for internal fraud detection and prevention programs.  This may provide immediate help to the bottom line. But in the long term it’s the wrong solution. Costs creep up in other areas when fraud is ignored.  This could result in an organizational culture shift; as the old saying goes, what we allow, we encourage. Coupled with human resources divisions, the fraud detection and prevention programs often provide employee training and formulate best practices in regard to fraud reduction. The ITRC realizes the critical importance of information management and data security. We believe strongly in the importance of educating consumers and businesses about  the value of our individual data and the importance of personally identifying information (PII). For this reason, our organization began tracking data breaches in 2005. Tracking breaches has allowed us to look for patterns in regard to how our information is being safeguarded, or compromised, by those we trust with it. The ITRC defines a data breach as an event in which an individual name plus a Social Security number, driver’s license number, medical record or financial record (credit/debit cards included) is potentially put at risk because of exposure. This exposure can occur either electronically or in paper format. The ITRC will capture breaches that do not, by the nature of the incident, trigger data-breach-notification laws. Generally, these breaches consist of the exposure of user names, emails and passwords without involving sensitive personal identifying information. These breach incidents will be included by name but without the total number of records exposed. (For a more detailed explanation of our methods, visit the ITRC breach report page). Data breaches and identity theft have been on the rise and have a significant effect on the individual victims as well as on the U.S. economy.  We acknowledge that there is no panacea to rid ourselves of this issue entirely. However, encouraging negligence by not providing employees with the proper tools, and simply not acknowledging the problem, is not the answer, either. Small and steady gains can be made by implementing training and increasing accountability for the individuals and organizations that we entrust to be good stewards of our PII.  A good start would be to understand and recognize how each type of incident plays a role and identify deficiencies. Another option for organizations is to get involved with industry and trade organizations that also tackle issues related to data breach best practices daily. Businesses want to keep proprietary information close to the vest, but best practices about breaches should not be a trade secret.  A highly engaged and enlightened health/medical community would be a step in the right direction.

The wellness industry’s latest string of stumbles and misdeeds are on the verge of overwhelming the cloud’s capacity to keep track of them. First, as readers of my column may recall, is the C. Everett Koop Award Committee’s refusal to rescind Health Fitness Corp.’s (HFC’s) award even after HFC admitted having lied about saving the lives of 514 cancer victims. (As luck would have it, the "victims" never had cancer in the first place.) Curiously, HFC’s customers have won an amazing number of these Koop awards, which are given for "population health promotion and improvement programs." Why so many, you might ask? Is HFC that good? Well, HFC is not just a winner of the Koop Award. HFC is also a major sponsor. Perhaps it was an oversight that HFC omitted this detail from its announcement that both Koop Awards were won by its customers for 2012. Second, the American Heart Association (AHA) recently announced its guidelines for workplace screenings. They call for much more screening than the U.S. Preventive Services Task Force does. As it happens, the AHA guidelines were co-written by a senior executive from Staywell, a screening vendor. Not just any vendor, but one that had already been caught making up outcomes. Third, although the American Journal of Health Promotion published a meta-analysis that showed a degree of integrity rare for the wellness industry, it then hedged the conclusion. The analysis showed that high-quality studies on wellness outcomes demonstrated “a negative ROI in randomly controlled trials.” But the journal then added that invalid studies (generally comparing active, motivated participants to non-motivated non-participants) showed a positive return. The journal said that if you averaged the results of the invalid and the valid studies you got an ROI greater than break-even. However, the averaging logic leading to that conclusion is a bit like “averaging” Ptolemy and Copernicus to conclude that the earth revolves halfway around the sun. How does the wellness industry respond to criticisms like these three? It doesn't. The industry basically pleads the Fifth. The industry knows better than to draw attention to itself when it doesn't control the agenda. The players know a response creates a news cycle, which they will lose -- and that absent a news cycle no one other than people like you are going to read my columns and notice these misdeeds. One co-author of the AHA guidelines wrote to my Surviving Workplace Wellness co-author, Vik Khanna, and said the AHA would respond to our “accusation” but apparently thought better of it when the lay media didn’t pick up the original story.  (As a sidebar, I replied that saying a screening vendor was writing the screening policy was an “observation,” not an “accusation,” and recommended the editors check www.dictionary.com to see the difference.) Similarly, in the past, I have made accusations and observations about the wellness industry both in this column and on the Health Care Blog…and gotten no response. So to make things extra easy for these folks, I dispensed with statements that needed to be rebutted. Instead, I asked some simple questions. I said I would publish companies' responses, which would create a great marketing opportunity for them…if, indeed, their responses appealed to readers. I posted the questions on a new website called www.theysaidwhat.net.  I got only one response, from the Vitality Group. The other wellness companies allowed the questions to stand on their own, on that site. To ferret out responses, I then did something that has probably never been done before: I offered wellness companies a bribe…to tell the truth. I said I’d pay them $1,000 to simply answer the questions I posted about their public materials, which would take about 15 minutes.( If someone makes me that offer, I ask, “Where do I sign?” but I’m not a wellness vendor.) Here’s how easy the questions are: Recall from a previous ITL posting that Wellsteps has an ROI model on its website that says it saves $1,358.85 per employee, adjusted for inflation, by 2019 no matter what you input into the model as assumptions for obesity, smoking and spending on healthcare. The company claims this $1,358.85 savings is based on “every ROI study ever published.” Compiling all those citations would require time, so I merely asked the company to name one little ROI study that supports this $1,358.85 figure. Silence. I asked similar questions (which you can view on the click-throughs) to Aetna, Castlight, Cigna, Healthstat, Keas (which wins style points for the most creative way to misreport survey data), Pharos, Propeller Health, ShapeUp, US Corporate Wellness and Wellnet, as well as their enablers and validators, Mercer and Milliman. Propeller and Healthstat responded -- but didn’t actually answer the questions. Healthstat seems to say that rules of real math don’t apply to it because it prefers its own rules of math. Propeller – having released the completely mystifying interim results of a study long before it was completed – said it looks forward to the study’s completion and didn’t even acknowledge that questions were asked. In all fairness, one medical home vendor sent a response expressing a seemingly genuine desire to understand or clarify issues with its outcomes figures and to possibly improve their validity (if, indeed, they are invalid). As a result, I am not adding the vendor to this site; the idea is not to highlight honest and well-intentioned vendors. (The company would like its name undisclosed for now, but if anyone wants to contact it, just send me an email, and I will pass it along to the company for response.) Likewise, there are good guys – Towers Watson and Redbrick, despite their high profiles, managed to stay off the list by keeping their hands clean (or at least washing them right before inspection). Allone, owned by Blue Cross of Northeastern Pennsylvania, even had its outcomes validated and indemnified. I will announce more validated and indemnified vendors in a followup posting. As for the others, well, I am not saying that their historic and continuing strategy of pleading the Fifth when asked to explain themselves means that they know their statements are wrong. Nor am I saying that they are liars, idiots or anything of the sort. Something like that would be an “accusation.” Instead, I am merely making an “observation.” It isn’t even my observation. It is credited to Confucius:  “A man who makes a mistake and does not correct it, is committing another mistake.”