Post on 27-Dec-2015
transcript
Gallagher Healthcare Insurance Services
Emerging Liability Issues Emerging Liability Issues for Healthcare Executivesfor Healthcare Executives
Medical Professional Liability SymposiumMedical Professional Liability SymposiumMarch 11 – 12, 2003March 11 – 12, 2003
Chicago, ILChicago, ILModerator: James M. Fasone, ARMModerator: James M. Fasone, ARM
Senior Vice PresidentSenior Vice President
Emerging Liability Issues Emerging Liability Issues for Healthcare Executivesfor Healthcare Executives
Medical Professional Liability SymposiumMedical Professional Liability SymposiumMarch 11 – 12, 2003March 11 – 12, 2003
Chicago, ILChicago, ILModerator: James M. Fasone, ARMModerator: James M. Fasone, ARM
Senior Vice PresidentSenior Vice President
Healthcare Executive LiabilityHealthcare Executive LiabilityHealthcare Executive LiabilityHealthcare Executive Liability
Healthcare Executive LiabilityHealthcare Executive Liability
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DISTINGUISHED PANELISTSDISTINGUISHED PANELISTSDISTINGUISHED PANELISTSDISTINGUISHED PANELISTS
Susan Huntington, PA, JD, Senior Vice President Chubb Specialty Insurance
Susan Huntington, PA, JD, Senior Vice President Chubb Specialty Insurance
Robert K. Neiman, Esq., Partner, Litigation Sachnoff & Weaver
Robert K. Neiman, Esq., Partner, Litigation Sachnoff & Weaver
Michael Flanagan, Managing Director, Technology & Finance- Silicon Insurance
Michael Flanagan, Managing Director, Technology & Finance- Silicon Insurance
Healthcare Executive LiabilityHealthcare Executive Liability
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Existing Executive / Board Challenges Existing Executive / Board Challenges
New Executive / Board Challenges New Executive / Board Challenges
New Liability ExposuresNew Liability Exposures
Corporate Compliance PlansCorporate Compliance Plans
Defending Employment LitigationDefending Employment Litigation
Corporate GovernanceCorporate Governance
HIPPAHIPPA
Cyberliability / Information SecurityCyberliability / Information Security
Existing Executive / Board Challenges Existing Executive / Board Challenges
New Executive / Board Challenges New Executive / Board Challenges
New Liability ExposuresNew Liability Exposures
Corporate Compliance PlansCorporate Compliance Plans
Defending Employment LitigationDefending Employment Litigation
Corporate GovernanceCorporate Governance
HIPPAHIPPA
Cyberliability / Information SecurityCyberliability / Information Security
AGENDA
Healthcare Executive LiabilityHealthcare Executive Liability
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Existing Executive/Board Existing Executive/Board ChallengesChallenges
Healthcare Executive LiabilityHealthcare Executive Liability
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Employment LiabilityEmployment Liability Employment LiabilityEmployment Liability
Class Action LitigationClass Action Litigation
Wage/Hour LitigationWage/Hour Litigation
Physician/Staff Member LawsuitsPhysician/Staff Member Lawsuits
Unionization/Labor IssuesUnionization/Labor Issues
Class Action LitigationClass Action Litigation
Wage/Hour LitigationWage/Hour Litigation
Physician/Staff Member LawsuitsPhysician/Staff Member Lawsuits
Unionization/Labor IssuesUnionization/Labor Issues
Healthcare Executive LiabilityHealthcare Executive Liability
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Financial ChallengesFinancial Challenges Financial ChallengesFinancial Challenges
Sources of RevenueSources of Revenue
Strategic Alliances/PartnershipsStrategic Alliances/Partnerships
Solvency or Cash Flow IssuesSolvency or Cash Flow Issues
Sources of RevenueSources of Revenue
Strategic Alliances/PartnershipsStrategic Alliances/Partnerships
Solvency or Cash Flow IssuesSolvency or Cash Flow Issues
Healthcare Executive LiabilityHealthcare Executive Liability
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Fraud and Abuse ExposuresFraud and Abuse Exposures Fraud and Abuse ExposuresFraud and Abuse Exposures
Legacy exposureLegacy exposure
New ventures or revenue sourcesNew ventures or revenue sources
Corporate DutiesCorporate Duties
Legacy exposureLegacy exposure
New ventures or revenue sourcesNew ventures or revenue sources
Corporate DutiesCorporate Duties
Healthcare Executive LiabilityHealthcare Executive Liability
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New Executive/Board ChallengesNew Executive/Board Challenges
Healthcare Executive LiabilityHealthcare Executive Liability
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Selecting/Retaining Board MembersSelecting/Retaining Board Members Selecting/Retaining Board MembersSelecting/Retaining Board Members
McKinsey & Company recently surveyed nearly McKinsey & Company recently surveyed nearly
2000 directors and found that 25 percent had 2000 directors and found that 25 percent had
declined or left a board seat in the past year due declined or left a board seat in the past year due
to concerns about legal liability.to concerns about legal liability.
- USA Today, 7/31/02 “Boards Demand - USA Today, 7/31/02 “Boards Demand
More More Time, Vigilance, Accountability Time, Vigilance, Accountability
McKinsey & Company recently surveyed nearly McKinsey & Company recently surveyed nearly
2000 directors and found that 25 percent had 2000 directors and found that 25 percent had
declined or left a board seat in the past year due declined or left a board seat in the past year due
to concerns about legal liability.to concerns about legal liability.
- USA Today, 7/31/02 “Boards Demand - USA Today, 7/31/02 “Boards Demand
More More Time, Vigilance, Accountability Time, Vigilance, Accountability
Healthcare Executive LiabilityHealthcare Executive Liability
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Selecting/Retaining Board MembersSelecting/Retaining Board Members Selecting/Retaining Board MembersSelecting/Retaining Board Members
Impact of EnronImpact of Enron
Need for Independence / No Potential Need for Independence / No Potential Conflict of Interest Conflict of Interest
Insurance Coverage Available or Insurance Coverage Available or AdequateAdequate
Impact of EnronImpact of Enron
Need for Independence / No Potential Need for Independence / No Potential Conflict of Interest Conflict of Interest
Insurance Coverage Available or Insurance Coverage Available or AdequateAdequate
Healthcare Executive LiabilityHealthcare Executive Liability
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Selecting/Retaining Board MembersSelecting/Retaining Board Members Selecting/Retaining Board MembersSelecting/Retaining Board Members
“ “ President Bush said today that he is ready to send President Bush said today that he is ready to send
corporate CEOs to prison and to the tough ones. You corporate CEOs to prison and to the tough ones. You
know, the ones that only have nine golf holes and not know, the ones that only have nine golf holes and not
the full eighteen.”- Jay Lenothe full eighteen.”- Jay Leno
“ “ President Bush said today that he is ready to send President Bush said today that he is ready to send
corporate CEOs to prison and to the tough ones. You corporate CEOs to prison and to the tough ones. You
know, the ones that only have nine golf holes and not know, the ones that only have nine golf holes and not
the full eighteen.”- Jay Lenothe full eighteen.”- Jay Leno
Healthcare Executive LiabilityHealthcare Executive Liability
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Risk Transfer AvailabilityRisk Transfer AvailabilityRisk Transfer AvailabilityRisk Transfer Availability
MoldMold
Small Pox VaccinesSmall Pox Vaccines
TerrorismTerrorism
HIPAAHIPAA
CybersecurityCybersecurity
MoldMold
Small Pox VaccinesSmall Pox Vaccines
TerrorismTerrorism
HIPAAHIPAA
CybersecurityCybersecurity
Healthcare Executive LiabilityHealthcare Executive Liability
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The biggest concern for entrepreneurs The biggest concern for entrepreneurs and small business enterprises the paand small business enterprises the past st three months is insurance- both its cost three months is insurance- both its cost and its availabilityand its availability..
- - National Federation of Independent BusinessNational Federation of Independent Business
The biggest concern for entrepreneurs The biggest concern for entrepreneurs and small business enterprises the paand small business enterprises the past st three months is insurance- both its cost three months is insurance- both its cost and its availabilityand its availability..
- - National Federation of Independent BusinessNational Federation of Independent Business
Healthcare Executive LiabilityHealthcare Executive Liability
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Carrier SolvencyCarrier Solvency Issues IssuesCarrier SolvencyCarrier Solvency Issues Issues
Price Shopping Has Its ConsequencesPrice Shopping Has Its Consequences
Potential D&O ExposuresPotential D&O Exposures
Contractual Issues - MalpracticeContractual Issues - Malpractice
Price Shopping Has Its ConsequencesPrice Shopping Has Its Consequences
Potential D&O ExposuresPotential D&O Exposures
Contractual Issues - MalpracticeContractual Issues - Malpractice
Healthcare Executive LiabilityHealthcare Executive Liability
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Corporate Compliance PlansCorporate Compliance Plans
“ “ We do not deal much in facts when we are contemplating We do not deal much in facts when we are contemplating ourselves.” – Mark Twainourselves.” – Mark Twain
Healthcare Executive LiabilityHealthcare Executive Liability
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Corporate Compliance PlansCorporate Compliance Plans
Committee MeetingsCommittee Meetings
Implementation of Compliance ObjectivesImplementation of Compliance Objectives
Outside/Independent Audit IssuesOutside/Independent Audit Issues
Investigation of Compliance IssuesInvestigation of Compliance Issues
Healthcare Executive LiabilityHealthcare Executive Liability
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Defending Employment Defending Employment LitigationLitigation
Harassment & Discrimination Policies and Harassment & Discrimination Policies and ProceduresProcedures
Employee Training/EducationEmployee Training/Education
Proper Investigation of Employment MattersProper Investigation of Employment Matters
Board Accessibility to HRBoard Accessibility to HR
Healthcare Executive LiabilityHealthcare Executive Liability
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Corporate Governance and Corporate Governance and Director ScrutinyDirector Scrutiny
“ “ Why have intelligent and decent directors failed so Why have intelligent and decent directors failed so miserably? The answer lies not in inadequate laws- it’s miserably? The answer lies not in inadequate laws- it’s always been clear that directors are obligated to represent always been clear that directors are obligated to represent the interests of shareholders- but rather what I’d call the interests of shareholders- but rather what I’d call “boardroom atmosphere.”“boardroom atmosphere.”
- Warren Buffet: 2003 Letter to Shareholders- Warren Buffet: 2003 Letter to Shareholders
Healthcare Executive LiabilityHealthcare Executive Liability
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Corporate Governance and Corporate Governance and Director ScrutinyDirector Scrutiny
Back to Basics: D/O Fiduciary Duties Back to Basics: D/O Fiduciary Duties
Due Diligence in Executive HiringDue Diligence in Executive Hiring
Independence of Third PartiesIndependence of Third Parties
Outside Auditor ScrutinyOutside Auditor Scrutiny
Executive/Board Open Door PolicyExecutive/Board Open Door Policy
Healthcare Executive LiabilityHealthcare Executive Liability
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Corporate Governance and Corporate Governance and Director ScrutinyDirector Scrutiny
“ “ The current cry is for “independent” directors. It is certainly The current cry is for “independent” directors. It is certainly true that it is desirable to have directors who think and true that it is desirable to have directors who think and speak independently- but they must also be business-speak independently- but they must also be business-savvy, interested and shareholder oriented”.savvy, interested and shareholder oriented”.
- Warren Buffet; 1993 Letter to Shareholders- Warren Buffet; 1993 Letter to Shareholders
Healthcare Executive LiabilityHealthcare Executive Liability
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HIPPA LegislationHIPPA Legislation
HIPPA Policy and TrainingHIPPA Policy and Training
HIPPA Compliance OfficerHIPPA Compliance Officer
Appropriate Business AgreementsAppropriate Business Agreements
Firewall ProtectionFirewall Protection
Healthcare Executive LiabilityHealthcare Executive Liability
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How do you protect yourself How do you protect yourself against a digital Pearl Harbor?against a digital Pearl Harbor?
How do you protect yourself How do you protect yourself against a digital Pearl Harbor?against a digital Pearl Harbor?
21st Century Cyber Perils21st Century Cyber Perils
Healthcare Executive LiabilityHealthcare Executive Liability
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1. Virus
2. Theft of Intellectual Property
3. Security
4. Privacy
5. Piracy
6. Downstream Liability
1. Virus
2. Theft of Intellectual Property
3. Security
4. Privacy
5. Piracy
6. Downstream Liability
21st Century Cyber Perils21st Century Cyber Perils
Healthcare Executive LiabilityHealthcare Executive Liability
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Equation:
Threat x Vulnerability x Cost = Total Risk
Net Result:
Cyber Exposure & Limits Analysis
Equation:
Threat x Vulnerability x Cost = Total Risk
Net Result:
Cyber Exposure & Limits Analysis
QUALITATIVE ANALYSIS“Secret Sauce”
QUALITATIVE ANALYSIS“Secret Sauce”
Healthcare Executive LiabilityHealthcare Executive Liability
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Exposure Analysis Market Capitalization 1.06 Billion
Annual Revenue 919 Million
On-line Revenue 103 Million
Intangible Assets 47 Million
Patents 185
Employees 4,757
I.T. Employees 200
Exposure Analysis Market Capitalization 1.06 Billion
Annual Revenue 919 Million
On-line Revenue 103 Million
Intangible Assets 47 Million
Patents 185
Employees 4,757
I.T. Employees 200
Sample Risk Quantification Factorsfor Healthcare Institution
Sample Risk Quantification Factorsfor Healthcare Institution
Healthcare Executive LiabilityHealthcare Executive Liability
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Risk Control Network Size 4,376 Machines
Websites 50
Subsidiaries 23
I.T. Investment (00-01) $120 Million
I.T. Security Investment $5 Million
I.T. Security Employees 3
Software Applications Microsoft
Risk Control Network Size 4,376 Machines
Websites 50
Subsidiaries 23
I.T. Investment (00-01) $120 Million
I.T. Security Investment $5 Million
I.T. Security Employees 3
Software Applications Microsoft
Sample Risk Quantification Factors for Healthcare Institution
Sample Risk Quantification Factors for Healthcare Institution
Healthcare Executive LiabilityHealthcare Executive Liability
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Loss Quantification Virus Incidents
5,000
Hacking Incidents 50
Hacking Incidents Resulting In Financial Loss 21
hacking Incidents Resulting In Brand Value Loss 10
Intellectual Property Theft Incidents 65
Historical Benchmarking of Limits$50mm
Loss Quantification Virus Incidents
5,000
Hacking Incidents 50
Hacking Incidents Resulting In Financial Loss 21
hacking Incidents Resulting In Brand Value Loss 10
Intellectual Property Theft Incidents 65
Historical Benchmarking of Limits$50mm
Sample Risk Quantification Factors for Healthcare Institution
Sample Risk Quantification Factors for Healthcare Institution
Healthcare Executive LiabilityHealthcare Executive Liability
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3 LEVELS OF VENDOR PROTECTION
Industry Best Practices (ISO17799 Certification)
Contractual Risk Transfer
Creation of MSN Network Insurance Product
3 LEVELS OF VENDOR PROTECTION
Industry Best Practices (ISO17799 Certification)
Contractual Risk Transfer
Creation of MSN Network Insurance Product
360o CyberRisk Management360o CyberRisk Management
Healthcare Executive LiabilityHealthcare Executive Liability
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INFRINGEMENT AWARDSExcess of $1 Million
INFRINGEMENT AWARDSExcess of $1 Million
1975 1980 1985 1990 1995 2000
5
10
15
20
25
30
Year
Millions