1. Wage and Hour Class Actions in the Healthcare Setting
Long-Term Care Risk Legal Committee
January 27, 2011
Las Vegas, NV
Integro Insurance Brokers
One Bush Street, Suite 1400
San Francisco, CA 94104
License #: 0E77964
Phone:
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2. Agenda Introduction Growth of Wage and Hour claims
Healthcare employment statistics
Examples of Wage and Hour claims
Avalon Health Care Group: Lessons Learned
Insurance coverage issues
Copyright 2011 Integro Insurance Brokers

3. Integro Healthcare Practice
A True Blending of Expertise
Our Practice Facts
Experienced brokers, transaction, placement, marketing specialists, including treaty reinsurance brokers
+19
Average years’ experience of Integro Healthcare Practice Brokers and Consultants 45
Number of Integro Healthcare professionals
+50
Number of HC self insurance / captive programs managed by Integro 98
Percent client retention
Risk
Financing
Healthcare
Operations
Risk
Mitigation
Program design consistent with HCO culture, client tailored risk consulting, risk financing compatible with overall TCOR objectives
Loss Prevention and Claims Advocacy, policy wording expertise, underwriting and complex claim support.
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4. Wage and Hour: A Growing Problem
Fastest growing workplace tort
In 2009, W&H outpaced all other workplace torts
the 10 largest private wage and hour settlements totaled nearly $364 million (2009). Up from $253M in 2008.
Settlement values more than employment discrimination
States with the most significant growth in wage and hour litigation are California, Florida, Illinois, New Jersey, New York, Massachusetts, Minnesota, Pennsylvania and Washington
Crosses all industries but Healthcare is a growing target
Numerous laws and regulations
State and Federal
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5. Wage and Hour: A Growing Problem
Wage and Hour are easy to plead and difficult to defend
Plaintiff attorney hotlines
Usually brought as a Class Action or Collective Action
Healthcare Reform
Applies to payments for direct care workers
Beginning in 2011, Health and Human Services will be responsible for tackling the challenge of improving wages for these workers
Increased Government Involvement
Current administration’s emphasis on regulation and enforcement may result in more government initiated lawsuits
The Labor Department has hired 250 new wage-and-hour investigators, representing a staff increase of one-third
Copyright 2011 Integro Insurance Brokers

6. Healthcare Statistics
In 2008, healthcare provided 14.3 million jobs for wage and salary workers.
Ten of the 20 fastest growing occupations are healthcare related.
Healthcare will generate 3.2 million new wage and salary jobs between 2008 and 2018, more than any other industry, largely in response to rapid growth in the elderly population.
Source: Dept. of Labor, Bureau of Labor Statistics
Copyright 2011 Integro Insurance Brokers

7. Examples Misclassification of employment Failure to pay OT
Exempt vs. non-exempt
Failure to pay OT
Failure to pay for work performed during meal or rest brakes
Failure to pay for duties required before or after hours activities required by job
E.g. time to change into and out of uniforms
Other types of claims
Anti-trust; suppression of wages
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8. Avalon Health Care Group Example
RN works for 3 months
Files Wage and Hour class action claim seeking twice the salary paid
Retains two law firms who specialize in W&H Class Actions
Court certifies Class
Plaintiff refused to settle for less than $5M
Strategy to approach attorneys to determine what fees they are seeking. Proposed minimum settlement fund.
Less than 20% of class elected to participate
Modest settlement achieved
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9. Avoiding Claims
Make sure worker classifications are reviewed and updated regularly
Establish and communicate a workplace due process procedures for workers to bring their grievances to the attention of managers
Ensure compliance with meal/rest brake and other labor regulations
If you get sued, partner with experienced counsel
Copyright 2011 Integro Insurance Brokers

10. EPL: Coverage Provided
The standard Employment Practices Liability (EPL) policy form provides coverage for claims brought by employees (in the form of written demands, civil or criminal proceedings, administrative proceedings, arbitration proceedings, etc.) arising out of:
Harassment (sexual or otherwise)
Discrimination
Wrongful termination
Employment related libel or slander
Employment related misrepresentation, invasion of privacy, humiliation
Wrongful demotion or discipline
Failure to provide or enforce adequate or consistent corporate policies and procedures relating to any employment practices violation
Retaliation
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11. EPL: Major Exclusions
The standard EPL policy form generally prohibits coverage for the following:
Wage & Hour Claims (FLSA)
Personal Profit/Deliberately Fraudulent Acts
Workers Compensation
Disability/Employee/Retirement benefits
Bodily Injury/Property Damage
Labor grievances pursuant to a collective bargaining agreement
Breach of written or express contract
Punitive Damages (except where insurable by law), fines and penalties
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12. EPL: Defense Issues Duty to defend Settlement Issues
Insurer or insured
Control of defense
Rates
Panel Counsel Requirements
Conflicts
Settlement Issues
“Hammer” clause
Allocation issues
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13. Coverage for Wage and Hour
Industry trying to respond
Difficulty in underwriting
Volatility of costs
Growing and changing exposure
Some limited coverage is available
Defense only
Sublimits
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14. Questions?
Copyright 2011 Integro Insurance Brokers