I was once hired to be the chairman of a return-to-work (RTW) subcommittee for a corporation that owned several major national newspapers. One minute into my first day, I was told: "We can't do this here; we have a union shop."

Several months later, the program we designed had full union support, and the CEO praised it as having the most effective return on investment in the company's history. We reduced lost-wage replacement costs by 33% and saved the company millions of dollars.

How?

The company historically had a passive role and no formal policy about having injured workers return to work until they could perform the "full duties" of their jobs. Consensus formed that, through the development of a "modified duty" program, we could return disabled employees to some form of meaningful work sooner, helping the employee recover while increasing the productivity of the company.

We decided not to use the term "light-duty," which carried a negative connotation among employees. We also had to overcome the traditional mindset of line supervisors that they didn't want employees to return to work unless they were "100%."

We found many other reasons why previous attempts at implementing an RTW policy had failed. The length of restricted-duty "transition periods" wasn't specified, and labor relations problems arose because the company only provided meaningless busywork to injured workers. There was also a lack of commitment at all levels of management -- RTW was considered to be only a human resources issue - so there was little coordination of efforts within the company.

Perhaps most importantly, there was a pervasive lack of knowledge about workers' compensation. Although front-line supervisors play a critical role, they were generally not held accountable for making decisions that accomplished the goals of an RTW program. In addition, workers' compensation costs were not allocated back to specific departments.

I conducted site visits at five business units and reviewed policies, procedures and site-specific circumstances, cultures, resources and needs. I also reviewed best practices during weekly discussions. The unions were included in my site visits to get their input and to gain their respect and cooperation.

We determined that there was potential for significant savings regarding lost-wage replacement costs by developing a consistent RTW policy for both occupational and non-occupational disabilities. We truly believed we could reduce workers' comp and disability abuse and costs, improve productivity and allow disabled employees to return to full-pay quicker. Everybody would win.

The key to success was getting the support of senior management and developing a well-planned, thorough communications campaign. We knew we had to get buy-in from the labor unions.

We designed brochures for employees and developed comprehensive training for supervisors. We improved communication about medical determinations of injured workers' capabilities and restrictions. We arranged for accommodations by supervisors that were not open-ended. Employees' progress was closely monitored, and all communications between injured workers, medical providers, claims administrators and supervisors documented.

The real key to success was to shift accountability for RTW from HR to department supervisors. Originally, 100% of workers' comp costs were allocated to the corporate risk management department; in a paradigm shift, the company tied 25% of supervisors' annual bonus to workers' comp costs in their departments. This change got their attention and encouraged cooperation.

We also changed the policy to allow injured workers on temporary modified duty to earn full pay. This gained the support of the unions by showing that modified duty was truly a benefit to the injured worker. But those on temporary modified duty were not entitled to overtime, to encourage the worker to return to full duty as soon as possible and restore that eligibility.

We also got labor and management to agree that, while state law allowed as much as one year to report an injury, prompt reporting was crucial. This allowed claims administrators to begin paying medical claims and benefits sooner.  It also expedited the necessary state and OSHA reporting, any necessary investigations of the accident and medical documentation of work restrictions.

Supervisors began to cooperate more. One might ask another, "Can you use some help this week?  I have an employee who can answer phones for you." That way, one supervisor got added help while the other avoided having workers' comp costs allocated back to his department. The injured workers benefited by returning to full pay, and management believes that they returned to their normal jobs sooner because there were not allowed to stay home unless it was medically necessary.

"We can't do this here" turned into a corporate-wide written policy that worked. A follow-up analysis found that 50% of the RTW accommodations had zero cost to implement; 20% cost less than $500; and 10% cost less than $1,000.

The company saved millions and greatly improved labor management relations.

A real success story.

Let’s imagine a meeting of the risk committee of the International Mercantile Marine Co. a bit more than a century ago. The meeting was called to order. Mr. Morgan addressed the representatives of its companies: Mr. Clement Griscom of the American Line and Red Star Line (International Navigation), Mr. Bernard Baker of the Atlantic Transport Line, Mr. J. Bruce Ismay of the White Star Line and Mr. John Ellerman of the Leyland Line. The topic was the business of the trust, including opportunities for growth and boosting investor confidence. Mr. Morgan noted with approval that IMMC had met the competitive challenge from Cunard by launching the Olympic. He said he expected that the builder, Harlan & Wolff, would deliver an even more prodigious conqueror of the sea, with Titanic.  He asked Mr. Ismay if plans were proceeding as scheduled for the second jewel of the White Star crown. Mr. Ismay replied that there had been a problem securing sufficient high-quality iron ore for the rivets fore and aft on the hull. Mr. Ismay added that Harlan & Wolff had decided that, to control costs, it would use iron rivets, rather than steel, to secure the hull fore and aft. Steel rivets would still be used amidships. Mr. Morgan cleared his throat.  He said he found it somewhat annoying that Mr. Ismay’s shipbuilder’s plans to lower quality to preserve its profits would, given the cost-plus nature of the contract, cut into IMMC’s own profits. Mr. Morgan also said that Lord Pirrie, the chairman of Harland & Wolff, had cabled him expressing concern about labor shortages and whether the suppliers of the iron rivets were up to the task. Mr. Ismay assured Mr. Morgan that the success of the Olympic vindicated Harland & Wolff’s approach and that it was typical in projects such as these that there would be labor and materiel shortages that must be resolved by using smaller firms to fill the gaps. He was certain that these suppliers would be up to Harland & Wolff’s standards. Every specification for Titanic meets maritime regulatory requirements, he said, and White Star will deliver handsome profits to IMMC.  He expressed his disappointment that Lord Pirrie raised his concerns to Mr. Morgan directly. That was not how a gentleman, let alone a peer, should conduct business. Mr. Morgan said he was also told that Harland & Wolff expressed concerns that not enough lifeboats are planned to be available in the event that the unthinkable were to occur. While the prime objective is to bring value to investors, Mr. Morgan said, IMMC must be prepared in the event that a serious loss, no matter how unthinkable, may occur. Insurance can cover the loss of property, but no policy can indemnify against a loss of reputation. Mr. Ismay reiterated that the number of lifeboats met regulatory standards and reaffirmed White Star’s compliance with the rules governing international shipping. Mr. Ismay also noted with pleasure that, while the announcement had yet to be made, legendary White Star Capt. Edward Smith would be pilotin Titanic on her maiden voyage. There was a deathly silence in the room. The other company officers looked away awkwardly. Mr. Morgan stared at Mr. Ismay and asked, almost under his breath, whether this was the same Capt. Smith whose piloting of the Olympic caused the collision with the HMS Hawke? The same Capt. Smith who caused Olympic to be laid up in Belfast and delay completion of Titanic? The Capt. Smith whom the Royal Navy found to be at fault for that collision; that Capt. Smith? Mr. Ismay replied that using the “Millionaires’ Captain” was necessary to make sure that the elite sailed to New York on Titanic. The ship has an excellent crew and experienced officers and is well-nigh unsinkable, so nothing will happen to her, Mr. Ismay told the group.  He assured all those in the room that the British had a rich tradition of honor and seafaring and that nothing would dim the success of the White Star Line and its crossings from Southampton to New York. Titanic and Capt. Smith would exceed their expectation for return on investment. After a brief pause, Mr. Morgan stated that he hoped that the IMMC would not prove to be his one business failure. With that, he looked to the other operating subsidiaries and asked for their reports. Obviously, this meeting never occurred, but it illustrates many problems that do occur with enterprise risk management (ERM). In our hypothetical meeting, the overall objective of investor return was articulated, but there was no enterprise-wide view of risk and no mechanism by which to measure whether IMMC’s risk tolerances were defined, let alone exceeded. Each subsidiary was a silo even though each subsidiary, and the White Star Line in particular, could put the entire enterprise at risk. From the management of the finances to the assessment of the qualities and capabilities of spot labor and materials, the only “risk” identified was not finishing the project (Titanic) as close to deadline as possible. Had IMMC not been so leveraged in Mr. Morgan’s efforts to create a transatlantic trust to dominate the shipping trade, perhaps an enterprise view of risk could have been articulated that would have allowed for sufficient controls and incentives on identifying and reporting risk, and Titanic would have sailed the Atlantic successfully for decades. But that was not to be. Virtually everything that could go wrong did go wrong. J.P. Morgan considered IMMC to be one of his few failures and was, indeed, a colossal one. Morgan died in 1913, and IMMC sought bankruptcy in 1915. The company continued on until the last vestige of IMMC, the United States Lines, went bankrupt in 1986.  The White Star Line merged with Cunard in 1934, and in 1950 Cunard bought the last remaining shares of White Star Line, ending that marque forever. Harland & Wolff continues to build ships in Belfast.

Series Conclusion

Think back to the transition from horses to cars and note that cars were initially called “horseless carriages.” Cars were defined by what they didn’t have, just as the “driverless car” is being defined by what is being removed from the equation. But doing away with the need for horses did much more than mean it was good to be Henry Ford and no longer so good to be a horse breeder.

The “horseless carriage” had far-reaching effects that not only redefined the transportation network but also provided the basis for the modern economy and even changed how we live, by making suburbs possible.

The “driverless car” will likewise change dynamics in the economy and in our personal lives in ways that are hard to predict at this remove. (The device will also get a real name, focused on what it is or does, not on what it lacks.)

Just in industries directly related to autos, trillions of dollars change hands each year—flowing to and from auto insurers, auto financiers, service and repair shops, rental agencies, taxi operators, fleet managers, oil companies, transportation and logistics companies, emergency rooms, health insurers, medical practices, personal-injury lawyers, government taxing authorities, road-construction companies, parking-lot operators and on and on and on. Driverless cars will inevitably reduce the need for a lot of that spending and throw much of the rest up for grabs.

But if history is any guide, people in these downstream industries feel that it will be decades (at least) before change is pervasive, and therefore decades before they have to worry about their own industry’s collision with the disruptive change. Until then, the reasoning goes, companies in industries peripheral to car-making can simply watch as automakers battle among themselves and with Google.

This is a dangerous point of view. It is the main failing that this series has tried to address. The raw technology is more developed and improving faster than most observers realize. And several scenarios could dramatically accelerate commercialization and adoption.

In addition, the calculation that disruption will not happen until driverless cars are prevalent could be faulty. A modest number of intelligent cars can change the whole dynamic, long before widespread adoption of driverless cars. So, it is important for market leaders in downstream industries to get into the game, rather than be spectators.

Even beyond the world of autos, the Google driverless car should be a wake-up call about the pace of disruptive technological change that looms for every industry. Or, taking an optimistic perspective, the driverless car demonstrates the kind of game-changing killer apps that are now possible in almost any industry.

While the Google car feels like it comes straight from some science fiction movie, it is nothing more than a mashup of widely available technological innovation—combining mobile devices, ubiquitous cameras and sensors, social media, the “cloud” and “big data” analytical tools.

Similarly bold mashups can upend any information-intensive industry. Mary Meeker, the noted venture capitalist and industry analyst, contends that technological forces are putting more than $36 trillion of stock-market value up for “reimagination” in the near future. That $36 trillion is the total market valuation of public companies in the 10 industries that are most vulnerable to change over the next few years—financials, consumer staples, information technology, energy, consumer discretionary, health care, industrials, materials, telecom and utilities. Companies will either do the reimagining and lay claim to the markets of the future or be reimagined out of existence.

No history of success will protect incumbents if they put themselves on the wrong side of innovation. Borders, Circuit City, Blockbuster and many more went from thriving business to out of business in almost no time. Think of how recently Nokia and Blackberry were on top of the world and how they’re now irrelevant.

And change is still accelerating. The near future will be even more brutal and more lethal, with faster cycle times, than the recent past has been.

As I have suggested in my analysis of Google and of Big Auto, the solution for incumbents and new entrants alike is to follow the innovation roadmap that Google demonstrates: Think Big, Start Small and Learn Fast.

Thinking big means innovators must consider the full range of possible futures. Like Google, they should dare to dream big, focusing on the “killer apps,” new products that can rewrite the rules of an organization or industry, rather than just looking for incrementally faster, better or cheaper products (as Big Auto is currently doing).

Starting small means that, rather than jumping on the bandwagon for one potentially big idea, companies must investigate multiple potential ideas and break them down into smaller pieces for testing. Like Google, successful innovators defer important decisions and keep their options open until they have real data, rather than make decisions early, based on intuition and experience. In addition, successful innovators take the time to make sure that everyone—the executive team, employees, partners, any agents and maybe even customers—are working in unison, rather than having people pay lip service to a vision while actually working at cross purposes.

Learning fast means taking a scientific approach to innovation. Successful innovators conduct extensive prototyping before they even get to the pilot phase—let alone the big rollout—so they can gather comprehensive information about their attempts at innovation and quickly analyze both what’s working and what isn’t. The successes also develop the institutional discipline to set aside or alter projects as soon as it’s clear that they’re not working.

Much has been written about the financial and tax power of forming and operating a captive insurance company that qualifies for the tax benefits of section 831(b) of the Internal Revenue Code. But all too often, promoters of this concept forget that each captive must be first and foremost a risk management tool with legitimate risks and properly priced premiums. An "831(b)" captive is an insurance company whose premiums do not exceed $1.2 million a year and that elects to have those premiums exempted from taxation. If the captive has proper "risk distribution" (a topic for another article), then the insured company can deduct the premium being paid to the captive, while the captive pays no income taxes on that premium. After the payment of losses and expenses, any profits in that captive can be distributed at a favorable dividend rate or can be distributed in a full liquidation of the captive, and the shareholders will receive those accumulated profits at capital gains rates. And if the captive is owned by trusts or adult children, the entrepreneur can also enhance the benefits in his or her estate plan by sidestepping the estate tax. But these benefits are only possible if you first get the underwriting right. Over the years, we have conducted audits on existing 831(b) captives formed by some of our competitors. We have been amazed by what people are charging for risks, many of which can be insured in the traditional insurance market at much lower rates. We call it "underwriting by the blind." The IRS is well aware of the pricing abuses in our industry. As we understand it, the majority of negative audits recently have not been because of faulty "risk distribution" mechanisms, but because of badly overpriced premiums being paid to the captive. For example, we found a $10 million (revenue) manufacturer that had purchased a $1 million general liability policy, including products liability, in the insurance market for an estimated $25,000 annual premium. The new captive issued a "differences in condition" policy with a $1 million limit and charged the insured more than $200,000 in annual premium. This type of policy covers things like exclusions in the underlying policy. It does not take an insurance expert to realize that such a premium is unreasonable and bears no relation to either market rates or the real risk that is being assumed (particularly because the insured was manufacturing a non-hazardous consumer product). Another example of egregious pricing is in the area of terrorism risk. One provider is promoting captives with more than $600,000 in premium for $10 million in limits for this type of risk even though the client could purchase that same coverage in the standard insurance market for less than $5,000. How can such a payment be "ordinary and necessary" and therefore be deductible? Knowing that these captives were approved by a regulator, we keep asking ourselves, "Where are the actuaries and the regulators, and why do they not concern themselves with the relationship between the risk assumed and the premiums charged?" The simple fact is that the requirements of the captive insurance laws fall far short of the requirements of the IRS. The laws of each captive insurance jurisdiction in the U.S. require that an actuarial opinion accompany each application for an insurance license. But that opinion is limited to determining "the amount and liquidity of its [the captive's] assets relative to the risks to be assumed [meaning the policy limits]." Thus, a regulator's primary concern is to ensure the solvency of the captive. Typically, this is achieved through pro-formas showing 3- to 5-year expected and adverse loss scenarios. Note that there is no requirement to examine or opine on individual rates used to price specific exposures being assumed by the captive. This "gap" between the captive insurance law and the realities of the tax authorities can be immense. One of the first questions asked by the IRS in the audit of a captive is, "How were the premiums (pricing) determined for each risk assumed?" Without an opinion of an actuary regarding these rates, it then comes down to the knowledge of the underwriter used by the captive management company. It is apparent that many captive managers do not have sufficient depth in this area or do not care to go beyond the specific requirements of the captive licensing requirements. (We, however, require that our actuaries examine every rate that we use in our feasibility studies.) A rule of thumb is that a properly priced portfolio of risk for a captive should equate to total premiums equal to 1% to 2% of the insured's revenue. The reason revenue is a good guide is because the majority of risks being transferred to section 831(b) captives are casualty risks. And the exposure base for casualty risks is generally revenue. The underwriter cannot change the exposure base, but he can raise the rate that is multiplied times the exposure base to get to a higher premium as desired by the client. But the captive will not survive an audit if rates are raised too high. That estimate of 1% to 2% of revenue is only a guideline: There are exceptions. But if you see a captive manager suggest that the premiums payable to an 831(b) captive can be 6% to 10% (or more) of revenue, run! That manager is ignoring the important risk management requirements of this captive concept, to the detriment of its clients. And the clients are playing audit roulette, hoping their "number" does not come up. Authors James Landis collaborated with Rick Eldridge in writing this article. Eldridge is the president and CEO of Intuitive Insurance and the managing partner of Intuitive Captive Solutions.

<p>But doing away with the need for horses did much more than mean it was good to be Henry Ford and no longer so good to be a horse breeder. The &ldquo;horseless carriage&rdquo; had far-reaching effects that not only redefined the transportation network but also provided the basis for the modern economy and even changed how we live, by making suburbs possible.</p> <p>The &ldquo;driverless car&rdquo; will likewise change dynamics in the economy and in our personal lives in ways that are hard to predict at this remove. (The device will also get a real name, focused on what it is or does, not on what it lacks.)</p> <p>Just in industries directly related to autos, trillions of dollars change hands each year&mdash;flowing to and from auto insurers, auto financiers, service and repair shops, rental agencies, taxi operators, fleet managers, oil companies, transportation and logistics companies, emergency rooms, health insurers, medical practices, personal-injury lawyers, government taxing authorities, road-construction companies, parking-lot operators&nbsp;and on and on and on. Driverless cars will inevitably reduce the need for a lot of that spending&nbsp;and throw much of the rest up for grabs.</p> <p>But&nbsp;if history is any guide, people in these downstream industries feel that it will be decades (at least) before change is pervasive, and therefore decades before they have to worry about their own industry&rsquo;s collision with the disruptive change. Until then, the reasoning goes, companies in industries peripheral to car-making can simply watch as automakers battle among themselves and with Google.</p> <p>This is a dangerous point of view. It is the main failing that this series has tried to address.</p> <p>The raw technology is more developed and improving faster than most observers realize. And several scenarios could dramatically accelerate commercialization and adoption.</p> <p>In addition, the calculation that disruption will not happen until driverless cars are prevalent could be faulty. A modest number of intelligent cars can change the whole dynamic, long before widespread adoption of driverless cars.</p> <p>So, it is important for market leaders in downstream industries to get into the game, rather than be spectators.</p> <p>Even beyond the world of autos, the Google driverless car should be a wake-up call about the pace of disruptive technological change that looms for every industry. Or, taking an optimistic perspective, the driverless car demonstrates the kind of game-changing killer apps that are now possible in almost any industry.</p> <p>While the Google car feels like it comes straight from some science fiction movie, it is nothing more than a mashup of widely available technological innovation&mdash;combining mobile devices, ubiquitous cameras and sensors, social media, the &ldquo;cloud&rdquo; and &ldquo;big data&rdquo; analytical tools. Similarly bold mashups can upend any information-intensive industry.</p> <p>Mary Meeker, the noted venture capitalist and industry analyst, contends that technological forces are <a href="http://www.businessinsider.com/mary-meekers-latest-incredibly-insightful-presentation-about-the-state-of-the-web-2012-5#-86">putting more than $36 trillion of stock-market value up for &ldquo;reimagination&rdquo; in the near future</a>. That $36 trillion is the total market valuation of public companies in the 10 industries that are most vulnerable to change over the next few years&mdash;financials, consumer staples, information technology, energy, consumer discretionary, health care, industrials, materials, telecom and utilities. Companies will either do the reimagining and lay claim to the markets of the future or be reimagined out of existence.</p> <p>No history of success will protect incumbents if they put themselves on the wrong side of innovation. Borders, Circuit City, Blockbuster and many more went from thriving business to out of business in almost no time. Think of how recently Nokia and Blackberry were on top of the world and how they&rsquo;re now irrelevant. And change is still accelerating. The near future will be even more brutal and more lethal, with faster cycle times, than the recent past has been.</p> <p>As I have suggested in my analysis of Google and of Big Auto, the solution for incumbents and new entrants alike is to follow the innovation roadmap that Google demonstrates: Think Big, Start Small and Learn Fast.</p> <p><strong>Thinking big</strong> means innovators must consider the full range of possible futures. Like Google, they should dare to dream big, focusing on the &ldquo;killer apps,&rdquo; new products that can rewrite the rules of an organization or industry, rather than just looking for incrementally faster, better or cheaper products (as Big Auto is currently doing).</p> <p><strong>Starting small</strong> means that, rather than jumping on the bandwagon for one potentially big idea, companies must investigate multiple potential ideas and break them down into smaller pieces for testing. Like Google, successful innovators defer important decisions and keep their options open until they have real data, rather than make decisions early, based on intuition and experience. In addition, successful innovators take the time to make sure that everyone&mdash;the executive team, employees, partners, any agents and maybe even customers&mdash;are working in unison, rather than having people pay lip service to a vision while actually working at cross purposes.</p> <p><strong>Learning fast</strong> means taking a scientific approach to innovation. Successful innovators conduct extensive prototyping before they even get to the pilot phase&mdash;let alone the big rollout&mdash;so they can gather comprehensive information about their attempts at innovation and quickly analyze both what&rsquo;s working and what isn&rsquo;t. The successes also develop the institutional discipline to set aside or alter projects as soon as it&rsquo;s clear that they&rsquo;re not working.</p> <p><strong><em>Series Conclusion</em></strong></p> <p>Think back to the transition from horses to cars and note that cars were initially called &ldquo;horseless carriages.&rdquo; Cars were defined by what they didn&rsquo;t have, just as the &ldquo;driverless car&rdquo; is being defined by what is being removed from the equation.</p>

 Jacques Louis David, The Emperor Napoleon in His Study at the Tuileries, 1812, National Gallery of Art, Samuel H. Kress Collection, Washington, D.C.  Every so often, a big book comes along that, in the words of Ralph Waldo Emerson, can rock people “clean out of my own orbit” and turn us into “a satellite” of the new ideas. French economist Thomas Piketty’s Capital in the Twenty First Century is lodging lots of Emersonian punches just now. He shows us that we have a pervasive problem, a hoarding society. The implications reach to the world of insurance, where many companies hoard what can be toxic securities, such as residential mortgage-backed securities, because a lack of information about the underlying assets makes for an illiquid market and makes companies fear an economic loss. In general, the near-absence of a secondary market for many types of securities retards economic growth in America and Europe for all companies, including insurers. The solution is interactive finance, by which I mean rewarding institutions and individuals with financial or strategic advantages for voluntarily revealing information detailing the risk in assets. Interactive finance resolves hoarding by creating liquidity and stimulating volumes in new risk vehicles and, crucially for insurers, puts incentives in place to enable the insurance industry and other institutions to shed toxic securities. Books like Piketty’s have come along before. Following World War II, John Hersey’s Hiroshima and Norman Mailer’s The Naked and the Dead became best-sellers among a public hungry for information after wartime censorship. At the time the Cuban missile crisis threatened World War III, Rachel Carson’s Silent Spring struck a chord about the fate of the earth. Francis Fukuyama’s The End of History and the Last Man resonated because of the collapse of Soviet communism. Nothing rivals the 9/11 Commission Report, with its stunning conclusions that failures of national imagination and surveillance agency cooperation explain the World Trade Center and Pentagon attacks. Now comes Piketty with the arresting insight that inherited wealth will in all probability exert disproportionate control in mature economies well into the 21^st century, to the detriments of meritocracy and democracy. He describes a permanent class of inherited wealth, augmented by vast new wealth in winner-take-all areas of information technology and in parts of finance that some have been able to game. As long as the top 1%’s capital has a higher rate of return than the overall economy, that top 1% consolidates power and protracts family wealth for succeeding generations. (“He… car'd to hoord for those, whom he did breede,” Spencer wrote in the Faerie Queene roughly 425 years ago.) In other words, Piketty shows that we have a hoarding society -- and a crisis. The super wealthy will invest what they want when they want where they want, and, from here on out, investments stimulating economic growth in national economies would weaken their power, prestige and income by helping disproportionately those less fortunate. So, a long stagnation awaits salaried professionals and wage earners and their progeny. The stagnation will curtail meritocratic achievement and compromise democratic participation and institutions. John Maynard Keynes would find all this unsurprising -- but concerning. “The moral problem of our age is concerned with the love of money, with the habitual appeal to the money motive in nine-tenths of the activities of life, with the universal striving after individual economic security as the prime object of endeavor, with the social approbation of money as the measure of constructive success and with the social appeal to the hoarding instinct as the foundation of the necessary provision for the family for the future,” the neoclassical economist observed in 1925. At the very least at this moment, Piketty is our Antigone. With every successive response, the powerful show themselves to be self-serving. The Financial Times generated buzz by claiming Piketty’s numbers were wrong. Many used that analysis as an excuse to dismiss Piketty. But numerous pieces have shown that he is, in fact, correct – for instance, here and here. His J’accuse punctures, equally mercilessly, Obama palliatives, libertarian rants, big business platitudes and regulator palaver. There have been unremitting waivers, settlements and failed prosecutions of large financial institutions by the Obama administration for billions and trillions of dollars of securities fraud. This comes amid vigorous prosecution of and fines imposed on European banks. The U.S. approach evokes Emile Zola’s withering indictment of corruption in the Third Republic general staff and War Office. In 2014, Thomas Piketty reigns as the Napoleon Bonaparte of neo-classical economics. No one dominates economic discourse so pervasively or as persuasively. Like Napoleon before him, Piketty is consolidating the ideals of the Revolution: liberty, equality and fraternity in a teleology brooking no refutation. In Piketty’s heuristic, the wealthy retain liberty to invest; nation states will exert new laws to tax global wealth to restore equality; and fraternity can then express itself with adequate resources.  All the financial engineering on Wall Street and with the euro since the late ‘90s, coupled with all the vast new wealth in Internet, Silicon Valley, Seattle, oligarchic Russian and Chinese state-chartered enterprises, has dislocated vast numbers of people and segments of national economies outside privileged participants. Obama and discordant, multi-various Europe are but a place-holding Directory, so many wanting Talleyrands,  achieving temporary stability but no real order, so economic growth never really happens. Hence, Piketty proposes a global tax on wealth, a 21^st century economic and public policy correlative to the Code Napoleon. Think of Antoine-Jean Gros’s monumental, heroic painting of Napoleon touching plague-stricken soldiers in Syria in 1799. Like Christ touching the leper, Napoleon reaches out to the afflicted to convey hope. Metaphorically, at this time, Piketty plays the same role in economic and public policy discourse. Tiketty’s triumph in Capital, like Napoleon’s at the Bridge of Arcole, the 1796 battle displaying heroism and brilliance outmaneuvering Austrian troops, may eventually give way to the scholar’s Waterloo, but, for now, none is in sight. No one can deflect the stunning realization that the rich have accumulated and are taking off with the wealth, and nothing any leader has yet achieved on behalf of salaried professionals and wage earners realistically addresses oligarchic shifts in economic power and wealth in national and international economic life. The top 1% are intent on locking in and growing their ever-increasing share of national incomes, which increased from 8% in 1970 to 17% in 2010 in the U.S. An estimated $30 trillion, floating around the world with few owners and whereabouts unknown, according to a 2013 report, simply ices the cake. Invisible elites now control and game inefficient markets and public policy so thoroughly to their advantages that political and social institutions are not equal to the challenge of addressing their hegemony or displacing their dominance. Contemporary regulation, originated in the Progressive period to spur investment and police wrongdoing in industrial capitalism, fails miserably addressing casino capitalism. With all this concentration in wealth, as if to prove there is no fairness in life, Janet Yellen, a capable economist and administrator and first woman to serve as chairman of the Federal Reserve Board, suffers the indignity in Senate testimony of complaining about the weather to explain protracted economic lethargy. She shares that plight with other economic monitoring authorities. In popular culture, “Shine Bright, Jamie Dimon,” Lauren Windsor/aka Lady Libertine’s American Family Voices YouTube hit, lampoons the CEO of JPMorgan Chase:. “Shine bright, Jamie Dimon Shine bright, Jamie Dimon Fined light by the S-E-C None from Sarbanes Oxley To the sky/to the sky Chasing profits ever high Thirteen billion penalty From mortgage securities Fraud you sold me Market dives Chasing profits ever high The regulators let you get away Oh, D-O-J Admission of wrongdoing you don’t have to say Paltry the fine your power buys So sleep tight tonight in your lies Crimes provable sealed from the public eye No jail time Shattered lives Foreclosures spike just like your bottom line Shine bright, Jamie Dimon Shine bright, Jamie Dimon….” Jason Furman, chairman of the Council for Economic Advisors in the second Obama administration, is coming forward with what might be characterized as the American response to Piketty. Furman offers a rehashed take on le defi Americain, articulated so eloquently by J.J. Servan-Schreiber in Charles de Gaulle’s latter days, seeing American dominance in information technologies as a threat to French control of its nuclear arsenal. While Furnam demurs from calling Piketty naughty, he suggests that Piketty is too French. Let’s shy away from Belle Epoque Third Republic wealth metrics and celebrate the frontier, Furnam says. Furnam acknowledges in a thoughtful address at the Institute of International and European Affairs that between 2001 and 2007 “the typical family did not share in the economic gains in the broader economic gains, the first time an economic expansion did not translate into rising middle class incomes.” He says that, because of the 2008 asset implosion, “there has been no net increase in incomes since the late 1990s.” Still, Furman disputes Piketty’s assertion that the return on wealth will necessarily be greater than growth in wages. Furman says “there is no a priori basis to predict [because] of unpredictable technological developments, norms, institutions and public policies.” To appreciable degrees, news from Silicon Valley vindicates both Piketty and Furman. In April, Apple, Google, Intel and Adobe Systems reached a $324 million settlement with salaried professional workers to avoid litigation alleging that the four firms had conspired not to solicit others’ employees lest each pay higher salaries. The suit called for $3 billion in damages, with $9 billion in potential liabilities. The wealthy hoard their riches and suppress labor, the settlement suggests, vindicating Piketty. Institutions and law now enable a labor market to flourish and challenge inequality, vindicating Furnam. Aren’t new money elites supposed to be less greedy and flagrant than aristocratic, merchant, manufacturing and landed elites, given how recently the new wealthy have attained their riches and how supposedly meritocratic they are? Apparently not. In Silicon Valley, salaried workers had to litigate simply to secure labor participation and capital accumulation rights they always held. Picketty’s suggestion for correcting the hoarding problem partly through a tax on international capital strikes me as a non-starter in the U.S. Thirty-four years out from the election of President Reagan, those with millions are not likely to join with those with little to assail those with billions. It may happen, but the constant din of so-called free market, libertarian and socialist-fear-mongering rhetoric make for a very, very long shot. The Solution: ‘Interactive Finance’ The surest means to address the hoarding society and crisis is, in practical terms, interactive finance, by which I mean rewarding institutions and individuals with financial or strategic advantage for voluntarily revealing risk detailing information. For starters, let’s take a breath, look around and recognize information as the 21^st century’s distinct commodity, analogous to steam in the 19th and oil in the 20^th. In the U.S., information is to the 21^st century as continental investment and settlement was in the 19^th and industrial development was in the 20^th. System architectures, information technologies and the Internet are adequately mature and mobile and broadband communications networks sufficiently widespread that information is now commoditized and monetized. Even digital currencies like bitcoin, though classified as property by the IRS, are emerging. Cognitive computing, big data, parallelization, search, capture, curation, storage, sharing, transfer, analysis and visualization are commonplace. Three-quarters of American households pay for broadband access. Nine in 10 Americans carry mobile telephones. Global mobile transactions are projected to show more than 33% average annual growth. User-generated information now creates significant assets. With each additional user, wealth creation shifts toward originators. “As value creation shifts from well-connected MBAs to the innovators themselves, so does wealth creation,” Reddit founder Alexis Ohanian observes in Without Their Permission. Interactive finance will increasingly take place over the Internet and mobile devices. Consumers and institutions will embrace interactive finance to participate in value they are creating. Many shrug off sale of metrics about their data to advertisers as inescapable tradeoffs for Internet and mobile telephone use. But, with interactive finance, users would receive financial or strategic advantages and rewards for information that they create in all these transactions and that they forego more or less involuntarily now. Amid these circumstances, eight in 10 millennials, those born between 1983 and 2003, concur with the statement that "there is too much power concentrated in the hands of a few big companies" and express dubiety about Wall Street, according to a recent Brookings Institution report. While it is amply clear that interactive finance enables users to become more efficient traders, more importantly interactive finance stimulates massive communities of use to capture and to monetize risk-detailing information for those willing to share and those willing to reward information revelations with financial or strategic advantage. By enabling each person’s control of his or her information when he or she chooses to reveal some part of it, interactive finance establishes open and free markets in information. These markets will complement the data miners, credit agencies and Internet behemoths that currently act as sole gatekeepers, repositories and traders of the data. While this may sound rather highfalutin’, interactive finance is wholly pragmatic.  Corporate bonds are all dried up. Residential mortgages are so lethargic that lay-offs are legion. Two key sectors lack adequate liquidity to stimulate aggregate demand. And, as long as the largest too-big-to-fail banks receive lifelines to the tune of roughly $7 billion a month from the Federal Reserve through its Orwellian-named quantitative easing program, a crisis is averted only at stinging, life-altering and phenomenal costs to all but those privileged institutions and their regulators. For instance, Brookings Institution economist Charles L. Schutlze contended in The Public Use of Private Interest (1977), that “according to conventional wisdom, government may intervene when private markets fail to provide goods and services that society values. This view has led to the passage of much legislation and the creation of a host of agencies that have attempted, by exquisitely detailed regulations, to compel legislatively defined behavior in a broad range of activities affecting society as a whole. …Far from achieving the goals of the legislators and regulators, these efforts have been largely ineffective; worse, they have spawned endless litigation and countless administrative proceedings as the individuals and firms on whom the regulations fall seek to avoid, or at least soften, their impact. The result has been long delays in determining whether government programs work at all, thwarting of agreed-upon societal aims and deep skepticism about the power of government to make any difference.” “Strangely enough in a nation that since its inception has valued both the means and the ends of the private market system, the United States has rarely tried to harness private interests to public goals. Whenever private markets fail to produce some desired good or service (or fail to deter undesirable activity), the remedies proposed have hardly ever involved creating a system of incentives similar to those of the marketplace so as to make private choice consonant with public virtue.” Technology now affords, as risk expert David M. Rowe points out, the vehicles to obsolesce regulatory inefficiencies and to challenge ever-worsening inequality by rewarding candor and providing incentives for reciprocity. Persons can do well by doing good. Marketcore, an intellectual property innovator that I am advising, is developing interactive finance with system architectures that reward originators, intermediators and investors alike without bias toward seller or buyer. Its technology enables interactive finance and turns the tables on hoarding and gaming. For instance, any time a borrower of a loan reveals information, the creditor is able to offer a credit toward a future transaction or to provide information that will be of strategic advantage to the borrower. Any time an issuer of a bond reveals projected cash flow, say in connection with scheduled payment, the holder of the bond can offer a credit toward a future transaction or provide information that will be of strategic advantage to the issuer. Because of its robustness, Marketcore system architectures clarify risks for institutions dealing in structured products like residential mortgage-backed securities or bonds, contracts, insurance policies, lines of credit, loans or securities. At this stage in technological and market development, large financial institutions and insurance companies are still incorporating Internet and mobile phones into their business models on terms that sustain revenues and market shares and that maintain margins and ownership of the all-important customer. And, large Internet firms like Google, Facebook, Amazon, Apple and Microsoft exert first-mover advantages by controlling use-generated Internet value-add to sustain market power. Salaried professionals, wage earners and the public generally will find that interactive finance will chart the surest paths to address and reverse hoarding and to supersede regulations now so thoroughly compromised by the elites they were created to regulate that they neither promote nor protect citizens they were designed to serve. For financial services professionals, interactive finance should prove a gold mine by leveraging domain competencies in financial data, creating voluminous new data for repurposing and analysis. Notice, too, that interactive finance channels the best of Piketty and Furman. It achieves egalitarian wealth creation, which each economist champions, more efficiently than contesting market administration systems stacked against average persons or raising taxes. As crucially, interactive finance entails no new 21^st century Code Napoleon and instead enables markets to thrive. No one is doing as much as Piketty to clarify middle-class fragility and impotence in contemporary America. Piketty has stated middle class insecurity, so crucial to Marx in The German Ideology and his earlier Capital, in the precise way that makes Americans gasp at, respect and resent the French. If only Louis Althusser could have commanded a simple sentence and hadn’t murdered his wife, or Michel Foucault had found public leaders as compelling as private pleasures.  

This is Part 1 in a two-part series on automobile insurance fraud. Introduction Traffic engineers would love to unblock the clogged arteries of Southern California's freeway system, where rush hour is anything but "rush" — more like gridlock. But in a land where one's car is one's empire, one's freedom and personal statement, carpooling is a tough sell. The high-occupancy vehicle (HOV) lanes have scant occupancy. In fact, cars carrying multiple passengers are such a rarity that they, alone, raise red flags for auto insurance claims adjusters. Operating under the radar is a fast-growing segment of the "underground economy" — organized criminal enterprises that stage automobile collisions to defraud insurance companies of medical payments. In some cases, the entire incident is created on paper, with fictitious vehicles and false identities. In other cases, the perpetrators take real vehicles with legitimate insurance policies out to vacant lots or remote fields to crash them and then fill out a report. The most compelling cases are the ones where participants intentionally ram vehicles together on city streets — often a rear-end collision in a left-turn lane — then dial 911 and wait for police and emergency medical services (EMS) to arrive. This approach triggers a police report and EMS records, which lend an air of legitimacy to the event. It really happened. Based on instructions from a stager, the driver and two or three passengers — who are known as "stuffed passengers" — report neck and back injuries. The passengers later visit a physician or chiropractor who is in collusion with the criminal ring. The patients sign in and leave without receiving any treatment. If the insurance company balks at paying the specious claim, the claimant enlists the help of an attorney who is also party to the scheme. The attorney is tenacious, willing to go to court, generally able to bluff until the insurance company backs down and settles. In the process, everybody except the insurance company gets easy money. Property damage to the vehicle is paid to the owner of the vehicle, while multiple players split the proceeds of the settlement for medical payments. In a typical case where the insurance company settles for, say, $6,000, each vehicle occupant might get $1,000, the lawyers and doctors collect their fees and the enterprise leader retains 50% of the professional services fees plus the balance of the claimants' settlement, if any. If the enterprise leader successfully stages dozens of such incidents a month, it's a lucrative business. This practice exploded in Southern California in the mid-1990s. If you are a special investigations unit investigator, you are dealing with this every day. The average caseload for an adjuster or claims representative might be 150 or 200 a day, depending on the size of the company. At least 25% of that is some flavor of fraud. It's either a false claim or an embellishment to it. People are doing it. Even people who think of themselves as law-abiding are doing it, because they don't think of insurance companies as victims. This type of activity is so prevalent that our undercover investigators would hear paramedics on the scene saying, "Okay, which one of you is going to the hospital this time?" Automobile insurance fraud is such easy money that the business is even creating unlikely bedfellows. For example, in south central Los Angeles, the Bloods and Crips — gangs that have had an intense and bitter rivalry — are now cooperating with one another in organized insurance fraud, because it's more profitable to join forces. Six Steps to a Successful Insurance Scam Constantin Borloff (not his real name), the former leader of a successful and sophisticated fraud enterprise that operated in San Diego, Los Angeles and San Francisco, shares his top tips for making fraud pay. Having paid his debt to society, the ringleader now tells insurance companies how he was able to steal so much money from them, who does it and why it's so easy. Go for the Med Pay Money Borloff would insist that vehicle insurance policies have med pay coverage — coverage for reasonable expenses to treat accident-related bodily injury. Because this coverage follows the vehicle, passengers in a vehicle that has med pay coverage will likely be covered, as well. Borloff gave vehicle owners a list of insurance companies that would freely provide these policies. In theory, claimants are supposed to repay med pay money if they receive a settlement, but that doesn't happen, according to Borloff. "For all history, maybe two times the insurance company asked for money back. If you say you don't have money and can't pay it back, they say, 'Okay, don't pay back the money.'" Find the Inattentive Insurance Companies Borloff also selected insurance companies with a reputation for laxity, the ones whose claims representatives didn't take a stand and ask the hard questions. "Big companies like State Farm or Farmers have millions of policies, good special investigation units and more experienced adjusters, so that's where you would see more problems. It's better to go to the smaller company or where it's not their main business. These companies usually pay more, while the big companies usually pay a little less." Insiders in the business share this information, so they know which companies to avoid and which ones would pay off like loose slot machines in Henderson, NV. What would make an insurance company an unattractive target? "I don't know what will stop me," Borloff. said "All insurance companies are bound by law to pay. So for us, the system is working perfectly. The insurance company can fight, and they have a lot of resources to fight, but eventually they have to pay something. Maybe more, maybe less, but eventually they have to pay something." Choose Participants Who Won't Raise Suspicion In a perfect world, your participants are white American citizens with clean driving records and their own driver's licenses. Judges and juries look most kindly upon this type of claimant, according to Borloff. It is equally important that their behavior fits accepted patterns. For instance, policies should be active for four to eight months before the staged collision. Claims should be modest, usually no more than $5,000 or $6,000. Activities were choreographed to avoid triggering red flags. "I know insurance companies have about 25 red flags," Borloff says. "What the claims adjusters know, the criminal enterprise knows twice. I knew about all these red flags, and I tried to avoid them." Distributing the cases is one way to avoid detection, Borloff said. "If the enterprise will do, say, 20 collisions a month, the claims will go to five different insurance companies, each to a different attorney — 10, 15 or 20 different attorneys — and any given adjuster will have at most two cases to a specific attorney. Will the adjuster be suspicious about it? I don't think so. It's very difficult for the insurance company to catch these people in this situation." Borloff tells of a fringe case where a woman, working against the advice of her stager, staged four accidents in a single week. She submitted claims to four different insurance agencies. All four claims were paid, but this pattern of activity could have exposed everybody in the fraud enterprise to scrutiny and discovery. Pay More Than Lip Service to the Medical Treatment When private investigators were first sent to wait outside medical clinics to observe and videotape (the comings and goings of visitors), the first people they caught were the ones who walked in, signed in and left within a minute. People quickly learned to stay longer inside the clinic and have follow-up visits at intervals that would seem appropriate for their injuries and type of care. Keep Your Stories Straight Cappers and stagers write notes for people so they can remember their stories when talking to claims representatives and, later on, if they meet with an attorney and go into depositions. Somehow, somewhere, there is a record of all this. If the ring is dealing in volume, there must be good notes, or they won't remember the details of a case, and that's how they get tripped up. Some stagers get tripped up simply by having these notes in their possession — in their offices or briefcases, waiting to be found during a routine traffic stop or search. Insulate the Players From Each Other These groups tend to function as classic cell networks. In an effective cell network, the claimant may or may not be exposed to the other people involved, or may be only exposed to the doctor but not to the attorney. That's how these people are protected from one another. Participants may not have a knowledge of what else the group is doing. When we arrested 72 people on a state level and brought them into interrogation rooms for 72 hours, it was pretty clear that they only knew their own activities or those of friends they had brought into the group. They had no knowledge of the bigger scheme. That's how you protect your enterprise. The parties in these fraud rings learn never to admit to anybody that the accident was staged. Everybody in the enterprise knows it, but if you tell even one person, there's a point of vulnerability. It is especially important to insulate the medical and legal providers, because their professional licenses are critical to facilitate these claims. They take it all the way and never back down. How often would a criminal enterprise walk away from a case because an insurance company's special investigations unit got involved? "I would not walk away, but I would accept lower settlement, for sure," Borloff said. "One time, one of my colleagues made a terrible mistake and sent 63 cases to Allstate — one attorney, same office. They came to me and said, 'What should we do now, SIU is after us?' I said, 'Don't give up, try to fight,' but they decided to give up. It was the biggest red flag. They lost money. It upset people." Giving up is tantamount to an admission of wrongdoing. This series of articles is taken from the SAS white paper of the same name. © 2013, SAS Institute Inc. Used by permission.

As the financial services industry consolidates rapidly, companies are entering into merger and acquisition agreements to grow and to gain infrastructure efficiencies, but many do not deliver the expected cost savings or revenue synergies. Many merger initiatives drag on interminably. There is often insufficient understanding of what is being merged or purchased. The business orientations have not been set at the outset, and the projects may have little direction. The plan to align the two organizations is often superficial. The subsequent steps and accountabilities to ensure that the benefits are delivered are not specified. Cultures clash over processes and information technology. It is crucial to overcome these problems, and a structured and focused management approach to planning merger projects will contribute to building a thriving new entity. To manage a successful merger project, a multi-disciplinary project team needs to actively participate throughout the project. This team is responsible for managing change. Depending on the vision, the business objectives and the nature of the agreement between the two companies, a number of areas within the organizations will need to adjust their operations to integrate. It is important to thoroughly scope the project, identifying all the activities that need to happen. A set of orientation questions needs to be used to support the project team during the planning phase. This approach can be used either in preparation for a merger or as a result of agreements that have already been signed. These questions should be considered as a checklist. By answering these questions, the merger team members will identify areas within all companies that will be affected. Subsequently, these identified areas will need to be analyzed and the magnitude of the change assessed and quantified, which will then form the base for the overall project plan. Each merger project is unique, and new challenges need to be addressed for each. Consequently, the list of questions should evolve as new merger situations are identified. This will allow subsequent project teams to take advantage of accumulated knowledge in this discipline if mergers take place in the future. Insurance Frameworks has developed a list of questions for mergers and acquisitions in the financial industry, primarily for insurance and wealth management organizations. The questions are divided into 11 sections. Each section is a domain within an organization that needs to be managed by the executive management. More than 330 have been developed using our Panorama 360, which is being used by more than 1,000 insurance, wealth management and banking organizations globally. The 11 domains are:

• Marketing
• Product development and management
• Distribution and sales
• Alliance service channels
• Customer care
• Sold product services and management
• Money management
• Asset management
• Business management
• Infrastructure development and management
• Organization management

The list of questions is not divided according to organization structures but according to functional domains that are part of the value chain. Each functional domain is then subdivided into areas that could be affected during a merger project, and a number of strategic questions have been developed from best practices. Such an approach can be used for any merger, acquisition or even partnership to identify the changes that need to take place. What to merge and what not to merge are the key questions. Here are some of the questions: Marketing Domain General Questions

• Is there a holistic vision for this merger?
• Is this merger about penetrating new markets?
• Will you be keeping the status quo once the agreement is signed or are improvements expected out of this merger?
• What are the objectives to achieve and by when?
• Are there any regulatory requirements or merger contractual agreements that need to be completed within a certain time?
• What are the biggest constraints foreseen during this project?
• What is and what is not part of this merger project?
• What are the indicators that will tell you that the merger has succeeded?

Specific Questions 1.1    Define Customer Service Strategy

• What is the customer service strategy for this merger?
• Is the service strategy different than the one you have in your organization?
• Is there a different service strategy as a result of new markets you are now entering as a result of this merger?
• Is the expected service level from the new markets different than what you currently provide to your existing market segments?
• Can you support any new markets with your existing support infrastructure?

1.2    Manage Promotional Campaign

• Are you inheriting product brands that belong to the merged company?
• Will the former brands still exist once the merger is completed?
• Will promotional campaigns be necessary to increase the visibility, focus and recognition?
• Does the merger include affinity, group or association businesses that might require specific promotional efforts?

1.3    Manage Public Relations

• Will there be an official launch of a new brand, services or products?
• Does the industry media need to be advised?
• What are the messages to be conveyed?
• Which media approach will be used?
• Will you need an infrastructure to answer questions once the messages have been communicated to the media?
• Do you need to develop material to support the messages?

1.4    Manage Corporate Communications

• What will be communicated to the distribution channels?
• What will be communicated to the clients?
• What will be communicated to the competition?
• What will be communicated to the employees?
• What will be communicated to unions?
• What will be communicated to the service provider?
• What will be communicated to other employees of your group of companies (if any)?
• Is there anyone else who needs to be kept informed of any developments?
• Will you need an infrastructure to answer the questions once the messages have been communicated?

It is important to understand the various aspects that are part of any merger and acquisition projects. The Panorama 360 includes similar questions for all 11 domains of an organization. If you are interested in getting a complimentary copy of the Panorama 360 – Merger and Acquisition Methodology, you can request it here.

Business owners, executives, board members, and other business leaders of companies facing financial challenges should heed a mounting series of recent fiduciary liability settlement orders, judgments and prosecutions as strong reminders of the potential personal risk they may face if their health, 401(k) or other employee benefit programs are not appropriately funded and administered as required by the Employee Retirement Income Security Act of 1974, as amended (ERISA). Businesses leaders struggling to deal with economic setbacks frequently may be tempted to use employee benefit plan contributions or funds for added liquidity or otherwise fail to take appropriate steps to protect and timely deposit plan contributions or other plan assets. A long and ever- mounting series of decisions demonstrates the risks of yielding to these temptations for businesses that sponsor these plans and the business leaders that make these decisions. EBSA Prosecutes Businesses & Executives That Bungle ERISA Obligations The mishandling of employee benefit obligations by financially distressed companies during the ongoing economic downturn is fueling an increase in Department of Labor Employee Benefit Security Administration (EBSA) enforcement actions against distressed or bankrupt companies and their officers or directors for alleged breaches of fiduciary duties or other mishandling of medical, 401(k) or other pension, and other employee benefit programs sponsored by their financially distressed companies. EBSA enforcement activities during 2009 continue to highlight the longstanding and ongoing policy of aggressive investigation and enforcement of alleged misconduct by companies, company officials, and service providers in connection with the maintenance, administration and funding of ERISA-regulated employee benefit plans. A review of the Labor Department’s enforcement record makes clear that where the Labor Department perceives that a plan sponsor or its management fails to take appropriate steps to protect plan participants, the Labor Department will aggressively pursue enforcement regardless of the size of the plan sponsor or its plan, or the business hardships that the plan sponsor may be facing. The Struthers Industries decision comes on the heels of EBSA’s success in Solis v. T.E. Corcoran Co. Inc. last month in recovering more than $89,000 from business owners and operators found to have breached fiduciary duties to the participants of the T.E. Corcoran Co. Inc. Profit Sharing Plan by improperly loaning plan assets to he plan sponsor and an affiliated company. The Labor Department sued T.E. Corcoran Co. and its owners, John F. Corcoran and Thomas E. Corcoran Jr., alleging that the company and its owners caused the plan to lend money to the two companies at below market interest rates, without terms of payment and without documentation in violation of ERISA. The suit filed in the U.S. District Court for the District of Massachusetts, also named as a defendant Coran Development Co. Inc., a company co-owned by the Corcorans. T.E. Corcoran Co. Inc. was the sponsor and administrator of the plan, while John and Thomas Corcoran were trustees of the plan, making all three fiduciaries and parties in interest with respect to the plan. ERISA specifically prohibits the use of employee benefit plan funds to benefit parties in interest. For this reason, businesses providing employee benefits to employees or dependents, as well as members of management participating in, or having responsibility to oversee or influence decisions concerning the establishment, maintenance, funding, and administration of their organization’s employee benefit programs need a clear understanding of their responsibilities with respect to such programs, the steps that they should take to demonstrate their fulfillment of these responsibilities, and their other options for preventing or mitigating their otherwise applicable fiduciary risks.

The last month has seen a continuation of the vendor consolidation that the workers' compensation industry has been undergoing for the past few years. As most know, a great deal of this consolidation is driven by private equity investors who see all the money flowing through the workers' compensation industry as a way to achieve growth goals. But there is an aspect of this consolidation that is not being heavily reported. When two companies in the same business merge, there are redundancies. This means jobs must be eliminated. Hundreds of people in the workers' compensation industry have lost their jobs because of this consolidation. In my travels around the country attending conference and meeting with employers, I have had the privilege of meeting so many great people in this industry. It saddens me to see some of these people now unemployed, a casualty of consolidation. It is not a reflection of their performance, but just the law of numbers. When there are two people performing the same function, and the new company only needs one, someone loses. By the grace of God, I have never been laid off. I cannot imagine what a kick in the stomach that must be. I do whatever I can to assist friends in finding jobs, including forwarding job openings, making introductions and being a reference. But the sheer number of people out of work in our industry right now is staggering. How can we help? While some companies are eliminating jobs, others are adding them. We need to match those great people needing jobs with those companies that are adding to staff. In the Work Comp Analysis Group, there is a job discussion board. Here, you can post information about job openings at your company. There is NO cost for this, and your post will be seen by thousands of people in the workers' comp industry. If you have a job opening, I encourage you to post it. And recruiters are welcome to post! I'm reminded of a speech in the movie "Dave," where Kevin Kline, a presidential impersonator, is thrust into the role of president of the U.S. He gave a great speech about unemployment that I think rings true today: "If you've ever seen the look on somebody's face the day they finally get a job, I've had some experience with this, they look like they could fly. And its not about the paycheck, it's about respect, it's about looking in the mirror and knowing that you've done something valuable with your day. And if one person could start to feel this way, and then another person, and then another person, soon all these other problems may not seem so impossible." Let's help find a job for those in the workers' comp industry displaced by vendor consolidation. Let's put the workers' comp industry back to work!