Although insurance companies are embracing analytics in many forms to a much higher degree than other businesses, adoption by the insurance industry is still only in its adolescent stage. Deployment is broad but inconsistent. The use of analytics may be about to mature considerably, though, based on a recent series of mergers and acquisitions.

Currently, while a majority of large carriers use predictive modeling in one of more lines of business, and mostly in personal lines auto, a smaller percentage use it in their commercial auto and property units. Insurers recognize predictive analytics as a critical tool for improving top-line growth and profitability while managing risk and improving operational efficiency. Insurers believe predictive analytics can create competitive advantage and increase market share.

Fueling even greater excitement – and soon to be driving transformational innovation - is the recent surge of M&A activity by both new and nontraditional players, which have combined risk management and sophisticated analytics expertise with robust and diverse industry database services. The list of recent deals includes:

• CoreLogic’s 2014 purchase of catastrophe modeling firm Eqecat, following its 2013 acquisition of property data provider Marshall & Swift/Boeckh; a significant minority interest in Symbility, provider of cloud-based and smartphone/tablet-enabled property claims technology for the property and casualty insurance industry; and the credit and flood services units of DataQuick.
• Statutory and public data provider SNL Insurance’s 2014 purchase of business intelligence and analytics firm iPartners, which serves P&C and life companies.
• Verisk Analytics’ 2014 acquisition of EagleView Technology, a digital aerial property imaging and measurement solution.
• LexisNexis Risk Solutions’ 2013 acquisition of Mapflow, a geographic risk assessment technology company with solutions that complement the data, advanced analytics, supercomputing platform and linking capabilities offered by LexisNexis.

Other 2013/2014 transactions that have broad implications for the insurance analytics and information technology ecosystem include:

• Guidewire Software, a provider of core management system software and related products for property and casualty insurers, acquired Millbrook, a provider of data management and business intelligence and analytic solutions for P&C insurers.
• IHS, a global leader in critical information and analytics, acquired automotive information database provider R.L. Polk, which owns the vehicle history report provider Carfax. 
• FICO, a leading provider of analytics and decision management technology, acquired Infoglide Software, a provider of entity resolution and social network analysis solutions used primarily to improve fraud detection, security and compliance.
• CCC Information Services, a database, software, analytics and solutions provider to the auto insurance claims and collision repair markets, acquired Auto Injury Solutions, a provider of auto injury medical review solutions. This transaction follows CCC’s acquisition of Injury Sciences, which provides insurance carriers with scientifically based analytic tools to help identify fraudulent and exaggerated injury claims associated with automobile accidents.
• Mitchell International, a provider of technology, connectivity and information solutions to the P&C claims and collision repair industries, plans to acquire Fairpay Solutions, which provides workers’ compensation, liability and auto-cost-containment and payment-integrity services. Fairpay will expand Mitchell’s solution suite of bill review and out-of-network negotiation services and complements its acquisition of National Health Quest in 2012.

Based on these acquisitions and the other trends driving the use of analytics, it will be increasingly possible to:

• Integrate cloud services, M2M, data mining and analytics to create the ultimate insurance enterprise platform.
• Identify profitable customers, measure satisfaction and loyalty and drive cross/up-sell programs.
• Capitalize on emerging technologies to improve pool optimization, create dynamic pricing models and reduce loss and claims payout.
• Encourage “management by analytics” to overcome departmental or product-specific views of customers, update legacy systems and reduce operating spending over the enterprise.
• Explore external data sources to better understand customer risk, pricing, attrition and opportunities for exploring emerging markets.                       

As the industry is beginning to understand, the breadth of proven analytics applications and the seemingly unlimited potential to identify even more, coupled with related M&A market activity that will drive transformational innovation, indicates that the growing interest in analytics will be well-rewarded. Those that are paying the most attention will become market leaders.

Stephen will be Chairing Analytics for Insurance USA, Chicago, March 19-20, 2014.

Wellness has failed.  Get used to it. 

Understanding why wellness has failed requires a brief history lesson of the wellness provision of the Affordable Care Act (ACA). The wellness provision was based on the success story at Safeway and a seminal article in Health Affairs -- both of which turn out to be made up. 

To begin this series on the failure of wellness programs, let’s look at Safeway, which is so central to the ACA wellness provision that the provision is sometimes called the Safeway Amendment. The Safeway CEO, Steven Burd, claimed to have reduced healthcare spending by 40% using a wellness program. He wrote an op-ed in the Wall Street Journal, testified before Congress and became friends with President Obama even as Sen. John McCain also cited Safeway as a role model. The slight problem with all of this: Safeway’s claim was absolutely, unequivocally, made up.

A front-page article in the Washington Post pointed out that the wellness program didn’t even exist at the time Safeway’s healthcare costs fell. Instead, the decline in corporate spending was because of the implementation of a high-deductible plan, shifting cost to employees. (Curiously, once Safeway actually did implement a wellness program, its health spending rose faster than average. This was probably a coincidence because, even today, only a small fraction of Safeway’s workplace participates in the program. 

Next came the seminal article in the prestigious journal Health Affairs, written by equally prestigious Harvard economists Katherine Baicker and David Cutler. The article was titled, “Workplace Wellness Programs Can Generate Savings.” Not “could possibly generate savings” or “may generate savings on a good day,” but “can generate savings.” These economists reviewed all the published evidence and reported quite a definitive “3.27-to-1” return on investment from wellness.

This article is easily invalidated on two points. First, the overriding rule of a study is that it must be replicable. This article was published four years ago and has yet to be replicated. Quite the opposite: Every subsequent article in Health Affairs has shown that even with the most generous assumptions imaginable, like leaving many elements of cost out of the ROI calculation, wellness doesn’t save money. 

Second, in July, lead author Baicker had enough sense to walk back the article’s conclusion, saying on NPR’s Marketplace that “it’s too early to tell” if there are savings. She also said that employers need to “experiment” to “see what happens with weight and blood pressure.”

Besides the retraction, two other things about this interview invalidate wellness:

1. Biostatistics 101 states that the smaller the effect, the larger the population needed to show it. To admit after decades of wellness programs involving millions of people that “it’s too early to tell” means that whatever effect there is (if any) would be very subtle, so subtle that it couldn’t possibly merit an entire industry and significant workplace disruption to achieve it.
2. Except at the extremes, for which a companywide wellness program isn’t needed, “weight and blood pressure” have almost no effect on corporate healthcare spending. Corporate spending on overweight people, during their working years, may be greater than for thinner people (the evidence is mixed), but there is no evidence that weight loss across an employee population can be maintained, and the reverse is usually true—most people who lose weight regain it. Controlling blood pressure is far more likely to increase corporate spending than reduce it. Rates of stroke in the working-age population are disappearingly low to begin with, and the cost of a stroke is far lower than the cost of controlling the blood pressure of 1,000 employees to prevent one. (Some companies will say they are “medicalizing their workplaces” for humanitarian reasons and not to save money, which is laudable…though, as subsequent installments in this series will show, misguided. In any event, the article was about saving money.)

Along with Safeway’s lie and Baicker’s retraction comes the Business Roundtable’s hypocrisy. The Business Roundtable was and is the major lobbying force in favor of wellness. Claiming they want to “help people” and “foster a culture of health” for “employees and their families” while opposing ACA and the minimum-wage increase is not even the hypocrisy here. The hypocrisy is that the head of the Business Roundtable’s health committee, Gary Loveman, is also the CEO of Caesars Entertainment. In that “day job” running a chain of casinos, he poisons more employees with second-hand smoke than any other CEO in the U.S.

Perhaps he feels that health hazard is more than offset by the meaningless seven-point reduction in blood pressure that he says wellness has achieved for the small segment of active participants committed enough to stay with the program. (He didn’t measure the dropouts and non-participants, whose results may not have supported his narrative.) A skeptic might therefore conclude that Business Roundtable CEOs support wellness only because it provides an excuse to dock some workers 30% of their health premium, and pocket it themselves.

To wrap up Part One, the entire premise of employers “playing doctor” by medicalizing their workplaces is invalid. It is no wonder, then, that the science and outcomes are made up, as well – those are topics for future installments. However, if you stay with this series (or cut to the chase and read the book), you’ll find that there are solutions, and those solutions incorporate everything that wellness doesn’t – science, morale and cost-effectiveness – while emphasizing the role of the broker and consultant in designing the benefit.

Over the last two years, we have witnessed executive appointments and many strategy projects related to improving the customer and agent experience. It seems like we’ve all been bombarded by banner ads, e-mail promotions, webinars and conference speeches on this topic (and I speak from personal experience, having participated in a number of these). All of this energy and activity will translate into more major initiatives and spending in 2014. The question is, “What will these initiatives look like, and who will be in the driver’s seat?”

There will still be many individual projects that will contribute to enhancing the customer experience. Insurers will roll out new mobile apps, customize customer documents, upgrade portals and provide new customer self-service options. All of these types of capabilities are important elements of the customer experience. 

But for insurers that are thinking ahead, there will be two overarching initiatives that set the stage for a differentiating customer experience.

One of these initiatives will be driven by business leaders – planning for customer interactions through the whole customer journey. In 2014, more insurers will map out their communications with customers and agents across the enterprise. This type of initiative is increasingly being driven by the CMO with the intent of improving brand consistency and customer satisfaction.

The second initiative is often driven by the CIO, and it is aimed at establishing a unified digital platform that integrates all types of digital communications with customers and agents – mobile, portals, the public web site, social media and collaboration technologies.

I expect to observe many different variations of these initiatives in 2014. Insurers that are able to combine these efforts will make the most progress in improving the customer experience and having an important impact on company results. The ideal scenario will be to establish a unified digital platform to support all digital customer interactions in a common, efficient manner and then optimize each interaction with an understanding of the overall customer journey. Individual projects for mobile, collaboration, portals or other technologies will be able to leverage the platform and produce consistent, personalized communications.

In general, the investments in technology tend to follow the state of the economy and the state of the insurance industry. However, we have noticed an interesting trend over the past five years – insurers have become increasingly optimistic about the prospects for the industry and more bullish about the role of technology.

This is not to say that IT budgets are dramatically increasing – in most cases, they aren’t. But, through an era when many organizations were slashing IT budgets and laying off staff, insurers have by and large maintained their investments and have gradually increased spending. For 2014, an average increase of 3% over 2013 is anticipated, and insurers are planning to spend even more on IT during 2015-2017.

However, more important than the spending numbers is the way that those dollars are being deployed. An increasing number of insurers are thinking long term and engaging in transformational initiatives. I don’t mean to imply that insurers have never been strategic regarding their IT investments before, but there is a great deal of energy around high-impact projects with companywide implications.

In our first Insurance Ecosystem survey at the end of 2009, only 13% of insurers considered their companies to be in transforming mode. Now, our survey at the end of 2013 indicates that 32% of insurers are transforming. Big, cross-functional initiatives for improving the customer experience, creating a culture of innovation, and core replacement/modernization are becoming more common.

What’s especially interesting is the activity going on in the core systems space. The industry has been experiencing a wave of replacing or modernizing policy, billing and claim systems for the past five years – it’s now new. While many of those replacements have been driven by legacy systems that are limiting the organization’s adaptability, there are more insurers that are now viewing core replacement as an opportunity to position for the future – to build a foundation for a more agile company, one that can respond to market needs, capitalize on innovation and leverage technologies such as mobile, analytics and cloud computing.

Certainly, the priorities and investments are different by line of business and insurer size. And each company has its own unique set of circumstances and strategies. But the big themes are unmistakable – we are in the midst of an era of change in the insurance industry, and technology is a vital enabler of that change.     

For more information about insurers’ IT plans and priorities, read SMA’s new research report, 2014 Insurance Ecosystem: Insurer Technology Spending, Drivers, and Projects.

Research suggests 40% of major business decisions are based not on facts but on the manager’s gut.[1] In workers’ compensation, critical decisions are made not only by managers but by front-line workers. How accurate and timely are the decisions that claims adjusters make? What about the decisions made to ignore information and avoid taking action? How are outcomes traced back to the decisions made and not made? What accountability is built into the process? What kind of decision support is available? Are decisions based on objective data?

Business intelligence, derived from analytics, can inform business decisions throughout the organization. But the data analysis must be infused into operations to lead to action. Only analytics that are linked to operations can consistently and positively provide decision support that creates positive outcomes.

Sequestered knowledge

Both garden-variety analytics and highly sophisticated predictive modeling are common now in many organizations. But few apply the analytics to their operational processes effectively to make a significant impact on outcomes and profitability. In workers’ compensation, applied analytics, particularly those relating to the medical aspect of claims, are rare.

In workers’ compensation, analytics are most often sequestered in the executive suite. Analytic results are shared at board meetings and are lavishly portrayed at marketing shindigs or annual reports. They are represented in colorful graphics while decision-makers ponder their meaning. But there is little impact on decisions made by middle managers and front-line workers.

Analytics must be linked to operations to allow for action.

Dashboards are not actionable

Dashboards have become a fashionable way to display analytic results, but they don’t link the analytics to operations. They do not change behavior. They are designed to portray conditions in the organization across a broad swath of indicators in one view. 

An example is a hospital where a dashboard displays vital operational statistics including admissions and discharges for the period, average lengths of stay and acuity rates. Dashboards are interesting and informative. But who should do what to incorporate the knowledge? What should be done operationally to affect the indicators going forward?

Basically, dashboards are for viewing only, and unless the organization has designed response procedures for assigned persons, the impact is negligible. Dashboards have no direct relationship with operations and no mechanism for tracking responses to the information. Changes in process are anecdotal only.

Corporate communications, regardless of how sophisticated, do not effectively translate analytic knowledge into action on the front line.

Actionable analytics

For analytics to lead to action they must be linked to, and fused into, operations automatically. Front-line workers must be led by the information process to take appropriate action. 

The best way to do this in workers’ compensation is to electronically monitor the data, execute the analytics in real time and initiate the desired actions among workers by means of an automated electronic message. This approach hurdles the communication log jam by sending immediate, specific information directly to the person who can best act on it. 

Infusing analytics into operations requires a computerized system specifically designed to monitor and analyze all transactions and to automatically send alerts.

Accountability

When the computer system identifies a high-risk situation in a claim, the appropriate person is automatically notified electronically. At the same time, the system should also keep an audit trail noting all claims identified, the reason and to whom the alert was sent. The end-to-end process will infuse analytics into the process, render the process more efficient and establish accountability.

When a person is alerted of a high-risk claim, action is expected. Some organizations have formal procedures for the actions required under a specific set of circumstances. Such actions are documented so that outcomes can be traced back to the claim conditions, initiatives taken and the persons involved. The results are exponentially improved while the data gathered in the process enhances organizational performance intelligence.

Results

Analytics by themselves cannot and will not change outcomes. But analytics linked to operations through specifically designed systems will affect both the process and outcome. Only actionable analytics create value.

[1] Davenport, T. Harris, J., and Morison, R. Analytics at Work, Smarter Decisions, Better Results. Harvard Business School Publishing Corporation. 2010.

Those of us who have been workers’ comp professionals for a while like to think that there are no new issues. We’ve seen it all, done it all, and have a closet full of T-shirts to prove it. Yet technology, like the proverbial new wine in an old wineskin, can break out of the boundaries created by aged statutes and old case law.

There have been some recent examples of corporate civil liability for employees who are in motor vehicle accidents while using their cell phones for business. This also raises a slightly different and thornier question: What about employees who get into accidents while off work but while making business calls on personal cell phones. Should they, too, be entitled to workers’ compensation benefits?

This issue was addressed in Virginia a few years ago in the case of Donna Turpin v. Wythe County Community Hospital.  (http://www.washingtontimes.com/news/2011/oct/9/workers-comp-case-upheld-in-cellphone-related-cras/?page=all)

Here, the claimant was a nurse who was off work, but on call, when she received a work-related phone call. While trying to answer the phone, she lost control of her vehicle and crashed, resulting in moderate injuries.

The fact that nurse Turpin was on call makes the injury arguably more compensable, and the Virginia Court of Appeals agreed. It awarded benefits even though she wasn’t technically at work.

But I have been waiting to see courts address the issue where a business professional is driving his or her car on a Saturday or Sunday, running personal errands and not on call. Then, when he receives a work-related cell phone call, he becomes distracted and is in a motor vehicle accident. Should this be compensable even though the employee is not at work and is doing personal activities?

As you may surmise, the majority of jurisdictions within the U.S. would probably find this injury to be compensable, as there is a benefit to the employer from having the employee take a business call on personal time. Under the "mutual benefit doctrine," if the employee is conducting legitimate work then the claim is compensable even if the employee is on his way to get donuts for his family.

However, if companies have a policy that prohibits the use of cell phones while driving, how do we resolve the inherent conflict between an injury arising out of work duties and an injury that occurred as the result of a violation of company policy?

Many states (but not a majority) have provisions within their workers’ compensation statute that allow for a reduction of benefits if the claimant is injured as a result of a failure to use safety devices or a failure to follow safety rules.

If you are in a state that has such provisions, this is an added reason why the company policy manual should be updated to prohibit the use of cell phones while driving. That way, even if the claim is compensable, there would still be a reduction of benefits paid.

The response to such policies is typically negative: “Why should the worker be punished when he was injured while trying to do his job?” Valid question. Here is a valid answer: incentive.

I often tell employers that safety rules and policies are not adopted to punish employees but to try to reduce injuries. Everything we do in life has risk. But any risk manager will tell you that the trick is to maximize work efficiency while minimizing (rarely eliminating) the risk. Employees should be penalized for violating safety policies, because without the concern for punishment (like having one’s comp benefits reduced or even eliminated), there is no incentive to follow the policies designed to minimize the risks faced by workers.

I drafted the hypothetical situation because: 1) It could easily happen, and 2) It demonstrates how technology blurs the line between our personal activities and our work activities.

Safety policies should be adopted to minimize risk—like a ban on driving and using cell phones at the same time. Such a policy should not only reduce the risk of injury to your employees but should also reduce the risk of increased insurance premiums.

Now, if only I could figure out a way to craft a policy that eliminated the calories in donuts, I would really be on to something.

The starting point

 “The absolute of leadership is followers.” -- Peter Drucker, management guru and author of dozens of influential books

Defining reality

“The first role of the leader is to define reality.” -- Max DePree, former CEO of Herman Miller and author of Leadership Is an Art

Verifying reality

“All the well-meaning advice in the world won’t amount to a hill of beans if you’re not addressing the real problem. And we’ll never get to the problem if we’re so caught up in our own autobiography, our own paradigm, that we don’t take off our glasses long enough to see the world from another point of view.”  -- Stephen Covey, author, 7 Habits of Highly Effective People

A shared characteristic

“All of the great leaders have had one characteristic in common: It was the willingness to confront unequivocally the major anxiety of their people in their time.” --  John Kenneth Galbraith, economist and author of dozens of books

The objective

“The task of a leader is to get people from where they are to where they have not been.” -- Henry Kissinger, secretary of state under President Richard Nixon and President Gerald Ford

The functions

“Change is the transition from today through tomorrows.” -- Mike Manes, founder, Square One Consulting

“Change management is solving problems and capitalizing on opportunities during the transition.” – Manes

“The best way to predict the future is to create it.” – Drucker

The challenge

“There is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful to success, than to step up as a leader in the introduction of changes. For he who innovates will have for his enemies all those well off under the existing order of things, and only lukewarm supporters in those who might be better off under the new.”  --Niccolo Machiavelli, author, The Prince

The risk in failing to lead

“Take change by the hand before change takes you by the throat.” – Winston Churchill, former prime minister of England

The importance of vision

“Where there is no vision the people perish.” – Proverbs 29:16

“People change what they do less because they are given an analysis that shifts their thinking than because they are shown a truth that influences their feelings.”– John P. Kotter and Dan S. Cohen in The Heart of Change

The best example of vision

“I believe that this nation should commit itself to achieving the goal before this decade is out, of landing a man on the moon and returning him safely to earth.”  -- President John F. Kennedy, May 25, 1961

The importance of leadership

“The only thing necessary for the triumph of evil is for good men to do nothing.” -- Edmund Burke, Irish statesman, author and philosopher

What leadership is not

“Consensus is the absence of leadership.” -- Margaret Thatcher, former prime minister of England

A bias for action

“If you start to take Vienna – Take Vienna.” -- Napoleon Bonaparte, emperor of France from 1804 to 1814

“I can accept failure, but I can’t accept not trying.” -- Michael Jordan, former NBA star

“Don’t find fault – Find a remedy.” -- Henry Ford, founder of Ford Motor

“There is no limit to what can be accomplished when no one cares who gets the credit.” -- John Wooden, UCLA coach who won 10 NCAA basketball championships in a 12-year stretch

“A man could do nothing if he waited until he could do it so well that no one would find fault with what he had done.” – Anonymous

“There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.” -- Kennedy

“Nothing in this world can take the place of perseverance. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Perseverance and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.” – President Calvin Coolidge

“Just do it!” -- Nike

The test of leadership

“If the end brings me out right, then what is said against me won’t matter. If the end brings me out wrong, then 10 angels swearing I was right would make no difference.” – President Abraham Lincoln

“It is not the critic who counts, or how the strong man stumbled and fell, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, who knows the great enthusiasms, the great devotion, and spends himself in a worthy cause; and if he fails, at least fails while daring greatly, so that he’ll never be with those cold and timid souls who know neither victory or defeat.” – President Theodore Roosevelt

“Fall down seven times, stand up eight.” -- Japanese proverb

During the presidential debate on Oct. 3, 2012, a KitchenAid employee used the corporate account to send a tasteless (some would say disparaging and grossly offensive) tweet regarding the president’s grandmother. KitchenAid quickly apologized to the president and his family and explained what happened. In other words, KitchenAid followed the “rules” of reactive reputation management.  

KitchenAid was praised for responding quickly. But the outrage about the tweet was overwhelming, if only for a short period, and underscores that companies need to consider their potential liability from ill-advised tweets.

A bit of background: Libel (written) and slander (spoken), collectively known as “defamation,” which is the general term used internationally, are civil wrongs (sometimes carrying criminal penalties) that harm a reputation, decrease respect, regard or confidence or induce disparaging, hostile or disagreeable opinions or feelings against an individual or entity. If the allegedly defamatory assertion is an expression of opinion rather than a statement of fact, defamation claims usually cannot be brought because opinions are inherently not falsifiable. However, some jurisdictions decline to recognize any legal distinction between fact and opinion. 

Contrary to a general belief that insulting tweets (or comments online through Facebook, online message boards, etc.)  are exempt from libel laws because they are fleeting, libel laws apply to the Internet the same way they do to newspapers, magazines, books, films, etc. The same technology that gives you the power to share your opinion with thousands of people also qualifies you to be a defendant in a lawsuit.    

In considering your legal exposure if an employee may have committed libel, you must consider the country you live in, as well as your exposure to libel laws around the world.

U.S.

The medium for communication is irrelevant; even an email to a single person can be libelous if the sender knew a statement to be false, acted with reckless disregard for the facts or was otherwise irresponsible. To be libelous, the statement must also cause some damage.

United Kingdom 

The basis of British libel law is not substantially different from that in the U.S.: to protect the reputation of an individual from unjustified attack. In British law, a person is defamed if statements in a publication expose a person to hatred or ridicule, cause a person to be shunned, lower a person in the estimation in the minds of "right-thinking" members of society or disparage a person in his work. In the U.K, though, the burden of proof is with the defendant, while in the U.S. the plaintiff must provide the proof. Unlike in the U.S., there is also no provision in the U.K. that makes it harder for public figures to win a judgment--in the U.K., a public figure does not have to prove a statement was made with malice.

Almost all of the rest of the world

There is ever-expanding concern about the use of social media, especially Twitter, to post harassing, offensive and false statements that are defaming or invade another’s privacy. As one judge said: “Twitter as we all know is widely used by individuals and organizations to disseminate and receive information. It is inconceivable that grossly offensive, indecent, obscene or menacing messages sent in this way would not be potentially unlawful.” ([2012] EWHC 2157 (Admin) at {23}. In India, amendments to the Information Technology Act, 2000 (IT ACT) specify that defamation via a computer or communication can lead to a prison term of three years and a fine. (The United Nations Commission on Human Rights ruled in 2012 that the criminalization of libel violates the right to freedom of expression and  is inconsistent with Article 19 of the International Covenant on Civil and Political Rights. The impact of this ruling, if any, is not part of the discussion in this article.) 

Now, let’s consider liability if you or an employee is the “retweeter”:

U.S.

If you retweet a libelous statement in the U.S., you or the company you work for  may be protected from defamation liability based on Section 230 of the Communications Decency Act, which states, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Simply put, this means you cannot be sued for something you retweet, even if the original tweet is libelous, so long as the libelous content was created by a third party. However, if you did have control (it was KitchenAid’s corporate Twitter account)  or you add something defamatory, you could be held responsible. 

United Kingdom

Keir Starmer QC was addressing the London School of Economics about social media in 2012 when he was asked: “Is it an offense to retweet something grossly offensive?" He replied: "You retweet, you commit an offense under the Act.”

The “Act” is the Communications Act, which outlaws sending a tweet that is “grossly offensive or of an indecent, obscene or menacing character.” A person can be prosecuted if he "causes any such message or matter to be so sent.”

For example: In 2012, the British Broadcasting Corporation settled a libel suit for about $300,000 with a UK politician. (The BBC reported that he was involved in a child sex abuse scandal but should have known the statement was false.) The UK politician then sought libel damages from at least 20 “high profile” people who tweeted and retweeted the report. 

Because tweets cross borders so easily, Twitter users in the U.S. and elsewhere should take the UK law into account.

India

Some legal scholars in India say that even accidentally retweeting an offensive tweet can create liability.

Freedom of Speech?

While freedom of speech in the U.S. is a constitutional right, legal exceptions make that right limited. For example: Speech that involves incitement, false statements of fact, obscenity, child pornography, threats and speech owned by others are all completely exempt from First Amendment protections. The U.S. Supreme Court has ruled that the First Amendment does not require recognition of a privilege for those stating opinions. Therefore, the  position that nothing should stand in the way of unabashed free speech on the Internet is like the ostrich with its head in the sand. Defamation and speech intended to inflict severe emotional distress is not protected.States can and do regulate this type of speech.

So here is the takeaway:

If you or an employee tweets or retweets something defamatory, you may face a libel claim. It doesn't matter how quickly you delete the entry or whether you follow up with a correction or an apology. It also doesn't matter where in the world you are.

Disclaimer: The information contained in this article is provided only as general information and may or may not reflect the most current developments legal or otherwise pertaining to the subject matter hereof. Accordingly, this information is not promised or guaranteed to be correct or complete, and is not intended to create, or constitute formation of an attorney-client relationship. The author expressly disclaims all liability in law or otherwise with respect to actions taken or not taken based on any or part of this article.

There is a $20 billion calamity on the tracks ahead, and no one seems to care. As this train hurtles ever closer to its inevitable demise, the passengers ride oblivious. A program created to protect those passengers – U.S. taxpayers -- seemingly will do anything but what was originally intended. 

Medicare Set Asides were developed with the good intentions of protecting Medicare, and the taxpayers that fund it, from unnecessarily paying for injuries and illnesses that are the prior responsibility of third parties. Quite simply, people were taking settlement money received from a general liability or workplace accident—money that was supposed to pay for future medical needs from the injury—and were spending it on anything but its intended purpose. While this was great for the bass boat and travel industries, it was a less than stellar deal for the U.S. taxpayer, who wound up paying for the injured persons’ care once they were eligible for Medicare.

Enter the MSA: a vehicle designed to protect a designated portion of settlement funds by placing them aside and requiring they be used for the purpose intended. This is not new. The roots of today’s MSA lie in the passing of the Medicare Secondary Payer Act of 1980. That act was significantly strengthened in 2003, however, and this has resulted in far more activity for the workers’ compensation industry over the past decade.

True to form, the government has not made implementation easy. Extremely detailed reporting requirements, extensive fines for the Responsible Reporting Entity (even for rules not established at the time) and a complex process made for a confusing road for employers and payers. An entire industry has sprung up to manage this process. The risks of not complying are serious, and the liability for getting it wrong is huge. The Medicare Set Aside today is integral to virtually any settlement situation in the workers’ compensation industry.

All of this is done to protect the U.S. taxpayer from Joe Sixpack and his desire for a bass boat.

I am in no way an expert on MSAs. I have, however, spent time over the last two years attending conferences and talking to various experts on the topic, trying to better understand their purpose and procedure. I discovered a singular statistic that absolutely floored me. It was a fact that, in my opinion, flies in the face of logic and makes all the burdened activity around the MSA seem pointless.

What is so shocking? Only 4% of completed MSAs are professionally administered.

The rest, 96%, are given directly to the claimant/recipient and are self-managed. That means that, when all is said and done, when the calculations are made, when the submissions and approvals are complete, the money that is set aside for the purpose of protecting Medicare and the U.S. taxpayer is given right back to Joe Sixpack, the guy we were trying to protect ourselves from in the first place.

It makes no sense. None.

I am not saying Joe Sixpack is a bad guy. I am not saying his intents are not pure. I am saying that managing payments from an MSA, making sure they are properly coded and complying with mandated reporting is difficult. The process may be well beyond the ability of an injured worker turned fund manager.

Even with his best efforts, Joe could be in trouble when Medicare starts paying for his health care. If he has not dotted every “i” and crossed every “t,” as well as made sure all expenditures were classified to show appropriate care for the affected injury, he could find himself denied needed coverage by Medicare.

And when an army of Joes are pounding at the door of Medicare, because of possible denial of coverage, something is going to have to give.

So how bad is it? What are we looking at here?

For that I turned to Ken Paradis, chairman of Ametros Financial, a company that offers professional administration of MSAs. He confirmed that my suspicions were potentially accurate and provided some very interesting – make that scary – numbers.

In 2010, the Centers for Medicare and Medicaid Services (CMS) approved $1.4 billion in MSAs. Assuming a consistent approach since 2001, the inception of the current program, we can estimate that $16.8 billion have been approved for MSAs in the past 12 years. Using a straight-line estimation, this could mean that $16.1 billion is being self-managed.

Not all MSAs are reviewed by CMS—some are set up with no input or review by the government—and these Class III MSAs represent a completely unknown addition in risk to the long-term health of Medicare. Paradis indicated from experience that 20% of MSAs may be in this category. Using the base numbers from our equation, that estimate brings the total risk pool to perhaps $20 billion.

That figure represents true risk for the nation and our industry.

It seems that many are under the impression that self-administered funds are managed with some level of competence by Joe Sixpack’s counsel. However, the existence of waiver or hold-harmless indemnification language in many settlement agreements tells a different tale. The November 2013 manual on MSAs included guidance for non-professionally administered MSAs, which tells us someone out there might need that advice.

After all the convoluted effort focused on setting up MSAs to protect the interests of Medicare, the guidelines on administration offered by CMS are surprisingly simple:

• Deposit the fund into an interest-bearing account.
• Use the fund only for the MSA settlement injury.
• Use the fund only for expenses covered by Medicare.
• Pay according to the appropriate fee schedule.
• Prepare and submit an annual account report to CMS.

The first three seem easy enough to understand. The last two, however, are where the wheels will most likely come off the bus for our wayward injured worker turned financial wizard. Fee schedule and medical classification codes are a science unto themselves, yet we expect Joe Sixpack to navigate that labyrinth with a ninja-like accounting skill set that many industry professionals themselves do not possess.

As for those detailed annual reports, anecdotal information shows CMS hasn’t actually seen many of those over the last decade or so. They, and we, are operating blind in that area.

And, as I’ve indicated, it is a damn big area.

The harsh truth is, no one knows what is out there. No one knows what is coming. We are blindly turning on faith that all this energy and effort will somehow end up doing what was intended. Trust me; this is not going to end well.

The cost of professional administration is a mere pittance when compared with the cost and complexity of setting up an MSA. It seems even smaller when we fully recognize the consequences at hand. Some in the industry are openly suggesting that the expense of professional administration could easily be offset by using it in place of the costly and slow approval process. By skipping the approval but securing the long-term health of the MSA, the greater goal of limited liability will be met. The indemnity saved by settling the case sooner would in many cases more than offset the cost of a professional manager.

Under the current scenario, the taxpayers will clearly be on the hook, but the workers' comp industry should not be foolishly complacent. There are potential clawbacks in our future, and many who think they've put these issues to bed may be again facing a call for more cash by our government.

Why the government fails to close the loop on this and secure the protection it originally intended is beyond comprehension. We are requiring the crafting of a lengthy and expensive letter, getting it reviewed, edited and approved, and then no one is putting a stamp on the envelope.

All that effort, all that expense, only to wind up where we were to begin with; with the exception of our new sense of security. Our false sense of security.

This is part of a much bigger issue: 10,000 retirees are entering the Social Security system every day. The Medicare trust fund will be broke by 2022 at its current expenditure rates, and the ability of Joe Sixpack to manage his funds has never been more critical. There is a train wreck coming, and we are all on board for the ride.  An army of angry Joes will soon be pounding on our door, and the $20 billion may be nowhere to be found.

After all the effort and fuss, I find myself wondering: Why?