Health Care PortfolioSM Five Insurance Solutions for Health Care Organizations It’s Chubb. Or it’s Chance. H E A LT H C A R E P O R T F O L I O S M Managing a health care organization has its risks, to say the least. Society’s standards for professional performance are becoming more demanding every day, from heightened expectations of health care “miracle cures” to demands for improved corporate governance. The government and public seek to raise the bar in health care and are demanding transparency in pricing of services, quality, governance, and charity care. With the cost of providing care continuing to rise while government reimbursement declines, there is precious little room for absorbing the potentially huge financial impact of a sudden liability or crime-related loss. Furthermore, the personal assets of the organization’s directors, officers, and employees may be at risk due to their decisions, actions, or inactions. Even with a skilled and experienced team at the helm, an organization can encounter unanticipated threats or risks that are best mitigated through insurance protection. For a health care organization, every dollar counts. Investments and expenditures are carefully considered. The bottom line matters. The organization’s success directly impacts the well-being of patients, employees, bondholders, and the community at large. The Remedy: Chubb’s Health Care PortfolioSM Chubb created Health Care PortfolioSM specifically to help remedy many of the most critical exposures faced by health care organizations and their directors, officers, and employees. Health Care Portfolio provides: Unmatched Portfolio Protection—Chubb’s Health Care Portfolio is an insurance solution offering up to five coverage sections and a variety of coverage options to help address each customer’s unique needs. This variety affords health care organizations choice and flexibility to help manage some of the most dangerous threats to their bottom lines. Health Care Portfolio’s coverage sections include: I Directors and Officers Liability (including optional Entity, Employment Practices, and Third-Party Liability coverages)—Every organization is a potential target for litigation by employees, bondholders, attorneys general, providers, customers, vendors, creditors, competitors, and regulatory agencies. I Fiduciary Liability—Any employee who has discretionary authority over a benefit plan or assists in its administration can be exposed to liability. I Crime—Occupational fraud can last for years, exploiting weaknesses in an organization’s financial controls. I Kidnap/Ransom and Extortion—An extortion threat against a health care organization’s property, proprietary information, computer system, or people can be enough to push it to its financial limits. I Outside Directorship Liability—Virtually all health care organizations face exposures when their insured persons participate on the boards of outside organizations. Our Chubb Health Care team continues to find ways to make great products better by tailoring them to help address each customer’s specific exposures. This flexibility assures that our customers may be able to purchase exactly the coverage that they need. Industry Specialization and Expertise—We have been creating insurance solutions for executives since the 1970s, and we revolutionized insurance for health care organizations in the 1980s. Our depth of understanding of health care business and exposures enables us to provide innovative, specialized, clear coverage that stands out in the market. The unique health care expertise of our underwriters, claims professionals, and attorneys enables us to maintain focus on the ever-changing issues facing this complex industry. Unparalleled Risk Management Services—Good risk management can help protect a health care organization against loss. Our Health Care Portfolio customers gain access to a wide array of risk management services that are designed to help promote awareness, provide resources, help identify risks, and enhance communication. Our risk management services include: I Employment Practices Liability Loss Prevention Program, including access to the ChubbWorksSM Web site, CheckPointSM newsletter, toll-free hot line, panel of risk management consultants, and much more. I Health care loss prevention tools and information at www.chubb.com. I STAT, health care risk management newsletter. I Topical webcasts. I Loss control booklets, including Directors and Officers Liability Loss Prevention, Employment Practices Liability Loss Prevention, Fiduciary Liability Loss Prevention, Managing Travel Risks, Managing Terrorism Risks, and Readings in Health Care Governance. Superior Claims Handling—The true measure of an insurance company is how it responds to and manages claims. The philosophy that guides Chubb, in each and every claim settlement, was established with the company’s founding in 1882: Treat each customer the way we would like to be treated if we experienced the same loss—with integrity, empathy, promptness, expertise, and fairness. Our philosophy is one of cooperation and partnership with agents and customers to provide both a vigorous defense against meritless claims and appropriate settlements where warranted. Our reputation for expert, fair claims handling is renowned in the industry. Financial Strength—Chubb’s financial stability and ability to pay claims rate among the best in the insurance industry, as attested by Standard and Poor’s and A.M. Best Company, the leading insurance rating services. For more than 50 years, Chubb has remained part of an elite group of insurers that have maintained Best’s highest ratings. Agents, brokers, and prospective customers often seek out our services because our reputation in the market is well known. Key Features of Health Care Portfolio Include: I One flexible, integrated package of tailor-made insurance coverages for health care organizations. I One simplified application for all five coverage sections. I Convenient declarations page illustrates all coverage sections selected, with respective limits and retentions outlined by coverage section. Individual declarations pages are also included by coverage section. I Certain coverage for newly acquired subsidiaries and runoff coverage for sold subsidiaries. I Domestic partner and spousal liability coverage. I Extended reporting period (bilateral discovery) is available even if customer cancels or Chubb non-renews coverage. I Worldwide coverage. In today’s litigious health care environment, no I Specialized, state-of-the-art risk management services. business relationship is free of risk, including a Customers can also select their level of protection by purchasing separate health care organization’s dealings with: aggregate limits of liability for each individual liability coverage section. • Employees. • Providers. Chubb’s Health Care Portfolio is the quality insurance solution for health care organizations. Much is at stake: the organization’s assets and the personal assets • Patients and other recipients of health care services. of its directors, officers, and employees; the organization’s financial well-being; and even its survival in the community at large. • Financial donors. • Vendors. • Creditors. • Regulatory agencies. • Other health care organizations. H E A LT H C A R E P O R T F O L I O : D I R E C T O R S A N D O F F I C E R S L I A B I L I T Y I N S U R A N C E ( I N C L U D I N G O P T I O N A L E N T I T Y, E M P L O Y M E N T P R A C T I C E S , A N D T H I R D - PA R T Y L I A B I L I T Y I N S U R A N C E ) In today’s volatile health care environment, every health care organization is a potential target for litigation. The business practices and decisions of health care boards, like boards in other business sectors, have come under intense scrutiny from governmental regulators and the public. Lawsuits, resulting in potentially devastating financial liability, can be brought by: I Employees. I Bondholders. I Attorneys general. I Providers. I Customers. I Vendors. I Creditors. I Competitors. I Regulatory agencies. Typical lawsuits against health care organization directors and officers often involve allegations such as: I Discrimination, harassment, wrongful termination, and other illegal employment practices. I Improper credentialing and peer review. I Restraint of trade, price fixing, and other antitrust issues. I Breach of fiduciary duty. I Mismanagement of operations or organization assets. I Waste of corporate assets. I Violation of certain state and federal laws. Litigation Is a Financial Drain Each of these types of litigation can last several years, and defending against them can soon become a significant financial burden and a continuous drain on a health care organization’s financial resources. Furthermore, if an organization cannot indemnify its directors, officers and employees—either because of the allegations of a lawsuit or as a result of the organization’s insolvency—then this financial burden can become the personal responsibility of the directors and officers. The D&O Liability Risk With more than two decades of experience, Chubb is a leader in the directors According to Tillinghast-Towers Perrin’s 2005 and officers (D&O) liability insurance market. When an organization purchases Directors and Officers Liability Survey: Health Care Portfolio D&O Liability Insurance from Chubb, it buys tailored • Health service organization directors and coverage that is backed by in-depth knowledge of the health care industry, officers are, on average, at least 10 times more likely to be sued than most other outstanding claims service, and financial stability about which most insurers can business classes. only dream. A health care organization can feel comfortable in the knowledge • More than half of all claims made against that its claims will be handled by a superior claims staff with significant directors and officers are made by employees. knowledge and experience in health care matters. • About one-quarter of D&O claim allegations are made by shareholders and other investors. • Defense costs per D&O claim average nearly $800,000. Key Coverage Features Include: I Optional coverage for entity, employment practices liability (EPL), and third-party liability (TPL) claims under one D&O liability policy. I Definition of “insured person” includes directors, officers, trustees, peer review committee members, staff, faculty, in- house counsel (and equivalent positions outside the U.S.), employees, and independent contractors. I Defense coverage for certain claims brought under the Health Insurance Portability and Accountability Act (HIPAA), Internal Revenue Code (IRC), Emergency Medical Treatment and Active Labor Act (EMTALA), and Excess Benefit Transaction. I Sublimited indemnification for certain IRC, EMTALA, Excess Benefit Transaction, and Title II HIPAA claims. I No “fraud or willful acts exclusion” for EPL or TPL claims. I Coverage for mental anguish and emotional distress damages that are associated with certain claims for employment practices and provider selection practices, which often result in the most significant monetary damages. Employees, bondholders, attorneys general, providers, customers, vendors, creditors, competitors, and regulatory agencies may bring legal action against the health care organization and its board. H E A LT H C A R E P O R T F O L I O : F I D U C I A R Y L I A B I L I T Y I N S U R A N C E Fiduciaries of employee benefit plans are expected to act in the best interests of the plan participants. Under the Employee Retirement Income Security Act of 1974 (ERISA), if this duty is compromised, either intentionally or unintentionally, fiduciaries can be held personally liable for losses. Any employee who has discretionary authority over a plan or who assists in its administration can be a fiduciary and thus be exposed to liability. This list of individuals might include an appointed fiduciary, a plan administrator, a human resources employee, or any employee who helps to administer a plan. ERISA also broadly defines the types of employee benefit plans for which fiduciaries are responsible, including pension plans and even health and welfare plans. These days, people who perceive that they have been wronged often react by filing lawsuits that can be extremely costly to defend and settle. This makes fiduciaries potential lightning rods for liability; particularly in light of the amount of money that is held in retirement plans today, the valuable protection that those plans afford to their participants, and recent efforts by many organizations to reduce participants’ retirement benefits. Moreover, designated fiduciaries are not the only targets of such lawsuits; targets can also include the employer and even the plan itself. Claims can be brought by: I Plan participants. I Participants’ legal estates. I The Department of Labor (DOL). I The U.S. Pension Benefit Guaranty Corporation. The most frequently alleged claims against fiduciaries include: I Denial or change of benefits. I Breach of responsibilities or fiduciary duties imposed by ERISA. I Administrative error. I Negligence in the administration of a plan. I Wrongful termination of a plan. I Failure to adequately fund a benefit program. I Cash balance plan conversions. Health care organizations can reduce the liability exposure to their fiduciaries by employing good loss prevention procedures, such as seeking and following the advice of independent experts; selecting diverse, financially sound investments; and so on. However, they cannot entirely eliminate their fiduciaries’ personal liability. In order to help protect health care organizations, their fiduciaries, and the benefit plans they manage from fiduciary liability claims, Chubb offers Health Care Portfolio Fiduciary Liability Insurance coverage. Key Coverage Features Include: I Duty-to-defend policy including a 70/30 settlement participation provision. I Voluntary settlement program coverage. I Definition of “insured” includes the organization, its benefit plans, and its fiduciaries. Coverage is also automatically extended to claims made against the insured person’s spouse or domestic partner for wrongful acts of the insured person. I Definition of “administration” includes advising, counseling, or giving notice to employees; producing plan interpretations; handling records; enacting enrollment; and terminating or canceling employees, participants, or beneficiaries under any plan. I Definition of “employee” includes part-time and temporary employees, as well as volunteers. I Definition of “claim” includes a written demand for monetary damages, a criminal proceeding, formal administrative or regulatory proceeding, and a fact-finding investigation by the DOL, U.S. Pension Benefit Guaranty Corporation, or any similar authority located outside the United States. I Coverage for civil money penalties relating to certain 502(i) and 502(l) claims. I Employee benefit plan language includes certain plans defined in ERISA, plans not subject to ERISA that are sponsored solely by the insured for the benefit of its employees including fringe benefit plans and excess benefit plans, and new benefit plans being proposed, developed, or formed by the insured (excluding employee stock ownership plans). Designated fiduciaries are not the only targets of fiduciary liability lawsuits. Targets can also include the employer and even the plan itself. H E A LT H C A R E P O R T F O L I O : C R I M E I N S U R A N C E Like it or not, a health care organization’s assets are exposed to occupational fraud. This can take the form of: I Embezzlement. I Theft of supplies, drugs, and inventory. I Purchasing schemes involving kickbacks. I Accounts payable fraud involving ghost vendors. I Payroll and check fraud. I Theft of cash. Fraud Can Last for Years Such frauds involve every possible angle and can last for years, exploiting any potential weakness in the organization’s financial controls. The ultimate impact of fraud can be enormous, and its cost directly impacts an organization’s bottom line. The financial consequences can be serious, even threatening an organization’s survival. Smaller organizations are especially vulnerable to such crimes. Chubb offers a solution to handling crime losses caused by employees and others through our distinctive Health Care Portfolio Crime Insurance coverage. Key Coverage Features Include: I Loss-sustained coverage for: I Employee theft. I Money and securities while on premises or in transit. I Forgery. Fraud Facts I Funds transfer fraud. Fraud and embezzlement in the workplace are I Computer fraud. on the rise, occurring in even the best work I environments. According to a leading Money order and counterfeit currency fraud. international accounting firm: I Credit card fraud. • 80% of workplace crime is carried out by employees. I Client coverage. • One in four employees has either committed I Coverage for investigative costs for covered losses. or witnessed workplace fraud and abuse. • One in four employees committing fraud against their employer has been with the company for more than 10 years. • Only one in three of those who have witnessed a workplace crime bother to report it. The Association of Certified Fraud Examiners has found that: • Fraud and abuse costs U.S. businesses more than $660 billion annually. • The average organization loses 6% of its total annual revenue to fraud and abuse committed by its own employees. H E A LT H C A R E P O R T F O L I O : K I D N A P / R A N S O M A N D E X T O R T I O N I N S U R A N C E In most organizations, few people fully understand exposures that are posed by business extortion and kidnap/ransom threats. Yet organizations of any size can be a target for threats against the organization and its employees. People tend to associate business extortion and kidnapping with global companies. The fact is, radical groups and criminals exist everywhere, and any organization can be a target. Managing these risks in a health care organization is a continuous challenge, particularly with the amount of private data that a health care organization must maintain. An extortion threat against a health care organization’s property, proprietary information, computer system, or people can be enough to push it to its financial limits. These risks may not feel like everyday exposures, but when they happen, the organization may need financial assistance to meet extortion demands and the extensive negotiation and recovery costs that are associated with a kidnapping. Health care organizations that treat or deal with infants and children have a heightened risk to these types of exposures. Managing the Extortion Risk The risk to an organization of an extortion threat is especially acute, according to the Federal Bureau of Investigation. Business extortion risks such as the following are all too real: I Threat by a criminal to harm employees unless a payment is made. I Threat by a criminal to poison a food or drug product unless payments are made. I Threat by a computer hacker to destroy private data, including patient information, unless a sizable sum of money is paid. More health care organizations are realizing the importance of managing these unexpected and diverse risks through Health Care Portfolio Kidnap/Ransom and Extortion Insurance from Chubb. Our coverage can help mitigate the potentially catastrophic costs of the ransom or extortion payment and the costs associated with managing these types of crises. Key Coverage Features Include: I Coverage for extortion threats against the organization’s property, proprietary information, computer systems, and employees. I Expense coverage for hijackings, wrongful detentions, and political threats. I Reimbursement for ransom or extortion payments and insurance for payments during delivery. I Coverage for expenses such as: I Access to a public relations firm. I Medical, cosmetic, psychiatric, and dental services. I Rest and rehabilitation costs. I Reward payments to informants. Crisis Assistance from The Ackerman Group I Salaries of employees and temporary replacement employees. In addition to insurance coverage, Chubb offers I Accidental death and dismemberment coverage. customers automatic access to the outside crisis management expertise of The Ackerman Group, I Legal liability coverage that provides defense and indemnity in the event Inc., which also produces RISKNETTM, an of a lawsuit alleging negligence on the part of the customer in a hostage Internet-based service that analyzes terrorism, retrieval operation or in the prevention of a kidnapping or child/infant criminal, and political stability risks around the abduction. world and is an essential information resource for any business traveler. After all, who but an I Access to the crisis management expertise of The Ackerman Group, Inc., expert has experience dealing with kidnappers or another expert of our customer’s choice. and extortionists? H E A LT H C A R E P O R T F O L I O : O U T S I D E D I R E C T O R S H I P L I A B I L I T Y I N S U R A N C E Outside board directorships can be a useful extension of corporate activity, represent good corporate citizenship, and help foster good community relations. That’s why health care organizations often encourage individuals to contribute their time and talents in the form of service as directors, officers, trustees, governors, or other, equivalent executive positions on the boards of not-for-profit and for- profit organizations. However, in today’s litigious world, these outside directorships can also create complicated liability issues and unintended losses for the organization and the individuals who serve it. ODL Risk Not Always Understood Just as liability exposures of corporate directors and officers have increased dramatically in recent years, outside directorship liability (ODL) exposures have also increased. Virtually all health care organizations face ODL exposures when their insured persons serve as outside directors for other organizations. ODL risks are generally not well understood, and few health care organizations have taken the initiative to identify their potential exposure to ODL loss. This may be because insured persons who are authorized by the organization to serve on outside boards are performing work that is “out of sight, out of mind”—usually the work has little or no serious business impact on the health care organization itself; therefore, it is “invisible” to the organization’s risk manager. Yet, ODL exposures faced by these individuals who sit on outside boards are the same as those faced by the organization’s own directors and officers. If ignored, they can ruin an otherwise well-conceived risk management program for executives and result in embarrassing (at best) and devastating (at worst) liability for an organization and its leadership. In response, Chubb offers Health Care Portfolio Outside Directorship Liability Insurance, coverage that combines an efficient method of facilitating risk identification, effective internal communication, and risk transfer. Key Coverage Features Include: I “Claims made” coverage. I Dedicated, separate limits for individuals serving in authorized outside directorships of both for-profit and not-for- profit organizations. I Coverage for wrongful acts of insured persons who are authorized by the organization to serve as director, officer, trustee, governor, or any equivalent executive position for an identified, outside organization. Virtually all health care organizations face ODL exposures when their employees participate on the boards of outside organizations. H E A LT H C A R E P O R T F O L I O Health Care Portfolio provides an extensive package of protection and services, specifically designed to help health care organizations handle the most complex liability and criminal threats to their bottom lines. With five insurance coverage sections, a variety of coverage choices within each section, and Chubb’s expertise, risk management services, superior claim handling, and financial strength, our customers enjoy the unique “peace of mind” that comes with being insured by Chubb. C O N TA C T U S For more information about Health Care Portfolio from Chubb, contact your agent or broker, or visit our Web site at www.chubb.com. It’s Chubb. Or It’s Chance. For promotional purposes, Chubb refers to the member insurers of the Chubb Group of Insurance Companies underwriting coverage: Chubb Insurance Company of Europe, S.A.; Chubb Insurance Company of Australia, Limited; Chubb Indemnity Insurance Company; Chubb Insurance Company of Canada; Chubb Argentina de Seguros, S.A.; Chubb do Brasil Companhia de Seguros; Chubb de Chile Compañia de Seguros Generales, A.S.; Chubb de Colombia Compañia de Seguros, S.A.; Chubb de Mexico Compañia Afianzadora, S.A. de C.V.; Chubb Group of Insurance Companies Chubb National Insurance Company; Federal Insurance Company; Great Northern Insurance Company; Northwestern Pacific Indemnity Company; Pacific Indemnity Company; Vigilant Insurance Company; Executive Warren, NJ 07059 Risk Indemnity Inc.; Executive Risk Specialty Insurance Company; and Quadrant Indemnity Company. Not all insurers do business in all jurisdictions. www.chubb.com This literature is descriptive only. Actual coverage is subject to the language of the policies as issued. Form 14-01-0803 (Rev. 5/06)
"Loss Prevention Employment"