August 2010 Issue
9 August 2010
Introduction Given that it’s not far into the beginning of a new financial year, we understand that most of you have a lot going on, but we hope that you can take the time to read the second edition of our newsletter for 2010. We promise, it’s worth the read. In this edition, Richard Thomas discusses the pros and cons for hoteliers in engaging independent security contractors at their licensed venues, Russell Walker provides another interesting personal accident claim case study involving a claimant who found out the hard way that the past can and does impact the future, and Eugenia Anang shines the spotlight on the benefits of adopting and documenting risk management procedures at shopping centres. Finally, as Proclaim continues to grow, we continue to retain and employ the best claims managers in the market. With this in mind, we take this opportunity to introduce you to our newest Proclaimers. We wish you success in the upcoming financial year and hope you enjoy this newsletter. Happy New Year! Hotel Security – Internal or Out-sourced?- Richard Thomas Insurers of licensed venues such as clubs, pubs, bars and nightclubs often include in their liability surveys and questionnaires a question about whether security is outsourced or internal. It seems to be a generally accepted assumption among insurers of hospitality risks that those venues which out-source their security function present a lower risk of claims and certainly of assault-type claims. A counter-argument often raised by venue managers is that by using directly-employed crowd controllers, they have greater control over the actions of these personnel – in particular when decisions are made on issues like evictions and on the means of restraints and holds. They might also argue that they are better off retaining their own security so they can be assured through internal processes that crowd controllers are well-trained and follow good procedures rather than engaging a contractor of unknown or dubious reputation or quality. It is all but inevitable that as soon as a fight occurs, the crowd controllers will be implicated – either as a party involved in the altercation or as the party that (arguably) should have prevented it. There are also an increasing number of claims where security companies are alleged to have failed to enforce no-glass-on-dance-floor policies, so the net is widening in exposure for security companies. Conversely, this same trend could be seen to improve risk exposures for hoteliers – with the rationale being risk referral. If a hotelier has in-house security then there is no-one else to whom blame can be apportioned. A venue might have the best systems in place as a club, but if it directly employs a guard then the venue automatically assumes responsibility for his actions every time he ejects (or fails to eject) a patron. The cases where it could be said that a guard has gone off on a “frolic of his own” and is therefore not acting within the scope of his employment are very few and far between. The Courts have been consistent in saying even an improperly performed mode of employment is still in the course of employment. That is a risk (i.e. of a finding of vicarious liability) that would otherwise fall on a contracted security company. As a hotelier, the following risk management steps are recommended: Security companies will need to be involved in most of the above activities with the added onus of training the individuals across a variety of skills, regularly checking the currency of security licences and implementing and enforcing codes of conduct (among other things). Even after undertaking all these steps, security companies can often be dragged into a situation where they are forced to defend themselves against potential large and expensive personal injury claims. Notably, the line between self-defence and a deliberate assault or unreasonable force can be blurred, particularly in the minds of the Courts. Even with extensive training and rigorously enforced procedures on approved holds and no-hit policies, injuries can arise and Courts can interpret these almost as evidence in themselves that unreasonable force has been used. The key risk management recommendation for hoteliers in this context is to properly manage their level of involvement in the security function if they have contracted out to a security provider. If a hotelier is involved to too great a degree in the details of the security function s/he can be seen as in effective/day to day control of the guards on your premises. This can dispel the usual legal presumption that a principal is not vicariously liable for the acts of an independent contractor. However, not enough involvement and a hotelier can be exposed to an allegation that s/he has failed to properly supervise the contractor. Personal Accident and Sickness Claim- Russell Walker How important is it to investigate a claim? On the 1st February 2010, a claim was submitted to Proclaim in respect to a back injury sustained by the claimant as a result of shovelling cement at home. Attached to the claim form were three medical certificates stating that the claimant was to be off work for at least 3 months. The claim form stated the following: The benefits under the policy were $1,000 per week for 104 weeks, making the potential of claim between $10,000 to $ 104,000. We reviewed the definition of injury under the policy. The definition states: “Injury means bodily injury resulting from an accident to the Insured Person during the period of Insurance and results in an Insured event within 12 calendar months from the date of the Injury”. We discussed this claim with the following people and took the following action: 1. We rang the broker and confirmed in writing to the claimant that the claim would be investigated and liability would not be determined until our investigations were finalized; Medicare records received after 6 weeks showed that the claimant had received treatment for his back in 2005, 2006 and 2007. Further reports received from the doctors who had treated the claimant in 2005 and onwards showed that his back condition was first diagnosed in 2005 but the claimant did not go off work until 2010 with this degenerative condition. Based on all the evidence in our possession, we were able to establish that the claimant’s condition was first diagnosed back in 2005. We again reviewed the Policy’s Definition of Injury which stated that the claimant has to be off work as a result of an Insured event within 12 calendar months from the date thereof. The condition was first diagnosed in 2005 but the claimant did not cease work until 2010.Under the definition of Injury there is no claim under the Policy and after confirming with the London Underwriter and advising the Broker, a letter of denial was sent to the claimant. To date no further correspondence has been received from the broker or the claimant disputing this denial. This case highlights the value of gathering information and researching the past medical history of the claimant. It also emphasized the importance of not accepting without question what is stated on a claim form. By using Proclaim’s experience in handling Loss of Income claims we saved the Underwriters a potential claim of $104,000. Spotlight on the Loop Sheet- Eugenia Anang Below is a brief discussion about enhancing and strengthening a client’s liability position with respect to public liability claims through the use of simple and cost effective risk management procedures. Proclaim manages claims on behalf of a number of clients who are owner/managers of shopping centres and supermarkets. It’s widely understood that when a public liability claim arising out of an incident at a centre or supermarket is commenced, the parties in the firing line are almost always the centre managers and owners. At Proclaim, we understand that regardless of how streamlined a client’s risk management procedures are, it’s impossible to prevent all incidents leading to injury to patrons from occurring. As a result, Proclaim has adopted an approach whereby we encourage clients to ensure that their risk management procedures are not only streamlined but documented as well. This approach at the very least allows the client to ascertain its liability position at an early stage. When a claim involving a slip and fall incident is commenced, the first step in ascertaining the client’s liability position is to identify whether there was an adequate system of cleaning and inspection in place at the premises at the time of the incident. It is generally accepted by the courts that a fifteen to twenty minute cleaning and inspection rotation of the common areas of large shopping centres is adequate. A five to fifteen minute rotation is required for the food courts at these centres. For smaller centres and supermarkets, a twenty to thirty minute rotation is usually considered adequate. Most large shopping centres utilise an electronic wand system which documents the cleaning and inspection rotations in place at the premises. When used properly, wand systems generate wand reports that can be used to ascertain whether the system of cleaning in place at a centre was being adhered to and vice versa at the time of an incident. The contents of the wand reports can assist in determining the client’s liability position and accordingly provide a valuable indication as how to best resolve any subsequent claims. For smaller centres and supermarkets, the implementation and use of a simpler and cost effective documented risk management practice that takes into account the size of the premises is recommended. Arguably, the loop sheet (which is aimed at preventing slips and falls) is best suited for smaller centres and supermarkets. 1) The loop sheet is basically a manual recording system that requires designated staff or cleaners to record the date, time and location of rotational cleaning and inspections undertaken at the premises in a day. Recently, Proclaim was provided with an opportunity to assist a client in implementing the loop sheet at its supermarkets nationwide. The client, who owns and manages supermarkets was contending a number of litigated claims arising out of slip and fall incidents at a number of its supermarkets. The main issue disputed in these claims was whether the client had in place an adequate system of cleaning and inspection aimed at preventing slip and fall incidents at its supermarkets. To prevent similar situations in the future, Proclaim encouraged the client to implement the use of the loop sheet in all its stores. In recommending the use of the loop sheet, Proclaim took into account the size of the supermarkets and the number of staff working at the stores at any given time. Since implementation of this cost effective measure, there has been a noticeable decrease in the number of incidents at the client’s store. Proclaim has also been able to successfully deny and resolve claims arising out of slip and falls on the basis that at the time of the incident, there was an adequate system of cleaning and inspection in place which was being adhered to. “There is nothing wrong with change, if it is in the right direction” Since publishing our December newsletter we have been busy creating the most effective structure to support our growing business. As a result there have been some key changes made internally - including expanding management duties of some team members, the creation of a new role, an old face has left the business for an exciting opportunity overseas and we have also had new starters join our Accident and Health and Corporate teams. To find out more….please keep reading Welcome to: Other Team News Richard Thomas (Melbourne) has now taken on the role of National Manager, Insurance. Richard is ultimately responsible for the areas of Liability, Accident and Health and Property. In order to support this change, Richard has 3 unit managers to assist him. Maria Rosman is now Manager, Liability, Kate Ellis has joined us as Manger, Accident and Health and Stuart Greaves continues in his role as Manager, Property.
• Carry out a due diligence check of any potential security company;
• Have in place clear and concise written guidelines in relation to the Responsible Service of Alcohol and patron ejections/restraints;
• Conduct weekly/fortnightly meetings with security providers on resourcing; and,
• Plan specific resourcing for special events (e.g. New Year’s Eve, grand finals etc).
Don’t always believe what you are told by the claimant.
(a) There were no witnesses to the actual event;
(b) The claimant had never suffered from a previous back complaint other than a couple of physiotherapy treatments approximately three years ago to a different part of his back;
(c) A doctor’s statement acknowledging the injury also stated that, based on the information provided, the claimant had never suffered a previous back condition, however the doctor had only been treating the claimant for one year. The doctor also stated it was a degenerative condition caused by heavy lifting over the years and the age of the claimant was 58. The claimants’ age is an important factor as it has an impact on whether the claimant chooses to return to work or stays on benefits for two years and then retires.
2. We rang the claimant’s employer who confirmed that the claimant often has days off work but the medical certificate only stated “Medical Condition.” When asked whether they were aware of a previous back complaint, the employer confirmed that the claimant often complains about his back, but again the Employer was unable to confirm that the days off work with a “Medical Condition actually related to claimant’s back;
3. We spoke to claimant who advised that the information provided on his claim form was wrong. He confirmed that the physiotherapy treatments that he had received were for a hip complaint and not his back. We told the claimant that as he had altered the information on the claim form from back to hip we would request his medical history from Medicare which should take 6 weeks and that liability would not be determined until this history was received;
4. The claimant’s employer also confirmed the claimant’s previous hip injury;
Although the client did have an adequate cleaning system in place, the system was largely undocumented. It was agreed that without documented/visual evidence, it would be difficult to convince a court that there was an adequate system of cleaning in place at the supermarkets so the client opted to commercially resolve the claims to avoid incurring further defence costs.
Proclaim recognised that had the client’s cleaning system been documented, it would have had an opportunity to successfully defend or settle the claims for nominal amounts.
The above discussion illustrates the importance of implementing and documenting risk management procedures.
Michelle’s Update for the August Newsletter
Winston Churchill
Introducing our newest team members
Kate Ellis – Manager, Accident and Health
We are happy to welcome Kate to our Accident and Health team. Kate is based in our Sydney office and comes to us with excellent industry experience gained at her time at Ace Insurance, both in Accident and Health claims management and a managerial capacity.
Kate has been working closely with Russell Walker and has now taken over the reins as Manager of the Accident and Health Unit. Russell will take on a senior consultative and technical role, continuing to utilise his invaluable experience in PA claims for our clients.
Rachel Peters – Account Manager – Corporate
With Daniela Cristea leaving Proclaim in June for a terrific opportunity in New York City, we have recently been joined by Rachel Peters in our Melbourne Corporate team. Rachel was admitted to the Supreme Court of Victoria last year and prior to this was exposed to a number of areas of civil and commercial law whilst working as an Articled Clerk in private practice. Last year Rachel worked in a contract role as Legal Officer for the Department of Sustainability and Environment as part of the Victorian Bushfires taskforce and most recently was undertaking contracted work in the Magistrates Court.
Rachel’s key clients are Spotless Group, The Reject Shop, Maroondah City Council, Menzies and Spotlight.
In order to meet the demands of our growing business, Marianne Lim (Sydney) has stepped into the role of National Manager, Corporate. Among other things, Marianne is charged with overseeing our Corporate Team with Ryan Francis (Manager, Corporate NSW) and Matilda Keenan (Manager, Corporate Victoria) reporting into her.
The stork has a busy couple of months ahead with two members of the team preparing for maternity leave. Matilda Keenan (Manager, Corporate Victoria) will be commencing maternity leave in late August and I am preparing to finish up in late July/early August for the impending arrival of baby number two.
Don’t forget you can learn more about the team at http://www.proclaim.com.au/our people and culture