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Understanding New York’s New Insurance Disclosure Requirements

If your organization operates or could be sued in New York, there has been recent activity on the legal and regulatory risk landscape that risk professionals should be prepared for.

New York’s newly-enacted Comprehensive Insurance Disclosure Requirements legislation opens the door for defendants to request that organizations disclose the details of their commercial insurance programs that may apply to a judgment in the case. These details include policy limits and potentially even access to your claims adjusters. For those with more complex risk financing structures, the law may also lead to the misinterpretation of the organization’s coverages.

For the greatest success in complying with this new regulation, risk professionals must become their legal department’s greatest ally, stepping in to lend their expertise to prevent potential confusion and errors. Risk professionals can be integral in keeping sensitive information confidential, monitoring all disclosure requests and alerting their teams to any discrepancies in the interpretation of the shared information.

Additionally, risk professionals should proactively identify the relevant policies for counsel, mindful that the policy or program must potentially respond to the plaintiff’s claim.

What are the New York Disclosure Law’s requirements and how do they impact your insurance program?

The New York law requires that an insured defendant disclose information about any insurance policies sold or delivered in New York that could be applicable to a plaintiff’s claim. This requires careful assessment to ensure compliance while avoiding potentially unnecessary insurance disclosures.

Depending on the claimed amount and a program’s retention levels, disclosures likely include primary insurance policies and may include excess and umbrella policies as well. 

The disclosure requirements extend to various risk financing structures, including captives, self-insurance programs, risk retention groups and surplus lines insurers. Many claims may not reach the retentions, arguably rendering the insurance policies nonresponsive to the claim.

Other than in personal injury protection cases, the New York law requires that insured defendants provide proof of insurance to other parties within 90 days after answering the complaint. This could lead to the disclosure of incorrect insurance information. To address that risk, risk professionals can instruct counsel to obtain the proper COI for a particular claim and advise that it may need to fine-tune their COI process with outside vendors or brokers.

In the cases where arguments are made that COIs are not sufficient proof of insurance, insureds should be prepared to disclose redacted portions of their declaration pages. 

The New York law also requires insured defendants to identify the claims adjustor assigned to the claim, including a potentially surprising level of detail such as the adjustor’s direct email address. It is critical to keep claims adjusters informed and risk professionals should alert their adjustors before this disclosure is made. Immediately report to counsel any plaintiff communications to the adjustor.

What steps can risk managers take to ensure compliance?

If possible, a risk professional or an attorney familiar with insurance coverage should assume responsibility for an organization’s compliance with these disclosure requirements in all New York cases. This will be instrumental in ensuring responses are uniform and avoiding disclosure errors. 

Creating a checklist, as well as a readily accessible library of COIs, redacted declarations pages, and other pertinent information can help keep the organization compliant with New York’s law. Although there might be differing disclosure requirements, organizations with larger footprints should consider extending this structure across other states as well.

By taking these steps, risk professionals can minimize insurance disclosure disputes, assist with their organization’s compliance efforts, and avoid unnecessary interference with an organization’s insurance program.

What Employers Need to Know About Federal COVID-19 Vaccine Mandates

In an effort to combat the COVID-19 virus and its subsequent variants, the Biden administration has instituted three important mandates that employers should be aware of as they may impact their business. First, the Emergency Temporary Standard (ETS), issued by the Occupational Health and Safety Administration (OSHA), requires that all employers with 100+ employees mandate vaccination or weekly testing. The second mandate involves federal workers and contractors and requires them to obtain a vaccination without any option for weekly testing. The final mandate was issued by the Centers for Medicare and Medicaid Services (CMS), and requires vaccination of all healthcare workers at CMS-covered facilities.

OSHA’s Emergency Temporary Standard

The mandate that has the most wide-ranging impact is Occupational Health and Safety Administration’s (OSHA) Emergency Temporary Standard (ETS) that calls for employers with 100 or more employees to either require employees to obtain a COVID-19 vaccination or to prove compliance with a weekly-testing program. This ETS is expected to affect over 80 million employees. 

On December 17, the Sixth Circuit Court of Appeals lifted the stay placed on OSHA’s ETS issued by the Fifth Circuit in November. The court held that OSHA does have statutory authority to mandate national vaccines and/or testing for employers with more than 100 employees. Specifically, it outlined that because COVID-19 is a virus that causes bodily harm, OSHA was well within its administrative authority to regulate the health and safety of employees. 

Since the Sixth Circuit’s decision to dissolve the stay, OSHA announced that it will not be issuing citations for noncompliance with the ETS requirements until January 10 and the testing requirements will not be enforced until February 9 with the caveat that the employer must make good faith efforts to come into compliance as soon as possible.

After this ruling by the Sixth Circuit, eight groups challenged the OSHA vaccine mandate and filed emergency applications with the U.S. Supreme Court asking it to stay the mandate again until the case can be heard in the highest court. On December 20, the Supreme Court requested a response from the federal government by December 30. And, on December 22, in an almost unprecedented move, the Supreme Court ordered oral argument on these emergency applications, which will take place on January 7.

Despite the fact that the validity of the ETS is now squarely before the Supreme Court, employers should still operate as if the ETS will go into immediate effect. OSHA has implemented new deadlines to reflect the current status of the ETS.

By January 10, employers should:

  • Track employee vaccination status
  • Create a database detailing vaccination information for each employee
  • Require unvaccinated employees to wear a mask
  • Provide paid time off for employees to get vaccinated and recover

As of February 9, 2022, employers must also require unvaccinated employees must start testing for COVID weekly. Self-administered or self-read tests would not comply. Employers must observe or use a proctor and have employees tested on site, or at a recognized testing facility.

The Mandate for Federal Employees and Contractors

The second mandate stems from President Biden’s executive order that requires most federal employees or contractors to get vaccinated. This mandate does not have a testing option.

On December 7, the U.S. District Court for the Southern Section of Georgia granted a preliminary injunction to temporarily halt the enforcement of the Biden’s administration’s vaccine mandate for federal contractors.The court found that the administration had overstepped the bounds of it authority under the Federal Property and Administrative Services Act 40 U.S.C. 101 et. seq. The injunction effectively prohibits enforcement of the federal contractor vaccine mandate in all 50 states and any territory of the United States. However, on December 17, the Eleventh Circuit, denied the government’s motion to stay. This effectively upheld the injunction. The court found that the government had failed to show that it “would be irreparably harmed absent a stay.”

The CMS Mandate

The third mandate is an interim file rule of the Centers for Medicare and Medicaid Services (CMS), which requires vaccination of all healthcare workers at CMS-covered facilities throughout the United States. The CMS mandate is currently enjoined by court order in 25 states and continues in full effect in 25 other states. After the ruling by the Fifth Circuit in November, however, CMS suspended implementation and enforcement of the mandate pending resolution of the challenges before the Supreme Court.

Employer Accountability Targeted by Osha and DOJ

Safety harness
OSHA and the Department of Justice (DOJ) formally agreed to team their investigations and prosecute worker endangerment violations on Dec. 17, 2015. While the agencies have worked together in the past, this is now a formal arrangement which employers should be very concerned about, especially those with something to hide. Facing OSHA is bad enough, but it’s a walk in the park compared to tangling with the Department of Justice.

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“On an average day in America, 13 workers die on the job, thousands are injured, and 150 succumb to diseases they obtained from exposure to carcinogens and other toxic and hazardous substances while they worked,” said Deputy Attorney General Sally Quillian Yates in a memo sent to all 93 U.S. Attorneys across the country. “Given the troubling statistics on workplace deaths and injuries, the Department of Justice is redoubling its efforts to hold accountable those who unlawfully jeopardize workers’ health and safety.”

Deputy Yates urged federal prosecutors to work with the DOJ in pursuing worker endangerment violations. The worker safety statutes provide only for misdemeanor penalties. Prosecutors, however, are now encouraged to consider utilizing Title 18 and environmental offenses, which often occur in conjunction with worker safety crimes, to enhance penalties and increase deterrence. Title 18 of the United States Code is the criminal and penal code of the federal government, dealing with federal crimes and criminal procedure.

This cooperation could lead to hefty fines and prison terms for employers and individuals convicted of violating a number of related laws.

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For example, the owner of a roofing company may go to prison for up to 25 years in connection with the death of one of his workers who fell off of a roof. Not only did the worker not have the required fall protection equipment, but the owner then lied to OSHA inspectors.

James McCullagh, owner of James J. McCullagh Roofing Inc. of Philadelphia, pleaded guilty in federal court to six charges in connection with the death of Mark Smith in June 2013. Smith fell 45 feet from a roof bracket scaffold while repairing the roof of a church in Philadelphia.

McCullagh pleaded guilty to one count of willfully violating an OSHA regulation causing death to an employee (failing to provide fall protection equipment) and four counts of making false statements. He admitted lying to investigators that he had provided safety gear and harnesses to his employees when, in fact, he hadn’t.

McCullagh also admitted to telling an OSHA inspector he had seen his employees in harnesses and tied off earlier on the day Smith fell to his death. McCullagh pleaded guilty to one count of obstruction of justice for instructing workers to tell OSHA investigators that they had safety equipment when they did not. He was sentenced in March 2016 to 10 months in prison as well a one year of supervised release and a $510 special assessment.

“No penalty can bring back the life of this employee,” said OSHA chief David Michaels, “but the outcome, in this case, will send a clear message that when employers blatantly and willfully ignore worker safety and health responsibilities, resulting in death or serious injury to workers, or lie to or obstruct OSHA investigators, we will pursue enforcement to the fullest extent of the law, including criminal prosecution.”

While criminal prosecution in worker fatalities is still a rarity, the likelihood of charges being brought increases when there is suspicion of lying to OSHA or other federal officials.

This partnership has been brewing for a while, as the Justice Department has tried to use the nation’s tougher environmental statutes to bring stronger prosecutions of workplace safety violations by focusing on companies that put workers in danger.

OSHA has placed emphasis on criminal enforcement of workplace safety violations recently by referring more cases to the Department of Justice and U.S. Attorneys offices for criminal prosecution. They referred or assisted with the criminal prosecution of 27 cases in fiscal year 2014—the highest ever in OSHA history.

What can an employer do to avoid the double team? They first need a strong offense by recognizing that under the OSHA Act, they are responsible for providing a safe and healthful workplace. Second, they must know that OSHA’s mission is to assure safe and healthful workplaces by setting and enforcing standards. They also provide training, outreach, education and assistance.

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OSHA inspections can be conducted without advance notice, on-site or by phone by highly trained compliance officers. Their priorities are imminent danger; catastrophes and fatalities; worker complaints; targeted inspections due to high injury or illness rates; and severe violators as well as follow-up inspections.

One of the errors many employers make is waiting too long to put an effective program in place. They risk a huge fine, being placed on the Severe Violators Enforcement list, or even jail. Before OSHA shows up, companies need to establish good safety and health programs with four essential elements:

  • Management Commitments and Employee Involvement. The manager or management team must lead the way by setting policy, assigning and supporting responsibility, setting an example and involving employees.
  • Worksite Analysis. The worksite is continually analyzed to identify all existing and potential hazards.
  • Hazard Prevention and Control. Methods to prevent or control existing or potential hazards are put in place and maintained.
  • Training for Employees, Supervisors and Managers. Managers, supervisors, and employees are trained to understand and deal with worksite hazards.

“Every worker has the right to come home safely. While most employers try to do the right thing, we know that strong sanctions are the best tool to ensure that low road employers comply with the law and protect workers lives,” said Assistant Secretary for Occupational Safety and Health Dr. David Michaels. “More frequent and effective prosecution of these crimes will send a strong message to those employers who fail to provide a safe workplace for their employees.

We look forward to working with the Department of Justice to enforce these life-saving rules when employers violate workplace safety, workers’ health and environmental regulations.”

That’s why it is important to have a living, targeted safety program, versus one copied from another employer or one quickly downloaded from a website. OSHA inspectors can quickly determine if a program is real or just a binder on a shelf.

Given the formal partnership with OSHA, the Justice Department’s renewed focus on prosecuting individuals, company executives, managers, and supervisors for workplace safety violations, organizations should note the enhanced risks, and implement measures to stay in the clear and keep their workers safe.

The Best and Worst States for Business, According to CEOs

For CEOs, who naturally favor “pro-growth,” low-tax states, southern states present an undeniable bastion for business, according to Chief Executive magazine’s 2015 “Best and Worst States for Business” survey.

In this year’s survey, Texas remained the best state for business for the 11th year in row, followed by Florida, North Carolina, Tennessee and Georgia. Since the recession began in December 2007, 1.2 million net jobs have been created in Texas, while 700,000 net jobs were created in the other 49 states combined, the magazine reported. This job creation contributed toward unemployment rates 1% lower than the national average, an advantage rounded out by extremely favorable taxation and regulation, strong workforce quality, and very good marks for living environment.

Despite notably low unemployment, two of the greatest hubs for business drew particularly unfavorable marks from CEOs: California ranked last in the survey, preceded by New York. Illinois, New Jersey and Massachusetts completed the bottom five. CEOs gave these states the lowest ratings because of their high tax rates and regulatory environments. One CEO told the magazine, “The good states ask what they can do for you; the bad states ask what they can get from you.”

Compared to the 2014 rankings, Idaho has made the largest improvement, rising 10 spots to number 18, primarily due to high growth rates in GDP, while South Dakota dropped eight places, “even though quality-of-life attractions enhance the state’s low-tax bona fides,” the magazine reported.

Check out the full rankings below:

Best States for Business rankings