EPIC Risk Advisory Bulletin
Volume 1, Issue 18
The global COVID-19 (coronavirus) pandemic remains both dynamic and fluid. We continue to see unprecedented disruptions at home and abroad. In this issue, we take a focused look at:
- General Information on Coronavirus
- Supply Chain and Business Risks
- U.S. DOL Acts to Help American Workers and Employers
- FMCSA Notice on Random Drug and Alcohol Testing Compliance
- Insurance Products and Coverage Information
- Business Interruption Litigation Update
- Liability Immunity Measures Move Forward
- News of Note
- Human Resources and Employee Benefits
- Coronavirus Testing Raises Questions
- Presumptive Compensability Legislation Update
- Coronavirus-Related Claims Rise
- Insights from Across the Firm
The information presented here is intended to provide a high level overview of critical areas of concern for businesses around coronavirus. Consult your EPIC insurance broker for more in-depth guidance.
General Information on Coronavirus
The best sources overall for timely information on the coronavirus pandemic remain the Centers for Disease Control (CDC), the World Health Organization (WHO) and Occupational Safety and Health Administration (OSHA).
EPIC continues to compile resources to aid in understanding the impact of the pandemic on employers, their workforces and the management of risk.
Supply Chain & Business Risks
U.S. DOL Acts to Help American Workers and Employers
The United States Department of Labor (DOL) recently took a range of actions to support and protect American workers and employers amidst the ongoing coronavirus pandemic. Perhaps the most significant was its awarding more than $245 million in grants for workers dislocated by the pandemic. The grants are funded by the CARES Act, which was passed by congress in March.
The Dislocated Worker Grants (DWGs) aim to address workforce-related impacts of the coronavirus, by expanding worker training and employment programs at the state and local levels.
In addition to the grants, the DOL has issued FAQs on keeping workers safe and is hosting webinars on providing coronavirus-related paid sick leave to workers. The FAQs cover cleaning and disinfection best practices as well as the use of cloth face coverings, PPE, testing, training and returning to work, among other important issues. The webinars run weekly on Tuesdays during July.
Most recently, the DOL issued guidance on how to protect oil and gas workers from contracting or transmitting the virus. The guidance covers both engineering and administrative controls employers can take to protect workers in this already dangerous industry.
Reach out to your EPIC broker for more information and resources.
FMCSA Releases Notice on Random Drug and Alcohol Testing Compliance
The Federal Motor Carrier Safety Administration (FMCSA) released a notice regarding compliance with random controlled substance and alcohol testing for commercial drivers.
The FMCSA is aware that the motor carrier industry continues to experience operational disruptions caused by the coronavirus. As the Nation engages in a phased re-opening, the pace of return to normal operations will vary across the country. In some regions of the U.S., motor carrier employers subject to controlled substance (drug) and alcohol testing under Part 382 may be unable to comply with certain testing requirements due to the ongoing impacts of the emergency.
In recognition of these barriers to full compliance in some locations, the FMCSA may exercise discretion to determine not to enforce the minimum annual percentage random testing rates for drugs and alcohol. They may also ease the requirement that employers administer random drug and alcohol tests throughout the calendar year (set forth in Sections 382.305(b)(1) and (2) and 382.305(k)). The FMCSA emphasizes, however, that employers capable of meeting these requirements must continue to do so.
Employers must continue to select drivers at the required rate of 50 percent of their average number of driver positions for controlled substances, and 10 percent for random alcohol testing during the calendar year 2020. If a test is unable to be completed, the motor carrier must maintain written documentation of the specific reasons for non-compliance. For example, employers should document closures or restricted use of testing facilities or the unavailability of testing personnel. Additionally, employers should document actions taken to identify alternative testing sites or other testing resources, and note factors such as prolonged or intermittent driver furloughs due to the impacts of coronavirus.
The FMCSA issued this Notice to assure employers unable to fully comply with the requirements identified above that they will provide reasonable enforcement flexibility during this unprecedented pandemic. At the same time, employers should not lose sight of FMCSA’s core safety mission, as this Notice does not suspend the current random testing requirements.
For more information, reach out to a member of the EPIC Transportation & Logistics team
Insurance Products & Coverage
Business Interruption Litigation Update
An ongoing issue since the onset of the coronavirus pandemic has been whether or not insurers will be required to pay business interruption claims on the basis of the virus. Many businesses have sued insurers for payment. Thus far, courts have ruled on the side of insurers.
The U.S. District Court for the Southern District of New York and the Pennsylvania Supreme Court are two prominent examples of litigation decided in favor of insurers. In the New York case, the judge denied the plaintiff’s claim for business interruption coverage for losses sustained due to suspended operations because of coronavirus-related governmental orders. The Pennsylvania case was decided without comment.
In Michigan, a judge ruled against two restaurants seeking to recover revenue lost during the shut-down period through their business interruption policies. The New York and Michigan cases are alike in ruling that no physical damage was incurred by the plaintiffs, which is a necessary trigger for coverage in business interruption policies.
In Las Vegas, one plaintiff of a large casino is filing suit for coverage under an all risks policy based on an allegation that its closure due to the pandemic has caused it to sustain both physical loss and damage. The plaintiff’s argument is that no specific language existed in its policy naming coronavirus as an excluded trigger for coverage.
The sticking point in the resolution of all these cases appears to be policy language. Action abroad could provide an indication of how future cases in America may be decided. The Financial Conduct Authority (FCA) in the United Kingdom, an independent regulator of insurers, is taking a direct approach to identify key language in insurance policies, looking at the prevalent facts acting upon them, and identifying the legal questions raised by them. While test cases will be settled under UK law, the results could provide guidance for policyholders in the U.S. with similar claims.
As these contentious issues continue to play out in the courts, swift, smart action by policyholders and careful review of policy terms and language remains critical. For assistance addressing your needs, reach out to an EPIC broker.
Liability Immunity Measures Move Forward
An ongoing issue concerning businesses and insurers is whether or not they will be provided immunity from civil liability for coronavirus-related claims. Numerous states, including Louisiana, North Carolina, Oklahoma, Utah and Wyoming have adopted laws granting businesses some form of immunity.
In North Carolina, the most recent state to adopt immunity legislation, liability protections now exist for all state businesses that develop coronavirus mitigation plans. Those protections posit that businesses would be protected from claims stating that an employee contracted coronavirus based on the property or business owner’s negligence. In Louisiana, three house bills offer businesses protection from most lawsuits involving coronavirus-related deaths or injuries.
On a national level, Senate Majority leader Mitch McConnell commented recently that his party will prioritize liability protections for businesses and health care institutions in the next round of coronavirus legislation. McConnell has called for a five-year lawsuit shield for businesses as part of the HEROES Act (Health and Economic Recovery Omnibus Emergency Solutions Act), which was passed by the House of Representatives on May 15 and is expected to be considered by the Senate sometime in July.
According to McConnell, the liability legislation will protect businesses from all claims with the exception of gross negligence or intentionally harmful conduct. Democrats have opposed such liability protections, and it is unclear whether a compromise can be reached.
For questions about how this developing issue may impact you, contact an EPIC broker.
News of Note
The passage of another two weeks has brought forth more developments across the insurance world. Here is a rundown of recent news stories of interest.
- Anticipating the impact of COVID-19 on the Representations and Warranties insurance market, National Law Review, July 13
- Government officials, and insurers, in fight against COVID-19 fraud, July 9
- Insurance costs on the rise for colleges, Inside Higher Ed, July 8
- Coronavirus effect on workers compensation in New York may be less than predicted, Business Insurance, July 8
- Movie theater chains sue New Jersey over coronavirus-related closures, Reuters, July 7
- US commercial prices rise in Q2: MarketScout, Business Insurance, July 7
HR & Employee Benefits Insights
As Workers Return, Coronavirus Testing Raises Questions
Across America, coronavirus cases are surging. The number of new daily cases has risen exponentially since the middle of June. Still, many workers have been authorized to return to their offices on either a full- or part-time basis. In Washington, the Pentagon has authorized up to 80 percent of its workforce to return.
While many private-sector employers remain cautious about bringing workers back, a Gallup News poll reported increased numbers of workers on-site at workplaces over a seven-week period. The poll also discovered that 46 percent of U.S. workers are concerned about being exposed to coronavirus at work.
Resources are available from the CDC and OSHA that outline standards and directives for employers on how to maximize workplace and worker safety amidst the ongoing pandemic. OSHA also recently released guidance on developing a strategy for employers considering testing employees for coronavirus.
The strategy allows testing to be incorporated as part of a comprehensive approach to reducing transmission in non-healthcare workplaces. Specifically, it recommends testing be conducted in five scenarios:
- Testing employees displaying coronavirus symptoms.
- Testing workers who were within six feet of an infected employee for 15 minutes or longer.
- Testing individuals who are asymptomatic and have had no known exposure to the virus, including an initial screening before returning to the workplace and/or at regular intervals.
- Testing to determine when an employee may discontinue home isolation.
- Testing to detect transmission hot spots.
The guidance also recommends that employees undergoing testing receive clear information on the manufacturer, name, type, purpose, reliability and any limitations associates with the test, as well as who will pay for it.
Meanwhile, new guidance from the White House states that insurers are not required to cover coronavirus tests for its members if a test is conducted solely as a condition of returning to work. The guidance clarifies that insurers must cover coronavirus testing for members without cost sharing if a health care provider determines a test is ‘medically appropriate.’ This indicates that tests required to screen for general workplace health and safety are not required to be covered by insurers.
Thus far, many insurers, including the nation’s largest – United Health Care, have erred on the side of providing full coverage for the cost of coronavirus tests without requiring them to be deemed medically necessary. However, a study funded by America’s Health Insurance Plans reveals the cost of continuing such a practice may reach $25 billion a year, which could be potentially detrimental to insurers if they are required to continue fully funding precautionary testing for workers.
At present, the White House’s guidance leaves the responsibility for payment of the tests open-ended. It remains to be seen what response may come from employees who are unable to afford the test or decline to pay, when one is required by employers as part of a standard screening process.
For more information or resources on managing return to work decisions, contact an EPIC team member.
Presumptive Compensability Legislation Update
An ongoing issue affecting workers’ compensation is presumptive compensability legislation from states. At least 18 states have proposed workers’ compensation bills related to coronavirus, including expanding coverage for either frontline, essential or all workers. Some states have issued executive orders, bulletins, emergency rules and directives on workers’ compensation coverage for certain workers. It is a dynamic situation that warrants monitoring by employers.
An excellent resource for staying current on legislative activity is the National Council on Compensation Insurance (NCCI) site. NCCI is tracking state compensability presumption legislation and updates state statuses weekly. Its coronavirus workers’ compensation compensability presumptions chart is updated weekly with developments around state legislative activity in this area and can be accessed here
Coronavirus-Related Claims Rise
A new report released by Fisher Phillips law firm reveals that employment discrimination and work-from-home claims are on the rise. The study found a 43 percent increase in coronavirus-related lawsuits during the month of June.
Highlights of the report include the following findings:
- Unsafe working conditions and wage and hour concerns comprise the most common types of workplace class action claims.
- Forty-one class actions were filed in June, an increase of 65%.
- Employment discrimination, work-from-home leave, retaliation, unsafe working conditions and wage and hour concerns make up the top five claim classifications.
- California leads the nation in the number of coronavirus workplace lawsuits filed; Florida, New Jersey, New York and Texas round out the top five.
The Report findings are not surprising given the current environment. The main source of coverage for non-bodily injury claims brought by employees against their employers is Employment Practice Liability coverage (EPL). The terms, conditions, and exclusions in EPL policies vary considerably.
Coverage under EPL policies for claims arising from coronavirus is not a given by any stretch of the imagination. There are a number of fairly common exclusions that could preclude or limit coverage for many of the types of claims identified in the Report. Further, it is probably safe to say, none of the existing EPL policies contemplated the volatility or complexity our current environment.
For more information or resources regarding workplace matters, contact an EPIC broker.
Insights From Across the Firm
EPIC thought leaders have written numerous articles on matters relating to coronavirus, all of which are available on EPIC’s website. Those most recent articles include:
- Community Wellness – a Lesson in Social Distancing, July 13
- Flight to Quality, July 9
- 2021 Healthcare Cost Trends are Rising, July 6
Conclusion
Our understanding of coronavirus and its impact around the world continues to evolve at a rapid pace. This newsletter briefly touches on issues that businesses may want to consider as they approach their response to novel coronavirus. More topics will be considered in future issues as our understanding of the virus and its impact continues to evolve. Please reach out to your EPIC broker for more information.
For all of EPIC’s coronavirus coverage, visit epicbrokers.com/coronavirus
Disclaimer: This has been provided as an informational resource for EPIC clients and business partners. It is intended to provide general guidance on potential exposures and is not intended to provide medical advice or address medical concerns or specific risk circumstances. Due to the dynamic nature of infectious diseases, EPIC cannot be held liable for the guidance provided. We strongly encourage readers to seek additional safety, medical and epidemiological information from credible sources such as the Centers for Disease Control and Prevention and the World Health Organization. Regarding insurance coverage questions, whether coverage applies or a policy will respond to any risk or circumstance is subject to the specific terms and conditions of the policies and contracts at issue and underwriter determinations.
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