The Hartford Names Andrade to Head P/C Operations

The Hartford Financial Services Group, Inc. has appointed Juan Andrade, 43, president and chief operating officer of its Property and Casualty Operations, effective immediately. Andrade will continue to report directly to the company's chairman and chief executive officer, Ramani Ayer, and will serve as a member of the Office of the Chairman.

An industry veteran, Andrade joined The Hartford in 2006, assuming leadership of the P&C claims organization. In that role, he transformed claims into a more focused and disciplined group, emphasizing enhanced customer service, greater employee engagement and increased efficiency. He was soon appointed to executive vice president for sales and distribution in 2008, where he expanded and enhanced the company's relationships with its agents. In February 2009, he assumed the role of Interim P&C Co-leader of The Hartford's Property and Casualty Operations.

Prior to joining The Hartford, Andrade held several leadership positions with The Progressive Corporation, serving as general manager of the company's Gulf Coast Region and, prior to that, the company's Southern California, Colorado and Wyoming business units. He also held management positions with American International Group (AIG), working with worldwide consumer lines operations and holding responsibility for personal lines operations and multi-line business development in the Caribbean. Andrade began his career as a presidential management intern and went on to work on national security and foreign policy issues within the executive branch and the Executive Office of The President.

Andrade earned a bachelor's degree in Journalism and Political Science from the University of Florida. He also earned a master's degree in International Economics and Latin American Studies from the School of Advanced International Studies at Johns Hopkins University.

Research Shows Continuing Reduction in Workers' Comp Claims Frequency

The decline in claim frequency for workers' compensation injuries continued in 2008, and economic factors suggest further reductions are likely in 2009, according to a report by NCCI Holdings. However, NCCI's latest review of claim frequency and severity shows that, while claim frequency is down, indemnity and medical severities continue to rise.

In its latest report, NCCI noted:

• Over the last five years, there were significant declines in total lost-time claims frequency for all industries, geographic regions, and employer sizes.
• The number and frequency of permanent total claims have increased significantly over the last four years, with all major causes of injury contributing to the rise.
• The rise in permanent total claims appears to be driven primarily by workers age 50 or under.
• While claim frequency generally decreases as risk size increases, single-state risks in some classes have higher claim frequency at the higher payroll sizes than at lower payroll sizes.

The National Council on Compensation Insurance Inc. is a provider of workers compensation and employee injury data and statistics.

Jury Rules for Ex-CEO Greenberg Over AIG in Starr Case

A company run by former AIG CEO Maurice "Hank" Greenberg did not plunder billions from a retirement fund, a jury ruled, dashing the bailed-out insurer's chances of collecting $4.3 billion in damages.

American International Group Inc. took Starr International Co, a private company run by Greenberg, to court in an effort to recover millions of shares held by Starr and get compensation for stock sold.

Tuesday's decision is the latest blow for AIG as it struggles to repay $83 billion in loans from the federal government.

AIG had sought to establish that there was the creation of an oral trust in 1970, entrusting Starr International to use a block of AIG shares acquired in a company restructuring to fund an executive retirement scheme for generations of AIG employees. It charged Starr with breach of that trust, and with a second claim of conversion related to sales of the stock for the company's own use.

The eight-person jury returned their verdict after about five hours of deliberation. It ruled Starr was not liable on the two claims.

However, a final decision on the breach of trust claim will be made by the court by next month.

David Boies, the lawyer for Greenberg and Starr International, said "the quickness of the (jury's) decision reflects the simplicity of the case. The trust AIG is alleging, no one had ever heard of or seen. No document mentioned it and I think the jury recognized that."

Boies added he was "hopeful the judge would see it the same way as the jury does."

A spokeswoman for Greenberg said the decision was a "complete vindication of Starr International and Mr. Greenberg."

Greenberg, 84, was forced out of AIG in 2005 after 38 years as CEO for failure to cooperate with an internal investigation into accounting practices at the insurer that once claimed global dominance.

POWERFUL DECISION

While the final decision in the breach of trust claim will be made by the court, the conversion claim was decided by the jury, meaning that there will be no damages awarded to AIG.

Greenberg, who took the stand for several days early in the three-week trial heard in U.S. District Court in Manhattan, and sat through much of the proceedings, was not present in court for the jury's verdict.

The final decision by Judge Jed Rakoff is expected by next month. Rakoff said in court on Tuesday he would take the jury's determination "very seriously" in coming to his own decision.

AIG and privately held Starr International, often referred to as SICO, were closely aligned until Greenberg left AIG in 2005. He kept control of Starr and its large block of AIG shares, worth in excess of $23 billion at the time. Over time, Greenberg sold some of the stock and started investing in businesses that have at times competed against his former company.

The retirement fund was cut off within days of Greenberg's ouster from AIG in 2005, ending a lucrative plan that had enriched hundreds of senior managers for 35 years.

AIG said in a statement after the jury announced its verdict that it was "disappointed."

"We await the court's final ruling. We continue to believe in the merits of our claims," the statement said.

The ruling was another strike for AIG, already under a dark cloud because of its federal bailout, and an executive bonus controversy that angered lawmakers and citizens nationwide.

AIG's federal rescue stemmed from losses on derivatives sold by a financial products unit. Both the bailout and details around Greenberg's termination were precluded from the trial after the judge ruled the matters were irrelevant to the matter at hand.

The insurer had sought the $4.3 billion based on the proceeds of Starr's AIG stock sales, hoping to use it to help repay its taxpayer debt.

The insurer had also sought to wrest back about 185 million shares held by Starr International, or roughly 9 million, if a 1-for-20 reverse stock split last week is taken into account.

AIG's stock, which has fallen dramatically since the company did a 1-for-20 reverse stock split last week, closed down more than 15 percent at $13.75 on the New York Stock Exchange.

There are still a string of lawsuits outstanding between Greenberg, or companies he controls and AIG, stemming from the parties' bitter 2005 break-up. Greenberg also continues to face civil charges of fraud brought by then New York-Attorney General Eliot Spitzer in 2005 related to complex reinsurance transactions at the insurer.

Tyson Foods Fined $500,000 for Worker's Death

Tyson Foods has sentenced in federal court to pay a $500,000 fine and serve a year on probation for the death of a Texarkana worker overcome by poisonous fumes at a rendering plant in Arkansas.

The Occupational Safety and Health Administration won the maximum fine for a willful violation of worker safety regulations. OSHA said maintenance worker Jason Kelley was overcome by hydrogen sulfide gas generated by decomposing poultry feathers. Five other people were injured.

The federal regulators said Springdale, Arkansas-based Tyson didn't take sufficient steps to reduce exposure to the gas after a March 2002 incident at the River Valley Animal Foods Plant in Texarkana.

Tyson Foods pleaded guilty in January. It said then that the incident was an accident and that steps had been taken to prevent additional ones.

Reducing Workers Compensation Claims during a Layoff

When facing an impending layoff, a risk manager is confronted with a more complex labor environment in which employees' attitudes toward workers compensation require special attention.

The recent downturn in the economy has caused many employers to confront the prospect of downsizing through either a layoff or plant closing. Now, more than ever, employees are becoming anxious about whether their jobs are secure and how they will be able to provide for their families. In times such as these, rumors fly and employees may seek an alternate source of income before their job loss becomes a reality.

Employees that would ordinarily shake off aches and pains may look to exaggerate them and file for workers compensation benefits rather than face the possibility of unemployment. For the risk manager, this can be expensive and challenging.

This article will outline the issues risk managers face and suggest strategies to help guide them through a layoff.

Layoff Problems

Among the problems the risk manager is confronted with are:

• Employees filing claims have little or no incentive to return to work, especially in plant closing situation.
• Reduction in commitment to management objectives of controlling costs by reducing the length of disability and returning to work.
• Claims for injuries become more subjective in nature and often include claims that involve soft tissue injuries or cumulative conditions which are alleged to have developed over a period of years.
• More workers compensation claims are filed since these benefits are usually better and for longer duration than unemployment benefits.
• The percentage of injured employees who retain legal representation typically increases as word of a workforce reduction spreads.
• Many states now require advance notice of plant closings, allowing employees time to pursue potential claims. The federal Worker Adjustment Retraining Notification (WARN) Act requires employers with more than 100 employees to provide 60 days' advance notice in the event of a plant closing or mass layoff as the terms are defined in the WARN Act.

Get Prepared

As soon as the risk manager is informed of a large layoff, a number of steps should be carried out immediately.

• Notify Sabal immediately
• Review with Sabal the relevant workers compensation statutes in the jurisdiction with special attention to cumulative trauma regulations.
• Notify your insurer or third-party administrator (TPA) of plans for the layoff and review existing claims for potential problems.
• Be aware of each state's rate and term of unemployment benefits, and their effect on workers compensation benefits.
• Explore the potential of other benefit programs available to employees. For example, the second injury fund may assist the company to offset claims expenses.

Gather Records

Accurate and complete records of workers compensation claims and employee personnel and medical records are essential to the defense of questionable and frivolous claims. A complete history of timely and accurate records can successfully assist the defense of late or unreported claims that may be triggered by a layoff or plant closing.

• Make sure you know where employee records are kept and, if they are being moved off site, obtain photocopies as backup.
• Identify an individual in management who can provide, explain, and testify regarding these records.
• Create a photographic or video record of plant conditions to preserve a visual image, especially if the physical plant is to be demolished or renovated.
• Consider termination interviews to identify potential future workers compensation claims.
• Evaluate whether termination physicals should be given; explore the potential merits versus risk with your broker or consultant.
• Update all claims information with key personnel so that all available information is in file and with your insurer.

The Best Defense

The potential of claims from a large layoff or shutdown increases the likelihood of exaggerated or fraudulent claims. Since most states have specific time limits for response to claims, the preparation and handling of claims is very important. Consider the following suggestions.

• Insist that the insurer or TPA centralize claims investigation and adjusting to one claims office.
• Request that the insurer or TPA have sufficient staff available to handle the initial caseload so that cases are neither accepted nor denied without adequate investigation simply because of time standard pressures.
• Request one senior claim person is assigned so that information flow and quality of service can be maintained.
• Request that the insurer or TPA hire one defense firm to handle all workers compensation claims. Arrange for defense counsel to visit the plant site prior to a shutdown, if possible, to familiarize themselves with the plant operation.
• Arrange for Sabal to assign a senior claims person to work with the insurer and defense counsel to coordinate and monitor the progress of the cases.
• Have the insurer or TPA identify physician(s) within specialties as experts and familiarize them with the plant conditions prior to a shutdown.
• Make videos of certain job functions available for physicians and as defense exhibits.
• Organize and update detailed job descriptions and locate them for easy access by the insurer and defense counsel.
• Provide defense counsel with names of individuals that are willing and capable to testify regarding the functional requirements of each job.
• Create a list of key personnel by name and title. Obtain home addresses and all telephone numbers (cell and home) in the event they are needed for testimony on litigated claims. Keep in contact and update these lists as necessary.

Additional Suggestions

When employees are certain where their next check is coming from, they will be less likely to file a workers compensation claim. Some ways to help accomplish this include the following.

• Ask local unemployment office to send a representative to facilitate the filing of claims for unemployment and avoid allowing plaintiff attorneys to pick up new clients at the unemployment office.
• Request governmental assistance in placing your trained/professional employees in positions with new employers.
• Explore job placement fairs at your facility and invite area employers.

Conclusion

Risk managers must be prepared to facilitate the effective resolution of workers compensation claims that may arise out of a layoff or shutdown of a facility. By organizing and developing a long-range policy and procedure that is sensitive to the problems and conditions which accompany a large layoff/plant closing, the risk manager can help to control the ultimate cost effect of the layoff/shutdown on their risk management program.

To this end, it is necessary to set solid procedures for investigating, reporting, and recording all potential workers compensation incidents. Without detailed records, no defense may be available to successfully refute late or questionable claims.