Covering Coronavirus: Risk Considerations

EPIC Risk Advisory Bulletin

Volume 2, Issue 5

In this issue, we take a focused look at:

1. Supply Chain and Business Risks
   • Cybersecurity Resources
   • Federal Railroad Administration Requires Masks
   • Could Home Tests Bring Business Travel Back?
2. Insurance Products and Coverage Information
   • Business Interruption
   • Presumptive Compensability
   • News of Note
3. Human Resources and Employee Benefits
   • DOL Issues Guidance on Unemployment Benefits
   • OSHA Audit on Pandemic Handling
   • Covering Coronavirus Hospitalization Bills
   • Coronavirus Vaccine Developments
   • 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.

Supply Chain & Business Risks

New Cybersecurity Resources Available

Cyber-attacks from sophisticated criminals have been on the rise since the start of the pandemic and show no signs of letting up. Attacks are up against law firms, accounting firms, and businesses of all types. Digital espionage targeting health bodies, vaccine scientists and pharmaceutical companies has surged in recent months.

Shipping companies transporting vaccines are using kill switches, panic buttons, plainclothes guards and increased monitoring to ensure delivery and ward off attacks from criminals. Heightened security measures are being taken after Interpol issued a global alert warning that criminal groups plan to target coronavirus vaccines. The CEO of the European arm of the Transported Asset Protection Association called the vaccine rollout, “the biggest security challenge in a generation,” according to a report in Bloomberg Businessweek.

In December, Pfizer, Inc. and its German counterpart, BioNTech, revealed that documents related to the development of the coronavirus vaccine the two firms were working on were hacked in a cyber-attack.

Oxford University later announced that it was investigating a digital intrusion after a researcher noticed evidence of a hack into a laboratory that had been researching coronavirus. While the hacked lab was not the same one that developed the Oxford coronavirus vaccine in partnership with AstraZeneca, it nonetheless renewed concerns over cybersecurity across the professional world and how businesses and organizations can protect themselves from cyber-attacks.

The Center for Internet Security’s (CIS) Security Operations Center noted a marked increase in remote desktop protocol exploitation, which it says is likely due to nefarious attempts to exploit teleworking capabilities. One tactic seeing increased deployment was coronavirus-styled phishing attempts, where cyber criminals sent malicious emails disguised as containing trustworthy, official information related to the pandemic.

The CIS has released a guide containing information about current, common cyber-attacks, which is available online. Visit the CIS website 

It continues to recommend sound cyber practices and increased vigilance from employees as the best safeguards against cyber-attacks. In particular, employees should be wary when opening emails about coronavirus, especially from senders outside the company or organization.

For more information about cybersecurity best practices or cyber coverage, contact an EPIC broker.

Federal Railroad Administration Requires Masks

The Federal Railroad Administration (FRA) issued an emergency order on March 1 requiring railroad employees to wear masks while working. The measure is designed to prevent the spread of the coronavirus and was issued to require compliance with the masking requirements issued by the Centers for Disease Control (CDC) regarding Masking While on Conveyances and Transportation Hubs. Trains were included in the CDC’s recommended modes of transportation for which masks should be required.

Further, the order supports the Transportation Security Administration (TSA) Security Directive, 1582/84-21-01, which included passenger rail in its masking requirements. With coronavirus and its variants continuing to present unprecedented challenges to the health of the traveling public, wearing of masks on all modes of transportation can mitigate the risk of travelers spreading coronavirus. It can instill safety and confidence in the transportation systems, and as such, the Transportation Secretary directed FRA to take action to support and carry out the enforcement of the CDC order.

The order applies to all railroad personnel, including those who have received a coronavirus vaccine or who have recovered from the virus.

Could Home Coronavirus Tests Bring Business Travel Back?

Some states and countries now require visitors to provide proof of a negative coronavirus test to enter. People refusing to comply may face mandatory quarantine periods.

The European Union is proposing a vaccine passport system for Europe. The proposed Digital Green Pass would allow vaccinated individuals to travel more freely than those who are not vaccinated. In America, as home testing kits hit the market, there is some question as to whether or not their use could revive the sluggish business travel economy.

The pandemic turned travel managers into risk managers overnight and any meaningful return to pre-pandemic levels has been inexorably intertwined with safety. Still, signs are beginning to point to a turn. Delta Airlines’ CEO commented that corporate travel is ready to start coming back and will return fairly aggressively beginning in the second half of 2021. As more of the population becomes fully vaccinated, Delta expects a pent-up demand for travel – business and leisure, to drive air traffic back up dramatically in the third or fourth quarter.

Some areas, such as Construction and Healthcare, are not well-suited for remote work and will likely be the first to return to pre-pandemic levels. Others, such as office-based work, can be done quite efficiently in a remote environment with videoconferencing and productivity tools. In this case, business travel will likely resume at a slower pace. Many are hopeful that widespread vaccinations will spur global travel and in-person work.

As vaccinations rates rise, a vaccine alone is not yet enough to enter most destinations, including the United States. And, the CDC left travel off its recommended activities for those who are fully vaccinated, due to the possibility of infecting unvaccinated individuals from high-risk populations. Negative coronavirus tests remain a standard of entry in many places.

Since obtaining tests can be cumbersome and in some cases, expensive, an opportunity has arisen for self-administered tests that can be taken at home or in a hotel room. Tests that were greenlit by the Food and Drug Administration (FDA) last year for emergency use authorization are now available for purchase. Airlines, notably Delta, are encouraging their use, even partnering with Azova to make home saliva tests available for travelers for under $120. Tests require video observation during administration of the test. Hawaii has initiated a pilot program with biometrics company Clear, to access at-home and in-person tests from an approved list of providers.

While these options may spur the return of business travel, users should take care to review the specific entry requirements of the particular destinations visited as many require a polymerase chain reaction lab test, and others accept rapid antigen versions.

Insurance Products & Coverage

Business Interruption Update

Legal activity continues to accrue, with a number of business interruption cases making headlines. In Boston, a federal district court dismissed a case filed by a real estate company against a Berkshire Hathaway unit, saying it was joining other courts’ decisions to dismiss what were viewed as outliers.

The decision turned on the interpretation of the contract language, “direct physical loss or damage to property.” In the Boston case, as in others elsewhere, the court decided coronavirus fell outside the policy’s scope of coverage for circumstances causing direct physical loss. While the ruling excluded remediation for the presence of bacteria, it considered the virus a transient phenomenon of no lasting effect and incapable of causing actual physical damage, reputational harm or loss.

It further commented that the many cases seeking to expand policy terms to apply to the widespread losses caused by the coronavirus pandemic are following outliers as opposed to dismissing on grounds. There was more bad news for policyholders when a federal district court dismissed a suit filed by a Las Vegas restaurant chain, ruling that the coverage applied only to ingestible items and not to service.

Plaintiffs had sought coverage for its seven-store chain under a Restaurant Recovery Insurance Policy from Tokio unit U.S. Specialty Insurance Co. Plaintiffs had argued that when the government suspended in-person dining, they suffered a covered loss, but the court argued the policy narrowly covered food and not the serving (in-person or otherwise) of that food, and dismissed the case.

On the other side of the litigation debate, policy owners were given new hope when a federal district court in California ruled that a Sompo International Holdings unit inappropriately hinged its denial of a hotel investment trust’s BI claim to a separate provision in its environmental policy. The insurer had claimed that the insured would have to incur $100,000 in cleanup costs to trigger coverage, but the court ruled that was nowhere in the policy’s section on business interruption and was therefore denying the insurer’s motion to dismiss.

In Chicago, a federal court ruled against a Wisconsin-based insurer’s request to dismiss lawsuits filed by several clients whose operations were shut due to pandemic lockdowns. The decision now allows those cases to move forward in court, and for a decision to be made regarding whether or not pandemic-related losses constitute direct physical loss or damage and are therefore covered.

All of this activity continues to come as approaching contractual limitations periods may impact policyholders’ ability to seek business interruption coverage for coronavirus related losses.

For more information on this evolving situation, contact an EPIC broker.

Presumptive Compensability Legislation

States continue to introduce coronavirus presumptive compensability legislation. Washington State was the latest, where its senate passed legislation that would make it easier for frontline workers to receive workers’ compensation for occupational diseases. The legislation establishes a presumption that infected workers acquired the virus on the job, but also allows employers to rebut the presumption. The bill also mandates that employees wear PPE at no cost to employers, and safeguards workers who raise concerns about workplace safety from retaliatory acts by employers.

In Texas, the State Department of Insurance issued a memo stating that employers with employees who are required to receive the coronavirus vaccine, and who miss one or more days of work because of adverse reactions to it, should file a First Report of Injury with the state’s Workers’ Compensation division. Workers’ compensation claims in the Lone Star state were nearly 25% higher in 2020 than the year before, and insurers disputed nearly 50% of claims with positive coronavirus test results. Income replacement costs for coronavirus claims totaled $21.2 million, which was well above the $13.4 million related to medical claims.

The National Law Review has compiled a helpful list of the state, territorial and local government policies proposed or passed in response to the ongoing coronavirus pandemic. It is organized by state and is available online.

For more information, 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.

• Coronavirus travel insurance becoming a vacation staple, Fox Business, March 7
• Cal/OSHA issues over $150K in fines for coronavirus violations, Business Insurance, March 3
• New Jersey passes bill upping payout to essential worker dependents, Business Insurance, March 3
• Coronavirus vaccine scams grow, leveraging confusion about how to get the shot, The Wall Street Journal, Feb. 23
• The No Surprises Act Becomes Law, JD Supra, Feb. 8 (in case you missed it)

HR & Employee Benefits Insights

DOL Issues Guidance on Unemployment Benefits

The Department of Labor has issued guidance extending unemployment benefits to workers who declined to work in conditions that could have exposed them to coronavirus. The document raises the question of whether workers can refuse to work and still receive unemployment benefits.

An executive order signed by President Biden at the end of January clarified that workers have a federally guaranteed right to refuse employment that will jeopardize their health and that if they do so, they will still qualify for unemployment insurance. Generally, workers cannot refuse suitable work, which during the pandemic has been harder to define. The new guidance requires workers to demonstrate three matters:

• Ways in which work environment places their health in jeopardy
• Proof of actions to raise the issue with their employer to enforce an improved standard
• Evidence that employer has chosen not to act on recommended health and safety guidance from CDC, federal government, state or local regulations

Importantly, a general fear of contracting coronavirus does not constitute sufficient cause to refuse suitable work, nor does it create the existence of an unsuitable work environment. However, if an employee can show that their employer is not following OSHA guidelines for workplace safety, such a condition could constitute an unsuitable workplace environment.

OSHA to be Audited on Handling of Pandemic

The Office of Inspector General for the Department of Labor is initiating an audit of OSHA’s operations and efforts related to protecting employees from exposure to coronavirus. The move is one democrats have been calling for since last summer.

The audit follows an executive order signed by President Biden on January 21, which called for OSHA to issue stronger safety guidance for workplaces; to review its enforcement efforts; and create an emergency temporary standard that would mandate requirements like mask-wearing, social distancing, handwashing breaks, and communication with workers during outbreaks.

The actions signal a shift from the previous administration, which preferred to let states, local governments and employers determine what constituted a safe work environment. By contrast, the new administration seeks to establish a national standard for all employers to follow.

For more information, contact an EPIC team member.

Paying Coronavirus Hospital Bills – Workers’ Compensation or Healthcare?

A trend is emerging in coronavirus-related medical bills; commercial health plans are delaying, and in some cases denying, reimbursement for coronavirus hospitalizations. This is particularly true of expensive inpatient stays. Health insurance plans are trying to defer these expenses to workers’ compensation coverage, on the grounds that the illness and subsequent hospitalization is work-related.

It is uncertain how workers’ compensation systems will respond; reports of lingering, “long haul” symptoms of coronavirus are causing industry experts to question how chronic health issues related to coronavirus infections will impact the workers’ compensation market. While most people who contract coronavirus recover in a matter of weeks, about 10% suffer from ongoing fatigue, “brain fog,” trouble sleeping, loss of smell and taste, joint pain, shortness of breath and coughing. Such symptoms could lead to a significant number of long term disability cases, particularly with the number of states that have passed or are considering presumptive compensability standards.

Workers’ compensation is a complex system that is set up to operate primarily for the coordination of benefits. Hospitals unfamiliar with how the system operates may find it difficult to identify when it is appropriate to challenge a health plan denial. Since failing to appeal denials could impact reimbursement, particularly for hospitals (which stand to bear the brunt of coronavirus long-haul cases) it is critical for hospitals to understand how workers’ compensation operates and act efficiently within it.

Hospitals faced with such a scenario should take steps to better understand their state’s workers’ compensation laws and coverage available for coronavirus hospitalizations. They should gain clarity on whether or not their state designates coronavirus as an occupational illness and whether a patient’s occupation falls within the state’s definition of a covered worker.

If the patient is not eligible for coverage under workers’ compensation, a hospital could appeal the health plan’s delay or denial of reimbursement.

For more information, contact an EPIC team member.

Coronavirus Vaccine Developments

As coronavirus vaccines from three different manufacturers (Moderna, Pfizer, and Johnson & Johnson) roll out in communities across America, hope is beginning to dawn for a return to school, work and recreation. Confidence in the vaccine is growing worldwide as more individuals are vaccinated and side effect worries fade.

This confidence could be buoyed by new guidance for fully vaccinated people released by the CDC on March 8. The information states that fully vaccinated people can:

• Visit with other fully vaccinated people indoors without wearing masks or physical distancing
• Visit with unvaccinated people from a single household who are at low risk for severe coronavirus disease indoors without wearing masks or physical distancing
• Refrain from quarantine and testing following known exposure if asymptomatic

The CDC stated that for the time being, fully vaccinated people should continue to wear masks and practice social distancing in public, and around individuals who are unvaccinated and at increased risk for severe coronavirus disease. In addition, it advises to avoid medium and large-sized in-person gatherings; get tested if experiencing coronavirus symptoms; follow CDC and health department travel requirements and recommendations; and importantly, follow the guidance issued by individual employers.

With vaccination providing hope for a return to normalcy, corporate America has joined in the vaccination effort. This includes the Move the Needle initiative, which is a nationwide campaign sponsored by the Business Roundtable to support President Biden’s efforts to increase vaccination and mask-wearing, and a “wartime mobilization” effort. Business Roundtable Chairman and Walmart CEO Doug McMillon, pledged to lend expertise, help dispatch vaccine doses more efficiently, leverage resources to ensure successful vaccination, and play a leading role in administering the vaccine.

One example of this cooperative effort can be seen in pharmaceutical company Merck’s decision to help produce its rival, Johnson & Johnson’s, coronavirus vaccine to expand supply quickly. While the two companies had been talking about cooperation on vaccine production for months, an “across the board” effort was made by White House officials to broker an official deal. Ford and The Gap will donate more than 100 million masks for free; pro sports leagues will allow more than 100 stadiums and arenas to be used as mass vaccination sites; Uber, PayPal and Walgreens will provide free rides to vaccination sites; and Best Buy, Dollar General and Target will give employees paid time off to get vaccinated.

In order to help people become aware of where they can get vaccinated, the CDC has launched a nationwide VaccineFinder tool. Currently, the site includes data from a few states, with more states expected to be added over the coming weeks. On the site, users may enter a zip code and select a search area to find a vaccine distribution site near them. Another helpful site to use to identify where vaccines are being distributed on a state-by-state basis is vaccinespotter.org.

The Biden administration says it will provide states with estimates of expected vaccine shipments months in advance as opposed to weeks, to help with states’ planning efforts. It has also said to expect substantial boosts in vaccine supply by 40% in early March.

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. The most recent articles include:

• The Shifting Infertility Landscape, March 8
• New Quality Management Standards for Accounting Firms, March 5
• Webinar Series: 2021 Employee Benefits Compliance Webinars – Register Now
• When is a Short-Term Disability Plan a Payroll Practice?, March 2
• Recording: The Ransomware Threat Landscape for Law Firms, March 2
• The COVID-19 Pandemic Didn’t Create a Mental Health Crisis, It Exposed It, March 1
• Enforcement Efforts for Mental Health Parity – New Comparative Analysis, March 1
• IRS Notice 2021-15 Provides Guidance on COVID-Related Cafeteria Plan Flexibility, March 1
• New DOL Outbreak Period and Extended Time Frames Guidance, March 1
• Recording: Understand How the Vaccine Will Impact Your Business, February 25

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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