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JANUARY / FEBRUARY 2023 FURTHERING THE HIGHEST STANDARDS OF CLAIMS AND LITIGATION MANAGEMENT Why Digital Risks Persist Trends in Class- Action Litigation How to Win in Negotiations USING THE TOOLS OF TOMORROW TO SOLVE TODAY’S CLAIMS CRISES FORECAST 2023THECLM.ORG/MAGAZINE CLM MAGAZINE 3 CONTENTS CLM MAGAZINE JANUARY / FEBRUARY 2023 18 FORECAST 2023 Using the tools of tomorrow to solve today’s claims crises 24 WHY DIGITAL RISKS PERSIST Breaking down the evolving cybersecurity trends of 2022 28 CHANGING TIDES Florida’s latest property insurance bill builds on a series of recent reforms 32 TRENDS IN CLASS-ACTION LITIGATION Prioritize compliance with biometric data privacy laws, or risk big losses 37 BUILDING EXCITEMENT FOR ANNUAL CONFERENCE What’s in store for CLM’s biggest event of the year 38 CAREERS What to consider when changing jobs 39 BETWEEN THE LINES What’s your work-related resolution for 2023? 40 NATIONAL News and verdicts that affect you from across the country 42 VOICES Getting to know Sompo International’s Rose Charles FEATURES 4 FRONT DESK Tampa comes calling 6 EXPOSURE Flooding in California 8 THE COMING STORM CMS moves forward with hefty civil monetary penalties for noncompliance 10 MAKING AN OFFER THAT CAN’T BE REFUSED Knowing what and how to present can help you win in negotiations 12 RISK TRENDS FOR 2023 Cybercrime, property losses, and supply chain disruptions remain areas of focus 14 THE OODA LOOP TRUMPS THE ‘SEINFELD’ MODEL How facts can get in the way of a good story COLUMNS AROUND THE CLM 18 32 24 8 12 37 42 384 CLM MAGAZINE JANUARY / FEBRUARY 2023 VP OF CONTENT Eric Gilkey SENIOR MANAGING EDITOR Phil Gusman CONTRIBUTING EDITOR Fran Clark ART DIRECTOR/ PUBLISHING OPERATIONS MANAGER Jason T. Williams EDITORIAL QUESTIONS Eric Gilkey eric.gilkey@TheCLM.org CHIEF EXECUTIVE OFFICER Ronna Ruppelt VP PARTNERSHIPS Jeremy Campbell SENIOR ACCOUNT EXECUTIVE Laurel Metz ACCOUNT EXECUTIVE Megan Josd ADVERTISING QUESTIONS Jeremy Campbell jeremy.campbell@TheCLM.org 513-377-7228 JANUARY / FEBRUARY 2023 • ISSUE 1 • VOL. 7 REPRINTS For reprints and licensing please contact Jeremy Campbell at jeremy.campbell@TheCLM.org or 513-377-7228. CLM Magazine is published monthly and covers news and topics of interest to insurance claims, risk, and litigation management professionals. Copyright © 2023 by the CLM. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the CLM. The views expressed in the articles are solely those of the authors or those interviewed and do not necessarily reflect the views or opinions of CLM or the companies in which the authors are employed. A publication of Our annual conference is right around the corner, and I’m excited to share with you all the work that has gone into making this show a truly spectacular one. In keeping with this year’s theme of “Ready. Set. Future,” here’s a peek into what I’m most excited for attendees to experience when we gather together again on March 29, 2023. Each year, there is stiff competition among our membership to turn their ideas into sessions that educate and inform. What takes these presentations to the next level is our signature roundtable format. Banished are the Powerpoints and “sit and get” approach, and in its place are the dynamic discussions and interactivity this conference is known for. I’m also excited to hear what futurist Nancy Giordano has to share with attendees on our opening night. What will her crystal ball reveal? She promises to focus on building a safe, inclusive, thriving future, and that’s a message I can certainly get behind. Following her address will be one of my favorite jobs each year: announcing our professionals of the year award winners and recognizing our Lifetime Achievement winner. Speaking of the latter, this year’s recipient is Larry Beemer, HCC Casualty Insurance Services Inc.’s vice president of casualty claims. Beemer has been part of CLM from the very beginning and is someone who truly embodies our organization’s values and commitment to education and collaboration. This is evident in his role in co-creating our Litigation Management Institute and serving as a dean for Claims College’s School of Litigation Management. He’s a dear friend and confidant, and I look forward to providing him with the recognition he truly deserves. Lastly, I also want to hear from you. As part of an “Ask Me Anything” panel consisting of chief claims officers, I want to know what some of your biggest questions are as they relate to your careers and the industry in general. This is your chance to get answers to the questions you’ve always wanted to ask of our industry’s top leaders, so don’t miss out. Scan the QR code below with your phone’s camera, type in your question, and it may get answered at the show. These are just a few of the things I’m excited about—make sure to flip to page 37 for more details of the conference and see what those who have already registered are looking forward to the most. It’s going to be an amazing event, and I look forward to seeing everyone there! All the best – Ronna Ruppelt CEO ronna.ruppelt@TheCLM.org LinkedIn.com/in/ronnaruppelt Tampa Comes Calling FRONT DESKawards NOMINATIONS ACCEPTED UNTIL FEBRUARY 10: www.theCLM.org/POY #CLM2023 PROFESSIONAL OF THE YEAR Nominate an Outstanding Colleague Help us identify and recognize the 2023 CLM Professional of the Year Award winners. Three finalists and one winner will be selected in each category: Beginning in 2023 our new Phenoms Under 40 will celebrate the accomplishments of the many young professionals in the CLM community and replace the Young Professional categories of the Professional of the Year Awards program. Nominations for the 2023 Phenoms Under 40 will open in October 2023. Stay tuned for details! • Claims & Litigation Management Professionals• Outside Defense Counsel6 CLM MAGAZINE JANUARY / FEBRUARY 2023 EXPOSURE FLOODING IN CALIFORNIA In this aerial view, floodwaters are shown covering an agricultural area after the Salinas River overflowed its banks on Jan. 13, 2023, in Salinas, Calif. Several atmospheric river events resulted in record rainfall and high winds, causing at least $30 billion in economic impacts stemming from major flooding, widespread power outages, landslides, fallen trees, and road closures, according to Accuweather. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES8 CLM MAGAZINE JANUARY / FEBRUARY 2023 COMPLIANCE P rimary workers’ compensation, general liability, and no-fault claims payers should be on alert for civil monetary penalties of up to $1,000 per day, per claim, which will be issued against noncompliant claims payers beginning spring 2023. On Feb. 18, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a Notice of Proposed Rulemaking regarding scenarios in which civil monetary penalties (CMPs) for noncompliance with Medicare, Medicaid, and SCHIP Extension Act (MMSEA) Section 111 reporting could be issued against non-group health plans (NGHPs, which include workers’ compensation, general liability, and no-fault payers/plans, including self- insurance). The comment period closed in April 2020, and comments submitted in response to the proposed rule are currently being reviewed by CMS. The Office of Management and Budget website indicates that the rule will be finalized by Feb. 18, 2023, as MMA Sec. 902 requires Medicare to publish final rules within three years of a proposed or interim final rule. The final rule will likely not become effective until at least 30 days after it is published in the Federal Register. Thus, one can speculate that the property and casualty industry is about one year out from a final rule on CMPs, and once the final rule is published, CMS may begin penalizing noncompliant workers’ compensation, general liability, and no-fault responsible reporting entities (RREs). The description of the proposed final rule now states the following, which is insightful regarding the areas of Section 111 compliance that CMS will seemingly focus on when determining whether to issue a CMP against an RRE: This final rule specifies how and when CMS must calculate and impose CMPs when group health plan (GHP) and NGHP RREs fail to meet their Medicare Secondary The Coming Storm CMS Moves Forward With Hefty Civil Monetary Penalties for Noncompliance By Jonathan Gerdes and Heather Sanderson Jonathan Gerdes, CPCU, SCLA, AIC, is chief claims officer for Frank Winston Crum Insurance. jonathang@fwcrum.com Heather Sanderson, Esq. is president of Sanderson Firm PLLC. heather@sandersoncomp.com. THECLM.ORG/MAGAZINE CLM MAGAZINE 9 Payer obligations in any or more of the following ways: when RREs fail to register and report as required by MSP reporting requirements; when RREs report as required, but report in a manner that exceeds error tolerances established by the Secretary of the Department of Health & Human Services (the Secretary); when RREs contradict the information the RREs have reported when CMS attempts to recover its payments from those RREs. This rule also establishes CMP amounts and circumstances under which CMPs would and would not be imposed. Thus, clearly, areas of focus for CMS when it comes to penalizing insurers are those entities that have failed to register and report, where the RRE is exceeding error tolerances/ not correcting errors, and where the Section 111 reporting contradicts what the RRE might argue on a Medicare conditional payment appeal as far as responsibility for payment. It is notably apparent that the proposed rule is designed to determine the extent an RRE is unable to obtain an injured individual’s Social Security number (SSN), and that the documentation of those “good-faith efforts” to obtain the SSN is highly important to defend against CMPs. In its proposed rule, CMS proposed that the RRE must make at least three attempts, both by phone and email/ mail, to obtain the SSN so that the RRE can properly report. This is a high standard for CMS to set, thus RREs should be prepared if this standard remains in the final published rule. This certainly impacts liability payers beyond workers’ compensation payers, which more readily have access to an injured individual’s SSN. Although the proposed rule has stated that any CMPs issued would be prospective in nature, the final rule will ultimately determine whether CMS intends to apply CMPs to RREs on a retroactive basis. Further, as CMS has proposed having a five-year statute of limitations in which to issue a CMP against an RRE, the time is now for RREs to ensure that their current and historical reporting of claims follow MMSEA Section 111 obligations. Practical implications and suggestions for claims payers to guard against civil monetary penalties would be, from a simplistic standpoint: • Register as an RRE and submit timely reports. • Do not report Section 111 data that might conflict with Medicare conditional payment disputes/ recovery processes. • Ensure your organization is correcting errors and not exceeding error tolerance thresholds. • RREs should make good-faith efforts to obtain the necessary information to report. Where an RRE cannot obtain the data required, the RRE should exercise due diligence to document those good-faith efforts to report. There are numerous challenges— for an insurance carrier, self-insured entity, or a third-party administrator— that need to be overcome to ensure compliance and avoid CMPs. Compliance standards are difficult as primary payers need to account for not just what is already known, but also for what CMS will introduce in the future. The $1,000 per day, per claim has been a sword hanging over the head of the industry for over 10 years now. The first and foremost challenge is the nature of the claims the industry handles: Workers’ compensation and no-fault are, at their core, medical claims where you normally “accept” an injury before payment is made. General liability claims are predominately settled with a release that specifically states that the settling entity is not admitting liability and, by default, not “accepting” the injury. The next challenge is that, depending on the size of the claims operation, the adjusting staff handling any one of these types of claims is different from staff handling the others. As CMS marches forward in the next few months with its final rule on CMPs, now is the time for primary payers to clean up their data to avoid $1,000 per day, per claim penalties. A proactive approach prior to the final rule being released is highly recommended. KNext >