Where Are All the Good Women?

We have the privilege of having our clients come to Tallahassee and spend a day or two planning, plotting, praying, preparing, presenting, and the list goes on.  And every time we have the privilege of spending quality time with our clients, we all walk away the better for it.  On a recent visit, one of my favorite CEOs shared with me his frustration in not finding enough women to serve in his company.  He has a wife and daughters and so has spent his life watching women make things happen.  We exchanged ideas about how to recruit women in the financial services industry and you probably aren’t shocked that recent Federal Reserve Board data reveals that women control slightly more than half (51.3%) of all personal wealth in the US, making up 83% of all household purchasing decisions.

The 2016, 130+ page survey report studied the personal finances of U.S. adults; income and spending; economic preparedness and emergency savings; banking, credit access, and credit usage; housing and living arrangements; auto lending; education and student debt; and retirement. This study underscores that women influence and drive consumer purchasing and they buy for others – friends, children and relatives – so their buying power is exponential.

So it was not surprising to hear this CEO want to recruit more women to the team.  Kathy Warnick, National Board Chair of the National Association of Women Business Owners (NAWBO) puts it this way in a recent article: “There is plenty of evidence that gender diverse companies outperform those without such a balance…Companies must begin to ask themselves — who better to understand what motivates women to buy and remain loyal buyers than other women?”

A recent Wall Street Journal article titled Insurance is a Fun Career! Just Consider the Zombies and Bacon, by reporter Leslie Scism, a seasoned pro in business and human interest reporting, discussed one insurance company’s extreme attempts to recruit talent, saying “For some reason, a lot of people just don’t want to work for insurance companies, and the firms are… taking extreme measures to lure new hires in and keep them.  Insurers have put in climbing walls, offered free beer and massages, and published at least one graphic novel to entice and retain new hires. At school-recruiting events last autumn, one company served mounds of freshly cooked bacon, whose aroma drifted around the grounds.”

So we ask our newsletter readers here to share with us, especially our women readers, “what is it in a business that keeps you there or what is it that makes you want to leave?” And with that, keep reading for what’s happening in other parts of the world.

More Challenges and Opportunities for Medical Marijuana Movement

We are doing our best to keep our readers abreast of the Medical Marijuana movement.  In the past few days, Employers Mutual Insurance Company (HEMIC), headquartered in Honolulu, announced it will cancel the workers’ comp coverage of many dispensaries slated to open in the next several months.  HEMIC is relying on legal opinions citing that HEMIC is concerned its Board of Directors have potential exposure for criminal liability based on federal medical marijuana laws because the U.S. Food and Drug Administration has yet to upgrade marijuana’s status, labeling it a Schedule I drug alongside heroin and cocaine.

This recent activity in Hawaii prompted us to ask some experts about the insurance environment surrounding the medical marijuana movement.  San Diego based Next Wave Insurance Company has “Seed to Sale” coverage for everything from crops, indoor cultivation and labs, to retail with claims arising from theft, vandalism and fires from overheated lamps.  The coverage is in some respects experimental and an emerging market.   Much of the underwriting includes appropriate licensure from both state and local governments and the grower’s compliance with these licensure requirements.

Lastly, with Florida’s medical marijuana law now signed by the Governor, the Department of Health has an October deadline to ensure that at least 10 more organizations are licensed and launching medical marijuana operations.  But in an interesting twist, Sunshine State News reported that Orlando attorney and medical marijuana amendment backer John Morgan has filed a lawsuit challenging the Florida legislature’s decision to disallow smoking medical marijuana as a way to ingest it.  Morgan’s lawsuit held true to his months-long promise where he excoriated lawmakers for not including the ability for patients to smoke medical marijuana…the legislation that passed prescribes edibles, oils or vaping.

The 14 page lawsuit closes with “WHEREFORE, Plaintiff, FLORIDA FOR CARE, INC., respectfully requests that this Court enter a declaratory judgment that the amendment to Fla. Stat. § 381.986(g)(1) (2016), which prohibits the use of marijuana in a form for smoking, is unenforceable, prohibit the State of Florida from enforcing same, award the Plaintiff its reasonable attorneys’ fees and costs, and grant such other relief as this Court deems just and proper.”

The suit goes on to say “Inhalation is a medically effective and efficient way to deliver Tetrahydrocannabinol (THC), and other cannabinoids, to the bloodstream,” and “By redefining the constitutionally defined term ‘medical use’ to exclude smoking, the Legislature substitutes its medical judgment for that of ‘a licensed Florida physician’ and is in direct conflict with the specifically articulated Constitutional process.”

Amendment 2, which passed with 71 percent of the vote last November, prohibits the smoking of medical marijuana in public places, so as he puts it:  “It doesn’t take a genius to figure out if smoking isn’t allowed in public, it must be allowed in private.  When you’re dying the last thing you care about is the smoke from marijuana.”  Morgan’s contention is that medical marijuana will kill the opioid industry and “every person using medical marijuana is a person who will not go to CVS…and buy their opioids which hook us, kill us and destroy our families.”

Others have a different view: “There’s a reason why every single major medical association opposes the use of the raw, smoked form of marijuana as medicine: smoke is not a reliable delivery system, it’s impossible to measure dosage, and it contains hundreds of other chemical compounds that may do more harm than good,” said Dr. Kevin Sabet, President of the nonprofit medical marijuana organization Smart Approaches to Marijuana.

“I started this thing in 2014 and this is the last promise I made to the people of Florida,” Morgan said in an interview. “Promises made are promises kept.”

Congress Pursues Tort Reform Cap on Medical Malpractice Damages

The Florida Supreme Court in a recent decision struck down caps on non-economic damages in medical malpractice cases as unconstitutional (See our June 12 newsletter story).  Now, Congress is considering H.R. 1215 which is a package of proposed reforms that supplement the American Health Care Act, the House measure to replace the Affordable Care Act that was narrowly approved in May. The proposed legislation contains a cap on noneconomic damages of $250,000 and The Trump administration has pledged to support this effort at tort reform.  If HR 1215 passes the House, Senate and is signed by the President (a big IF indeed), the noneconomic damages cap would supercede the Florida Supreme Court’s opinion on the matter.

As you would imagine, there are powerful forces opposing and supporting the measure.  Patient advocates contend that the cap would be unfair to people seriously injured in a medical procedure and some conservatives are not supporting the provision, rather wanting to leave the decision with individual states and rejecting the idea that this legislation is a magic bullet to bring down healthcare costs.

Supporters of the bill say caps discourage frivolous lawsuits and reduce the cost of health care because providers no longer need to practice defensive medicine.  The Congressional Budget Office (CBO) which scores proposed legislation to provide its economic impact, confirms the bill would lower health care costs by reducing the premiums of medical liability insurance and lead to lower spending on federal health care programs to the tune of a $50 billion reduction over 10 years.

From a state perspective, about 25 states have a non-economic, medical malpractice damage cap and the proposed bill allows those to stay in place.  The key for Florida is that the bill’s $250,000 cap would apply despite the Florida Supreme Court finding that such caps violate the Florida Constitution’s equal protection clause.

The bill also sets a three-year statute of limitations for consumers to bring a lawsuit after an injury, or a one-year limit from the date that the consumer discovers or should have discovered the injury.  There is no state that has the one-year limit and the bill sets limits on the amounts that lawyers can recover in contingency fees.  We will monitor this legislation for you very closely.

Proposals for Settlement Are Enforceable in Small Claims Court
   by Patrick Carleton, insurance attorney for Groelle & Salmon, West Palm Beach

In Korah v. Lakeland Toyota Scion, Inc. and Clive Hunter, (County Court, 10th Judicial Circuit Polk County, Small Claims Div., Case No. 2014SC-004377), plaintiff filed a claim involving a vehicle transaction. The defendants served a Proposal for Settlement (“PFS”) pursuant to Florida Statute §768.79 and Florida Rules of Civil Procedure 1.442.  After a jury trial, judgment was entered for defendants, and plaintiff took nothing.

Defendants filed a Motion for Attorney Fees and Costs to recover their fees as allowed by the Proposal for Settlement. The Court noted Procedural Rule 1.442 did not apply in a small claims action, and denied the attorney fee recovery. However, on appellate review, the Korah Court found that a party may avail themselves of Florida Statutes §768.79, which provides for the award of attorney fees to a party when a case on a policy of insurance or other contract, regardless of the applicability of Rule 1.442 in a small claims action.

Plaintiff also argued that a Proposal for Settlement of $100.00 was not reasonable, but the Korah court noted that the burden was on the offeree to demonstrate the offer was not reasonable, and in the present action, defendants had consistently contended they had no liability. The Korah Court found nothing in the record to support a finding that defendants’ proposal was not made in good faith, and plaintiff failed to prove the absence of good faith.  Accordingly, the Court found that defendants were entitled to an award of reasonable attorney fees and costs incurred from the date of the filing of the PFS, and reserved jurisdiction to determine a reasonable award.

Ambiguous Policy Language

LMA follows other state’s insurance happenings and came across this California case.  It involves whether a California insured homeowner can recover full replacement costs by purchasing a home at another location.  Attorney Stephanie Poli did the research and found that the short answer is yes.  This case points to the age old court decisions that policy ambiguities are resolved in favor of the insured.  In Conway v. Farmers Home Mutual Insurance Company, the California Court of Appeal followed several out-of-state authorities in considering the issue and ruling in favor for the insured.

In Conway, the plaintiffs purchased a house in Imperial Beach, California, paying $230,000 for the home and subsequently renting it out to tenants.  They also obtained $100,000 in fire insurance on the property from Farmers Home Mutual Insurance Company (Farmers).  The home was damaged by fire and although it could have been replaced, the Plaintiffs decided not to make any repairs because they believed it made more economic sense to develop the subject parcel in conjunction with development of an adjacent parcel they owned.  So instead of repairing the damage within months of the fire, they paid $230,000 for another single-family home in Imperial Beach.  After disagreements as to the value the insureds were entitled to, Farmers paid the actual cash value and refused to pay the replacement value of the loss.

The policy Farmers issued to Plaintiffs was pretty straightforward, promising that in the event of a fire at the insured premises, Farmers would pay for: “c. Buildings under Coverage A or B at replacement cost without deduction for depreciation…”  Plaintiffs argued that the policy placed no restriction on where an insured may replace a damaged building.

Conway was a case of first impression in California, however the appellate court considered the other states that found replacement costs can include purchase of another building at a different location, namely Connecticut, Alabama, Michigan, New Jersey, New York, Maine, and Washington.

The court noted in particular, that in the case of Hess v. North Pacific Insurance Company out of Washington, the policy there had standard limitations on the recovery of replacement costs identical to the ones in the Farmer’s policy in Conway. Quoting Hess the court noted,

“The insured desires to rebuild either a different structure or on different premises.  In those instances, the company’s liability is not to exceed what it would have cost to repair an identical structure to the one lost on the same premises. Although liability is limited to rebuilding costs on the same site, the insured may then take that amount and build a structure on another site, or use the proceeds to buy an existing structure as the replacement, but paying any additional amount from his or her own funds.”

In rejecting Farmer’s arguments and analyzing the definition of “replace,” the court held, the dictionary definition does not draw any distinction between what can be repaired and what cannot be repaired.   More importantly, although the term replace certainly includes rebuilding on the same premises, the term also includes the notion of substituting for an original item another item which serves the same function as the original but is different in nature from the original.

The broader and widely accepted meaning would certainly encompass the purchase of another house at a different location.  Thus at best, Farmers can only contend there is an ambiguity in the policy with respect to the limitations on replacement of a damaged home.  Because the ordinary and popular use of ‘replace’ includes the purchase of a replacement dwelling at another location and no other provision of the policy alerts the insured to a narrower limitation on payment of replacement costs, Farmers’ argument brings us to the rule which requires that ambiguities are to be resolved in favor of the insured.

Where You Are is Where You Sit

Just before the July 4th holiday rush, the U.S. House Transportation and Infrastructure Committee included U.S. Rep. Neal Dunn’s (R-Fla.) ideas attacking overbooked flights into the Federal Aviation Administration (FAA) reauthorization, according to Sunshine State News.

All of us were horrified earlier this year as Dr. David Dao was forcibly removed from an overbooked flight.  Within a couple weeks of the incident, Rep. Dunn filed the “Secure Equity in Airline Transportation (SEAT)” Act.  The proposal “requires the Secretary of Transportation to revise federal rules governing how airlines treat travelers with confirmed tickets on over-booked flights” and ensures “airlines cannot involuntarily remove a person from their seat on an over-booked flight simply to make room for another passenger – airline employee or otherwise.”

If Rep. Dunn’s ideas are adopted, airlines will face an unfair business practice allegation if they remove an onboard passenger timely checked-in with a confirmed reservation.  Dunn’s legislation was brought into the “21st Century Aviation Innovation, Reform, and Reauthorization Act.” (21st Century AIRR Act).

“If you’re seated on the plane, you should stay on the plane,” Dunn, a freshman to Congress elected in November 2016, said.  “This simple change will give Americans reassurance they will not be dragged off a plane, and it will lead to airlines sorting out over-booking before travelers take their seats.  I appreciate Chairman Shuster and the Transportation and Infrastructure Committee for their support.”

All aboard!

Did It Used to be This Hot?

The leading catastrophe risk modeler, AIR Worldwide, has released a climate science report focusing on extreme weather.  Dr. Peter Sousounis, AIR’s Assistant Vice President and Director of Meteorology, is the primary author of the research that explores tropical cyclones, extratropical cyclones, severe storms, wildfire, and floods and it warns of an overall increase in all of them.  Among the interested readers of this research are regulators, rating agencies and the financial services industry.  “Many in the insurance world are paying increased attention to climate change in light of reports of increasing variability of atmospheric perils such as windstorms and floods,” said Sousounis in a news release.

Extreme weather is difficult to predict because of multiple variables in the atmosphere, as well as the unpredictability of emission levels, but one of the study’s findings is that by the end of the 21st Century, global surface temperatures will likely increase by a few degrees Celsius.

However, the speed of climate warming will not be regionally uniform and the expectation is that we will see an increase in the frequency and intensity of severe weather events with inland and coastal floods bringing the greatest risk.

Wildfires, started by lightning, and to a lesser extent arsonists, will become more frequent as the earth heats and rainfall levels change, i.e., where rainfall is scarce, the trend will be that it will be even more scarce.  The AIR report also underlined and explained the U.S.’ particular vulnerability to severe weather events with the report citing, “Geography also plays a role in generating preferred environments.

One of the reasons the United States has the highest probabilities of severe weather has to do with the country’s geography.  The Gulf of Mexico is the primary source of warm moist unstable air for the Great Plains.  As low pressure systems develop on the lee side of the Rocky Mountains, southeasterly winds ahead of the low draw the warm moist unstable air northwestward.  At upper levels, strong southwesterly winds bring air from the Mexican Plateau, which is much drier and cooler.  This configuration creates both a thermodynamically unstable environment as well as one with both wind speed and directional shear.”

Healthcare and Health Insurance Costs Up

This past week, several of us received our annual premium notices from our health insurers.  In our last newsletter edition, we reported that the Office of Insurance Regulation (OIR) had received rate filings for increases averaging 17.8%.  Those increases are set to take effect in January 2018, subject to final review and approval by OIR. But the heck with the 2018 rate increases.  Bills are jumping for individual policies as reported by our readers by $100 a month, and for families, it’s jumping $500 to $1,000 a month.

We all wonder why and what can be done.  Jonathan Fialkow, medical director at the Cardiovascular Research Center of South Florida, part of Baptist Health South Florida was recently quoted in Miami Today as saying, “Rising pharmaceutical costs are a major driver, as are people finding more expensive sites to be seen when ill.”  Emergency rooms, he explained, are more expensive than urgent care centers, which are more expensive than primary care offices; he also believes that “more costs are shifted to patients by insurers with higher deductibles and co-payments.  This makes people less likely to go to a doctor when they are mildly ill so they become sicker before being seen, which leads to poorer outcomes and higher costs.”

A local Leon County doctor recently shared with me that he’s noted that many of his colleagues are receiving calls from more desperate, sicker patients with illnesses that could have been prevented, and people are less likely to see their doctor for preventive/educational visits.  A vicious cycle indeed!

Other experts cite a shortage of primary care physicians and therefore, patients don’t have a relationship with a primary care doctor.  Estimates are that 6 of every 7 Florida physicians are specialists leaving the primary physician care field at a disadvantage.  This causes a spike in the more expensive emergency room and urgent care offices.  General practitioners are reimbursed at lower rates, too, thus contributing to the shortage.  And the 22 million people now insured mostly for the first time in their lives through the Affordable Care Act still go to emergency rooms and urgent care centers, out of habit or lack of information.  As insurance companies increasingly shift the cost burden to consumers, people seeking medical services are learning to shop around, often finding huge differences in costs for services.  For example, an MRI could cost $2,000 in one location and $500 in another.

In a recent article found on Actuary.org, estimates are that prescription drug costs will be the most costly among all healthcare services.  The article said “More high-cost specialty drugs are expected to come to market… including new drugs to treat cancer. Some drugs (including Crestor, Benicar and Symbicort) are coming off, or have recently come off, patent and will over time reduce drug costs; however, price decreases aren’t necessarily immediate, because generic competition for drugs coming off patent is often limited or slow to be adopted.  The impact could be further mitigated if patients are moved by their physicians to newer, higher-cost alternative drugs.  The increase in costs of medical services and prescription drugs… is based on not only the increase in per-unit costs of services, but also changes in health care utilization and changes in the mix of services,” the article said.

Pills: Doctor Arrested for Giving Them Away

Dr. Willem Ouw from Broward County was arrested recently for illegally prescribing and distributing approximately $10 million in pain pills, including more than 400,000 oxycodone pills, more than 16,000 amphetamine pills and 64,000 morphine pills, according to federal Drug Enforcement Administration agents. The 84-year old physician was released on a $500,000 bond and faces conspiracy and other federal charges.

Dr. Ouw’s Medical Center of North Broward, on Northeast 20th Avenue in Pompano Beach, was at the center of the arrest along with 3 other employees who all face a maximum penalty of up to 20 years in federal prison.  The investigation, dating back to 2015, involved undercover agents who paid Dr. Ouw cash for prescriptions without any physical exam.  The employees ensured the patients followed instructions during the course of the 18-month investigation.  Law enforcement authorities are sure this is the tip of the iceberg in Florida’s continuing pill crisis.

On the other end of the state, some better news.  Northwest Florida will receive about $1.2 million to combat its share of the state’s opioid and pill mill crisis.  In May, Governor Scott drew down over $27 million in federal grant funding to combat the addiction epidemic.  Big Bend Community Based Care is contracted by the Florida Department of Children and Families (DCF) to provide child welfare, substance abuse and mental health services to Panhandle families. The organization is managing the Panhandle’s share of the grant funding and working with partner agencies to start rolling out therapy, counseling and treatment programs. Local inpatient and outpatient substance abuse treatment programs, three methadone clinics (that patients can turn to rather than illicit drugs like heroin) and a program offering Vivitrol, a monthly shot that suppresses opioid cravings and withdrawal symptoms, are part of the plan.

DCF is also in the process of purchasing 3,600 Naloxone kits and plans to purchase 15,000 more over the next year. Naloxone is a medicine that can be administered to stop the deadly effects of an overdose, and the state plans to distribute the kits to organizations that have direct contact with people who may be at risk of experiencing or witnessing an overdose.   If you want more information about the DCF programs, please let us know.

Leave Sooner, Drive Slower, Live Longer

Allstate Insurance Company’s annual America’s Best Drivers Report was recently released with Boston “winning” the category of the worst drivers in the nation while Kansas City, Kansas ranked at the top of the list for having the safest drivers.  The report indicates the average driver nationwide makes a collision claim every 10 years. In Boston, the rate was every 3.6 years.  Brownsville, Texas; Madison, Wisconsin; and Cape Coral, Florida ranked in the top 5 for a positive driving experience, out of the U.S.’s largest 200 cities examined.

This report marks the 13th year Allstate has conducted the safe driver study and places such as Anchorage, Alaska and New York City moved up in the rankings significantly with improved driver habits.  But unfortunately, a strong economy means drivers are moving around a lot more in their cars which increases the likelihood of crashes.

The Allstate America’s Best Drivers Report also examines hard-braking events in more than 100 cities, using data collected by Allstate’s Drivewise device that enables consumers to monitor their driving habits. Defined as slowing down eight miles per hour or more over a one-second period, the average American driver may experience approximately 19 hard-braking events for every 1,000 miles driven.

Lessons We Must Learn

We hope that all of you had a splendid Independence Day celebration with family and friends.  We are so very fortunate to live freely, to say what we think and do what we lawfully want to do.  We would like to leave you with some key points from historian David McCullough, who at age 84, speaks with passion and persuasion.

The two-time Pulitzer Prize winner is the author of numerous books including 1776, John Adams and Truman. He captivated his audience with keen insights and compelling messages about the vital link we all have to our individual and collective past.

Among McCullough’s key points were a “declaration of dependence” on the lessons we must learn from those who preceded us. “Everything we have in our culture, all cultures, is the result of someone leading the way for us, paving the path to an uncertain but inevitable future.  By documenting the thoughts, deeds and determination of people who preceded us we learn how to become the people we need to be.”  Thank you for all the lessons LMA learns from you every day!


P.S. As summer is the season for preparing for fall’s busy meetings and key events, please consider me for inspirational keynote speeches, strategy seminars, and professional development leadership sessions. I welcome hearing how I may be of service to you!