Director & Officers Liability Issues, Trends and Loss Control.
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Transcript of Director & Officers Liability Issues, Trends and Loss Control.
Director & Officers Director & Officers LiabilityLiability
Issues, Trends and Loss Issues, Trends and Loss ControlControl
Types of Claims Typically Filed Against Types of Claims Typically Filed Against D&O’sD&O’s
Wrongful Termination
“At will” provision may eliminate these claims.
Sexual Harassment and Discrimination (age, sex, race, disability, etc.)
Civil Rights Violation
Retaliatory Acts – such as a transfer to a physically arduous, less desirable job or a 37 day suspension without pay
Breach of Contract (employment or other)
Breach of Fiduciary Duty
Actual Claims Filed Against Golf ClubsActual Claims Filed Against Golf Clubs
Alleged discrimination arising out of men’s grills/lounges.Less Golf Time for women due to course dedicated to men’s tournaments.Defamation or alleged lack of due process arising out of disciplinary actions taken against members when they overindulge and misbehave at club parties.Alleged harassment of employees of the club when they are working club functions where members may be inclined to take inappropriate social liberties.General employment practice claims filed by employees.
Golf Club Claims, ContinuedGolf Club Claims, Continued
Many of the claims are linked to the food/beverage service aspect of club, such as bus boys, waiters/waitresses and bartenders.
The backgrounds/education levels of the employees are sometimes very diverse.
The work environments typically range from high stress to an almost social atmosphere. The former can lead to flaring tempers and impromptu reprimands. The latter to sometimes off-color humor or sexual overtones.
Because the employees generally work in close physical proximity to one another, there are often many witnesses to the alleged EPL acts, which can be good or bad.
Claims made against the board involving membership issues, such as disgruntled parties who were refused membership; club members who disapprove of the board letting in too many members, the wrong kind of members, etc. Damages are often difficult to assess in such situations.
Why are D&O’s Sued?Why are D&O’s Sued?
The accused is a Director or Officer
Officer is the supervisor of the claimant
Officer is the supervisor of the accused
Officer is the decision maker in the dispute
Inaction on the part of the Director/Officer
Director/Officer developed the employment
practice /company procedure
Director/Officer approved the employment
practice/company procedure
The Complaint The Complaint Historically vs. TodayHistorically vs. Today
Plaintiff sues employer
for Wrongful Termination
for Breach of Contract
for Civil Rights violation
Plaintiff sues employer
and D’s and O’s
and supervisors/mgrs.
and co-employees
• for multiple wrongful acts based on federal statute and state law
20042004Bases Alleged in EEOC Suits Filed Bases Alleged in EEOC Suits Filed
Sex Discrimination 185 52.4%
Retaliation 144 37.9%
Race 58 15.3%
Disability 45 11.8%
Age 45 11.8%
National Origin 37 9.7%
Religion 16 4.2%
Equal Pay 5 1.3%
*Source: EEOC Accomplishments Report for Fiscal Year 2004 (www.eeoc.gov)
2004 EEOC Resolutions By Statute2004 EEOC Resolutions By Statute
Title VII 264 Counts 76.1%
Civil Rights Act – passed 1964
ADA 38 Counts 10.9%
American with Disabilities Act – passed 1990
ADEA 28 Counts 8.1%
Age Discrimination Employment Act – passed 1967
*Concurrent 17 Counts 4.9%
*under more than one statute
2004 Monetary Relief By Statute2004 Monetary Relief By Statute
Title VII $157.9 Million 93.9%
ADA $ 5.4 Million 3.2%
ADEA $ 2.5 Million 8.1%
*Concurrent $ 2.3 Million 1.4%
*under more than one statute
In 2004, the Office of General Counsel resolved a total of 347 merit lawsuits,
Yielding $168,098,895 in monetary relief.
The Claims ProcessThe Claims Process
Review of facts and/or Complaint
Review of Policy and/or coverage issues
Correspondence/investigation
Assignment of Counsel
Response to plaintiff attorney/investigative agency
Evaluation and mediation process
Potential LitigantsPotential Litigants
Plaintiffs
Job Applicants
Current/Former Employees
Terminating Employees
Customers
Co-workers
Independent contractors
Defendants
Interviewers
Human Resources
Supervisors & Managers
Board of Directors
Common AllegationsCommon Allegations
Discrimination
National Origin
Race
Religion
Sex
Sexual Preference
Age
Failure to Promote/Hire
Hostile Work Environment
Harassment
Breach of Implied Contract
Negligent Hiring or Supervision
Damages: What the Claimants WantDamages: What the Claimants Want
Back Pay
Front Pay
Lost benefits and seniority
Compensatory damages
Punitive damages
Attorneys fees and costs
Assessing Case ValueAssessing Case Value
Damning internal investigation or faculty committee findings
Other complaints against same accused
Multiple claimants or corroborating witnesses
About the claimant
Hign earner/Professional?
Demeanor/Credibility?
Still Employed?
Sympathetic?
Contract Employee?
Length of employment
Assessing Case Value Con’t...Assessing Case Value Con’t...
Prior pattern of same conduct
Documented evaluations
Publicized Policy against discrimination, harassment, etc.
Internal complaint procedures
Written employment contracts
Loss or partial loss of motion for summary judgement
Wake up call when you are dead set on defending
Reputation of the judge, and reputation and experience of claimant’s counsel
Claimant’s counsel has a lot of time/$ on the case
Attorney fees are recoverable
Assessing Case Value Con’t...Assessing Case Value Con’t...
Mediator’s recommendation significantly exceeds current thinking on case value
Defense counsel is telling you to settle
Agency finding of probable cause (or EEOC “A” or “B” charge rating)
Rating the alleged behavior
Sexual contact or just verbal
Frequency? - one time occurrence or repeated offenses
Related crime matter
Profile of a “Bad” ClaimProfile of a “Bad” Claim(Features of a Potentially Costly Suit)(Features of a Potentially Costly Suit)
Egregious or Outrageous Behavior
Professional Level Plaintiff
Class Action or Potential Class Action
History of Repeated and Reported Incidents
Lack of Published Policy & Procedure
Inadequate or no civil management training
Ignored policy or procedure
Plaintiff in protected class
Multiple Allegations, Plaintiffs, Defendants
Poor, if any, documentation
Prevention of Employment Liability Prevention of Employment Liability LossesLosses
Establish & implement
management training
employee awareness
manuals
interview procedures
complaint procedures
Controlling Employment LitigationControlling Employment Litigation
Oversee internal complaints through resolution
Retain decision-making in litigation
Remain sensitive to rights of accused
Establish committees for special tasks (i.e.. Downsizing)
Offset Losses (ie. Insurance )
Recommendations for Employment Recommendations for Employment Law TrainingLaw Training
Sexual Harassment Types of harassment ( hostile environment and quid
pro quo)
How to respond to formal and informal complaints of harassment, including the role of the supervisor and manager
Maintaining appropriate confidentiality
Non-retaliation
Employment Training (Con’t)Employment Training (Con’t)
Equal Employment Opportunity Define & describe protected classes ( disability, age,
race, etc.)
EEO issues in hiring and interviewing
Non-discriminatory discipline & discharge
Selection for training & other job benefits
Reasonable accommodation issues
Employment Training (Con’t)Employment Training (Con’t)
Wrongful Discharge & Wrongful Demotion At will employment
Types of claims including breach of contract, public policy, negligent hiring & supervision
Performance evaluations
Discipline & discharge
Training & other job benefits
Documentation of performance issues
Interplay Between the ADA, FMLA and Interplay Between the ADA, FMLA and Worker’s CompensationWorker’s Compensation
Must understand:
Who is protected individual under the ADA & FMLA
When you can make medical inquires or request medical examinations and how this relates to worker’s compensation claims
When you have a duty to make a reasonable accommodation for a person with a disability related to occupational injuries
When you have a duty to grant leave under the ADA
Job modification or reassignment and leaves of absence
Activities, which if mishandled by Activities, which if mishandled by management, often lead to liabilitymanagement, often lead to liability
Ill-considered e-mail messages
Failure to document misconduct and performance problems
Inappropriate complimentary evaluations
Failure to follow company policies and procedures
Talking with others about why an employee was discharged.
Activities, which if mishandled by Activities, which if mishandled by management, often lead to liabilitymanagement, often lead to liability
Failure to communicate problems to Human Resources Dept.
Uncontrolled letters of reference
Failure to treat like cases alike
Showing favoritism
Failure to obtain advice when a situation arises that is not covered by company policy
QUESTIONS?
Non-Profit Director & Non-Profit Director & Officers Liability OverviewOfficers Liability Overview
PARTS OF A D & O POLICYPARTS OF A D & O POLICY
Definitions
Insuring Agreement
Conditions
Exclusions
POLICY DECLARATIONS PAGEPOLICY DECLARATIONS PAGE
Named Insured
Policy Period
Limit Of Liability
Retention
Premium
Retro Active Date
Endorsements
WHAT’S A GOOD RISK ?WHAT’S A GOOD RISK ?
Good Loss History
Good Employment Procedures
Low Turnover Rate
Diverse Sources of Revenue
Positive Fund Balance
In Operation 3+ Years
Steady Revenue
Nature of Operation / Type of Services Provided
Experience of Directors and Officers
MERIT SUITS FILED 1995 TO 2004MERIT SUITS FILED 1995 TO 2004
MERIT SUITS RESOLVEDMERIT SUITS RESOLVED
Monetary Relief – 1995 through Monetary Relief – 1995 through 20042004
Golf and Country Club Coverage
DEFINITION OF GOLF COURSEDEFINITION OF GOLF COURSE
Golf Course meaning tees, cut fairways, greens, practice driving ranges, bunkers, cut and maintained roughs and other cut and maintained playing surfaces.
Golf Course means a tract of land containing at least 9, but not more than 18, separate holes of golf.
Greens, tees, fairways, and rough means: the outdoor grounds at the described locations that are specifically designed and maintained for the game of golf.
Golf Course means tees, fairways, putting surfaces, practice driving ranges and other playing surfaces used to play golf.
Golf Course means greens, rough areas, sand bunkers, fairways, tee boxes, out of bounds areas, driving ranges.
Lawns coverage – greens, tees and cut fairways.
GOLF COURSE LIMITSGOLF COURSE LIMITS
$1,000,000
$2,000,000
$100,000
$50,000 Each Green, $250,000 Occurrence, $500,000 Annual Aggregate
$250,000
$50,000
Limit shown in the Declarations page
GOLF COURSE - TREES, SHRUBS & GOLF COURSE - TREES, SHRUBS & PLANTS PLANTS
$50,000 Any one tree, shrub or plant
$25,000 occurrence/$2,500 per tree, shrub or plant
$75,000 occurrence/$2,500 per tree, shrub or plant
$100,000 Aggregate per occurrence/up to $3,000 per tree
$500,000 Annual Aggregate/$250,000 per occurrence/$25,000 each tree, shrub or plant/$50,000 each green
$10,000 per occurrence
$1,000 each tree, shrub or plant
$50,000 any one occurrence
GOLF COURSE - DEBRIS REMOVAL GOLF COURSE - DEBRIS REMOVAL COVERAGECOVERAGE
$250,000 Annual Aggregate
$150,000 Tree Removal Sublimit
$50,000
$50,000 Any one occurrence
$250,000 Any one occurrence
$25,000
$10,000
Golf Course – Covered PerilsGolf Course – Covered Perils Fire, Smoke
Lightning
Smoke
Explosion
Riot or Civil Commotion
Aircraft, Vehicles
V&MM
Wind/Hail if covered in the Property
Collapse, Sinkhole collapse, Volcanic Action
Ice
Country Club Property Coverage Form
Coverage Extensions
Most Golf Programs
Enhancement Endorsements
Your Carrier
Accounts Receivable $50,000
Arson Reward $5,000
Automated External Defibrillators
Not Provided
Back-up of Sewers and Drains
$25,000
Brand and Label $2,500
Building Alterations $100,000
Building Glass Included
Business Income and Extra Expense
$25,000
Coverage Extensions
Most Golf Programs
Your Carrier
Business Personal Property
Within 1000 Feet
Claims Expenses $25,000
Club Professional Replacement Expenses
Not Covered
Communication Towers, Antennas or Satellite Dishes, including their Lead-in Wiring, Masts and Guy Wires
Not Covered
Computer Upgrade Not Covered
Computer Virus Extraction Expense
Not Covered
Consequential Damage to covered BPP
Not Covered
Coverage Extensions
Most Golf Programs Your Carrier
Contract Penalty Clause
$25,000
Electronic Data Processing Equipment and Media
$50,000
Emergency Real Estate Consulting Fee
Not Covered
Emergency Vacating Expense
Not Covered
Employee Dishonesty
Available
EQSL Not Covered
Errant Golf Ball Property Damage Coverage
Not Covered
Expanded Premises Boundary
Included
Coverage Extensions
Most Golf Programs Your Carrier
Expediting Expenses Not Covered
Fines for False Alarms
Not Covered
Fine Arts $25,000
Fire Department Service Charge – No Deductible
$10,000 (Emergency Service Charge
Fire Protection System – Recharge or Refill
$2,000 to $5,000
Fire Protective Devices
$10,000
Furs $2,500 to $5,000
Garages / Storage Sheds
Not Provided
Golf Course $1,000,000
Coverage Extensions
Most Golf Programs Your Carrier
Hole-in-One Reimbursement Expense
$250 Occurrence / $2,000 Aggregate
Identity Theft Expense
Not Provided
Inventory or Appraisal
$25,000
Kidnap / Ransom Not Provided
Lease Cancellation Moving Expenses
Not Provided
Lost Key / Lock Replacement
$5,000
Machinery and Equipment
Not Provided
Money and Securities
Not Provided
Coverage Extensions
Most Golf Programs Your Carrier
Newly Acquired Business Personal Property
$1,000,000 / 180 Days
Newly Acquired or Constructed Buildings
$2,000,000 / 180 Days
Off Premises Utility Failure
$50,000 Utility Services
Ordinance or Law $250,000
Outdoor Property / Debris Removal Coverages
$50,000
Outdoor Trees, Shrubs and Plants
$25,000 / $2,500 per Tree
Outdoor Signs $10,000
Coverage Extensions
Most Golf Programs Your Carrier
Pairs, Sets or Parts Not Stated
Personal Effects $25,000
Personal Effects – Spouses
Not Covered
Personal Property of Members and Guests in your CCC
$5,000 per person / $50,000 per occurrence
Property of Others $10,000
Pollutant Clean Up and Removal (each separate 12 month period)
$25,000
Power Interruption Available
Coverage Extensions
Most Golf Programs Your Carrier
Precious Metals $5,000
Preservation of Property
$25,000
Property in Transit, on Exhibition or in Custody of Salespersons
$25,000
Property Off Premises
$25,000
Reward Reimbursement
$5,000
Spoilage $25,000
Temporary Meeting Space Reimbursement
Not Covered
Terrorist Travel Reimbursement
Not Covered
Coverage Extensions
Most Golf Programs Your Carrier
Theft of Dataline Services
$5,000
Theft of Fur Garments
$5,000
Theft of Jewelry $5,000
Theft of Precious Metals
$5,000
Valuable Papers and Records – Cost of Research
$50,000
Worldwide Coverage – Limited to Certain Areas for Property
Not Included
Workplace Violence Counseling
Not Included
HOW TO ANALYZE GOLF COURSE HOW TO ANALYZE GOLF COURSE COVERAGECOVERAGE
Golf Course Coverage can be confusing
Have your agent complete the comparison sheet
Check the definition of Golf Course
Check the limit of insurance for the Golf Course
Check the limit of insurance for Trees, Shrubs & Plants
Check the limit of insurance for Debris Removal
Check to see if there is a limit per golf hole
Check the covered perils for the Golf Course
Are the limits “per occurrence”, “Aggregate per loss”, “Annual Aggregate”
QUESTIONS?