URMIA Journal 2007–08

Denver

UNIVERSITY RISK MANAGEMENT AND INSURANCE ASSOCIATION

5692 Cover_NoSpine.indd 1 12/17/2010 4:05:49 PM The mountains they are silent folk They stand afar—alone, And the clouds that kiss their brows at night Hear neither sigh nor groan. Each bears him in his ordered place As soldiers do, and bold and high They fold their forests round their feet And bolster up the sky.

—HAMLIN GARLAND (1860–1940), “THE MOUNTAINS ARE A LONELY FOLK”

Front cover: Rocky Mountains, Colorado Denver: host city for the 2007 URMIA Conference.

5692 Cover_NoSpine.indd 2 12/17/2010 4:06:27 PM URMIAURMIA JournalJournal 2007–08

University Risk Management and Insurance Association

OFFICERS President Ellen M. Shew Holland, ARM University of Denver (303) 871-2327 [email protected] President-Elect Vincent E. Morris, CPCU, ARM, AIC, CRM, CIC Wheaton College (630) 752-5013 [email protected] Secretary Anita C. Ingram, MBA, ARM Southern Methodist University (214) 768-4047 [email protected] Treasurer Margaret Tungseth, CPA, MBA Concordia College (218) 299-3327 [email protected] Downtown Denver, Colorado Parliamentarian Photo credit: Denver Metro Convention & Visitors Bureau Gary W. Langsdale, ARM Pennsylvania State University (814) 865-6308 [email protected] Immediate Past President Allen J. Bova, MBA, ARM, DRM Cornell University (607) 277-1188 [email protected]

DIRECTORS Julie C. Baecker, AIC, ARM (’10) University of Alaska (907) 450-8153 [email protected] Mary Breighner, CPCU, DRM (’09) FM Global (513) 742-9516 [email protected] Steve Bryant, CRM, ARM (’09) Texas Tech University System (806) 742-0212 [email protected] Mary Dewey, ARM, CIC, CPCU, DRM (’08) University of Vermont (802) 656-8453 [email protected] Jill Laster, ARM, DRM (’08) Texas Christian University (817) 257-6798 [email protected] Marjorie F. B. Lemmon, ARM, CPCU (’10) Yale University (203) 432-0140 [email protected] David Pajak, ARM (’10) Syracuse University (315) 443-5334 [email protected] National Offi ce P.O. Box 1027 Donna Pearcy, ARM (’09) Bloomington, Indiana 47402 The University of Iowa (319) 335-3425 Tel. (812) 855-6683 FAX (812) 856-3149 [email protected] E-mail: [email protected] Paul Pousson, ARM (’08) Web: www.urmia.org University of Texas System (512) 499-4653 [email protected] Larry V. Stephens, AIC, ARM, CPCU, AAM, DRM (’09) A Professional Non-Profi t Forum for the Exchange of Information, Concepts, Indiana University (812) 855-9758 Practices and Developments Between Higher Education Risk Managers [email protected] The food of hope Is meditated action; robbed of this Her sole support, she languishes and dies. We perish also; for we live by hope And by desire; we see by the glad light And breathe the sweet air of futurity; And so we live, or else we have no life.

—WILLIAM WORDSWORTH (1770–1850)

“DISCOURSE OF THE WANDERER, AND AN EVENING VISIT TO THE LAKE” From the President

Welcome to the University Risk Management and Insurance Association’s annual journal publication for 2007–08. Th e journal has a rich history of showcasing topics of interest from the profession of risk management in higher education. While the topics vary in nature, they will explore some of the more relevant risks and hazards of our unique risk environment while providing insight into best practices for managing these risks. In addition, we hope that these articles provoke further discussion and awareness within your institution or entity, supporting your eff orts to inform your colleagues who may benefi t from the experiences and knowledge highlighted within. Th e topics vary from coping with student psychological problems in the aftermath of the Virginia Tech tragedy; to maintaining awareness of national security threats; to preventing computer security breaches that result in identity theft. We know that we have only tapped into a small portion of the broad scope of responsibilities and potential risks within higher education risk man- agement. Yet we trust you will fi nd these articles an informative and valuable resource for your program. I would like to thank the authors who took the initiative and eff ort to research and write these articles, the volunteer and committee members who assisted, and the national offi ce staff for their countless hours of hard work and eff ort in editing and publishing this year’s journal for our members. We hope you will enjoy reading it.

Ellen Shew Holland, ARM President, URMIA (2008) Contributors

URMIA thanks each of the fi nancial contributors who supported the publication of the 2007–08 edition of the URMIA Journal:

Arthur J. Gallagher Higher Education Practice Group Gallagher’s Higher Education Practice Group specializes in serving

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Marsh, Inc. Global Education Practice For over 38 years, Marsh has been honored to serve the higher

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Without the assistance of these contributors, this publication could not exist. Features

7 Tragedy at Virginia Tech: Student Suicide, School Shootings, and the Campus Mental Health Crisis Robert B. Smith and Dana L. Fleming, Nelson, Kinder, Mosseau & Saturley P. C .

21 The Yin and Yang of an Aging Work Force J. Tim Query, Associate Professor of Risk Management and Insurance, New Mexico State University

29 The Threat Level Is Orange Leta C. Finch, Executive Director of Higher Education Practice, Arthur J. Gallagher Risk Management Services, Inc.

41 Mold in the Environment: The Diffi culty of Assessing the Risk George H. Bender, Manager of Environmental Health and Safety, Duquesne University

49 Assessing RMIS Needs for Colleges and Universities David A. Tweedy, CMC, Practice Leader for Risk Information Consulting Practice, Albert Risk Management Consultants, Inc.

61 In Case of Emergency: Selecting a Qualifi ed Air Ambulance Provider Denise Treadwell, CRNP, MSN, CEN, CFRN, CMTE, Executive Vice President, AirMed International

69 The Mixed Motive Instruction in Employment Discrimination Cases: What Employers Need to Know David Sherwyn, J.D., Steven Carvell, Ph.D., Joseph Baumgarten, J.D.

83 Risk Manager as a Grievance Petitioner? Manage Lobbying Risks or Lose Pamela J. Rypkema, Risk Manager, Gallaudet University

97 Identity Theft and Data Loss on Campus—Minimizing and Addressing Risk James A. Keller, Esq., and Melissa Hill, Esq., Saul Ewing LLP Tragedy is a tool for the living to gain wisdom, not a guide by which to live.

—ROBERT F. KENNEDY (1925 –1968), U.S. ATTORNEY GENERAL Tragedy at Virginia Tech Student Suicide, School Shootings, and the Campus Mental Health Crisis

Robert B. Smith and Dana L. Fleming, Nelson, Kinder, Mosseau & Saturley P.C.

Abstract: Th e Virginia Tech shootings and other acts of however, colleges and universities are being forced to school violence are causing lawmakers, school administrators, reexamine the way they deal with students with mental and the public at large to reevaluate how educational illness and related on-campus emergencies. Th e complex institutions deal with the mental health problems of students. legal and societal problems associated with mental illness Th is article explores the historical context of student violence have been laid at the doorstep of colleges and universities and examines the events leading up to and surrounding the for years, but now schools are under more scrutiny than massacre at Virginia Tech. It further reviews the aftermathf ever before. Not surprisingly, the response has run the of the nation’s deadliest school shooting,g, and the ensuiensuingng gamutgamut from thethe implementationimplem of new, high-tech emer- dialogue about what can be done to preventevent gencygency notifi cation systems to the aug- future tragedies. mentationment of existing counseling services The real learning andand oother mental health resources. On April 16, 2007, every college and WhileW these measures may be entirely university in the country was asking opportunity appropriateappro for some schools to under- itself the same questions: What now?? take,take, they are, by and large, reactionary. presented by What next? Could we be the next Virginiaginia Th e realr learning opportunity presented Tech? Is the next shooter sitting in our Virginia Tech is by VVirginia Tech is not in the latest secu- English class, turning in page after pagege rity mmeasure or mental health screening of violent malcontent and bloodlust poetry?etry? not in the latest system—itsyste is the start of a national dia- Does someone on campus have informationation loguelogue about the legal limitations schools security measure on a threatening individual that they areare face whenw dealing with mentally ill stu- afraid or unwilling to share? How do wwee or mental health dents.dents Th e shootings at Virginia Tech are prevent something like this from happeningening a sadsad but appropriate starting point for on our campus? How do we prepare forr screening system. thisthis conversation,c in which every higher the unthinkable?1 What is the appropriateriate educationeduc stakeholder should participate. response? Th e short answer to these questionsons might be to MentalMental Health CrisisCrisis on Campus turn your school into a minimum-security prison, com- According to the 2006 National Survey of Counseling plete with airport security screening procedures outside Directors, an annual survey conducted since 1981, colleges every dorm, classroom, and quad. Arm your campus and universities are seeing an overall increase in deeply police. Create a SWAT team. Install 24-hour video sur- troubled students. Ninety-two percent of the counseling veillance, loudspeakers, and sirens to alert students and directors surveyed believe that the number of students faculty that the quiet kid from ECON101 has just gone with severe problems has increased in recent years,2 and and snapped. Conduct lock-down drills and “practice” for 91.6 percent report a growing concern with the number the next massacre. of students with “severe psychological problems.”3 For those of us who are old enough to remember Another steep increase highlighted by the survey is the crouching beneath our desks for protection from a nuclear percentage of counseling center clients referred for psychi- attack, the utility of such emergency drills may escape atric evaluation. Counselors estimate that 16.4 percent of us—perhaps rightfully so. In the wake of Virginia Tech, their clients are referred for evaluation, an increase from

URMIA Journal 2007–08 7 just 12 percent in 2004.4 An even more striking increase dormitory housing 900 students. Two students, Emily is the percentage of students on psychiatric medication, J. Hilscher and Ryan C. Clark, were killed. Th en, more up from just nine percent in 1994 to 25 percent in 2006.5 than two hours later, the shooting resumed in Norris Th e survey concludes that this increase may be due in part Hall, where morning classes were already in progress. Th e to counselors’ hyper-vigilance and an increased level of ordeal ended when Cho turned the gun on himself as concern on campus about liability risks regarding student police closed in on the building he had chained shut from suicides.6 But those explanations do not account for all the inside. of it; counselors say that more students are already on Cho was known as a “loner” on the large Virginia Tech medication upon entering school.7 campus. He ate his meals alone, rarely spoke to his fellow When asked about other concerns, such as an increase classmates, and signed in to one of his academic classes in the number of self-injury reports, the need for better with a question mark, rather than his real name. After referral resources for students requiring long-term care, graduating from high school in Chantilly, Virginia, about and the increased demand for crisis counseling, directors four hours away from Blacksburg, Cho enrolled with a reported heightened concern in every category.8 Th ey also number of his fellow high school classmates at Virginia noted an increase from 2004 in the number of students Tech. In the spring 2007 semester, Cho was a senior, with eating disorders, an increase in the number of sexual majoring in English. He was also planning a massacre. assault cases, and more reports of previous sexual abuse.9 Th e survey is not all bad news for colleges and univer- Complaints and Concerns sities, however. Among participating schools, the number from Cho’s Fellow Students of suicides per 100,000 students is 3.8, which is still far Early in his college career, Cho began to exhibit behavior lower than the 15-per-100,000 rate among same-age that suggested his troubled mental state. In 2005 he was individuals who are not in college.10 If these numbers accused of stalking two female students. One of the remain consistent, even as the number of students with students complained of excessive phone calls. She charac- severe psychological problems increases, one could infer terized Cho’s behavior as annoying, but not threatening. that college and university counseling services are working. Th e other student complained about instant messages Despite the availability of statistics and hard data like she received from Cho and reported him to the police, this, predicting suicide is not an exact science. According and again indicated that no threats had been made. Both to Robert Irvin, M.D., medical director of a long-term women declined to press charges and Cho was subse- residential treatment program within the Bipolar and Psy- quently referred to the university’s disciplinary system. chotic Disorders Program at Harvard’s McLean Hospital, Shortly after investigating Cho on stalking complaints, “Unless they have previously acted violently or threatened campus police received a call from one of Cho’s former violence, there’s simply no way to predict whether a person roommates who reported that Cho might be suicidal. will commit a violent act. . . . Th e greatest predictor of acts Campus police spoke with Cho at length and urged him of violence is prior acts of violence. Lacking that, we can- to seek counseling. He agreed to accompany campus not say who will be violent and who will not. . . . Th ere is police to an independent mental health facility in Blacks- no reliable predictor of who[m] or who[m] not to avoid.”11 burg, where he would be evaluated. At the facility, a social worker determined that Cho was a danger to himself and Tragedy at Virginia Tech: others. Based on the social worker’s evaluation, a Virginia The Shooting Rampage Begins special justice declared Cho mentally ill and an immi- On the morning of April 16, 2007, Seung-Hui Cho, a nent danger to himself, and issued a temporary detention student at Virginia Polytechnic Institute in Blacksburg, order. Cho was then detained at a behavioral health center Virginia, killed 27 students and fi ve faculty members pending a commitment hearing. After another evaluation, before committing suicide. Th e massacre included two a psychologist concluded that Cho was mentally ill but rounds of shootings and lasted some three hours. Shots did not present an imminent danger to himself or others, were fi red in West Ambler Johnston Hall, a freshman and therefore did not require involuntary hospitalization.

8 URMIA Journal 2007–08 Based on this second conclusion regarding Cho’s mental it was appropriate to allow Cho to remain on campus after health, a court magistrate released him, ordering outpa- students and faculty voiced concerns about his mental tient treatment and additional follow-up. It is not clear condition. Chris Flynn, director of the Cook Counseling whether he received such treatment or was ever contacted Center at Virginia Tech, said that once Cho was released for follow-up. from the independent mental health facility, discrimina- tion laws prevented the school from taking any action Bizarre Behavior Continues against him: “We work under discrimination acts . . . we Students were not the only ones who noticed Cho’s cannot discriminate against the mentally ill, nor do we strange behavior. A number of his English professors want to.” When asked why faculty concerns about Cho’s found his behavior disturbing and his writing menacing violent writing were not addressed, university police chief and angry. Some faculty members even complained to Wendell Flinchum said “the writings did not express any police and university administrators. After the shootings, threatening intentions or allude to criminal activity. No Cho’s former playwriting professor, Edward Falco, said in criminal violation had taken place.”19 an e-mail to the class, “Cho’s behaviorr was didisturbingsturbing to SSomeome hhaveave aalsolso questionedqu Virginia Tech’s response to all of us—and the English departmentnt thethe shootingssh themselves and the school’s tried, with the best of intentions, to bothboth decisiondecis not to “lock down” the campus get him help and to make the appropri-pri- after the fi rst round of shots were fi red ate authorities aware of his disturbingg Critics have earlyearly that morning. In response to media behavior.”12 In September of 2005, NikkiNikki wondered aloud inquiries,inqui university president Charles Giovanni, Cho’s poetry professor, foundund StegerStege said offi cials decided not to his actions and writing so “weird” andd whether it was evacuateevacu campus after the fi rst shooting “intimidating” that she asked that he be becausebecau they believed it was an isolated removed from her class.13 Some femaleale appropriate to incident,incid “a domestic fi ght, perhaps a students refused to attend the poetryy allow Cho to murder-suicide.”murd No one was prepared class with him because they claimed hehe for theth carnage that followed. was discretely taking pictures of theirr remain on campus. Cho’sC chilling videotaped manifesto, legs and knees from underneath his whichwhic he mailed to NBC News in be- desk.14 Giovanni complained to then-- tweentween shootings, haunted the airways head of the English department, Lucindainda for days.d Cho’s multimedia package to Roy, who alerted student aff airs, the dean’sdean’sofficeand offi ce, and NBC included an 1801800-word diatribe, 29 photos, and campus police, but in the absence of overt threats to harm one video. As investigators tried to make sense of it all, himself or others, the school believed its options to be Virginia Tech mourned. limited.15 Cho was eventually removed from the class and Cho’s fi nal words were chilling: was tutored individually by the department head. Dur- You had 100 billion chances and ways to have ing the hour-long tutoring sessions, Cho rarely spoke and avoided today but you decided to spill my blood. exhibited a palpable anger. Students who had other classes You forced me into a corner and gave me only one with him claim that his writing and classroom behavior option. Th e decision was yours. Now you have was so “twisted” that they openly wondered whether he blood on your hands that will never wash off .20 could be a school shooter.16 One student recalls joking to You had everything you wanted. Your Mercedes her friends that Cho was “the kind of guy who might go wasn’t enough, you brats. Your golden necklaces on a rampage killing.”17 Other students, however, merely weren’t enough, you snobs. Your trust fund wasn’t described Cho as “quiet” and noted that he “would not enough. Your vodka and cognac weren’t enough. respond if someone greeted him.”18 All your debaucheries weren’t enough. Th ose Virginia Tech has come under fi re for its response to weren’t enough to fulfi ll your hedonistic needs. Cho’s behavior, and critics have wondered aloud whether You had everything.21

URMIA Journal 2007–08 9 Not the First: Long Line of Tragedies [Elizabeth’s housemaster] could reasonably foresee Pre-Date Virginia Tech that Elizabeth would hurt herself without proper supervision. Accordingly, there was a “special rela- School Shootings: Columbine High School tionship” between the MIT administrators . . . and While Virginia Tech is the deadliest school shooting in Elizabeth imposing a duty on [the administrators] American history, it is certainly not the fi rst.22 Perhaps the to exercise reasonable care to protect Elizabeth from closest parallel is the 1999 school shooting at Columbine harm.23 High School in which Eric Harris and Dylan Klebold Th e parents of Elizabeth Shin claimed that MIT was killed 13 people and wounded 24 others. Th e Columbine on notice of their daughter’s mental problems as early as shooters wore long, black coats on the day of the shoot- 1999, her freshman year, when she was hospitalized after ings and were part of a counterculture group called the overdosing on Tylenol with codeine. Shin’s housemaster “trenchcoat mafi a.” Members of the trenchcoat mafi a notifi ed her parents of the hospitalization after obtaining were considered part of an “anti-clique” movement at the Shin’s consent to do so. Following the overdose, Shin high school focused on resisting bullying and other forms received treatment from MIT psychologists and was in of hazing. close contact with school administrators. Shin continued Like Virginia Tech, the Columbine shootings were to suff er from suicidal thoughts and engaged in self- meticulously planned to achieve a maximum number destructive behavior such as self-cutting. In December of fatalities. Harris and Klebold placed two 20-pound of 1999, Shin sent an e-mail to a faculty member, in propane bombs inside the school cafeteria just before the which she admitted that she was contemplating suicide. start of the lunch period and then waited outside in the Th e message was forwarded to university administrators school parking lot. Th e two intended to shoot students and an MIT psychiatrist. as they fl ed from the building following the blast. Fortu- Less than a year later, Shin’s housemaster brought her nately, the bombs never went off , but determined to carry to the university infi rmary for cutting herself. After being out their plan, the two boys returned to the west entrance diagnosed with depression, a possible borderline personal- of the school and began shooting. ity disorder, and suicidal ideation, Shin was discharged. Harris and Klebold ransacked the school, shooting In the weeks that followed, Shin made numerous visits students in stairwells, hallways, the cafeteria, and a science to Mental Health Services, for both scheduled appoint- room, until fi nally committing suicide in the school library. ments and as a walk-in patient. Reports of these visits In the aftermath of the bloodshed, the nation tried to uniformly detail Shin’s thoughts of suicide, feelings of make sense of the tragedy. Task forces examined gun con- worthlessness, and routine self-mutilation. An outside trol laws, the psychology of bullying, and school security. therapist who met with Shin on April 4, 2000, told an MIT doctor that Shin needed more treatment than she Student Suicide: Shin v. MIT was able to provide and recommended that she be admit- On April 10, 2000, Elizabeth Shin, a Massachusetts ted to an in-patient treatment facility immediately.24 On Institute of Technology student, set herself on fi re in her April 8, 2000, Shin threatened to plunge a knife into her dorm room. Nine months later her family fi led a wrong- chest. MIT campus police escorted her to Mental Health ful death suit against the school and several of its medical Services, where she spoke by telephone to an on-call professionals and administrators. A Massachusetts Su- psychiatrist. Notwithstanding Shin’s history of mental perior Court judge determined that the school’s medical health problems, the psychiatrist determined that he did professionals, as well as Shin’s housemaster and student not need to meet with her in person and that it was safe life dean, shared a “special relationship” with her and they for Shin to return to her dorm room. could have or should have reasonably foreseen that she Two days later, Shin set fi re to herself. Students who would try to hurt herself. resided in the dormitory could smell smoke and hear Th e plaintiff s have provided suffi cient evidence that moaning but could not enter Shin’s room because the door [the counseling and support services dean] and was locked. MIT police gained access to the room only

10 URMIA Journal 2007–08 to fi nd Shin engulfed in fl ames. She succumbed to her incident, the dean of student aff airs required Frentzel to injuries four days later. sign a statement promising not to hurt himself. Frentzel Th e Shin case is notable not only for its jarring facts signed the statement, in which he intimated that he would and tragic outcome, but also because the judge’s ruling commit suicide. Again, his girlfriend turned notes over to signals that even non-clinicians may be held liable for fail- college offi cials and the resident assistant. On February ing to prevent student suicides. Th e Shin case also gained 23, 2000, school offi cials went to Frentzel’s room to speak national attention because Shin’s parents were not notifi ed with him about the notes and found that he had hanged about her deteriorating mental condition (a parallel to himself with his belt.27 Seung-Hui Cho’s case). Although the judge did not touch In the wake of his death, Frentzel’s guardian brought upon this in her ruling, the issue of parental notifi cation a wrongful death suit against the college, its offi cials, and looms large post-Virginia Tech. Laws intended to protect the resident assistant. Th e United States District Court students’ privacy rights may deter schools from notifying for the Western District of Virginia ruled that the college parents about their children’s mental hhealthealth proproblems.blems. ooffiffi cialscials hadhad a “special“special relationship”r with Frentzel, that they Knowing when and whether to notifyfy knewknew or should have known there was parents about a suicidal student is onene ooff anan iimminentm probability that he would the toughest questions school adminis-is- hurthurt himself, and consequently, they Laws intended to trators and counselors face. MIT’s then-en- hadhad a duty to protect him.28 Th e parties president Charles Vest called the balanceance protect students’ ultimatelyultim settled out of court for an between students’ privacy rights and “the“the undisclosedundis sum. obvious interests of parents in knowingng privacy rights how their sons and daughters are doing”ing” WallaceWall v. Broyles may deter schools a real quandary—one that colleges andnd InIn WallaceW v. Broyles, the court permitted universities are still grappling with.25 from notifying thethe parentsp of a varsity football player to By not formulating and enacting proceedproce with a lawsuit against employees an immediate plan to respond to parents about their ofof theth University of Arkansas at Fay- Elizabeth’s escalating threats to com-om- ettevilleettev based on the theory that school children’s mental mit suicide, the plaintiff s have putt offioffi cialsci actually caused him to com- forth suffi cient evidence of a genuineuine health problems. mit suicide.s Th e student was seriously issue of material fact as to whetherer injuredinjur in a football game, and required the MIT administrators were grosslyossly extensiveexten physical therapy and high negligent in their treatment of Eliza-iza- dosagesdosag of Darvocet, a powerful pain- beth. Accordingly, the MIT administrators’nistrators’ motion killer with ith mind-altering mind alteri side eff ects. Th e drug was for summary judgment as to Count VIII for gross supplied by the university’s athletic department. Th e negligence is denied.26 student’s parents alleged that the painkiller was dispensed by the university without proper registration or adequate Schieszler v. Ferrum College warnings about the drug’s tendency to increase depressive Michael Frentzel, a freshman at Ferrum College in thoughts and behavior. Virginia, had a fi ght with his girlfriend on February 20, Th e court noted that Darvocet is a major cause of 2000. Campus police and the resident assistant of the drug-related deaths. Warnings associated with the drug dormitory where Frentzel lived intervened in the alterca- include a directive to advise patients “of additive depres- tion. A few days later, Frentzel sent a note to his girlfriend sant eff ects of these combinations with alcohol,” and telling her that he planned to hang himself. She showed Darvocet-related deaths had occurred “in patients with this note to a resident assistant and campus police, who histories of emotional disturbances, suicidal ideation or later found Frentzel in his room with bruises on his attempts, or misuse of tranquilizers, alcohol, or other . . . head, which he said were self-infl icted. In response to the drugs.”29

URMIA Journal 2007–08 11 Given the potentially harmful side eff ects that could statement from the counseling center, which stated that result from the unsupervised taking of Darvocet by the school would protect his privacy except in certain the athletes, in general, a fact issue is posed that such situations—namely, if he ever presented an immediate harm could reasonably have been expected in the threat to himself or others. Later that year Mahoney’s circumstances described here, where, it has been said, ex-girlfriend contacted Kondrot to tell her that she and these defendants had illegally permitted large orders to other friends were worried because Mahoney told them he be indiscriminately accessible to anyone entering the wished he were dead. Kondrot determined that Mahoney athletes’ training room.30 was again at high risk for suicide, but based on advice she Th e court found that an issue of fact was raised as to received from a psychiatrist consultant who concluded whether Darvocet, illegally dispensed by the university that the situation was not grave enough to break confi den- athletic department, contributed to or caused the student’s tiality, Kondrot did not notify his parents. death.31 Although the matter was eventually settled out of Over the next few months, Mahoney repeatedly court, the ruling signaled that individualdual scschoolhool offi cials refused Kondrot’s requestsrequ to call his parents. She was so may be held liable not only for failingg worriedworr that she even tried to circumvent to prevent a student’s suicide, but for thethe confic dentiality laws by calling Ma- actually causing it. While the holdingg Individual school honeyhone at his parents’ house, in the hopes of the case is quite narrow, prescribingg thatthat theyt would pick up. Th e weekend or dispensing drugs in an illegal mannerner offi cials may be beforebefor Mahoney’s suicide, his fraternity seems suffi cient to trigger this type off brothersbroth contacted the deans to express individual liability.32 held liable not growinggrow concern that he would hurt only for failing to himselfhims or someone else. Mahoney v. Allegheny College33 MahoneyM hanged himself with his Chuck Mahoney was a star athlete andnd prevent a student’s dog’sdog’s leash in the fraternity house where honors student. It was not until the bbe-e- hehe lilivedv on February 11, 2002. Th at very ginning of his freshman year at Alleghenyheny suicide, but for dayday hhe sent several desperate e-mails to College in Meadville, Pennsylvania, thathat actually causing it. Kondrot,Kond who begged him to get more he began to show signs that he was strug-trug- help.help. His parents blamed the school, its gling with depression. Mahoney calledd hhisis deans,dean and counselor for not notifying parents and told them that he was feelingeling themthem about their son’s ongoing problems depressed. Th ey called their family doctoroctor forfor antide-antide- or ggivingiving ththemem tthehe oopportunitypp to intervene. Mahoney’s pressants and drove to Allegheny to visit Mahoney and parents sued Allegheny College, two of its deans, and the connect him with a school counselor, Jacquelyn Kondrot. school counselor who was treating Mahoney at the time, Mahoney did well in school, pledged a fraternity, and went claiming they each had a responsibility to prevent his to see the counselor. suicide. At the beginning of his sophomore year, however, Before the trial began, the Court dismissed the Mahoney informed Kondrot that he wanted to take all of Mahoneys’ claims against the deans, stating that they his drugs and cut his wrists. She obtained his permission had insuffi cient knowledge of Chuck Mahoney’s situation to contact his parents and informed them that he was at to be held liable, leaving only the school and Kondrot as high risk for suicide. He was voluntarily hospitalized for defendants. Th e jury deliberated for just three hours and fi ve days and signed temporary releases allowing Kondrot returned an 11-1 verdict, fi nding the school and counselor to speak with his parents and the dean of students about were not liable. his care. After his hospitalization Mahoney said he felt Th e verdict sparked debate among privacy law better, returned to school, and went on to earn a 3.85 advocates and those who would see privacy restrictions grade-point average. loosened in favor of parental notifi cation: When he began his junior year, Mahoney signed a Th e college maintained that Chuck was never an

12 URMIA Journal 2007–08 imminent risk for suicide, so his confi dentiality mental health problem without the benefi t of knowledge couldn’t be breached. He was an adult and insisted acquired by previous institutions.37 Each institution, the school shouldn’t call his parents about his prob- from Cho’s elementary school, to his middle school, to lems, college offi cials testifi ed. Th ey said violating his high school, to Virginia Tech, spent signifi cant time and privacy would have worsened his situation, and that resources in attempting to help the troubled student. But his parents should have shown more active concern, each time he moved on, the next school would be forced to especially after their son was hospitalized as a suicide start with a blank slate. risk in his sophomore year. Th ey said Chuck’s parents For instance, Cho’s high school instituted an Individu- should have gotten their son to sign a waiver sent to alized Education Plan (IEP), which federal law requires in all students that would have allowed the college to order to maximize the educational development of chil- discuss his situation with the family.34 dren with disabilities. Because of Cho’s inaudible speech in class (diagnosed as “selective mutism”), his IEP modifi ed The Government Speaks: grading for oral presentations and group presentations Report of the Virginia Tech Review Panel to refl ect his communication diffi culties.38 With these In August 2007, the Virginia Tech Review Panel modifi cations, Cho did quite well and received a 3.52 GPA presented its report on the April 16, 2007 mass shootings in an honors program. to Governor Timothy Kaine of Virginia.35 Th e creation When he applied to Virginia Tech, the university saw of the Review Panel was announced by Governor Kaine only his grades and SAT scores. Cho’s high school never on April 19, just three days after the shootings, and was informed Virginia Tech about his special education his- intended “to perform a review independent of the Com- tory. Virginia Tech thus had no way to know about Cho’s monwealth’s own eff orts” to respond to the tragedy.36 Th e long history of treatment for mental health disorders, panel was comprised of a number of experts in the educa- or that his grades were “propped up” due to the IEP.39 tion fi elds of mental health, as well as security, including Th e report blames the narrow interpretation of student former Homeland Security Secretary Tom Ridge. privacy and health privacy laws by school administrators In its report, the Review Panel assessed Cho’s long for their reticence to share records of mental or emotional history of mental health problems and the governmental problems. Th e Review Panel concluded that “information response leading up to and during the April 16 massacre. critical to public safety should not stay behind as a person Th e report further analyzed the logistics of securing the moves from school to school. . . . Maybe there really large rural campus; campus emergency response and com- should be some form of ‘permanent record.’”40 munications systems; the eff ectiveness of the university Th e report also faults various departments within and state mental health screening systems; and the impact Virginia Tech for not fl agging Cho as a threat to other of federal and state privacy laws on the university’s re- students. Multiple professors in the English department sponse to the warning signs exhibited by Cho. In doing so, had signifi cant concerns about Cho, and he was the sub- it made hundreds of recommendations for both lawmak- ject of discussions by the university’s Care Team. Resi- ers and university administrators. dent advisors also shared concerns about Cho with their Th e report outlined numerous fi ndings regarding the supervisors. He was investigated by the Virginia Tech improvement of emergency preparedness and response police after the reports that he stalked female classmates, measures, as well as the improvement of campus-wide and was further evaluated by the Cook Counseling Center emergency notifi cation systems. Perhaps its primary at least three times. Despite these numerous contacts with concern, however, was the return of current privacy laws: persons designed to identify individuals who could pose a there was the near total lack of information sharing be- danger to others, the lack of information sharing between tween the schools Cho attended and between the various the various offi ces contributed to “a failure to see the big departments at Virginia Tech. Th e report’s detailed mental picture.”41 health history of Cho demonstrates how each school Th e report recommended that Congress amend the he attended was forced to identify and respond to Cho’s Federal Educational Rights and Privacy Act (FERPA)

URMIA Journal 2007–08 13 with a “safe harbor” provision protecting persons who grades and disciplinary records to detailed medical share student information in the good faith belief that histories. It also established guidelines as to when such doing so is necessary for health or safety reasons. Th e information could be released. Many university offi cials— panel also recommended that FERPA should ensure that not just those at Virginia Tech—believe that FERPA student treatment records are treated just as any other ties their hands and prevents them from disclosing vital health records would be under the Health Insurance Por- mental health information about students to parents and tability and Accountability Act (HIPAA), thus allowing other third parties. the sharing of records for treatment purposes. Th e report Tim Murphy (R-Pa), a lawmaker and child psycholo- does recognize, however, that suffi cient fl exibility currently gist, has proposed legislation that clarifi es when schools exists in FERPA’s “emergency exception clause” that would may release information about a student’s mental health have permitted Virginia Tech to share critical information under FERPA. Th e bill, called the Mental Health Coop- about Cho with administrators, professors, law enforce- eration Act for Families and Schools, would clarify when ment, and his parents. As the panel recognized, “Privacy institutions may release information to parents about a laws can block some attempts to sharee information, but stustudent’sdent’s mental healthhealth under FERPA. Th e proposed leg- even more often may cause holders off islationislati would also allow universities to such information to default to the nondis-ndis- notifynotif a student’s parents if the student closure options—even when laws permitmit The lack of is deemeddee to be at risk of committing the option to disclose.”42 Because of ann suicide,suicid homicide, or physical assault, incorrect and restrictive interpretationn information withoutwitho fear of violating FERPA. of FERPA (the university’s attorney toldold MurphyM says that FERPA’s current sharing between the review panel FERPA did not alloww emeemergencyr exception (which allows the sharing of information on a studentnt the various offi ces scschoolshoo to release information to “protect like Cho43), Virginia Tech was unable to tthehe healthh of the student”) is too vague recognize the serious danger posed byy contributed to ttoo bebe of much use to schools faced with Cho until it was too late.44 studstudentse in crisis. Consequently, he “a failure to see claiclaims,m schools may withhold vital infor- A Re-Examination of the Rules the big picture.” matimationo from parents for fear of litigation In response to the shootings at Virginiania or bbacklasha from the Department of Tech, lawmakers and university offi cialsals EduEducation,c which is charged with enforc- are re-examining rules that might haveve iningg theth law. Th e proposed legislation helped to avoid the tragedy. Less thann ttwowo wweekseeks aafterfter wowoulduld pepermitrmit sschoolschools tot release information to parents the incident, Governor Kaine issued an executive order whenever a mental health professional has determined expanding background checks for gun purchases, and at that a student is at risk of committing suicide, homicide, the federal level a number of bills aimed at strengthening or physical assault. gun laws have been introduced. HIPAA also bars the release of health records to As the Review Panel was still investigating, lawmak- parents in the absence of a signed waiver by the student. ers and university offi cials had already begun to scrutinize While Murphy’s current proposal does not specifi cally in- the privacy and discrimination laws that kept Virginia clude HIPAA, this law has come under the same scrutiny Tech offi cials from informing the shooter’s parents of his that FERPA now faces and will likely be re-examined by troubled mental state or from expelling him for his disrup- Congress in order to eliminate any barriers to emergency tive behavior. disclosures. FERPA (also known as the Buckley Amendment) was Another area of concern for universities post-Virginia instituted in 1974 and was designed to protect students’ Tech is the Americans with Disabilities Act of 1990 privacy rights by barring the release of students’ education- (ADA). Th e ADA raises a number of concerns relating to al records, which may include everything from academic the screening, involuntary withdrawal, and readmission

14 URMIA Journal 2007–08 of students with mental illness to campus. Schools should system for on-campus emergencies, unless these and other note, however, that while the law prohibits discrimination eff orts to reduce risk are coordinated to meet your school’s against persons with disabilities, including mental illness, unique needs, they will not be eff ective. By failing to the courts have made it clear that schools need not tolerate undertake a formal legal review of your school’s programs abhorrent or violent behavior from students, whether the and policies as they relate to mental health, student aff airs, behavior is arguably caused by a covered disability or not. and campus safety, you may miss opportunities to imple- In the wake of Virginia Tech, some college administra- ment truly thoughtful, systemic changes (where necessary) tors have posited that disability and privacy laws prevent and risk eliminating lawful, time-tested procedures that are schools from taking appropriate action against students already in place. who exhibit suicidal or violent behavior until it is too late. A formalized risk audit can help identify loopholes and Th is paints a rather stark picture for colleges and universi- weaknesses in school policy, assessing and reducing risk as ties that face a growing number of students with mental well as managing liabilities in a good faith eff ort to prevent health issues with each passing year. Th ankfully, this is student suicide or school shooting. Such an audit often not the whole picture. Disability and privacyprivacy laws do not entails one or more ooff the following: require stalwart inaction in the face off • A rreview of the school’s mental health outrageous and uncivilized behavior ffromrom policies,pol including but not limited to: students—even students with mentall The tragedy at conficon dentiality waivers, involuntary health problems. Th ough the law, as een-n- withdrawalwit policies, and re-admittance forced by the U.S. Department of Educa-duca- Virginia Tech has procedurespro for students returning from tion’s Offi ce of Civil Rights, may requireuire medicalme leave. made the mental a school to determine that a student • A rreview of campus safety and emer- poses an “imminent” threat to himselff or health crisis on gencygen response procedures with others before it can mandate treatmentnt attendantatte assessments of the resources or remove the student from campus, ““im-im- college campuses availableava to schools in the immediate minent” does not mean “sometime shortlyortly aftermathafte of a student suicide, shoot- part of a heated after the fi rst rounds have been fi red.”” ing,ing or similar tragedy. If colleges and universities believe tthehe national debate. • A rreview of student conduct codes and law erects too many barriers to the imple-mple- disciplinarydis procedures relating to the mentation of eff ective and sensible schoolhool removalrem of students from campus and policies on this issue, then those schoolsols thethe scope of acceptable behavior have a responsibility to lobby for change.nge Th e tragedytragedy aatt pepermittedrmitted in ddormitories,or classrooms, and common Virginia Tech has made the mental health crisis on college areas throughout campus. Training of administra- campuses part of a heated national debate. Th is puts the tors, faculty, and staff on the actions that may be higher education community in a unique and powerful taken with a student in crisis, which comply with position to demand that legislatures and regulatory agen- existing law. cies ease the current restrictions and confusion surround- Th e audit should be conducted by experienced legal, ing the legal duties owed to students with mental health medical, and educational professionals. Th e audit commit- problems, where such students pose a threat to themselves tee may include, for example, the school’s attorneys, risk and others. managers, deans, counselors, campus security offi cers, and other offi cials with the power to change and implement What Now? What Next? new policy on an as-needed basis. Th is multi-disciplinary approach to liability assessment ensures that the recom- While it is tempting to buy the latest emergency notifi ca- mendations of the formalized risk audit are consistent tion system off the shelf, institute more training for coun- with the school’s legal obligations, as well as its unique selors and student life staff , and implement a lockdown educational mission.

URMIA Journal 2007–08 15 Th e audit would allow a school to clarify its poli- domestic education policy at the Woodrow Wilson School cies and reduce risk across many areas of student life at of Public and International Aff airs at Princeton University. once. Where appropriate, such audits may also encourage the development of more proactive measures to address Th e authors gratefully acknowledge the contribution of students’ pressing mental health needs. In all cases, the risk Laurie Bishop, a second-year law student at Northeastern audit is designed to reduce liability within the current legal University School of Law, who will join the fi rm in 2008. framework of federal and state disability and privacy laws. While there is no one answer to the questions, “What E-mail comments to: [email protected]. now? What next?” conducting a comprehensive audit is © Nelson, Kinder, Mosseau & Saturley, P.C., reprinted by a good fi rst step. Whether you are a Big Ten school or a permission for the purposes only of this URMIA publication, small liberal arts college, it is recommended that all insti- and legal reprints thereof. All other rights reserved. tutions conduct a formal legal review of their existing poli- cies with advice from experienced legal professionals. As Appendix A the list of school shootings and student suicides suggests, no one is immune from these tragedies. School Shootings • August 1, 1966—Charles Whitman, a student at About the Authors University of Texas at Austin, killed 14 and was shot Robert B. Smith leads the College & Uni- and killed by police. versity Practice Group at Nelson, Kinder, • July 12, 1976—Edward Charles Allaway, a custodian Mosseau & Saturley P.C. in Boston and at California State University, Fullerton, killed seven, Manchester, New Hampshire. His 26 years and was later committed to state mental hospital. of litigation experience includes fourteen • January 29, 1979—Brenda Ann Spencer, a years as Associate General Counsel for Boston University, 16-year-old who lived across the street from the nation’s fourth largest independent university. While Cleveland Elementary School in San Diego, at BU, he won numerous jury trials in state and federal wounded eight children and killed the principal courts involving claims of employment discrimination, dis- and a custodian, confessed and was jailed. ability discrimination, student aff airs, academic freedom, • January 20, 1983—David Lawler, an eighth grader police matters, contracts, and tort claims. He has also at Parkway South Junior High School in St. Louis, counseled multiple university departments and senior killed one classmate and wounded another before university management concerning the panoply of legal shooting and killing himself. issues confronting modern higher education. He resides • January 17, 1989—Patrick Edward Purdy, a drifter, in Walpole, Massachusetts, with his wife, Lynne, and shot and killed fi ve children at Cleveland Elementa- children, Zachary and Avery. ry School in Stockton, Calif., before killing himself. • December 6, 1989—Marc Lepine, 25, killed Dana L. Fleming formerly worked for 14 women at the École Polytechnique de Montréal, Nelson Kinder Mosseau & Saturley P.C., Quebec, before killing himself. after graduating from Boston College Law • November 1, 1991—Gang Lu, a Chinese physics School. Her work has involved advising graduate student at the University of Iowa, killed school administrators, program directors, fi ve and then committed suicide. and risk managers on a variety of diff erent legal issues • August 24, 1992—Dr. Valery Fabrikant, former including trial litigation. While pursuing her law degree, associate professor of mechanical engineering, shot Ms. Fleming also earned a master’s in education admin- and killed four professors at Concordia University istration from the Lynch School of Education at Boston in Montreal, Quebec, and remains in jail today. College. Before law school, she worked as an education • December 14, 1992—Wayne Lo, a Taiwanese researcher in Cambridge, Massachusetts, and studied immigrant and student at Simon’s Rock College

16 URMIA Journal 2007–08 of Bard in Great Barrington, Mass., killed a student committing suicide. and a professor, confessed and was jailed. • October 21, 2002—Huan Yun “Allen” Xiang, a stu- • November 15, 1994—Jaime Rouse, a 17-year-old dent, killed two at Monash University in Melbourne, student at Richland High School in Lynnville, Victoria, Australia. Tenn., killed a student and teacher and was sen- • September 24, 2003—John Jason McLaughlin, 15, tenced to life in prison. killed two classmates at Ricori High School in Cold • February 2, 1996—Barry Loukaitis, a 14-year-old, Spring, Minn. killed three at Frontier Junior High in Moses Lake, • February 3, 2004—Michael Hernandez, an eighth Wash., and received two mandatory life terms. grader at Southwood Middle School in Palmetto • October 1, 1997—Luke Woodham, a 16-year-old, Bay, Fla., stabbed and killed his friend in a school killed his mother and two classmates at Pearl High bathroom. School in Pearl, Miss. • March 21, 2005—Jeff rey Weise, a student at Red • December 1, 1997—Michael Carneal, a 14-year-old, Lake High School in Red Lake, Beltrami County, killed three students at Heath High School in West Minn., killed his grandfather and his grandfather’s Paducah, Ky., and was sentenced to three concurrent girlfriend before going to school and killing seven life sentences. more people and committing suicide. • March 24, 1998—Mitchell Johnson, 13, and • November 8, 2005—Kenneth Bartley Jr., 15, killed Andrew Golden, 11, killed four students and one a school administrator and wounded two others at teacher at Jonesborough School in Craighead Campbell County High School in Jacksboro, Tenn. County, Ark. Both were released from jail at the age • September 13, 2006—Kimveer Gill killed one and of 21. shot himself at Dawson College in Westmount, • May 20 and 21, 1998—Kipland Kinkel killed both Quebec. of his parents and two classmates at Th urston High • September 27, 2006—Duane Roger Morrison, 53, School in Springfi eld, Oreg. entered Platte Canyon High School in Bailey, Colo., • April 20, 1999—Eric Harris, 18, and Dylan and sexually assaulted a number of female students Klebold, 17, seniors at Columbine High School in before killing one and himself. Jeff erson County, Colo., killed 12 students and one • October 2, 2006—Charles Carl Roberts, IV, 32, teacher before committing suicide. killed fi ve girls and himself at West Nickel Mines • April 28, 1999—A 14-year-old killed a student at School in Lancaster County, Penn. W.R. Myers High School in Taber, Alberta, Canada. • September 29, 2006—Eric Hainstock, a freshman at • May 20, 1999—Th omas Solomon, Jr. (T.J.), a Weston High School in Cazenovia, Wisc., shot and sophomore at Heritage High School in Conyers, Ga., killed the school’s principal. shot and injured six students and has since attempted • December 12, 2006—Shane Joseph Halligan, 16, a suicide on a number of occasions, but has failed. high school student at Springfi eld Township High • March 5, 2001—Charles Andrew Williams, a School in Springfi eld, Penn., brought a gun to 15-year-old student at Santana High School in school and shot himself in the hallway. Santee, Calif., killed two students. • January 3, 2007—Douglas Chanthabouly, a junior • January 16, 2002—Peter Odighizuwa, a Nigerian at Henry Foss High School in Tacoma, Wash., shot former student at Appalachian School of Law in and killed another student. Grundy, Va., killed two faculty members and a • April 16, 2007—Seung-Hui Cho shot and killed student and was sentenced to multiple life terms 32 people at Virginia Polytechnic Institute in in prison. Blacksburg, Va., before killing himself. • April 26, 2002—Robert Steinhauser, a student • May 23, 2007—Two 17-year-old students at expelled from the Johann Gutenberg Gymnasium in C.W. Jeff ries Institute in Toronto, Ontario, killed Erfurt, Germany, shot and killed 16 people before a 15-year-old student.

URMIA Journal 2007–08 17 • September 21, 2007—Two Delaware State freshmen 32 Ibid. at 718-19. 33 Mahoney v. Allegheny College did not generate a published opinion by the were shot in the early morning after a fi ght between court. Accordingly, the facts set forth herein were taken from published students on a campus parking lot. Delaware State reports, media, and other sources. freshman Loyer D. Bradsen has been charged in the 34 Elizabeth Bernstein, “After a Suicide, Privacy on Trial,” Wall St. Journal, shooting. Th e victims have survived. Th e campus Mar. 24, 2007 at A1. 35 Va. Tech Review Panel, Mass Shootings at Virginia Tech April 16, 2007: was initially locked down, demonstrating the lessons Report of the Virginia Tech Review Panel (2007) (hereafter Report of the of the Virginia Tech shooting. Review Panel), available at http://www.governor.virginia.gov/TempContent/ • September 30, 2007—a University of Memphis techPanelReport.cfm. The Review Panel’s report was the most anticipated football player was shot and killed on campus. Th e and publicized analysis of the tragedy, although both the federal govern- ment and Virginia Tech itself had previously released reports. See e.g., assailant or assailants have not been apprehended. Report to the President on Issues Raised by the Virginia Tech Tragedy (June 13, 2007), available at http://www.hhs.gov/vtreport.html; Presi- dential Internal Review: Working Group Report on the Interface between Endnotes Virginia Tech Counseling Services, Academic Affairs, Judicial Affairs and 1 Although many describe the Virginia Tech shootings as unknowable, un- Legal Systems (Aug. 17, 2007), available at http://www.vtnews.vt.edu/ thinkable, and unforeseeable, the accompanying chart of school shootings documents/2007-08-22_internal_communications.pdf. suggests the contrary. See Appendix A. 36 Report of the Review Panel, supra note 35, at vii. 37 2 National Survey of Counseling Directors, 2006, Item 18. This mental health history is contained in Chapter 4 of the Report of the 3 Ibid. at item 20. Review Panel, supra note 35. 38 4 Ibid. at 17. Ibid. at 38. 39 5 Ibid. at 15. Ibid. 40 6 Ibid. at 40(i). Ibid. at 39. 41 7 Ibid. at 16. Ibid. at 52. 42 8 Ibid. at 26. Ibid. at 63. 43 9 Ibid. Ibid. at 63. 44 10 Ibid. at 29. Cho’s parents told the panel that they would have pulled him from school 11 As quoted in Daniel J. DeNoon, “Va. Tech Gunman: Warning Signs? Experts and gotten him help if they had known of his increasingly antisocial Say Cho’s Violent Acts Were Not Predictable,” WebMD Medical News, April behavior during 2005. Id. at 49. 18, 2007, http://www.webmd.com/mental-health/news/20070418/va-tech- gunman-warning-signs. 12 See http://www.cnn.com/2007/US/04/18/vatech.professor/index.html. 13 Ibid. 14 See http://www.time.com/time/nation/article/0,8599,1612003,00.html. 15 Ibid. 16 See http://www.cnn.com/2007/US/04/18/cho.profi le/index.html. 17 See http://www.msnbc.msn.com/id/18248298/site/newsweek/page/5/. 18 See http://www.msnbc.msn.com/id/18148802/. 19 See http://www.cnn.com/2007/US/04/18/vtech.shooting/index.html. 20 See http://featuresblogs.chicagotribune.com/entertainment_tv/2007/04/ what_follows_he.html 21 Ibid. 22 See http://www.nytimes.com/2007/04/16/us/16cnd-shooting.html?ex=119 2334400&en=305721272cfa098d&ei=5087&excamp=GGGNvatech 23 Not Reported in N.E.2d, 13 (Mass. Super. 2005) (J. McEvoy). 24 See “Elizabeth Shin Chronology,” The Tech, Vol. 121, Issue 70, Jan. 30, 2002. 25 “Privacy vs. Protection: How Should a College Tell Parents When a Student’s Health or Safety Seems at Risk?,” The Christian Science Monitor, Feb. 12, 2002. 26 Shin v. MIT, 19 Mass L. Rptr 500 (Mass. Super., 2005). 27 Schieszler v. Ferrum, 236 F. Supp. 2d 602 (W.D.Va., 2002). 28 Ibid. 29 961 S.W.2d 712, 717 (Ark. 1998). 30 Ibid. 31 Ibid. at 719.

18 URMIA Journal 2007–08 The mind sees the world as a thing apart, And the soul makes the world at one with itself. A mirror scratched refl ects no image— And this is the silence of wisdom.

—EDGAR LEE MASTERS (1868–1950)

“ERNEST HYDE,” SPOON RIVER ANTHOLOGY Forty is the old age of youth; fi fty the youth of old age.

—VICTOR HUGO (1802–1885), FRENCH WRITER The Yin and Yang of an Aging Work Force

J. Tim Query, Associate Professor of Risk Management and Insurance, New Mexico State University

Abstract: Yin and Yang are representations of complemen- accepting diff erences.” Ken Dychtwald, author of a World tary opposites rather than absolutes, which could describe Future Society study in 2005, predicts the Boomers will the situation surrounding an aging work force. Th is article postpone old age by disposing of the current “linear life” explores the challenges and opportunities organizations must culture in which people move lockstep through life, fi rst consider in hiring and retaining older workers. through education, next through jobs, and fi nally through leisure and retirement. Instead, according to Dychtwald, Introduction a new “cyclic life” Baby Boomer culture is taking shape. Like many other organizations, collegesges and universities Education, worwork,k, and lleisure will be intermingled repeat- are faced with a challenging demographicphic edly throughoutt the life span. Th is phe- issue involving the work force. In 2014,14, nonomenonme coincides with the increasingly some 78 million Baby Boomers will fallfall Progressive rrapidapid obsolescence of knowledge and the between the ages of 50 and 68. Aboutt 31 rresultantesul growing importance of lifelong percent of those 55 and older were inn tthehe thinking is learlearningn (Gordon 2007). workforce in 1984. Th at number climbedmbed Th is paper examines the issues beginning to to 36 percent in 2004, and the fi gure will mmostost germane to the aging work force jump to 41 percent in 2014, accordingg to recognize the ssituation—potentialitua skilled labor the Labor Department’s Bureau of Laborabor shshortages;ort health and safety concerns Statistics. For Baby Boomers, born be-e- unique potential fforor theth mature worker; job restructuring tween 1946–1964, it is becoming normalrmal ttoo fi t the changing physiology of older of experienced for 50-year-olds to go back to school andand woworkersrk and meet their need for self- for 70-year-olds to reinvent themselveses older workers. actuactualization;a aging faculty members; through new careers (Mooney 1997).. and rregulatory infl uences on the retire- Th e challenge of “Gray2K” (as coinedd mmentent decision. Some of these areas are by some) is one that all institutions off ppertinenterti for university risk managers, higher learning will need to address soonerooner or later.later. wwhilehile otothershers fall undeunderr the authority of other disciplines. A variety of research around the world shows that out- However, an awareness of all these issues should provide dated HR views of older workers continue to exist. Th e a broad foundation for the aging work force dilemma. bias against workers over the age of 50 includes claims that older workers are expensive to sustain, adapt poorly The Labor Shortage to change, fi nd it diffi cult to interconnect with younger Not only will the future employee base have a higher workers, and provide a substandard return on investment average age, but projections of a labor shortfall in just for training purposes. However, progressive thinking a few years have ranged from two to 10 million people. is beginning to recognize the unique potential of expe- Based on sheer numbers alone, fi nding skilled Baby rienced older workers. According to Louise Rolland, a Boomers to fi ll ever-widening skill gaps over the next professor studying aging and work at Swinburne Univer- 15 years will require a revamping of human capital strat- sity in Australia, “Planning and verbal abilities actually egy. While the shortage will be mitigated to some degree peak in people’s 50s and 60s.” Workforce researcher Juhani by immigration, the signifi cant percentage of special- Ilmarinen of the Finnish Institute of Occupational Health ized personnel that make up the university work force believes that, “With age, social skills get better—getting on still remains an area of concern. It is particularly true for with people, understanding people, working together and people with master’s degrees and doctorates in fi elds such

URMIA Journal 2007–08 21 as physics, chemistry, and engineering. More restrictive However, are the health-risk exposures of an aging work immigration rules instituted after the terrorist attacks force as dire as some expect? If one considers the obesity, of September 11, along with competing opportunities drug dependency, and anxiety levels of young people in in other places, may be lessening the attraction of a U.S. general, they may not be much more physically fi t than education for top students around the globe (Bureau of their elders in the workforce. According to the National Labor Statistics 2005). Council on Compensation Insurance (NCCI) study, on In those areas where there are extensive shortages average, younger workers have higher incidence rates of qualifi ed workers, it is helpful to understand what of workplace injuries and illnesses than older workers, motivates some older workers to continue working. One although older workers have higher costs per claim. A reason for a prolonged working career is a continued need signifi cant portion of the diff erences in claim severities to contribute to society and a desire to make a diff erence. between younger and older workers were accounted for A recent study from think tank Civic Ventures and the by other factors correlated with age—average wages, MetLife Foundation found that half of Americans ages claim durations, lump-sum payments, injury diagnoses, 50 to 70 want jobs that contribute to the greater good now and number of medical treatments. Th e overall medical and in retirement. Various studies fi nd that older workers severity of lost time claims tends to rise for all age groups. are more likely to continue working when they have more Indemnity severity rises for all ages until age 65, when control over their work hours, workplace fl exibility, job it falls due to Social Security off sets and lower average autonomy and learning opportunities (MetLife Founda- weekly wages (Shuford and Restrepo 2005). Also, there is tion/Civic Ventures New Face of Work Survey 2005). not a consensus that older workers cost more to employ. Another reason people are working longer is fi nancial For instance, the belief that older workers contribute to need. A 2003 report from the Economic Policy Institute, a increased health care costs has been disproved by several Washington, D.C. think tank, cited the loss of retirement studies. In particular, a research study by Yankelovich, wealth and the loss of access to retiree health insurance Skelly, and White Inc. suggests that health care costs as causes for older workers to remain in the labor force between three groups—30-year-old males, women with longer than before. According to surveys by Watson dependents, and 65-year-old retirees—are about the same. Wyatt and others, many older workers, particularly those Th e study also concluded that 55-year-olds are the least who opt for part-time work, look for companies that will costly of all groups. Moreover, results reveal that even if “bridge” medical coverage until Medicare begins. Roughly health care costs were higher, the advantages of employing one-third of the workforce continues to be covered under mature workers virtually off sets any added cost because of defi ned benefi t plans. Moreover, because early retirement lower absenteeism and turnover (Solomon 1995). incentives are generally not incorporated into defi ned One unforeseen source for mitigating older worker contribution plans, retirement rates among those in their health and safety risk exposures is the Americans with early 60s have actually declined, reversing a decades-long Disabilities Act. Because of such regulations, many em- trend (Gordon 2007). ployers have already modifi ed public environments and will Another strategy for managing a possible skilled labor not have to make many additional drastic changes to meet shortage is to create a job bank of retirees that would like the needs of mature workers. Some needed measures may to be considered for part-time or full-time work after include improving lighting, turning doorknobs into door retirement. Th is could be used to match retiree skills with levers, and building walkways that off er alternative ramps. the demands of the university. Mitigating the Health and Safety Exposure Health Aspects Despite numerous studies challenging the perception Universities and colleges want the brainpower, experience, that health and safety risk exposures increase drastically and knowledge provided by mature employees, but not with an aging work force, the fact remains that our bod- the lost workdays, Workers’ Compensation claims, or ies change as we age. Th ese changes are natural and can any of the negatives associated with injuries and illnesses. include: loss of strength, muscular fl exibility, and joint

22 URMIA Journal 2007–08 range of motion; diminished postural steadiness; reduced to reduce carpal tunnel syndrome grip strength; change in balance, inner ear, and nervous • Augment economy-of-motion training system responses; reduced blood fl ow and tactile feed- • Promote memory training activities and a nutrient- back; reduced visual capacity; and slowing of our mental rich diet for memory and attention processing (Pater 2006; Roth 2005). • Provide workers special keyboards to prevent carpal As university risk managers, it is constructive to know tunnel syndrome what steps can be taken to reduce the frequency and • Use brighter lighting and larger type/screens on severity of workplace accidents and illnesses for mature computer monitors to accommodate the loss of employees. In the area of risk identifi cation, it is helpful to visual acuity (some conditions include presbyopia, a identify those jobs that possess the greatest physical risks diffi culty reading small print; fl oaters; and cataracts) (twisting of the upper torso, work with sustained fi xed • Tactfully remind older workers to consider the real- postures, etc.) through an organized, systematicy process ityygg of aging and recognize the changes in strength, that is quantifi able. Th is will assist in prioritizing tthehe jobs agility, and balabalancen that age inevitably brings, then that need to be changed as well as thoseose adjustadjus their work objectives to address that could be used for return-to-workk thosethose changes. and to keep employees working longer.er. The belief that StretchingS after work also keeps While older employees have bet- musclesmusc fl exible and reduces the risks ter safety records than younger ones iinn older workers ofof injuries.inj Aquatic therapy provides a general, there are practical proceduress reducedreduc weight-bearing environment. contribute to employers can implement to improvee MostMost universities and colleges have ath- workplace conditions and habits. Herere increased health leticletic facilities on campus that are avail- are some suggestions: able tto employees, and many also off er • Reduce noise levels from machines,nes, care costs has been variousvario fi tness classes on campus. Th ose air conditioners and other appli-i- thatthat ddo not have on-campus facilities disproved by ances maymay consider investing in a discounted • Ergonomically adjust seats and several studies. oror ssubsidizedu membership fee for local desktops at workstations to reduceduce YMCAYMC s and health clubs. Sometimes a leg and back problems physician’sphysi prescription can assist in get- • Prevent long-term exposures to tingting a reduced rate, too. extreme hot and cold environmentsments AnotherriskmanaAnother risk management issue that accompanies an • Prominently mark and light slippery fl oors, stairs, aging employee base is the dreaded “slips and falls” expo- and uneven surfaces sure. According to the Liberty Mutual Research Institute • Set and enforce broad driver safety policies and for Safety, slips and falls are the second leading cause of evaluate jobs that require quick response times workplace injuries. Same-level falls rank second in most (According to the National Institute for Occupation- industries (behind overexertion), and falls to a lower level al Safety and Health, roadway crashes are the leading rank fourth. Th e combined cost of slips and falls amount- cause of occupational fatalities for older workers.) ed to around $11.3 billion in 2004. As a broad generaliza- • Post reminders about proper use of ladders to tion, aging workers are at a higher risk for slips and falls retrieve high objects and the use of carts or wheel- because they typically do not see as well, their muscles barrows for heavy lifting are not as strong for readily recovering balance, and their (Back pain is the leading cause of lost workdays refl ex time is sluggish (Minter 2004). and one of the most costly health problems facing Given this reality, companies should be motivated to employers today.) take a more proactive approach toward preventing slips, • Recommend brief breaks from working at computers trips, and falls. Because of the variety of factors that can to avoid back problems and suggest hand exercises contribute to slips and falls, safety experts caution that

URMIA Journal 2007–08 23 single remedies are far less likely to succeed than a have a continuing sense of self-discovery (Mullich 2003). comprehensive program that includes good design, main- Organizations should also continue to develop and tenance, and training; slip-resistant footwear; accurate train older workers. Th e Bureau of Labor Statistics recordkeeping and reporting of close calls; evaluation of reports that workers age 55 and older receive only one- hazardous conditions, etc. Other areas that warrant even third as many hours of formal training as workers 45 to closer scrutiny are fl ooring and fi nishes, mats, fl oor coat- 54. Reasons for these statistics may include the erroneous ings and treatments, and warning signs. Th ose responsible belief that “you can’t teach an old dog new tricks,” or for safety and risk management should routinely audit the the perception that some organizations do not want to slip and fall prevention program to monitor the frequency waste time or money on employees nearing the end of and severity of slips and falls alongside objectives. their careers. While these suggestions are certainly not compre- Fortunately, an increasing number of employers are hensive, they provide a good starting popointint to mminimizeinimize bbeginningeginning to makemake thethe connection between mature worker injuries. Note that some of these modi-di- prproductivityod and job attributes. Orga- fi cations can also help younger workersers nizanizationst are introducing fl exible work stay healthier and safer, too. sschedules,ched retraining, health-and-well- A signifi cant aspect ness seminars, part-time positions, job Keeping Older Workers Happy of attracting and shsharing,ari and other strategies in an eff ort and Productive ttoo rretainet and recruit older workers. Sound management practices have retaining older OOne other area that deserves men- proven over and over again that engagedged ttionion iis the relationship between mature workers is offering employees show fewer signs of organiza-iza- woworkersrk and their younger counterparts. tional neglect, such as absenteeism andnd them new roles In ssomeo situations there are workers of less motivation. Th ey even exhibit fewerwer retiretirementre age with an active social life aches, pains, and claims (Russell 2007).7). and responsibili- wwhoho have little interest in “moving up the To ensure that the relationship betweeneen laddladder.”e Under those circumstances, it is ties, so they have universities and their older employeess not uunusual to fi nd supervisors or man- remains mutually benefi cial and produc-duc- a continuing sense agagersers who are many years younger than tive, universities must take advantage of ssubordinates.ubo Th is appears to be more the knowledge and experience providedded of self-discovery. ooff anan issue for the younger worker than by older workers by involving them inn in- tthehe oldero worker, as younger managers novations and procedure improvements.nts. ssometimesome feel like they are supervising Everyone wants to be part of and contrib-ntrib- ttheirheir parents (or grandparents), and they ute to organizational success. feel uncertain of how to do so (Solomon 1995). However, Experienced older employees have much to contribute when employers respect all employees and are consistent when they are included in the productivity process. In with their treatment, age becomes less of an issue. It is addition, studies have shown that a major cause of slowed important to educate supervisors and managers on how mental function is, in fact, associated with lack of mind to work with the Boomer generation, and to teach Boom- use or challenge. A survey conducted by the American ers about the diff erent generational attitudes toward work Association of Retired Persons (AARP) asked respon- and authority. dents to rank attributes of the jobs they hold or plan to hold in retirement. Factors that contributed to a life/work Regulatory Compliance balance and allowed workers to grow and learn new skills Legislative and regulatory constraints may aff ect the ability were deemed “very important” by half of those polled. A of risk management programs to eff ectively deal with an ag- signifi cant aspect of attracting and retaining older work- ing work force. For example, rules from the Employee Re- ers is off ering them new roles and responsibilities, so they tirement Income Security Act, the Internal Revenue Code,

24 URMIA Journal 2007–08 and the Age Discrimination in Employment Act severely benefi ts with no limit on earnings. Note that another hamper true fl exible retirement for most employees. Th ere potential infl uence on the decision to continue working is are legal ways to get around these norms, but it requires the gradual increase in the full retirement age from 65 to organizations to be creative and imaginative (Ruiz 2006). 67 years of age. Phased retirement has been an increasingly popular option in certain situations, such as with senior faculty Aging Faculty members at universities. One diffi culty that employers Th e graying of America’s college and university faculty has face when arranging a phased retirement plan centers on occurred at roughly the same time as new federal regula- defi ned benefi t (DB) pensions. Th ese plans potentially tions prohibiting mandatory retirement were enacted in complicate phased retirement in two ways. First, benefi ts the 1990s. Many current faculty members used student sometimes depend on earnings in the llastast ffewew worworkingking defermentsdeferments dduringuring tthehe Vietnam War to earn their gradu- years prior to retirement. In those cases,es, ate degrees,d so the level of traditional an older person who chooses to work halfhalf retiretirement-agere faculty is now substantial time at half pay could lose as much ass hhalfalf and ccontinues to grow. Tenure, a senior Some universities of all future pension benefi ts. Th e secondond acadacademic’se contractual right not to be way in which DB pensions impede phasedhased have indicated fi rred e d without cause, can also complicate retirement involves federal pension regu-egu- mattmatters.e While academic tenure is pri- lations. However, a ruling last summerer that they may marimarilyl intended to guarantee the right to by the Internal Revenue Service providesides acadacademice freedom, it has been criticized eventually adopt guidelines that allow employers with for allowingal some senior professors to DB plans to begin paying out benefi tss to long-term incen- becobecomem unproductive, shoddy, or irrele- employees age 62 or older, even if theyy vantvant.. About 50 percent of all U.S. colleges continue working on a reduced schedule.ule. tive contracts for and uuniversities have enacted a myriad For workers between 55 and 62 years of rretirementet incentives and processes to younger employees old, employers are supposed to make a mamanagena faculty retirements and assume “good faith determination” of whetherr similar to those momorere control over position vacancies the worker is of “the normal retirementnt (Les(Lesliel and Janson 2005). age” for the industry and can begin payingaying commonly used in UniversitiesU have been relatively benefi ts to workers on a reduced schedule.dule. ununsuccessfulsu in encouraging earlier private industry. Th e goal of these rules is to allow employ-ploy- retiretirementsre via pension plan and other ers to retain workers longer. iincentivesncen because these are expensive to Th e Social Security Administrationon ooffff er faculty who are reasonably close to also has rules that can aff ect early retirementirement benefi ts if an retirement. However, somes universities have indicated that individual continues working while collecting Social Se- they may eventually adopt long-term incentive contracts curity. If one is under normal or full retirement age (FRA) for younger employees similar to those commonly used in when he or she starts getting Social Security payments, $1 private industry. Post-tenure reviews have also been imple- in benefi ts will be deducted for each $2 earned above the mented by a number of public and private universities to annual limit. For 2007 that limit is $12,960. Remember, help underperforming professors get back on track. the earliest age someone can receive Social Security retire- ment benefi ts remains 62 even though the FRA is rising. Conclusion In the year a person reaches his or her FRA, $1 in benefi ts While organizations understandably express health and will be deducted for each $3 he or she earns above a dif- productivity concerns about older employees, looming ferent limit, but only including earnings before the month labor shortages are causing those same groups to seek out FRA is reached. For 2007, this limit is $34,440. Starting and retain older employees for their experience, accumu- with the month one reaches FRA, he or she will receive lated wisdom, and work ethic.

URMIA Journal 2007–08 25 It is important to remember that although some re- Pater, Robert. “Boosting Safety with an Aging Workforce.” Occupational Hazards (March 2006). cruiting generalizations can be made about older workers, Roth, Cynthia L. “How to Protect the Aging Work Force.” Occupational Hazards individuals in this group are as varied as any other large (January 2005). segment of the population. Th ey include people who are Ruiz, Gina. “Age Wave: Adapting to Older Workers.” Workforce Management in mid-life career changes, early retirees, older retirees, (March 2006): 32–36. Russell, Rob. “Riding the Gray Wave.” Occupational Health & Safety 76 (2007): displaced workers, and people who have never worked 16–18. outside the home before. Each group has its own motiva- Shuford, Harry and Tanya Restrepo. “Thinking About an Aging Workforce— tions to work and benefi ts needs. Potential Impact on Workers Compensation.” NCCI Research Brief 1 Many of these workers are eager to contribute to a (May 2005). Solomon, Charlene Marmer. “Unlock the Potential of Older Workers.” university, if given the opportunity, and age does not seem Personnel Journal 74, no. 10 (October 1995). to decrease creativity. A researcher recently made a list of the 1,000 most important ideas that had an impact upon the world, and the average age of the inventors was 74. In addition to the health and safety suggestions men- tioned, universities need to consider reviewing and amend- ing their employee benefi ts where possible—especially retirement, pension and health care plans—in a way that facilitates retirees returning to work without being penal- ized. It is also imperative that university communications serve to invite older workers to come, stay, and work safely and productively.

About the Author J. Tim Query, Ph.D., ARM, is a Baby Boomer as well as an Associate Professor of Risk Management and Insurance at New Mexico State University. He has research and consulting interests in various univer- sity risk management issues. Dr. Query wishes to thank NMSU graduate student Paul McHorse for his research assistance with this paper.

References Bureau of Labor Statistics. “Labor Force Projections to 2014: Retiring Boom- ers.” Monthly Labor Review (November 2005). Gordon, Edward E. “Retiring Retirement: Mastering the Workforce Generation Gap.” Benefi ts & Compensation Digest 44 (2007): 17–20. Leslie, David W. and Natasha Janson. “Easing the Exit: An Aging Professoriate Likes Options.” Change 37 (2005): 40–47. MetLife Foundation/Civic Ventures, 2005, “New Face of Work Survey.” Minter, Stephen G. “Underestimating Slips and Falls.” Occupational Hazards (October 2004). Mooney, Sean F. “Aging Baby Boomers Impact Workers’ Comp. Costs.” National Underwriter/Property & Casualty Risk & Benefi ts Management 101, no.12 (1997). Mullich, Joe. “They Don’t Retire Them, They Hire Them.” Workforce Management (December 2003): 49–54.

26 URMIA Journal 2007–08 What a paradox appears their age, How people respond to them, yet know them not, How there is something relentless in their fate all times, How all times mischoose the objects of their adulation and reward, And how the same inexorable price must still be paid for the same great purchase.

—WALT WHITMAN (1819–1892), “BEGINNERS,” LEAVES OF GRASS Above yon sombre swell of land Thou see’st the dawn’s grave orange hue With one pale streak like yellow sand, And over that a vein of blue.

—RICHARD HENRY HORNE (1803–1884), “THE PLOUGH” The Threat Level Is Orange

Leta C. Finch, Executive Director of Higher Education Practice, Arthur J. Gallagher Risk Management Services, Inc.

Abstract: Risks are everywhere—the question is, which are 3. International travel incidents resulting in injuries, possibly the most threatening and why? From the fl uctuat- fatalities, and kidnappings ing climate, to mysterious viral mutations, to increasing 4. Terrorism, including acts involving nuclear, unease over fuel shortages, this article presents some of the biological, chemical, and radiological (NBCR) most pressing concerns that could soon aff ect risk managers weapons everywhere. 5. Increased substance abuse 6. Increased campus violence Th e English historian, H.A.L. Fisher, wrote in 1935 in 7. Increased student suicides A History of Europe, “I can see only one emergency 8. Oil shortages following upon another as wave follows upon wave.”1 How real are these threats to college and university Th is paper presents eight potentialal crises that,that, campuses? were they to materialize, would presentent unprecedented challenges to risk manag-nag- 1. ClClimate Change ers. To minimize the destructive impactact Homeland Security Th e erer is little doubt these days that of each demands innovation in manage-age- cclimatelima change is occurring. Experts now ment techniques, new technology, andd defi nes fi ve threat agagreeree that human-generated greenhouse creative thinking. Th ere are fi ve threatat ggasesases are aff ecting the stability of the levels as defi ned by Homeland Security:rity: levels . . . the eearth’sarth weather patterns.3 Nontheless, the lowest is green and the highest is lowest is green and therethere are those who argue that because red. For airline safety, the current levelel climateclima change has occurred throughout is orange or “high”—one step away fromrom the highest is red. history,histo there is little to worry about. As red, the most severe level possible. reportedrepor in Th e Economist,4 what may not In establishing the threat levels, thehe bebe understoodun is that extreme weather Attorney General, in consultation withith fl uctuationuctu stopped about 10,000 years the Director of the Offi ce of Homelanddfi Security, verifi es ago, anddh the climate li settled down to what we have the threat conditions using a variety of factors, including typically experienced since. Greenhouse gases, available evidence that can provide the answers to the resulting from human activity, are at their highest following questions: in at least 650,000 years, and they continue to rise • Is the threat credible? at an exponential rate. • Is the threat corroborated? Th ese gases come from burning fuels and solid waste, • Is the threat specifi c and/or imminent? agriculture and waste decomposition, and industrial • How grave is the threat? processes. Th e following risks are emerging in severity, complex- A combination of rapid population growth (about ity, and frequency, and for each the threat level is already 80 million net growth per year globally) and massive high. Several are new and several have been around a industrialization in countries like China and India are while, but the magnitude of their impact is expanding accelerating greenhouse gas production.5 signifi cantly. Furthermore, climate change is making weather less 1. Th e eff ects of climate change predictable. In the last fi ve years, for example, there have 2. Th e increased numbers and spread of infectious been a record number of destructive hurricanes, more and zoonotic diseases2 frequent deadly heat waves in Western Europe and the

URMIA Journal 2007–08 29 United States, and unprecedented severe fl ooding in many University of East Anglia in England, has presented countries of Western and Central Europe.6 As ocean tem- research8 indicating that there is strong evidence that peratures rise, conditions for more hurricanes, typhoons, climate change is contributing to the increased spread of and other types of gale force windstorms will increase and infectious disease occurring around the world. hurricane seasons will last longer. Forest fi res are expected For example, illness-causing organisms that only grow to increase, more droughts will aff ect agriculture, and soil in warm waters, such as those in the Gulf of Mexico, have erosion from deforestation and fl ooding is expected to now been reported as far north as the Baltic Sea. Congo increase and reduce the ability of the ground to absorb Crimea Hemorrhagic Fever has also begun to appear in water, also aff ecting crop yields. areas where it was previously unknown. Th e insurance industry sees these results of climate A mosquito-borne disease that was fi rst detected change as a threat to its viability, and as a result is taking in Central Asia and Africa and has since spread across natural catastrophe trends seriously. the North American continent is the West Nile Virus In particular, Lloyd’s of London has taken a lead in (WNV). Th e CDC has reported that over 15,000 people warning about the insurance consequences of climate in the United States have tested positive for West Nile change. Posted on their website is thee followinfollowingg statement: infection since 19991999,, oof which there have been more than We foresee an increasing possibilitylity 500500 ddeaths. of attributing weather related lossessses AsA of July 2007, WNV infections to man-made climate change factors.tors. Climate change havehave been reported to the CDC from Th is opens the possibility of courtsrts ArArkansas,ka California, Florida, Idaho, assigning liability and compensationtion means exposures IllinIllinois,o Indiana, Iowa, Mississippi, Mis- for claims of damage. . . .7 We needed are changing, soursouri,i Nebraska, North Dakota, Ohio, to take action now and start discuss-uss- PPennsylvania,enn South Dakota, Tennessee, ing the steps we should take as ann and new ones TTexas,exa Utah, and Virginia. (Note: not all industry to prepare for the impactct ststatesate have WNV detection and report- of climate change. It’s a case of adaptdapt emerging. inging pprograms.)9 or bust. AnotherA mosquito-borne disease Lloyd’s has identifi ed the followingng ooff eevenv greater concern to the CDC is key issues for the insurance industry:: DDengueengue Fever (DFDF).). DFD is now a pandemic and its global • “Climate change means exposures are changing, and reach is comparable to malaria. From 1977 to 2004, a total new ones emerging. Insurers must regularly review of 3,806 suspected cases of imported DF were reported in and communicate conditions of coverage.” the United States by travelers. Most fatal cases are among • “Recent events have shown capital and pricing children and young adults.10 models to be wanting. We must regularly update and Recent news has made almost everyone aware of recalibrate our models to keep pace with reality.” untreatable tuberculosis (TB), and the World Health • “Insurers must prepare for the impact of climate Organization (WHO) has reported there are more than change on asset values. Underwriting for profi t will a few emerging strains that are drug resistant. be key.” Currently, most of the 425,000 drug-resistant TB • “Eff ective partnership with business and government cases are occurring in the former Soviet Union, India, and will be key to managing risk.” China. However, four percent of all U.S. TB cases in the Risk managers can expect underwriting to be more last year were drug resistant. Th ere are about 1.7 million aggressive in areas where the eff ects of climate change are deaths per year worldwide from untreatable TB.11 expected to be particularly damaging to property risks. A growing medical problem among athletes is Methicillin-Resistant Staphylococcus Aureus (MRSA), 2. Infectious and Zoonotic Diseases a highly contagious bacteria that causes blood infections, Dr. Paul Hunter, head of health protection at the pneumonia, and, in some cases, death.12

30 URMIA Journal 2007–08 MRSA is described as a “super bug” resistant to most Increased Population Growth standard antibiotics. Th e CDC has identifi ed it as an Th roughout the world, there has been urbanization and emerging health risk because the number of “community- population growth. Often these changes have resulted in acquired” cases has increased. Th e spread among athletes substandard housing, as well as inadequate water, sewer, is through contact sports, and it can exist anywhere there and waste management systems, all of which can facilitate is crowding, poor hygiene, and broken skin. the growth and transmission of infectious diseases. According to Th e Chronicle of Higher Education,13 in the past three years, outbreaks have occurred among Poor Public Health Infrastructure sports teams at the following schools: In many regions of the world, a public health infrastruc- • University of Southern California ture either does not exist or has deteriorated because of in- • University of Georgia ternal strife and war, or fi nancial collapse. Many countries • Bowdoin College are barely able to respond to ongoing epidemics, leaving no • Lycoming College (PA) (where one player died) resources available to develop disease prevention programs. • University of Tulsa (where one player died) Antibacterial cleaning of gyms and locker rooms has Increased air travel cost these schools from $5,000 to $10,000. Air travel has provided an ideal way by which infected A concern these days to almost every college and uni- people can transport infectious disease among the world’s versity is the threat of a pandemic fl u outbreak. most populated cities. At this point in time, all of the world’s leading experts and public health offi cials agree that a pandemic fl u out- Microbial Mutations break is inevitable—the question is when. Th e rapidity with which many infectious microbes can Currently, the H5N1 virus (a subtype of the infl uenza mutate and adapt to change has led to the development of A virus) has a 61 percent fatality rate,14 primarily among new, virulent strains that, in some cases, have developed the young and healthy. By comparison, the 2005 fl u season drug resistance. had a less than 10 percent fatality rate primarily among the aged and ill.15 In a study by the Insurance Information Institute (III), When an outbreak will occur depends on when it the eff ects of a-million-plus death claims resulting from fi nally mutates into a strain that is easily transmissible a pandemic would most likely include dramatic increases from human to human. Th e mutation process of the virus in reinsurance rates. Primary insurers would either be is carefully monitored by the World Health Organization unwilling or reluctant to write new life and health polices.17 in every country where the virus has appeared. WHO is In addition, insurance regulators are already concerned the appointed watchdog agency and will alert countries about the possibility of insolvencies in the event of a pan- when an outbreak appears inevitable. Many colleges and demic fl u outbreak and the need to reconsider risk-based universities have already begun developing response plans capital requirements while there is time to do so. to cope with a predicted absentee rate of staff and faculty Other concerns include uninsurable business interrup- of approximately 30 per cent during the duration of the tions as a result of having a large percentage of employees pandemic. unable or unwilling to come to work during a pandemic. Below are reasons the Centers for Disease Control Parents with dependent children at home would most suspect for the global emergence of certain infectious likely stay home with them as day care centers and schools diseases.16 close. Th ere will likely be signifi cant delays in claims process- Climate Change ing as insurers will also suff er from employees too ill or As countries with cold and temperate climates warm, too afraid to show up for work. they become susceptible to the types of infectious agents Th ere is additional concern that employers could typically found in tropical environments. experience liability claims from allegations of being

URMIA Journal 2007–08 31 unprepared for a pandemic that they had suffi cient warn- Energy Agency (IAEA), reveals that worldwide since 1993, ing about. there have been 16 confi rmed cases where “highly enriched When the III released this information, it was meant uranium or plutonium (of which both can be used as the to specifi cally address the insurance issues related to core of a nuclear weapon) has been lost, stolen, or seized pandemic fl u outbreak. Th e concepts are easily applicable from would-be traffi ckers.”21 Th e story goes on to state that to other types of infectious disease outbreaks. not all countries bother to report such incidents, and, thus, it can be assumed many more such events have occurred. 3. International Program Risks: Consider this scenario: Illnesses, Fatalities, and Kidnapping According to the Rand Corp, as reported in Risk Th e goal of the Senator Paul Simon Study Abroad Foun- Management,22 a 10-kiloton nuclear bomb detonated dation Act of 2007 (H.R. 1469, S.991) is to have one mil- in a shipping container at a Long Beach, California, lion students (approximately half of all U.S. college stu- port would cause “10 times the economic damage” of dents graduating annually) acquire foreignoreign language skills tthehe World TradTradee Towers attack, and destroy a signif- and international knowledge throughh iicantcant area of metropolitan Los Angeles, expanded study abroad opportunities.s.18 kkillingillin 60,000 people. Another 150,000 Increasing the number of studentsts The threat of ppeopleeop would be exposed to hazardous studying abroad ensures a greater num-m- llevelsevels of radiation, and another two to ber of serious accidents and illnesses terrorism using ththreeree million people could be forced to occurring while in a foreign country. FForor mmoveove out of the extended area because of example, more students will be exposedsed nuclear material ththee potentialp for nuclear contamination. to car accidents, muggings and assaults,lts, is particularly RResulting fi res from the blast could infectious diseases, acts of terrorism, ppotentiallyoten destroy all of the ships and substandard healthcare facilities and challenging to eexistingxisti infrastructure of the port, in- non-western trained providers, and kkid-id- ccludingludi the Los Angeles port. Some areas nappings and ransom demands, to nameame minimize. nnearear the epicenter would not be habit- a few. aableble ffor at least 20 years. Th e economic Kidnapping in particular is a growingwing iimpactmpa would be felt worldwide and risk with estimates of 20,000–30,0000 worsworsened if the United States chose to persons kidnapped annually.19 In many developing close all ports as a temporary security precaution. countries, kidnapping gangs exist because of the fi nancial Combined, Long Beach and Los Angeles, incentive from paid ransoms. California’s shipping ports, handle one-third of all Th e countries that create the greatest kidnapping risks imports into the country. are those with the largest gaps between the wealthy and How probable is this event? poor (with little to no middle class, resulting in signifi cant As Daniel Benjamin and Steven Simon, two former income distribution problems); countries with ongoing U.S. counter-terrorism offi cials, noted in the journal internal confl icts; and countries in which the governments Foreign Aff airs, “All that is needed for a terrorist attack to are highly corrupt. According to Th e World Bank, there succeed are the most portable, least detectable tools of the are 71 countries that meet this description.20 Most of these terrorist trade: ideas.” 23 countries appeal to students, and faculty members are Nuclear, biological, chemical, and radiological (NBCR) willing to take them there. agents can be spread by numerous means, for example through HVAC systems, food and water supplies, crop 4. Terrorism and NBCR releases dusters, and, of course, the U.S. Postal Service. Th e threat of terrorism using nuclear material is particu- Money is no inhibitor to terrorism, either.24 John larly challenging to minimize. A database kept by the Muller, in the September/October 2006 edition of United Nations organization, the International Atomic Foreign Aff airs, wrote that it is estimated that Al Qaeda’s

32 URMIA Journal 2007–08 September 11 attack on the World Trade Towers cost less Th e Substance Abuse and Mental Health Services than $500,000 to execute. Administration, a division of the Department of Health Th e April 2004 Madrid subway bombings cost less and Human Services, conducts an annual national survey than $1,000, and were later replicated in London and on drug use and health. SAMHSA creates “TEDS,” the Mumbai. For close to $1,000, an Al Qaeda affi liate killed Treatment Episode Data Set. 200 people in a nightclub bombing in Bali. TEDS identifi es “youth” as those persons whose ages In his book Terror and the Internet: Th e New Arena, are between 12 and 17, and “young adults” as those per- the New Challenges, Gabriel Weimman points out that sons whose ages are between 17 and 25. in his eight-year study of terrorists’ use of the internet, Th e 2005 TEDS data set (the most recent available as he found 40 organizations designated as active terrorist of this writing) indicated the following: groups by the U.S. State Department that maintain over • 1.5 million youths (six percent of the youth popula- 4,000 websites.25 tion) were classifi ed as needing alcohol treatment, Terrorists use the internet to: and only about sseven percent received it. • Solicit money • AboutAb an equal number of youths were • Recruit new supporters clclassifia ed as needing illicit drug use • Distribute training and weapons-ns- Almost every trtreatment,e and nine percent received it. making materials • Th e criminal justice system was the • Gather information about futurere college and principalpri source of referral to sub- targets. stancesta abuse treatment for 47 percent Unfortunately this threat will not university in of young adults (ages 17–25), and for abate anytime soon, and perhaps not the United States 5252 percent of youths. in the foreseeable future. Insurance willwill • BasedBa on the TEDS supplemental data remain elusive and expensive at best. has by now set,set 17 percent of young adults had a And coverage for events involving NBCRBCR psychiatricpsy problem in addition to sub- agents is not available, with most of had to address stancesta abuse, as did 20 percent of the the insurers opposing off ering any suchch the issue of youthyou admissions for substance abuse coverage.26 As stated in the May 25, 22007007 treatment.tre edition of Business Insurance,27 “NBCRR substance abuse. events are qualitatively and quantitativelyively The ssituation is worsening. diff erent from events arising from thee use In 2006,20 Afghanistan had a record crop of conventional terrorist weapons.” ofof oopiump (the source of heroin) with a 60 percentt increasei over the previous year. In 2007, the 5. Increased Substance Abuse crop yield set another record. Acreage harvested that year Almost every college and university in the United States for opium was 457,135 compared with 407,715 acres in has by now had to address the issue of substance abuse on 2006. Afghanistan now produces 90 percent of the world’s their campuses. Th is can include underage drinking and opium, and as a result, the availability of heroin has binge drinking of alcoholic beverages, use of illegal drugs, recently outstripped demand. It is now cheaper and more and overuse of prescription drugs. Every year, students die easily available.28 from such abuse. Where does this lead us? Th e impact and uninsurable costs of incidents involv- ing student substance abuse include increased aggressive 6. Increased Campus Violence behaviors resulting in physical injury and property dam- According to SAMHSA, the National Survey on Drug age, poor academic achievement of those involved, and Use and Health indicated that youths ages 12 to 17 who damage to the institution’s reputation when incidents of used alcohol and/or an illicit drug in the past year were substance abuse are severe. almost twice as likely to have engaged in a violent behavior

URMIA Journal 2007–08 33 as those who did not use alcohol or an illicit drug (49.8 Our Sons Turn Violent and How We Can Save Th em, percent versus 26.6 percent). wondered how that could be. Too many colleges and universities have had to man- Th e fall 2002 edition of the magazine of the Harvard age the aftermath of the worst situation imaginable—a Graduate School of Education reported in an article person’s violent madness taken out on innocent members titled “Th e Secret Lives of Adolescents”30 that Professor of the campus community. Garbarino asked his students to research the question, Two important considerations: “Is it possible for parents to fail to see murderous and • Homicide (mostly from guns) is second only to suicidal tendencies in their children?” Th e study found vehicle accidents as the leading cause of occupational that many teens admitted to having been raped, tried death in the workplace in the United States for illegal drugs, committed acts of vandalism, and seriously women.29 considered suicide. Th e respondents believed that their • Persons who have experienced a lifelongg exposurep to pparents knew nothingg of these events or behavior. violence and illegal substances areare becoming memmem-- Acts of anger and aaggression are often drug induced. bers of our higher education staffaff , AccordingAcco to SAMHSA’s, 1999 National faculty, and student communities.ies. HouHousehold Survey on Drug Abuse, an Cases of violence on campus havee Virginia Tech is eestimatedstim 833,000 youths between the involved staff , spouses of staff and faculty,culty, agageses of 12 and 17 had carried a handgun and outsiders, but most cases reporteded iinn but one in the iinn theth past year. the general media have involved studentsents history of cases AAccording to the national survey of as the perpetrators. ccrimerime victims, the rate of fi rearm violence Virginia Tech, the most recent andd of violence by iincreasedncre in 2005. We are likely to see most horrifi c example, is but one in thehe ththisis ssituation worsening. history of cases of violence by studentsnts students on on campus. campus. 7. IIncreasedn Student Suicides Although an act of violence has As rreportede in SAMHSA’s 2004 occurred on a college or university NNationalatio Survey on Drug Use and campus every year now for decades, 20022002 HeaHealth,l an estimated 2.2 million adoles- was particularly violent. Th at year, at theUniversityofthe University of centsaged12to17hacents aged 12 to 17 have experienced at least one major Arizona’s College of Nursing, three professors were shot depressive episode during the preceding year. Depressed to death by a student, and similar to Seung-Hiu Cho adolescents are more than twice as likely to have used at Virginia Tech, the student later committed suicide. illicit drugs as their peers who had not experienced a Another student at the Appalachian School of Law shot major depressive episode. and killed the law dean, a faculty member, and a student. Consider that an estimated 712,000 adolescents And a fi ght between students at Catawba and Livingstone had tried to kill themselves during their worst or most Colleges in Salisbury, North Carolina, resulted in gun- recent major depressive episode (representing almost shots that left a Catawba student dead and six Livingstone three percent of those ages 12 to 17). Only 36 percent students charged with homicide. of youths at risk for suicide during the past year received Although the shooting spree that Dylan Klebold and mental health treatment or counseling. A portion of this Eric Harris embarked upon in 1999 was not on a college age cohort arrives on college and university campuses or university campus, what they accomplished at Colum- every fall. bine High School could have been considered foretelling Th e 2006 American College Health Association’s at the time. Based on statements made by Dylan Klebold’s National College Health Assessment reported that parents that they were completely unaware of their son’s the number of college students who said they had ever intent to commit murder and suicide, Professor Garbarino received a diagnosis of depression increased by 4.6 per- of Cornell University and the author of Lost Boys: Why centage points over the last four years. Of the students

34 URMIA Journal 2007–08 who reported a diagnosis of depression, 38 percent said In addition, China is gaining in oil consumption. Since they were taking medication for it and 25.2 percent said 2000, Urstadt observed, China has accounted for one- they were in therapy. third of the increase in world oil consumption. China has In addition to those statistics, about 10 percent of 13 million car owners today, whereas in 1995, they only all students surveyed in 2004 said they had seriously had two million. considered suicide at least once during that year. Worldwide consumption does not appear to be Based on the numbers of youths and college students decreasing at a rate to delay the anticipated oil peak. at risk, we can expect to see a growth in the number of Nevertheless, according to Noam Scheiber in “Where the student suicides on campus and, considering the liability Oil Is,” an article published in New York Times Magazine issues, colleges and universities had better be prepared to on November 10, 2002, there are, however, untapped do all that is possible to prevent them from occurring. reserves in countries such as Russia, Kazakhstan, and Azerbaijan,j and improvementsp in technology could result 8. Oil Shortages in more effi cient extractionextrac processes in West Africa and As if everything else risk managers aree thethe UU.S. Gulf Coast.32 facing is not challenging enough, the mostmost LatinL America could increase its diffi cult may be the impending oil crisis.sis. Based on the prproduction.od Colombia, however—once a In their CEO briefi ng, Th e Economistmist’s mmajorajo exporter of oil—has experienced Intelligence Unit reported that their numbers of youths frfrequentequ attacks on its pipeline. In 2005, survey of 500 CEOs revealed that and college tthehe UnitedU States had to invest $100 managing the scarcity of oil was one ooff mmillionillio in counterinsurgency aid to keep the major challenges identifi ed in the students at risk, a majormaj U.S. oil company from leaving upcoming decade. What is the basis fforor CColombia.olo 33 this concern? Th e United States is heavilyeavily we can expect ManyM off shore oil sites are in deep- dependent on oil, the growing shortagege to see a growth watewaterr fi elds with considerably higher is aff ecting the cost of doing business,, eextractionxtra costs.34 and there are few eff ective and aff ordableable in the number of NigeriaN could supply the United alternatives available in mass quantities.ies. StatStatese with more oil, but the political In 1956, Shell oil geologists pre- student suicides ssituationitua is unstable and kidnappings of dicted that the domestic oil productionon on campus. ooilil workersw have signifi cantly decreased would peak between 1965 and 1970. It prproduction.od 35 peaked in 1970.31 At the same time it AsA Urstadt wrote in Harper’s, life was predicted that global oil productionion withwithouto oil is bleak.36 would peak in the year 2000. Althoughgh that has not hahap-p- • Starvation will beb more widespread because food pened, pessimists believe that the world peak may occur production and transport is oil dependent. as soon as 2011, and optimists believe we have another 30 • Wars will occur more frequently over scant remain- years before the peak. Whatever the case, no one disputes ing oil. Fighting over limited resources is already the fact that petroleum, the source of fuel oil, is a limited happening in countries in Africa. resource and that a peak is inevitable. • Dirty alternatives like coal will aff ect climate change. Bryant Urstadt wrote in Harper’s August 2006 edition • Cars may become luxuries because of limited a piece titled “Imagine Th ere’s No Oil” which noted that production of alternative fuels. more than half all of the remaining oil in the world is in • Production of plastics will cease as plastic is derived the Middle East. Th e United States owns about fi ve per- from petrochemicals. cent of the remaining world oil reserves, but it is estimated • Consumer goods will become unaff ordable or that we consume within U.S. borders 30 percent of all the unavailable, as they are typically shipped to their oil produced in the world. destination at large energy costs.

URMIA Journal 2007–08 35 • Many buildings will not be heated or cooled. Electric Cars Th ere are alternatives, but each creates it own challeng- Electric cars are currently usually powered by energy from es, risks, and production limitations. Urstadt summarizes non-renewable sources. for his readers issues with each of the alternative fuels. Hydrogen Coal Hydrogen is far more expensive to produce than gasoline, As a fossil fuel, burning coal has a huge impact on global and a single hydrogen-powered car costs hundreds of warming. More burning will only increase the eff ects.37 thousands of dollars. Th ere is an urgency to fi nd new reserves, and research Nuclear Power and development is occurring. In the meantime, the cost Today there are 103 nuclear power plants in the United of gas continues to escalate, grain products like cereals are States. To replace today’s oil consumption, with no soaring as food grains are diverted to biofuel production increase in energy use, the United States would need 427 (increased demand for ethanol has already resulted in a more plants,38 and that is without providingg anyy ppower doublingg of the pricep of corn in the last year44), and the cost for cars. Nuclear waste remains the biggestiggest problem for of doindoingg business will begin to aff ect personal incomes. society to solve.39 ConclusionConc Alternative Fuels No one disputes In 2006,20 as a result of diverse and com- Corn grain ethanol and soy biodiesel plex cchanges occurring in the world and currently provide six percent of our totalotal the fact that thethe impactim these changes have had on in- energy needs. To grow enough biomassss petroleum is a surers,surer the United Nations’ Environment to meet today’s world energy needs wouldould ProgrammeProg Finance Initiative created require more than 10 percent of the limited resource thethe InsuranceIn Working Group (IWG), world’s landmass, approximately all off thethe consistingconsi of 16 insurers, reinsurers, and land that is already under cultivation. Fur-Fur- and that a peak is brokersbroke from Australia, Bermuda, thermore, we would have to cultivate new inevitable. France,Franc Germany, Greece, Japan, Norway, landmass and transport the crops usingng Spain,Spain Sweden, Switzerland, the Neth- machinery that does not use petroleum.m.40 erlands,erlan the United Kingdom, and the Also consider that current produc-c- UnitedUnit States.45 tion processes of ethanol and soy biodieseldiesel consume ononlyly Th e IWGIWG’s inauginauguralu report on sustainability stated, slightly less energy than they produce. Burning ethanol “Climate change is the greatest environmental risk con- results in only 12 percent less greenhouse gas emissions fronting the insurance industry, but it is not the only one.”46 than burning gasoline. Soy biodiesel provides a 41 percent Although this paper reports on many of the challenges reduction in greenhouse gases; however, with current risk managers must now consider addressing on their technology, one acre of soybeans yields only 60 gallons campuses, there are still others that have gone unmen- of fuel.41 tioned. Simply, the number of concerns and dangers in the world are limitless. Yet it is all too easy to become ostrich- Solar like and bury one’s head. Th e most vexing problem about For solar and wind power to equal the output of one the risks described in this paper is that, in many cases, the nuclear power plant, one would need to build fi ve square threats are vague. Th is in itself creates a bigger risk. In the miles of solar panels or turbines.42 book Facing Ambiguous Th reats, authors Roberto, Bohmer, and Edmonson state, “Th e most dangerous situations arise Geothermal Power when the threat is ambiguous. Th is leads managers to ig- Geothermal power is renewable, but it can only be used nore or discount the risk and take a wait-and-see attitude. close to its source.43 Such an approach can be catastrophic.”47

36 URMIA Journal 2007–08 We can also become anchored to an opinion, causing business continuity plans us to underreact to new information. Sometimes we have • Develop breadth and depth of awareness and chosen to believe in something at any cost, becoming wed- response skills among all persons affi liated with ded to certain beliefs because we don’t like or want to know your institution, and most importantly, with the facts.48 senior management. Because one can easily become complacent about Th is paper has not intended to summarize every ambiguous risks, it is easier to believe such events would new or emerging challenge facing risk managers. Rather, not or could not aff ect one’s campus. To counter this its intent is to clarify the need for urgency in preparing thinking, Bob Bickel of the Stetson Law School has said college and university campuses for the threats looming that one must overcome the unconscious belief that the on the horizon. No campus is immune to them. campus is safe. In other words, “the illusion of safety is its Th e greatest challenge, however, may be convincing own kind of danger.” senior management of the potential severity of these So what can risk managers do to begin to prepare threats and the need to begin planning for them. Perhaps their campuses for these emerging crises? a fi nal thought from R. Buckminster Fuller can help to 1. Get past fear and denial, and then urge top man- inspire the planning process: “We are called to be archi- agement to get past it, too. As risk managers know, tects of the future, not its victims.” it is far better to identify the risks, think logically, and plan ahead, than to be taken by surprise. About the Author Averting a crisis may not always be possible, but Leta Finch has more than 25 years of expe- risk management steps are valuable in helping to rience in higher education risk management, minimize one and to recover more quickly; other- and formerly served as the Director of Risk wise we can suff er from extreme regret after the Management at the University of Vermont. event. A risk manager’s job is to take steps to avoid She also served as the Director of the Insti- such regret. As the old Chinese saying goes, “Take tute for Financial Services at Champlain College, where care of the diffi cult while it is still easy.” she was a member of the Dean’s Council. Ms. Finch is a 2. Realize that fi nding insurance solutions for any or member of the Board of Trustees of Champlain College, all of the risks reported on in this paper is diffi - and a member of the international board of directors of cult at best, and in some cases, impossible. Where Samara State University in Samara, Russia. She has also coverage may be available, a cost/benefi t review by served as a trustee of the American University of Central the institution of the exclusions and premiums may Asia. She is founder and president of the Foundation show that coverage is not advantageous. for Higher Education in Central Asia, past president of 3. With few insurance options available, there is a URMIA, and a recipient of URMIA’s Distinguished Risk crucial need to minimize the potential catastrophic Manager Award. She received her bachelor’s degree from consequences of each of the risks identifi ed. In the University of Hawaii and holds a master’s degree in other words: public administration from the University of Vermont. • Identify the threats that could aff ect your campus • Evaluate your institution’s vulnerability to those Endnotes 1 threats Antony Jay, ed., The Oxford Dictionary of Political Quotations (Oxford: Oxford University Press, 1996), p. 136. • Evaluate the impact of these threats to your 2 A zoonotic disease is one which normally exists in animals but that can institution be transmitted to and infect humans. There are many zoonotic diseases • Assess existing operating policies, procedures, including anthrax, plague, Lyme disease, monkey pox, rabies, trichinosis, and protocols intended to minimize potential typhus and West Nile fever. 3 “A Dangerous Experiment,” The Sierra club, Global Warming Fact Sheet, p.1. threats and to manage a catastrophic event 4 “The heat is on,” The Economist, September 9, 2006, p. 11. • Develop comprehensive response, recovery, and 5 “The heat is on,” The Economist, September 9, 2006, p. 11.

URMIA Journal 2007–08 37 6 “What is Global Warming,” National Geographic, Environment; 32 Noam Scheiber, “The Way We Live Now: Economics of Oil; Where the Oil http://green.nationalgeographic.com/environment/global-warming/ Is,” New York Times Magazine, November 10, 2002. 7 Lloyd’s 360 Risk Project, Climate Change: Adapt or Bust, p. 5 (report can 33 Noam Scheiber, “The Way We Live Now: Economics of Oil; Where the Oil be accessed at www.lloyds.com/360). Is,” New York Times Magazine, November 10, 2002. 8 BBC NEWS, http://news.bbc.co.uk/go/pr/fr/-/2/hi/science/nature/5311196. 34 Noam Scheiber, “The Way We Live Now: Economics of Oil; Where the Oil stm; published 2006/09/04. Is,” New York Times Magazine, November 10, 2002. 9 Communicated by ProMED-mail, [email protected], the global 35 Noam Scheiber, “The Way We Live Now: Economics of Oil; Where the Oil electronic monitoring and reporting system for outbreaks of emerging Is,” New York Times Magazine, November 10, 2002. infectious diseases and toxins, a program of the International Society for 36 Bryant Urstadt, “Imagine There’s No Oil,” Harper’s, August 2006, p. 34. Infectious Diseases. 37 “As Security and Climate Concerns Rise, Nuclear Power May Be Coming 10 Dengue Fever Fact Sheet, Centers for Disease Control, Department of Back,” The Economist, June 2, 2007. Health and Services, January 7, 2005. 38 Bryant Urstadt, “Imagine There’s No Oil,” Harper’s, August 2006, p. 32. 11 Drug and Multi-Drug Resistant Tuberculosis (MDR-TB) Fact Sheet, World 39 “As Security and Climate Concerns Rise, Nuclear Power May Be Coming Health Organization. Back,” The Economist, June 2, 2007. 12 Erin Strout, “An Unwelcome Visitor in the Locker Room,” The Chronicle of 40 Bryant Urstadt, “Imagine There’s No Oil,” Harper’s, August 2006, p. 40. Higher Education, September 29, 2006, p. A46. 41 Kevin Bullis, “Ethanol vs. Biodiesel,” Technology Review, published by MIT, 13 Erin Strout, “An Unwelcome Visitor in the Locker Room,” The Chronicle of Sept/Oct 2006. Higher Education, September 29, 2006, p. A46. 42 Bryant Urstadt, “Imagine There’s No Oil,” Harper’s, August 2006, p. 40. 14 Cumulative Number of Confi rmed Human Cases of Avian Infl uenza 43 Geothermal FAQs, Geothermal Technologies Program, U.S. Department of A/(H5N1) Reported to WHO; World Health Organization; 25 July 2007; Energy (http://www1.eere.energy.gov/geothermal/faqs.html) http://www.who.int/csr/disease/avian_infl uenza/country/cases. 44 “Biofuelled: Grain prices go the way of oil prices,” The Economist, June 23, 15 Update: Infl uenza Activity—United States, 2004–05 Season; MMWR 2007. (Morbidity and Mortality Weekly Report), Centers for Disease Control, 45 Richard Miller, “U.N., Insurers Release Sustainability Report,” Business April 8, 2005. Insurance, May 25, 2007. 16 National Center for Infectious Diseases, Centers for Disease Control, 46 Richard Miller, “U.N., Insurers Release Sustainability Report,” Business website http://www.cdc.gov/ncidod/. Insurance, May 25, 2007. 17 Avian Infl uenza (Bird Flu), I.I.I. Research and Analysis, Insurance Institute 47 Michael A. Roberto, Richard M. J. Bohmer, and Amy Edmonson, “Facing of America. Ambiguous Threats,” Harvard Business Review, November 2006, p. 110. 18 Public Policy: Senator Paul Simon Study Abroad Foundation Act of 2007; 48 Richard T. Zatorski, “Vividness, Anchoring, and Regret,” Contingencies, NAFSA: Association of International Educators (http://www.nafsa.org/public September/October, 2000, p. 76. _policy.sec/study_abroad_2/faqs_2/#signifi cance). 19 “Risk Managing Kidnap and Ransom Exposures,” The Risk Report, IRMI, April 1999. 20 States and Markets, 2007 World Development Indicators, The World Bank, p. 260. 21 The Economist, February 3, 2007, p. 60. 22 “Effect of Nuclear Blast at Port Would Be National,” Risk Management Magazine, October 2006, p. 8. 23 John Mueller, “Is There Still a Terrorist Threat?” Foreign Affairs, Volume 85, No. 5, September/October 2006, pp. 3-4. 24 John Mueller, “Is There Still a Terrorist Threat?” Foreign Affairs, Volume 85, No. 5, September/October 2006 pp. 3-4. 25 Gabriel Weimman, “Terror and the Internet: The New Arena, the New Chal- lenges,” United States Institute of Peace Press; as cited in The Economist, April 29, 2006, p. 87. 26 Mark Hofmann, “Industry groups says NBCR events ‘uninsurable,’” Business Insurance, May 25, 2007. 27 Mark Hofmann, “Industry groups says NBCR events ‘uninsurable,’” Business Insurance, May 25, 2007. 28 “Afghanistan will break opium growth record,” Associated Press, July 18, 2007. 29 National Census of Fatal Occupational Injuries in 2005, Bureau of Labor Statistics, United States Department of Labor; August 10, 2006, p. 12. 30 “The Secret Lives of Adolescents,” ED, the magazine of the Harvard Gradu- ate School of Education, Fall 2002. 31 Bryant Urstadt, “Imagine There’s No Oil,” Harper’s, August 2006, p. 32.

38 URMIA Journal 2007–08 I lived on dread; to those who know The stimulus there is In danger, other impetus Is numb and vital-less.

—EMILY DICKINSON (1830–1886), “TIME AND ETERNITY” Now I am terrifi ed at the Earth! it is that calm and patient It grows such sweet things out of such corruptions . . . . It renews with such unwitting looks, its prodigal, annual, sumptuous crops It gives such divine materials to men, and accepts such leavings from them at last.

—WALT WHITMAN (1819–1892), “THIS COMPOST,” LEAVES OF GRASS Mold in the Environment: The Diffi culty of Assessing the Risk

George H. Bender, Manager of Environmental Health and Safety, Duquesne University

Abstract: Mold can contribute to a variety of adverse health health problems when eaten by humans or animals. In fact, conditions, and it is often problematic because of its many this species of fungus was the fi rst source for lysergic acid manifestations. While some forms of mold are more dan- diethylamide (LSD). As society became more civilized, the gerous than others (and at varying levels of exposure), a awareness of mold and its eff ects became more prevalent. number require extensive procedures to detect, address, and Many people have even theorized that the Salem Witch prevent. Th is article analyzes various forms of mold, the Trials held in 1692 were the result of ergotism suff ered by health threats they pose, and subsequent strategies for risk women. Although outbreaks of ergotism have occurred managers who must deal with its changeability. since 1853, the last reported case was in 1951 (University of Georgia 2005). Introduction In the 1990s, the unhealthy side eff ects of mold Mold, or more appropriately fungus, is found everywherey returned to the forefront. Between 1994 and 1997, 10 in the natural outdoor environment. ItsIts prime purpose is infants in Cleveland werew identifi ed with acute idiopathic to break down organic material, and itt pupulmonarylm hemorrhage, also called pul- has been known to man for thousandsds momonaryna hemo-siderosis. It was theorized of years. Many believe that mold was In the 1990s, the ththatat tthe affl iction was due to the infants fi rst loosely referenced in Chapters 133 bbeingeing exposed to the fungus Stachybotrys and 14 of the Book of Leviticus in thee unhealthy side cchartarumhart (S. chartarum) six months * Bible. But the fi rst chronicled reactionn to effects of mold bbeforeefor the onset of illness, through mold exposure is described as a seriousus ininhalation.hal S. chartarum is known to outbreak of ergotism, a type of poisoningning returned to grgrowow indoors in moist environments brought on by ingesting a certain fungusgus and pproduce mycotoxins that are toxic present in the Rhine Valley in 857 a.d.d. the forefront. ((DearbornDea et al. 2002; Centers for People suff ered swollen blisters, rottingng DiseDiseasea Control and Prevention 2000). fl esh, and loss of limbs, and the affl ictionion In late 1999, an article published was named the Holy Fire. In 1039, anothernother similar epepisodeisode in USA WeeWeekendkend desdescribedcr the problems that a woman of ergotism erupted, named St. Anthony’s Fire. While the named Melinda Ballard and her family were having with cause of both outbreaks was not known at the time, the S. chartarum in their new home. Th e copper plumbing details surrounding the events suggest mold was at fault. in the home began to leak in 1998, and by December, Th e next documented occurrence of side eff ects from the hardwood fl oors began to warp. By March 1999, the mold exposure was in 1670, when a French physician, entire family was experiencing a series of health problems, Th uillier, observed that ergot was growing on grain stalks which became so severe that the family was forced to instead of grain. In the following years ergot was espe- vacate the home and live in a nearby motel. Th e ensuing cially prevalent, and the incidence of St. Anthony’s Fire lawsuit fi led by Ms. Ballard resulted in a multimillion- increased dramatically. Still, the cause of the outbreaks dollar award to her and her family (Mann 1999). was not recognized. Finally, in 1853, Louis Rene Tulanse As a result of the Cleveland infants and the Ballard proved that the fungus Claviceps pupurea was attack- case, the media began to increase the reporting about ing rye grain and was the cause of ergotism. Th is fungus S. chartarum or the “toxic black” mold and the harm it contained poisonous alkaloids that caused a variety of could cause. Naturally, this heightened public awareness

URMIA Journal 2007–08 41 raised concerns about exposure to mold indoors. Th ese contribution of each is unknown. concerns have contributed to the development of a service Another health eff ect is hypersensitivity pneumonitis market to evaluate the risk associated with exposure to (HP), which is an infl ammation of the alveoli. It is not molds or fungi (Flappan et al. 1999). induced by normal or slightly elevated concentrations of Initially, risk assessment generally involved a four-step mold propagules, but instead is a result of the body pro- process: hazard identifi cation (health eff ects), exposure ducing excessive IgE antibodies in reaction to exposure to assessment, establishment of a dose-response relationship, molds. Although most cases result from occupational expo- and fi nally the assessment of the degree of risk (DiNardi sures, some cases have been attributed to birds, humidifi - 1997). To date, this process appears to be more of a subjec- ers, and HVAC systems. Th ermophilic actinomyces, which tive eff ort than an objective one, placing professionals in are bacteria rather than fungi, are the organisms associated a position of having to conduct risk assessments for an with exposures from humidifi ers and HVAC systems. exposure for which there is limited scientifi c information or Allergic bronchopulmonary aspergillosis (ABPA) and consensus for support. Th e following reviews the current allergic fungal sinusitis (AFS) are variations of allergic re- information available as it applies to the risk associated actions in which the fungi actually grow in the airways. In with fungal exposure and describes thehe diffi culty involvinvolveded bbothoth cases, patients hhavea preexisting airway damage that in determining that risk. impairsimpa normal drainage. Th is permits thethe fungusfu to grow without aff ecting Health Effects Molds that are anyany aadjacent tissue. Usually this does Approximately 1,000 species of moldd or not rresult in any health issues unless the fungi can be found in the United States,tes, generally found patientpatie is allergic to the specifi c fungus. and more than 100,000 species have outdoors are of AlthoughAltho Aspergillus is the fungus typi- been identifi ed worldwide (United Statestates callycally involved, Curvularia is also associ- Occupational Safety and Health Ad- more concern atedated with AFS. ministration 2003). Th ey typically affff ect WWith regard to infection, there are human health adversely in three ways:s: than those a limitedlim number of fungi, particularly allergy, infection, and toxicity (Robbinsins found indoors. indoindoors,o that can infect humans inter- et al. 2000). Molds that are generally nallnallyy and possibly cause death. Cryptococ- found outdoors are of more concern ththanan ccusus ((birdb droppings), Histoplasma (bat those found indoors because they causeuse dropdroppings), and Coccidioides (soil from airway allergic diseases such as allergicic asthma or rhinitisrhinitis. southwest United StaStates)t are generally not found indoors Red eyes and a runny nose are the most common allergic and are pathogenic only to people who are immuno- responses observed. Th ese responses are the result of the compromised. body producing allergic antibodies (IgE) to address the Skin and mucosal infections, on the other hand, are “attack” of fungal spores or hyphal fragments inhaled into quite common and involve the feet, nails, groin, skin, and the lungs. Although 40 percent of the population displays oral or vaginal mucosa. Moisture in shoes, body creases, high levels of allergic antibodies in their systems, only fi ve and loss of epithelial integrity are critical to this type of in- percent actually present allergic symptoms (Hardin et al. fection. But it should be noted that the fungus C. albicans 2003). Aspergillus and Penicillium species are associated might be found on half of the population that exhibits no with the indoor environment, while Cladosporium and sign of infection. Alternaria species are affi liated with the outdoors. Th ese Yet another health eff ect of mold is caused by my- outdoor species are believed to be the cause of airway cotoxins, which are secondary metabolites that result in allergic disease—more so than indoor species. However, mold toxicity. How mycotoxins are produced is not clearly exposure to bacteria, dust mites, and endo-toxins will understood; therefore, the presence of a toxigenic mold also elicit the same reactions as fungi or molds. Each does not mean that mycotoxins are present. Instead, could contribute to the overall “illness,” but the exact production is dependent upon nutrient availability,

42 URMIA Journal 2007–08 temperature, and humidity. When mycotoxins are storing fi rewood indoors, poor housekeeping, and attach- produced, they are found in all parts of a fungal colony. ing greenhouses to buildings. Assessment of certain odors Typically in the past, exposure has been the result of the can be helpful too, as they may be an indication of hidden ingestion of contaminated foods. Th e other method of fungal growth. For example, a “musty” odor is the result exposure is inhalation, but few studies have researched the of the production of VOCs from normal growth, while a inhalation of mycotoxins, which is the primary source of “dirty sock” odor is indicative of bacterial growth. Chemi- infection in today’s society (Robbins et al. 2000). cal odors may also contribute to respiratory problems and Molds, furthermore, do not produce the same my- need to be considered (Dillon et al. 1999). cotoxins. Aspergillus species, for example, produce the mycotoxin afl atoxin, whose ingestion has been related to Questionnaires liver cancer. Some Penicillium species produce the myco- Questionnaires can help determine if there is a building- toxin ochratoxin A, which is teratogenic. On the other related problem. Demographics, health complaints, and hand, Alternaria produces a wide array of mycotoxins. location of respondents are acquired through this tech- Skin irritation, vomiting, diarrhea, hemorrhage, convul- nique, which can also assist in the development of a sam- sions, and sometimes death are the result of exposure to pling strategy, if necessary. Th e questionnaire may be stan- trichothecenes, which are mycotoxins produced by some dardized or tailored toward testing a particular hypothesis. molds, particularly Fusarium species. Furthermore, the information collected may be compared Mycotoxins themselves produce volatile organic to a database established by the Environmental Protection compounds (VOCs) that can be inherently toxic. But the Agency (EPA) and the National Institute for Occupational concentration of VOCs produced is not toxic by inhala- Safety and Health (NIOSH). It is important, however, that tion—it would require one to inhale an extremely high respondents complete the questionnaire in confi dence to concentration not found in homes, offi ces, or schools maximize the accuracy of the responses (Macher 1999). (Kelman et al. 2004). Glucans, which are glucose polymers that are located Sampling Strategy in most fungal cell walls, are often associated with myco- If the visual inspection indicates that fungal growth or toxins. It is believed that they play a role in some fungal fungal indicators are present, then the potential for expo- infections, particularly hypersensitivity pneunomitis, by sure may further be defi ned by utilizing various sampling aff ecting airway macrophages. Exposure is determined by techniques. For instance, air sampling may indicate that bioassays, but it is generally assumed that if you are ex- the spore concentrations in the air are related to the health posed to fungi, you are exposed to glucans (Macher 1999). symptoms being displayed by the building occupants or may assist in identifying hidden growth. Bulk or surface Exposure Assessment (dust) sampling may be used after visual observation to Visual Inspection confi rm. A good sampling strategy includes determin- Before an exposure assessment strategy can be developed, ing the materials to be sampled, sampling locations, the a visual inspection of the aff ected building or area is number of samples, and the effi ciency of the appropriate required. Fungal growth requires moisture, a food source, sampling method and laboratory analysis. Sampling meth- and the proper temperature. Th erefore, the inspection ods must be selected according to their ability to provide should involve, in addition to quantifying visible fungal some measure or estimate of exposure. Th is typically growth, the identifi cation of water intrusion, including results in the use of air sampling methods more so than dampness, water leaks, or fl ooding, and damaged cellu- others (Macher 1999). lose-based building components. Th e fungal growth must also be quantifi ed, since this is a measure of the extent Sampling Method of possible contamination. Occupant behavior must be Th e traditional sampling method involves culturing noted, as well. Some additional indicators of possible fun- organisms on nutrient agar. Th is method may be used gal issues include poor maintenance of HVAC equipment, for air, bulk, or surface sampling and is attractive because

URMIA Journal 2007–08 43 of its ability to identify fungal species. Air sampling The Dose-Response Relationship captures viable organisms on plates fi lled with agar via and Assessing the Risk multi-hole impactors, whereas surface and bulk samples Culturable air sampling analysis results are reported in are washed and the resulting solute introduced to the agar. colony-forming units per cubic meter of air (CFU/m3), Th e agar is incubated for seven days at 25° C, after which and total propagule air sampling results are reported in a mycologist visually identifi es and quantifi es the fungal spores per cubic meter (spores/m3). Th ere are no permis- growth, if present. sible exposure limits (PELs) or threshold limit values Air sampling for spores (total propagule counts) in- (TLVs) established by any regulatory agency in the United volves the collection of spores on either a membrane fi lter States against which to evaluate. Current opinion is that or grease-coated slides. Th e fi lter or slide is then placed there is insuffi cient information available to establish a under a microscope to obtain the total fungal mass (viable limit, although regulatory limits did exist in 1989 (United and non-viable). Although some molds have distinctive States Occupationalp Safety and Health Administration spores, many, including those found indoors,indoors, do not. Th us, 2003; Macher 1999). Since no standard guidelines exist, air sampling for spores may or may notnot thethe currentc common industry practice be eff ective. isis to compare the concentration inside One type of air sampling techniqueue Samples are a buildingbui against the concentration is vacuum canister sampling, which iss a outsideoutsi the building, with lower con- technique that uses a vacuum canisterer to typically collected centrationscentr indoors versus outdoors to capture a known volume of air. Th e aairir from the areas in establishestab the benchmark for “acceptable” is then analyzed via gas chromatogra-- concentrations.conce Also, indoor concen- phy/mass spectrometry to identify anyny question, trationstratio are to be compared to indoor volatile organic compounds that mayy be concentrationsconce from a non-aff ected area produced by fungal activity. Th is methodthod areas that are not (Macher(Mac 1999; Yang 2004). is attractive since some VOCs are indica-dica- considered to be ItIt is also recommended that the results tors of specifi c fungal species. be evaluatedev for rank order percentage Polymerase chain reaction (PCR) isis a problematic, and (Macher(Mac 1999; US Micro-Solutions, Inc. molecular biology method that is becom-com- 2005;2005 Kemp et al. 2003; Spicer 2005). In- ing more prominent for the identifi ca-a- the outdoors. door and outdoor concentrations may be tion of specifi c fungal species. It is moreore similarsimil in numeric value, but may contain accurate than the above listed methods,ds, diffdiff erenter or varying amounts of fungi. For but can only identify one species at a time. It is an eff ective example, tthehe total outoutsides count from a building may be identifi cation method for both bulk and surface sampling 2,500 spores/m3 with 25 percent of the spores being asco- (Macher 1999; Yang 2004). spores and 75 percent being basidispores. Th e correspond- ing indoor count may be 1,500 spores/m3, but 80 percent Number and Location of Samples of the spores are Aspergillus and Penicillium and 20 percent Th e number of samples to collect depends on the objective are Chaetomium. Th is situation indicates that although the of the collection process, the variability of the parameter indoor versus outdoor concentrations are acceptable, the being measured, the limitations of the sampling equip- comparison of the types and percentage composition of ment, and labor availability. Based on these factors, the the two samples implies that growth is occurring inside the matrix at Appendix A may be employed for selecting the building and requires further investigation. number of samples. Samples are typically collected from Th ere are also a few other types of sampling methods the areas in question, areas that are not considered to be commonly used in industry practice today, some of which problematic, and the outdoors. Outdoor samples should are regulated and some which are not. Bulk and surface be collected upwind from the inlet closest to the problem sample analysis concentrations are typically reported in area (Macher 1999). colony-forming units per unit area or per unit gram. As

44 URMIA Journal 2007–08 with air sample results, there are currently no acceptable further investigation a few years after publication limits published by a regulatory agency in the United (Centers for Disease Control and Prevention 2000). States. Vacuum canister sampling, on the other hand, Th e media also failed to report that the Ballard case does present the opportunity to compare analysis results ultimately concerned an insurance claim by the Ballards against PELs or TLVs, with results being reported in parts against their insurance carrier for repair and remediation per million (ppm) or milligrams per cubic meter of air of their home from a series of water leaks, not a damage (mg/m3). PCR analysis is used in a diff erent fashion in claim for health related eff ects. Th ere are other celebrity that it identifi es just one species of mold. It is an investiga- cases (Erin Brockovich and Ed McMahon, to name a few) tive tool for confi rming the presence of a target species. that have also been presented to illustrate the dangers Aside from the regulatory agencies, other groups or of toxic black mold exposure (Trial Lawyers, Inc. 2006). individuals have published guidelines for determining if Th erefore, professionals are continually asked to determine a dose response relationship exists. Clark, for one, devel- if any suspected fungal growth is the toxic black mold and oped criteria for evaluation that was published in 2001. if the aff ected area is safe. Since there is currently no de- Normal background levels are detailed in Appendix B. Th e fi ned and recognized dose response information available, American Academy of Allergy, Asthma, and Immunology professionals must subjectively assess the risk to exposure. (AAAAI) developed a standard in 2002 based on how For example, stained suspended ceiling tile, a com- allergic individuals may react to spore exposure, using the mon observable building condition, indicates a water scale detailed in Appendix C. It should be noted that these intrusion incident occurred, but does not refl ect future guidelines are based upon outdoor exposure. Th e World fungal growth or exposure. If a professional decides to Health Organization, the Nordic Council, and the Russian take a sampling, he or she must determine which methods Federation also published standards in 1988, 1991, and should be employed. Bulk sampling is the natural choice 1993, respectively, that recommended other sets of expo- since it will provide a concentration of fungi present on sure levels (Rao et al. 1996; Brandys and Brandys 2004). the ceiling tile. However, many questions are raised by this method, such as whether or not the fungi are viable Discussion or dormant. If they are viable it must be determined if Exposure to molds or fungi is unavoidable and occurs on a they are producing spores, and if so, whether or not those daily basis. Furthermore, outdoor molds are more abun- spores contain mycotoxins. A practitioner must delve dant than indoor molds. Ten percent of the population is deeper into the sampling to answer these questions. allergic to molds, with fi ve percent expected to display any Air sampling is typically performed to address these clinical illness. Th e most common allergic reactions are al- questions, but there is no one air sampling method that lergic asthma or allergic rhinitis (hay fever), with the most provides all the answers. A combination of total propagule susceptible members of the population being the very sampling and culture sampling can determine the level of young, the elderly, and pregnant women. Yet more impor- spore production and subsequent fungi growth (Macher tantly, the allergen concentrations that cause symptoms or 1999). Th en the professional must select a guideline or sensitization are unknown. guidelines against which to compare the sampling results. Based upon information that has been presented However, determining which one to use can be diffi cult. though the media over the past 12 years, however, the Th e Occupational Safety and Health Administration general population is concerned only with overexposure and the American Conference of Governmental Industrial to “toxic black mold.” Th is is the result of the reports of Hygienists at one time published exposure limit values the infant deaths reported at the Cleveland Clinic and for mold (Brandys and Brandys 2004). However, based the Ballard case, both of which revolve around the fungus upon the ongoing lack of dose-response information, both Stachybotrys chartarum. Th e media failed to report that the elected to withdraw these levels and concluded that indoor original study concerning the infant deaths was withdrawn concentrations should be less than outdoor concentra- by the same organization that published the study report, tions—the base standard that most professionals use today. the Centers for Disease Control and Prevention, following It should be noted that even this position is problematic.

URMIA Journal 2007–08 45 Th e AAAAI’s 2002 standard, which defi nes outdoor for sample analysis and collection are needed. In addition, exposure, states that a spore concentration less than the general population needs to be educated on the prob- 6,500 spores/m3 is not considered to be an issue and no ability of exposure to molds and the subsequent heath symptoms of exposure are anticipated. If one compares related eff ects that may occur. Over the past decades, high- this to the “acceptable” concentrations in many of the in- profi le media reports on the eff ects of mold have brought door standards, one fi nds that the acceptable indoor levels much attention to the potential dangers of mold exposure. are considerably lower. (Th is level ranges from 1,000 to However, until a defi nitive dose-response relationship is 2,000 spores/m3). established, quantitative risk assessment will continue to Th e laboratory analysis of samples is also a problem. present problems for the investigative professional.

Spore propagule and culture samples require a mycologist * This reference was made in conjunction with a discussion on leprosy, using a microscope to visually identify the fungi and then which is caused by a bacterial infection, not a fungal infection. quantify them (Indoor Environmental Standards Orga- nization 2002). Aspergillus and Penicillium fungi spores About the Author have the same appearance and are reported as an Aspergil- George H. Bender, CIH, is the Manager lus/Pencillium combined concentration. Stachybotrys spores of Environmental Health and Safety for are generally not identifi ed in spore propagule samples Duquesne University in Pittsburgh. He is because they do not become airborne easily and are found certifi ed in comprehensive practice by the in a somewhat gelatinous material of the fungus. Not all American Board of Industrial Hygiene and fungi grow well on the same culture agar, so diff erent agar has more than 20 years of experience with occupational must be used to identify many fungi. Th is is particularly safety and health issues in schools and universities. true for Stachybotrys, which has diffi culty competing with other fungi and is easily overgrown in common agars. References Th e number and location of air samples to collect is a Brandys, Robert C., and Gail M. Brandys. Worldwide Exposure Standards for major consideration (Macher 1999). Although many wish Mold and Bacteria. Hinsdale, IL: OEHCS, Inc., 2004. to know if they have the toxic black mold present and wish Centers for Disease Control and Prevention. “Update: Pulmonary Hemor- rhage/Hemosiderosis Among Infants–Cleveland, Ohio, 1993–1996.” to identify its risk factors, even if they are at risk, many MMWR 49(09)(2000): 180–184. do not possess the fi nancial resources required to have Clark, Geoffrey A. “Assessment and Sampling Approaches for Indoor Microbio- sampling performed at a rate that will provide data that is logical Assessments.” The Synergist, 2001. within the 95 percent confi dence range. Costs for sampling Dearborn, Dorr G., et al. “Clinical Profi le of 30 Infants with Acute Pulmonary Hemorrhage in Cleveland.” Pediatrics 110 (2002): 627–637. at this rate could be in the tens of thousands of dollars. Dillon, H. Kenneth, J. David Miller, W. G. Sorenson, Jeroen Douwes, and Robert As a result of all of these variables, a conservative R. Jacobs. “Review Methods Applicable to the Assessment of Mold Exposure approach is currently employed. If mold or fungi is to Children.” Environmental Health Perspectives Supplements 107(S3) present, exposure will occur, and an adverse health eff ect (June 1999): 473–480. DiNardi, Salvatore R. The Occupational Environment–Its Evaluation and will develop. If air sampling is performed, samples are Control, Fairfax, VA: AIHA Press, 1997. usually collected from the problem area, a non-problem Flappan, Susan M., Jay Portnoy, Patricia Jones, and Charles Barnes. “Infant area, and from outdoors. Results compare outdoors versus Pulmonary Hemorrhage in a Suburban Home with Water Damage and indoors, with rank order percentage of fungi identifi ed Mold (Stachybotrys atra).” Environmental Health Perspectives 107(11) (November 1999): 927–930. (Macher 1999). Hardin, B. D., B. J. Kelman, and A. Saxon. “Adverse Human Health Effects Associated with Molds in the Indoor Environment.” Journal of Occupational Conclusion and Environmental Medicine 45(5) (May 2003): 470–8. Complete freedom from any risk to mold exposure at Indoor Environmental Standards Organization. “Standards of Practice for the Assessment of Indoor Environmental Quality,” Minneapolis, MN: IESO the current time is not attainable. Th us, society must (April 2002). decide what risk it is willing to accept. Currently risk Kelman, B. J., C. A. Robbins, L. J. Swenson, and B. D. Hardin. “Risk from assessment is an extremely diffi cult task for a variety Inhaled Mycotoxins in Indoor Offi ce and Residential Environments.” of reasons. Th e development of more accurate methods International Journal of Toxicology 23(1)(Jan–Feb 2004): 3–10.

46 URMIA Journal 2007–08 Kemp, P. C., H. G. Neumeister-Kemp, B. Esposito, G. Lysek, and F. Murray. Appendix B “Changes in Airborne Fungi from the Outdoors to Indoor Air: Large HVAC Systems in Non-problem Buildings in Two Different Climates.” American NUMERIC GUIDELINES FOR FUNGAL CONTAMINATION Industrial Hygiene Association Journal 64 (March/April 2003): 269–275. Macher, Janet. Bioaerosols: Assessment and Control. Cincinnati, OH: ACGIH, Type of Sample Normal Concentration 1999. 3 Mann, Arnold. “Mold: A Health Alert.” USA Weekend (December 5, 1999): 8–9. Air samples from <5,000 spores/m residential buildings <500 CFU/m3 Rao, Carol Y., Harriet A. Burge, and John C. S. Chang. “Review of Quantitative Standards and Guidelines for Fungi in Indoor Air.” Journal of the Air & Waste Air samples from <2,500 spores/m3 Management Association 46 (September 1996): 899–908. commercial buildings <250 CFU/m3 Robbins, Coreen, L. J. Swenson, M. L. Nealley, R. E. Gots, and B. J. Kelman. “Health Effects of Mycotoxins in Indoor Air: A Critical Review.” Applied Dust and bulk samples <100,000 spores/gram Occupational and Environmental Hygiene 15(10)(October 2000): 773–784. <10,000 CFU/gram Spicer, R., and H. Gangloff. “Establishing Site-Specifi c Reference Levels for 2 Fungi in Outdoor Air for Building Evaluation.” Journal of Occupational and Swab and tape samples <10,000 CFU/in <1,500 CFU/cm2 Environmental Hygiene 2 (May 2005): 257–266. Trial Lawyers, Inc. “A Parasitic Plague Spreads.” 2003 (online); available from Clark, Geoffrey A., “Assessment and Sampling Approaches for Indoor http://www.triallawyersinc.com/html/part07.html [accessed November 15, Microbiological Assessments.” The Synergist, 2001. 2006]. United States Occupational Safety and Health Administration. “A Brief Guide to Mold in the Workplace.” 2003 (online); available from http://www.osha. gov/dts/shib/shib101003.html [accessed September 3, 2004]. Appendix C University of Georgia Plant Pathology Department. “Ergot: A History Changing AAAAI MOLD & POLLEN SPORE CONCENTRATIONS RANKING SCALE Plant Disease.” 2005 (online); available from http://www.plant.uga.edu/ labrat/ergot.htm [accessed September 30, 2006]. Spore Concentration Ranking Health Related Symptoms US Micro-Solutions, Inc. Micro-Notes, Greensburg, PA: US Micro-Solutions, Inc. (Spores/m3) QA Department, June 2005. Yang, Chin S. Assessment of Fungal Contamination in Buildings. 2004 None Zero No symptoms (online); available from http://www.aerotechpk.com/Resources/Technical PaperDetails.aspx?i=54FFFC13-81FB-4C5F-AECC-9AF4748B4834 [accessed >1 to 6,499 Low Only individuals extremely October 11, 2006]. sensitive to molds and pollens will experience symptoms

Appendix A 6,500 to 12,999 Moderate Individuals sensitive to pollens and molds will SUGGESTED SAMPLE NUMBERS experience symptoms

Worst-case Monitor at least three worst- 13,000 to 49,999 High Most individuals with any inhalation case exposure periods, and sensitivity to pollens and exposure collect duplicate samples at molds will experience each location symptoms

Average Monitor at least three times per >50,000 Very High Almost all individuals with inhalation day for three consecutive days, any sensitivity to pollens exposure and collect duplicate samples and molds will experience at each location symptoms

Confi dence Collect at least six samples Brandys, Robert C., and Gail M. Brandys. Worldwide Exposure Standards interval around a mean exposure for Mold and Bacteria. Hinsdale, IL: OEHCS, Inc., 2004.

Variance of Collect at least 11 samples a data set

Macher, Janet. Bioaerosols: Assessment and Control. Cincinnati, OH: ACGIH, 1999.

URMIA Journal 2007–08 47 Proverbial wisdom counsels against risk and change. But sitting ducks fare worst of all.

—MASON COOLEY (1927–2002), AMERICAN APHORIST Assessing RMIS Needs for Colleges and Universities

David A. Tweedy, CMC, Practice Leader for Risk Information Consulting Practice, Albert Risk Management Consultants, Inc.

Abstract: What is an RMIS, and why is it important for But do these homegrown systems really generate the collegiate risk managers? While many if not all already have types of results that commercial system vendors promise? risk management information systems (RMIS) in place, Certainly they are inexpensive, but do they yield suffi cient some may not be aware of how to assess the eff ectiveness of and tangible results? their existing RMIS, or the feasibility of upgrading to a more effi cient system if necessary. Th is article off ers strategies for Objective conceptualizing an RMIS system customized to the individu- Th e purpose of this article is to explore the value of risk al risk manager’s needs in his or her specifi c context. management information systems for colleges and uni- versities. It will defi ne an RMIS, evaluate its usage and Introduction signifisignifi cance, discuss leadinglea commercial vendors, address Improved effi ciency. Lower cost of risk.sk. enterpriseenter risk-related tools, and more. Ongoing performance measurements.s. Elimination of repetitive, manual tasks.ks. Most collegiate Is theth Collegiate Risk Management Increased ability to spot disturbing riskisk EnvironmentEnvi Unique? trends. Increased visibility to senior risk managers WhileWhil all risk management positions management. havehave a common base, there are certain Sound good? Th ey should. Most vven-en- use a hodgepodge nuancesnuan in the collegiate environment dors providing commercial, off -the-shelfhelf of software thatthat shoulds infl uence the type of RMIS risk management information systemsms implemented.imple Some characteristics are: (RMIS) have been claiming those and manual • Non-claimNo based: RMIS came into results for years. And there are more ththanan existenceexi in the 1970s due to clients 50 systems, plus or minus 10 percent,, activities that can withwit high volumes of claims (mostly which off er a wide variety of commercialrcial be generically Workers’Wo Compensation and liability) solutions for all types of industries. whowh desired a better way of analyzing But in spite of success stories acrossoss referred to as their themthe and their causes. It is not that many industries and with various clientent universitiesun do not have these losses; sizes, there have also been complaintss own RMIS. theythe are, however, less claims intensive such as: “the RMIS is too claims- in frequency. Most colleges and univer- focused”; “it doesn’t really deal with my sitiessiti are exposure driven. specifi c problems or industry”; and, thehe clincclincher,her, “it’s • Exposure driven:driven: Colleges and universities have a too expensive.” wide and diverse set of exposures that need tracking As a result, there seem to be fewer comprehensive, and analysis. Th ese include (but are not limited to) commercial RMIS systems used by colleges and uni- study abroad programs, external community events at versities. Instead, most collegiate risk managers use a college facilities, medical centers/teaching hospitals, hodgepodge of software and manual activities that can be construction projects, terrorism risks, club sports, generically referred to as their own RMIS. Microsoft Of- pollution liability, release of toxic elements from fi ce (with Word, Excel, PowerPoint, Access and Outlook) laboratories, fi ne arts, etc. And they also have claims. seems to be the software of choice because of its many Th e chosen RMIS must refl ect these exposures. functional uses, relative user-friendliness, and widespread • Lean staff : Many universities and colleges have small acceptance and use across many industries. risk management departments. Th e risk manager

URMIA Journal 2007–08 49 wears many hats and must depend on the resources The RMIS Landscape and services available. Th e risk landscape has changed with the advent of Sar- • Budget limitations: While this seems to be endemic banes-Oxley, the Patriot Act, and recent acts of terrorism. in all of risk management, it is especially true here. Even privately held or non-profi t organizations feel the Risk managers have to make more of less. impact. Figure 1 summarizes just some of the risks that a risk manager faces today. What, therefore, would a collegiate RMIS look like? More than ever, risk managers need a well-designed What elements should it contain? risk management information system. Th is is a computer- Here are some characteristics: ized composition of software applications and databases • Cost-eff ective: Th e system should be inexpensive that enable risk managers to evaluate information and enough that a quick payback can be shown through make informed decisions. It should, ideally, mirror the its use. risk management process: gathering data, analyzing/syn- • Easy to learn and use: Most risksk managers are not tthesizing,hesizing, decision-makingdecision-ma on risk fi nancing and risk con- “techies.” Th e system should be in- ttrolrol iissues, and reporting those fi ndings tuitive and easy to appropriate. Th is and rresults. also applies to the attached reportort More than ever, Th e RMIS must be powerful, yet easy writer (including graphics). toto uuse.s It must be capable of providing • Adaptable/fl exible: Th e systemm risk managers a big picture view of diverse data, but should be able to incorporate also beb able to provide detailed analy- claims, exposure, and fi nancial need a well- sis onon specifi c data. Th e data on which analysis with a demonstrated abilitybility designed risk thethe RMISR relies must be accurate and to be used across a wide spectrumum thorough.thoro Th e RMIS must be able to ef- of activities. It should be easy too management fectivelyfectiv interface with other key systems alter without aff ecting the underly-erly- withinwithi the organization, and to keep ing code. information up wwith technological advances without • Inclusive: Th e system should bee system. beingbeing too focused on needless “bells and able to use or access collaborativeve whistles.”whist Above all, the RMIS must be web-based tools (Web 2.0) suchh as cost-effcost- ective and capable of handling eRoom or SharePoint (or similar).lar). thethe newn challenges that the increasingly Many traditional RMIS do possessss many of these beleagueredbeleagueredriskmana risk manager throws at it. qualities. It can be easier if the risk manager can use an How is this possible for a risk management depart- off -the-shelf package rather than creating one. ment that has less time to worry about managing technical With this foundation, what does the commercial problems? Moreover, how can the risk manager function in RMIS industry look like today? today’s dynamic business environment and not use well-de- signed and effi cient technology? It is truly a Gordian knot. Consider the following two-phase process. Th e fi rst FIGURE 1 THREATS RISK MANAGERS FACE phase centers on following a logical process to determine Macro Threats Micro Threats and prioritize needs before taking action. Increased compliance pressures Information fl ow bottlenecks and gaps Constantly changing system Integration issues Phase 1: Assessing Your Needs technologies Limited resources to spend on RMIS Disparate data sources, data You Already Have a System improvements accuracy issues Increased globalization Vendor support issues When the term RMIS is used, most risk managers think Shrinking risk management Limited internal IT availability of commercially developed and sold solutions, such as department staff those from CS Stars, Aon, or CSC.

50 URMIA Journal 2007–08 Some risk managers think that they have no need for of coverage, complicated by multiple insurers and an RMIS and never will. But interestingly enough, all risk third-party administrators (TPAs) over the years. managers have some type of information system. Consider Th at means a lot of data that must be tracked. Th e one of the baseline defi nitions of “system” from Webster’s problem is that the electronic data is rarely stored Dictionary: “A group of interdependent items that interact in similar ways among the various providers. For regularly to perform a task.” example, the details of a back claim are recorded Regardless of the format or where it is stored, all by insurer A in a diff erent manner than insurer B. risk managers have policies, claims, exposure lists, auto Consolidating this data into one unifi ed source takes schedules, certifi cates, and contracts. Th ere is also an time and eff ort. Further complicating this situation established set of business procedures that govern how data is that data errors typically abound, either in is gathered, analyzed, organized into some type of report, recording the information, or in transferring it to and submitted. Th at is a system by any defi nition. Th e key another media or provider. Oftentimes, this is the questions are: How effi cient is that systemstem in identifying, singsinglele most ddiffiiffi cultc issue facing a risk manager in analyzing, and managing the risks of tthehe asassessings true RMIS needs. It is like an organization? What tools are being usedsed iceberg—mostice of the problem is below to help the risk manager in this eff ort?? Everyone has a the surface. What are the barriers facing this eff ort?rt? • ComplexCo and diverse reporting needs: Today, risk managers are expand- system. And if Th e primary output of any RMIS is ing their activities into enterprise riskk reports.rep Th e report-writing tool must management (ERM). ERM involves so, they also have bebe easy to use, yet able to perform even more data, processes, and systems.ms. the problems complicatedcom analysis. Th e reports must Indeed, as will be seen later, the numberber bebe quickly available and provide a good of ERM systems is far more than the that correlate overviewove with graphical representa- traditional RMIS. tiontio if need be. Th e tool should also Yes, everyone has a system. And iff so, with systems. providepro good “drill-down” capability they also have the problems that correlateelate andand provide the backup details of an with systems. analysis.ana Unfortunately, many systems todaytod are challenged in this area. Th e Traditional Problems and Barriers tool is either too user-friendly and unable to provide Today’s increasingly complicated IT and risk landscapes the detailed analysis, or it is very powerful and too generate many challenges. Some of them have already diffi cult to use. been listed. To properly assess RMIS needs, a clear under- • Increased demand for faster, deeper analysis: standing of the problems and barriers is necessary. Th ese Th e advanced RMIS must operate as a business issues can be divided into two separate areas of traditional intelligence tool. Drawing data from diverse sources, risks and enterprise risks, as defi ned by the report issued organizing it, and presenting it quickly and fl exibly by the Committee of Sponsoring Organizations of the to risk managers is a necessity. Unfortunately, many Treadway Commission (COSO). Traditional risks are risk managers must spend hours entering data and those that risk managers have dealt with for decades: risk preparing the reports to run, sacrifi cing analysis time of fortuitous loss to property and human resources. Tradi- to time-consuming manual activities. Th is is both tionally, an RMIS receives, consolidates, and analyzes data; counterintuitive and nonproductive. generates reports; tracks exposures; and performs various • Vendor support: An endemic problem in the IT and administrative duties (policy tracking, asset tracking, etc.). insurance industries is the level of support provided Th e following are issues relating to these RMIS: by the vendors to their clients. It is no diff erent • Multiple data sources/data accuracy: Many in the RMIS sub-industry. Off -the-shelf software companies and organizations have multiple lines applications have great advantages. However, the

URMIA Journal 2007–08 51 drawback is that some customization is necessary, is the cost to customize a module? Or build an inter- and constant data conversion issues may occur. face? What about the cost of converting the data to Bugs, viruses, downtime, faulty reports, and interface the new system’s format? Th ese and others are good issues with internal accounting systems all require questions. But it must be recognized that there is a proper vendor support. Yet, the vendors themselves cost in doing nothing, too. In fact, the cost of doing have resource limitations, too. How do they properly nothing may have a larger economic impact on the allocate them among their customer bases? organization. Th ese are the questions that risk man- • Limited IT resources: Vendors are not the only ones agers must answer to make an informed decision. facing resource scarcity issues. Internal IT depart- COSO defi ned enterprise risk management (ERM) ments, especially since the advent of various federal as a process initiated by senior management defi ning and legislation (such as Sarbanes-Oxley, the Patriot Act, quantifying risk in the context of an organization’s vision, the Health Insurance Portability and Accountability mission, and business strategies. Accordingly, these issues Act, and the like) are under constant pressure and involve expanded areas of risk, such as business risk, spec- scrutiny by senior management. Risk management ulative risk (hedge funds), market risk, and governmental/ departments are typically not hhighigh up on tthehe IT compliance risrisk.k. WheWhenn an ERM initiative is undertaken, priority list. thethe RMIS/ITR issues expand accordingly. • Integration issues: Integrating • Compliance:Co Sarbanes-Oxley (SOx), RMIS with internal systems—suchsuch The cost of doing the Health Insurance Portability and as the general ledger, payroll, andnd AAccountabilityc Act (HIPAA), and human resource systems—rep-- nothing may have similarsim federal and state acts require resents both opportunities and a carefulc monitoring and documenta- problems. RMIS vendors will toutout a larger economic tiontio of business processes, such as the ease of plugging their systemm impact on the disclosuredis procedures for employee into the milieu of a corporation’sn’s informationinf and other important internal IT structure. However,, organization. activities.act To be truly helpful, good while system technology, throughgh informationinf on these business service-oriented architecture processespro (i.e., where the gaps and (SOA), is moving toward an easiersier bottlenecksbo are) must be immediately integration environment, this is stillill not widespread id d anddl accurately transmitted to executive offi cers. enough. Potential problems abound, which necessi- Accordingly, systems must be able to handle this. tate thoughtful planning before opportunities can • IT security: Th ere is the ever-present, and growing, be realized. threat from hackers who seek to either damage IT • Technology obsolescence: None of these issues exist structures or get access to valuable client, employee, in a vacuum—many vendors and customers alike and fi nancial data. suff er from technology obsolescence, and that has a • Business processes monitoring: ERM practices are decided impact on the type of systems in which one more developed in fi nancial industries, such as banks can invest. Yet the problem in not dealing with the and insurance companies with high volumes of obsolescence has profound eff ects, too. Web-based transactions and well-defi ned processes. Adoption solutions through application service providers and embedding of ERM practices within organiza- (ASPs) help the risk manager to avoid internal ar- tions with less defi ned business processes are not chitecture limitations, to be sure, and many vendors as frequent. Many IT fi rms are marketing business now off er this type of system. process monitoring (BPM) software applications to • Cost: It is common for the cost of the system to be help clients analyze and modify business processes a major focus of risk managers. What is the annual to comply with ERM objectives. BPM systems, in license fee? What about the annual service fee? What eff ect, can be regarded as a type of enterprise risk

52 URMIA Journal 2007–08 management information system (ERMIS) as they Consider the table in Figure 2 showing indicators of are tools that help satisfy ERM goals. the need for a comprehensive RMIS solution. If an organi- In the end, ERM is dependent on the availabil- zation has three or more of these situations, a solid RMIS ity, accuracy, and timeliness of information reach- is essential. ing senior level management to equip managers to Similarly, Figure 3 provides a simple activities-based make proper decisions. Sound familiar? It is the test to help perform an assessment. A “yes” answer to three same objective that the risk manager has in using a traditional RMIS. FIGURE 3 Not all risk managers will face each of these issues, RMIS SELF-ANALYSIS TEST Question Y/N but they will experience enough to identify some clear Do you spend more than 10 hours a week on needs in their current RMIS confi guration. Th is is where repetitive, manual tasks (e.g., data entry, copy and risk managers must determine their own prioritized lists paste type reports)? Do you have more than three separate sources of of needs and the level of detail that is necessary to deal claims data? Do you spend more than four hours making sure that with those needs. While risk managers should intrinsically know the state of their programs, it is wise to go through the data is properly consolidated and accurate? Do you spend more than one hour requesting a a defi ned process. report from your RMIS? Do you spend more than two hours adjusting your Conduct Issues Review RMIS when your company reorganizes its hierarchy or acquires a new company? Step one is an honest appraisal of the RMIS issues within Does it take longer than four hours for your RMIS the organization. Is there a technology gap? (Is the organi- vendor to respond to service inquiries? Do you need to access two or more systems to reach zation still using client/server technology? Windows 95?) a fi nal signifi cant decision? How many data sources exist? Is there a need for consoli- Do you manually maintain certifi cate of insurance dation into one source? Is the data really accurate? Are you lists and/or exposure lists (properties, autos, etc.)? Are you frequently ignored by your internal IT comfortable with the level and accuracy of the reporting? department on critical issues? Does your RMIS negatively affect (either in time or Are costs properly and easily allocated among divisions or is there painstaking maintenance of an ever-expanding substance) your decision-making process? Excel spreadsheet? Are compliance issues within your scope of activities? Does the organization frequently or more questions means the current RMIS is in need of reorganize? Do mergers and acquisitions occur often? Are adjustment, or at least some thoughtful scrutiny. there complex risk fi nancing programs in place? Are there foreign operations? And the most important question: Determine Scope Does the current RMIS satisfy the demands placed on it? Step two is to determine the scope of the system needs assessment. Th ere are three options. Do nothing: FIGURE 2 1. Th is is a necessary option to consider INDICATORS OF A NEED FOR AN RMIS and one that many unconsciously choose when Multiple data sources Large volume of historical confronted with this type of analysis. Yet recognize (more than three) claims data Small internal risk management High frequency of mergers/ that it is also an active decision to “do nothing.” It staff acquisitions means that you are able to adequately confront the High frequency of WC and/or Complex hierarchy, constantly issues listed above with the tools at hand. GL claims changing Complex internal charge-back 2. Twea k : If after evaluating step one, the risk High Sarbanes-Oxley exposure procedures manager determines that the needs are mostly Small and/or unresponsive IT Complex insurance program met by the amalgam of internal systems, external department International exposures Self-administered claims program systems (from an insurer or TPA or broker), and/ Frequent vendor changes or existing off -the-shelf RMIS, then minor modifi - Complex and/or diverse reports (broker, insurer) cations are in order. For the purpose of the rest of

URMIA Journal 2007–08 53 FIGURE 4 this analysis, it would be useful to follow the next TOP RMIS VENDORS—SYSTEMS AND CONTACTS option template (overhaul) and co-opt whatever is Bundled RMIS Providers necessary to achieve a desirable end solution. AIG—Intellirisk GAB Robins—EyeAdvisor Director Alan Louison Andrew Miller 3. Overhaul: Th is option means that the current [email protected] [email protected] (973) 993–3524 situation is clearly detrimental to the risk manager CNA—Clearview Director Nancy Giecewitz Gallagher Bassett—RisxFax getting the job done. It can also be further subdi- [email protected] Colleen Saurbier [email protected] vided into either a build, buy, or hybrid approach. Cambridge Integrated Services— Hartford/SRS—@venture And it is important to really evaluate what kind of Claims/Reporting System Cathy Leonard Senior Vice President Tracy Mock [email protected] solution is needed. [email protected] Liberty Mutual—RiskTrack Chubb—RMIS Dimensions, Alicia Rawnsley Conduct a Preliminary Review of Potential Solutions Loss History Analyzer, ClaimView [email protected] Richard Kaiser Assuming a decision is made to obtain a new RMIS (over- [email protected] Sedgwick CMS, Inc.—Juris (800) 715–7475 [email protected] haul), the next step in the process is to determine whether (901) 415–7400 ESIS/ACE—RiskAdvantage it will be an off -the-shelf solution through the available Frankie Santos-Ragin St Paul Travelers—eCarma [email protected] Vice President, RMIS, commercial vendors in the marketplace. At present, there (215) 640–1855 Matthew Cardin matthew.l.cardin@stpaultravelers. are more than 50 traditional RMIS vendors and about two Frank Gates, Inc.—G2 WebLink com Gates2000 to three times that number of ERMIS vendors. Figure 4 [email protected] Zurich of North America— lists most of the top RMIS vendors, governed chiefl y by (800) 777–4283 RiskIntelligence (877) 263–0583 numbers of clients and users. Unbundled RMIS Providers Th e capabilities and approaches are signifi cantly dif- American Technical Services— Exigis, LLC—WorkFlow Solutions ATS/RMIS Armand Alvarez ferent. Some risk managers actually access several RMIS Nick Zivlovich (800) 928–1963 [email protected] providers, depending on their program makeup, especially GenSource—GenIris, GenComp, Aon— RiskConsole GenPac, GenDis if they have multiple insurers, brokers, and TPAs involved. Kathy Burns Michael Kosten Designing or selecting the best RMIS, whether it is a [email protected] (800) 949–9192 Blackburn—RiskPro INFORM Applications—Inform stand-alone application or an amalgam of diff erent systems, [email protected] RMIS, Inform Claims fi rst requires a survey of available systems. Lists of many of Steve Sheridan Brightwork —Alyce Claims [email protected] the vendors are published periodically in Business Insurance Management System Ted Lukens JW Software—Filehandler and Risk and Insurance magazines, and a list is included on [email protected] Tim Cuckow (440) 519–1740 the RMIS website (www.rmisweb.com). Soon a compre- CSC—RiskMaster Sales: (800) 345–7672 Occusoft—RiskPro hensive review of these systems will also be available from [email protected] CSStars—STARS the Institutional Risk Management Institute (IRMI). Jeffrey Markowitz OCI—RMIS [email protected] Steve Tomsic, Sales Th e best method to categorize RMIS vendors is by [email protected] DAVID—Renaissance, NavRisk looking at several critical factors: ownership, portability, Mary-Margaret Dale PerDatum—Prognos business intent, system functionality and confi guration, [email protected] Sales: (800) 351–1370 Delphi Technologies—Oasis Risk Sciences Group—Sigma Encore and price. Peggy Randolph Manny Quintana • Ownership: Most RMIS vendors are owned by [email protected] manny.quintana@risksciencesgroup. com some type of insurance service provider (insurer, Effi soft—Webrisk Will Warren Valley Oak—VOS broker, TPA, or medical bill reviewer). However, a will@effi soft.com Randy Wheeler [email protected] good number are either independent or are funded Emerson Software—eRMIS2 Sales: (910) 794–1616 Visual Risk Solutions— by equity capital fi rms. Still others are owned by Visual Risk Portal Envision—RiskEnvision [email protected] large system integrators. Ownership suggests the Scott Harper [email protected] WLT Software Enterprises— type of investment placed in the system, the target WLT RMIS market pursued, and the resources available for [email protected] Sources: Business Insurance’s annual directory of RMIS; RMISWeb’s listing research and development. How long have the (www.rmisweb.com); and Risk and Insurance’s annual directory. vendors been providing RMIS?

54 URMIA Journal 2007–08 • Portability: Th e next diff erentiator is focused on the they would off er under certain business scenarios. systems provided by these vendors. Most provider- For example, provide several vendors with a profi le owned systems are not portable, or unbundled. Th at indicating the number of claims, data sources, loca- means the system only stays with the client as long tions, lines of coverage, and types of reports needed. as the client stays with the vendor. Th is is a signifi - Th en ask for an indication of the estimated cost and cant issue, especially if you’ve been with one of these the ongoing service cost (it is usually a percentage bundled systems for a long time. of the fi rst year license fee). In a formal RMIS bid • Business intent: Th is is very important. What are project, details of the pricing will be more explicit. the primary, secondary, and even tertiary business Th e objective here is to get a preliminary read on the intents of these RMIS vendors? Is it claims man- potential cost. agement (tracking), claims administration (claims management plus check-cutting),g), rriskisk anaanalysis,lysis, popolicylicy Phase 2: DesigninDesigning the Solution administration, or some or all ooff tthehe above? What are their strengthss anandd At thisth point, the all-important fi rst weaknesses? For example, it standsnds phasephas of preliminary RMIS assessment A SWOT analysis to reason that most insurer-ownedned byby ttheh risk manager is completed. RMIS are focused on the prod- provides a means AlthoughAltho nothing formal has been done, ucts/services they provide, suchh as it is veryv important that those steps be claims administration, safety/lossoss for reviewing completedcomp to really evaluate the state of prevention, and policy information,tion, thethe ccurrent system(s) that are being used. how well the while independent systems typicallyically NowNow that the real issues and challenges provide a more comprehensive aap-p- current system are identifiid ed, it is time to determine proach. It depends on the risk mman-an- whatwhat type of systems should be pre- ager’s primary needs. One shouldn’tldn’t and business selectedselect for potential consideration. purchase a sledgehammer whenn Th at decision may or may not involve procedures work only a tack hammer is required.. non-traditionalnon- software solutions. For Further, what target markets doesoes or do not work. example,exam it may be that a better use of the RMIS vendor pursue? It wouldould MicrosoftMicr Offi ce and some collaborative make sense to pursue vendors withwith web toolst such eRoom or SharePoint is a specialty focus on your industry,try, moremore in line with the ultimate goal. be it healthcare, banking, maritime,ime etcetc. Indeed,Indeed because cocollegiate environments are typically • System Functionality: Th is is more of a drill-down not claims oriented (as was discussed earlier), a RMIS into specifi cs. What lines of coverage does the RMIS solution may not involve a traditional off -the-shelf handle? What kind of reporting tool does it have? application. How well does the vendor handle knotty issues like Th is second phase is all about design, selection, and data conversion and integration? implementation. Th e assumption going forward, as in the • System Confi guration: What types of system fi rst phase, is that a total overhaul is required. Th e follow- solutions are off ered? Client/server or web-based? ing steps off er one possible template for proceeding. Is there a leasing or site license option? Are time- share solutions off ered? What are the applications Begin SWOT Analysis. After going through phase one, written in? Who are the system business partners performing a SWOT analysis (strengths, weaknesses, op- (e.g., Oracle and Microsoft)? portunities, and threats) is an excellent way to begin phase • Price: Th is is a very diffi cult variable to compare on two. A new system should not be conformed to the existing an “apples-to-apples” basis. A useful comparison tool business practices until they, themselves, are vetted. A would be to ask the vendors what type of pricing SWOT analysis provides a means for reviewing how well

URMIA Journal 2007–08 55 the current system and business procedures work or do not manager to gain additional authority to work with senior work. Back in the beginning of the fi rst phase (acknowl- management on ERM initiatives. edging that you already have a “system”), the risk man- ager, in essence, began this SWOT assessment. Strengths Establish RMIS Search Committee and weaknesses should be very obvious at this juncture. Armed with senior management approval, the risk man- Th reats and opportunities, however, might not be. ager now has the authority to organize the search commit- To identify threats, a good question to ask is, If I do tee. It is important for the risk manager to identify those nothing, what will happen? To identify opportunities, a in the organization critical to the success of a compre- good question to ask is, If I implement a new system, what hensive RMIS. Who are those stakeholders that stand to benefi ts will likely occur? Th is is an excellent segue into the benefi t or profi t most from a new system? Also, who have second step—conducting a cost/benefi t analysis. FIGURE 5 Conduct Cost/Benefi t Analysis. To secure the time and EXAMPLE VENDOR RATING MATRIX Rate Priority Total Score = resources needed to either implement a new RMIS or Issue Evaluated 1 (low) 1 (not critical) Rate x Priority signifi cantly adjust an older one, a cost/benefi t analysis is to 5 (high) to 3 (critical) General Questions critical. Th e SWOT review, combined with some prelimi- How well did the 53 15 nary information gathered on potential vendor solutions, proposal meet RFP should qualitatively identify the benefi ts and costs associ- requirements? How clear was the 43 12 ated with a new system. vendor’s presentation? Quantifying the expenses is easy: software license What is the length 52 10 of time in business fees, hardware, ongoing service, conversion costs, custom (stability)? programming, telecommunication expenses, etc. Quantify- What is the number 42 8 ing the benefi ts, however, is more diffi cult because many of implementations (experience)? of them are so-called “soft benefi ts.” Th ese benefi ts will What is the fi nancial 52 10 be diff erent for each organization due to its unique strength? circumstances. For example, through comprehensive Will vendor allow “test 11 1 drive” before fi nal policy administration module, an RMIS identifi ed double contract acceptance? coverage for business interruption when comparing a Average 9.33 global program with a domestic one, and eliminating the Overall System Functionality Integrated database of 53 15 duplicate policy saved $80,000 in premium. Improved Excel spreadsheets data, claims-monitoring software identifi ed $200,000 in dupli- including claims cate payments or inaccurate reserves for this same com- Real time data entry 5 3 15 Automatic updating of 53 15 pany. Th rough use of a reasonable return on investment database once changes equation, the risk manager was able to identify a payback to claims, fi nancial transactions or policies period for the investment of only 18 months. are made Simplifi ed data entry; 53 15 Obtain Senior Management Approval error reduction built in, eliminate redundant Completion of the fi rst two steps provide the information entry needed to obtain approval for the project. Showing a posi- System security (levels 53 15 of access) tive return on investment (ROI) and a well-thought-out Authority levels for 53 15 SWOT analysis often earns a quick approval from senior payments, reserve changes, etc. management. Th is would be especially true if managers Flexible hierarchy 53 15 themselves are under scrutiny for implementing enterprise management risk management practices in all of their business opera- Internal intranet Access 5 1 5 tions. It may even provide an opportunity for the risk Average 12.00

56 URMIA Journal 2007–08 been the most vocal critics? Sometimes, it is wise to have the organization prefers. Typically, the IT manager on those critics involved in the process to build understand- the RMIS committee or a procurement agent will be the ing and consensus. point-person at this stage. Moreover, it is also very important for someone from IT to be part of the committee to ensure that internal stan- Conduct Bid Project dards are met. Having someone from IT well acquainted Once the RFP/specifi cations package has been released, with the RMIS will only benefi t the system, especially if it it is typical to allow between 30 to 60 days for responses, is to be integrated with other internal systems. depending on the size of the system and number of vendors involved. It is customary to allow a question-and- Formalize the Needs Assessment answer meeting (which can be handled via web conference Th e risk management department is really an information instead of on-site) to clarify potential misunderstand- clearinghouse: data fl ows in, is collected and analyzed, and ings. Some projects also allow on-site or web conference then information fl ows back out in thehe form of reports. demonstrations to the RMIS committee to further clarify Th us, the next step is for the RMIS ccommitteeommittee to ddivideivide diff erences between theth participating vendors and systems. up the organization in a logical fashionon Th e ultimate selection is performed and identify the needs of other depart-rt- by ttheh committee after a careful ex- ments and individuals by querying them.hem. Needs must be aminationamin of the proposals, interviews, Of ultimate importance is what senioror ranked by and ppresentations. It is helpful to use a management desires. Th is will grow vendor-ratingvend questionnaire that seeks in intensity and urgency as enterprisee importance of toto eleliminatei subjective decision-making risk issues begin fl owing through the and eencourages a quantifi ed rating by the risk management department. Now tthehe meeting them reviewer.revie Figure 5 provides an example. SWOT analysis is complete. as well as by the Th e needsn are listed in the left column, a weightweigh is given to the attribute (typically Identify/Prioritize Options diffi culty of betweenbetw 1 to 3), and a rating (typically Needs must be ranked by importancee betweenbetw 1 to 5) is assigned. Th e weight of meeting them as well as by the dif- satisfying them. is mmultipliedu by the rating for a score fi culty of satisfying them. For example,e, on thatth attribute. Th e total score is then there may be a highly defi ned need to put addedadde and compiled with other reviewers together a comprehensive cost-of-riskk allocation module, toto hhelpelp reacreachh a fi nal cconclusion.o but the anticipated customized programming involved Once the system and vendor are selected, the next might end up being cost prohibitive when compared to the step is one that is frequently overlooked, but is extremely benefi t derived. Th e results of this process will yield system critical. specifi cations for the upcoming bid project. Do Not Forget Implementation Select RMIS Vendors To Approach Two of the most overlooked, yet crucial, issues regarding Using the information about potential systems that was RMIS are data management and system implementation. developed in phase one, three to fi ve potential RMIS Data problems were mentioned in phase one. Implemen- providers that best meet the requirements list should be tation is the all-important “danger below the surface” issue selected. It is unwise to consider more than fi ve vendors in phase two. Th ose risk managers who give it short shrift because the bid process becomes unwieldy. do so at their peril. From the signing of the contract to screen and report Compile Specifi cations/Request for Proposal (RFP) design, rollout of the application, interface construction, System and user specifi cations are detailed in this data conversion, parallel testing, and turnover to the new document along with whatever formal RFP guidelines system, there are many places where breakdowns can

URMIA Journal 2007–08 57 occur. Th at is why the RMIS committee needs to stay use Access for claims databases. But other generic together until the system is actually deployed. Sound software can be used. SharePoint is a low-cost collab- project management techniques should be followed by orative software tool that can be used for the all im- setting clear timelines with linked dependencies, due portant communication application that would keep dates, and regular updates to the plan. Meetings with the risk manager in touch with key people inside the the vendor should take place weekly to make sure that university and vendors and contacts outside the uni- the tasks and deadlines are being properly assigned and versity. Th is may be the most important part of the met. Th e contract itself should contain penalty clauses collegiate RMIS: getting the risk manager’s contact if the project is delayed because of the vendor. Similarly, list on the collaborative shareware application. it is good to build in incentives to reward an installation Th ere are also some low-cost, powerful applica- of the system ahead of schedule. tions for creating risk maps, and other such quanti- tative software. Constant Monitoring • Invest dollars in most signifi cant area: Only the re- Another good practice is to keep the RMIS committee to- sults of the needs assessment will show what this is. gether during the fi rst year to monitor the progress of the Many may choose to fortify their risk management new system. A goal should be to document improvements website, making it more informative, interactive, and in processes and savings from the presence of the RMIS. rich with information, from risk management pro- Because the RMIS touches on most parts of the organi- cedures to how to fi le a claim. Th is can be a separate zation, the risk manager has an excellent opportunity to topic in itself. strengthen ties with other departments while providing valuable information horizontally and vertically to senior Conclusion management. Going through a detailed RMIS needs assessment and selection/implementation process may be a painful experi- A Potential Solution Scenario: ence. However, the knowledge, experience, and benefi ts (A Possible Case Study) derived from a well-executed process will yield signifi cant For argument’s sake, let us assume that the risk manager benefi ts to the risk manager and the organization alike. has performed the above needs assessment procedures and has determined that a hybrid approach is warranted. He About the Author or she has a pre-existing relationship with a broker that David A. Tweedy, CMC, is the RMIS has a bundled system that takes claim feeds and provides Solutions Practice Director of Albert Risk online access to the risk manager. Th e budget is extremely Management Consultants’ (ARMC) Risk limited and too small to aff ord a full-blown unbundled Management Information Systems practice. RMIS solution. Th e risk manager has Microsoft Offi ce He provides clients with risk informa- (Word, Excel, PowerPoint, and Access) and uses Outlook tion technology advice and services, is an internationally for e-mail. recognized expert in the RMIS and claims management What could the risk manager do? arena, and has more than 24 years of experience as a • Set priorities/establish a plan: Th e needs assessment risk management consultant. He holds a B.S. from the process will help do this for the risk manager. Priori- University of Massachusetts in Amherst, and an M.B.A. ties will be established. from the University of Rhode Island in Kingston. He is • Leverage all technology opportunities: MS Offi ce is also the author of RMIS Review, which was published by probably the most popular RMIS today, although it IRMI in 2007. Mr. Tweedy can be reached at DTweedy@ is not typically called one. Many risk managers plan albertrisk.com. their budget and keep schedules of autos, properties, and policies on Excel, and put together presentations with PowerPoint. More advanced risk managers will

58 URMIA Journal 2007–08 University/Collegiate Risk Map (Sample)

Analysis Limited to Insurable Risk Insure Cat Exposure Insure Cat Exposure

Terrorist Education Activity Legal Liability

Employee Class Suit

Flood HIGH

Wind Auto BI/PD Terrorism Study Abroad 3 1

Severity Sports Accident Building Program Dorm Key Fire Exec. Collapse Loss Employee ERISA Advertising Dishonesty Quake Suit Injury

LOW Customer Workers Employee BI Comp Indiv. Suit Political Pollution Risk Liability Retain Retain, but Cap with Loss Limit

4 2

LOW Severity HIGH

Property Casualty Executive Control Priority

© Albert Risk Management Consultants

URMIA Journal 2007–08 59 I think one’s feelings waste themselves in words; they ought all to be distilled into actions which bring results.

—FLORENCE NIGHTINGALE (1820–1910) In Case of Emergency: Selecting a Qualifi ed Air Ambulance Provider

Denise Treadwell, CRNP, MSN, CEN, CFRN, CMTE, Executive Vice President, AirMed International

Abstract: When emergency injury or illness necessitates country. Usually this description does not encompass air medical evacuations, it is important to have a reliable tourists or students traveling abroad, but it may be used air ambulance provider. Such transports may often involve when describing students who are studying abroad for extended times outside of a medical facility, especially during extended periods of time. Derived from the word repatri- international fl ights. Th is article provides an overview of ate, the return of the person due to illness or injury by an requirements air ambulance providers must meet, as well as air ambulance fl ight or a medical escort may be referred other safety measures that must be considered to ensure the to as a repatriation fl ight. Repatriation is the process of well-being of patients, fl ight and medical crew, and passen- returning assets that are held in foreign destinations to gers during transport. their home or place of origin. Medical transport refers to the transport of a patient from what is considered a According to studies conducted by thehe CCentersenters fforeignoreign locationlocation ttoo hihiss or her home state, province, or for Disease Control (CDC), more thanan cocountry.un While this term is used primar- 65 million U.S. residents travel abroadad ililyy whenwh speaking of a foreign national, it each year. Relatively few of these travelerselers may also be used to describe a domestic The risk for illness are prepared for a medical emergency,y, yeyett ttransportrans between one state and the the risk for illness or injury remains highhigh or injury remains ppatient’satie home state. Most of these trans- in all travel situations. One of the mostost poportsrts are conducted in jet aircraft since common causes of injury during interna-rna- high in all travel ththeyey involve distances that often exceed tional travel is motor vehicle accidents,ts, ththee capabilitiesc of helicopter transports, situations. for which few are prepared. And illnessesesses wwhichhich are more commonly thought of that aff ect travelers include cardiovas-- by iindividualsn when air ambulance is cular complications, infectious diseases,es, mementioned.nt Transport across interna- respiratory illnesses, and other medicalcal related diadiagnoses.gnoses. ttionalional bbordersorders rrequiresequires unique pre-transport preparations Preparing for these and other adverse circumstances has compared to transport involving domestic originations never been more important than it is today, and medical and destinations. Th e required preparation and planning evacuation fl ights are an essential solution. is dependent on the length of the transport, the patient’s Almost any aircraft with minimal medical equipment condition, and the aircraft selected. can be described in loose terms as an air ambulance, espe- Th e proper aircraft selection is determined by the cially when the government regulation of air ambulances mission requirements and may involve aircraft ranging is surprisingly limited. Costs, services and quality vary from those used primarily for executive charter, to those signifi cantly. It is important to ascertain specifi cs about permanently equipped for air ambulance fl ights. Routinely, service, staffi ng, equipment, and expertise when selecting jet aircraft are used for transports exceeding 500 miles. an air ambulance provider to ensure the patient’s medical For missions less than 500 miles, a twin-engine pressur- transport needs are met throughout the transport. ized aircraft fl own by two pilots would be appropriate. Executive charter aircraft are used for executive or private Repatriation Flights fl ights. Often the interiors of these aircraft are inter- Th e term expatriate is often used to describe a person changeable between an executive confi guration and an air who is temporarily or permanently residing in a foreign ambulance confi guration, and can be reconfi gured within

URMIA Journal 2007–08 61 a couple of hours. Transporting a patient on a commercial • Air Worthiness Certifi cate (FAA document 8100-2) fl ight using medical escort(s) has its own specifi c intrica- • Air Ambulance operations specifi cations cies, as it involves transporting the patient through airport • Aircraft registration (FAA document #8050) terminals, providing care in the presence of the commer- • Minimum Equipment Lists (MEL) as approved for cial aircraft population, and adhering to the established the aircraft schedules of commercial carriers. By and large, the best • Minimum Navigation Performance Specifi cations choice for repatriation fl ights is a permanently equipped (MNPS) and Reduced Vertical Separation Mini- air ambulance aircraft. A true air ambulance aircraft has mum (RVSM) been reconfi gured with an ICU-capable medical interior • Operations specifi cations as cited for the aircraft for the exclusive use of air ambulance operations. type (FAR 91.705 / AC 91.49) • Diplomatic clearance reference numbers and landing Selecting a Reputable Medical Transport Service permit fi lings for all areas of operation Th ere are several key factors to consider when selecting a • Passenger Manifest company to transport your ill or injuredred traveler. First and • General DeclarationsDeclara Record (U.S. Customs and foremost are the aviation accreditationsons IImmigration)m and certifi cates held by the operator. • U.S.U. Customs Bond/Decal Aircraft operators are required to holdld The best choice • DocumentationDo of U.S. TSA No-Fly a current Air Carrier Certifi cate (FAAA ListsLis references document #8430) in accordance withh for repatriation Additionally,Ad to confi rm coverage Federal Aviation Regulations (FARs) limits,limit the operator should also provide fl ights is a regulated by the Federal Aviation Ad-d- a certificert cate of insurance for the service’s ministration (FAA). In order to conductduct permanently aircraftaircra liability and professional liability, air ambulance missions, the air carrierer oror a bondb suffi cient to meet the require- is required to operate under approvedd equipped air mentsment of all U.S. agencies or foreign operations specifi cations, including thosehose governmentsgover within their operation. For ambulance for air ambulance operation. Th ese speci-peci- aircraftaircra liability insurance, air ambu- fi cations regulate installed medical equip-quip- aircraft. lancelance operators are advised to carry a ment (such as a stretcher in the aircraft).aft). minimumminim of the following amounts for However, portable equipment, which may eacheach aircraft: $5 million for twin engine also include stretchers, is not regulateded aircraft;aircra $10 million for turboprops; and by these specifi cations. Moreover, thee FAA chooses not $20 million for jets. jets For Fo international providers, insurance to exercise control over the medical aspects of the fl ight, requirements for the specifi c regions in which the aircraft which include the medical staffi ng or equipment required is operated must also be considered. For example, to oper- for the fl ight. When selecting the aircraft and an air am- ate within European airspace, aircraft ranging from more bulance provider, one can easily determine that the service than 26,400 pounds to 55,000 pounds in gross weight providing the fl ight is an approved air carrier and that the must carry €80 million minimum limits of liability, which aircraft is operated within approved air ambulance opera- amounts to slightly more than $117 million. Furthermore, tion specifi cations, simply by requesting and examining a a minimum of $1 million in medical malpractice insurance copy of the operator’s air carrier certifi cate. is recommended, and operating certifi cates and air ambu- In addition to the Air Carrier Certifi cate, the car- lance permits for areas of operation must be maintained rier must also maintain currency of several credentials for places like Mexico, Canada, etc. and must have proof of these on hand, as they must be presented immediately upon request to demonstrate com- Other Considerations pliance with all federal regulations and other applicable Th e FAA regulations provide minimum requirements with international requirements. Several such documents are: which the operator must comply. Th e professionalism and

62 URMIA Journal 2007–08 expertise of the provider may be determined by evaluating if the customer is not familiar with how to locate, inter- the program’s achievement of specifi c benchmarks identi- view, and hire a reputable air ambulance provider. But fi ed within the transport industry. One such benchmark caution should be taken when using a broker for medical that refl ects the program’s commitment to excellence is transports, as determining the quality of service and who accreditation by the Commission of Accreditation of will actually be providing it is diffi cult at best. When a Medical Transport Systems (CAMTS). CAMTS off ers company’s status is questionable, inquire as to whether it a voluntary evaluation of compliance with accreditation holds an Air Carrier Operating Certifi cate. standards, demonstrating the ability to deliver service of a Experienced air ambulance providers will profi ciently specifi c quality. By participating in the voluntary accredi- plan for the following logistical considerations as appli- tation process, services can illustrate their adherence to cable when conducting patient transports internationally: quality accreditation standards to their peers, medical pro- • Communication with the aircraft, since in-fl ight fessionals, and to the general public. Accredited programs phone systems will not operate outside the U.S. and are identifi ed on the CAMTS website ((www.camts.org),g), cellular coverageg is limited in foreign locations including the specifi c lines of businesss for wwhichhich ttheyhey are • Language barriersbarrier in some international locations, approved (e.g., international, fi xed-wing,ng, andand how to overcome these barriers commercial medical escorts, etc.). More-ore- • ArrangementAr of ground ambulances, over, the air ambulance provider’s experi-peri- When a company’s andand possible diff erences between do- ence can be ascertained with the provisionision mesticme and foreign ground services of evidence demonstrating operationalal status is • EntryEn and exit documents for the experience within each region. questionable, fl ightig crew, medical crew, patient, and A fi rm, itemized price quotation all passengers onboard the aircraft should be agreed upon between the inquire as forfor each international stop during the customer and the provider prior to thehe fl ighti g (including all technical or aircraft transport, and should be provided to to whether it refuelingref stops of the aircraft). Some the customer in writing. Costs will varyary holds an Air or all of the following may be request- depending on type of aircraft, mileage,e, ed depending on the governmental fl ight dispatching cost, medical staff Carrier Operating regulationsreg specifi ed for that particular required by the patient, needed medicalcal countrycou or region: supplies, and ground ambulance charges.rges. Certifi cate. – Passports International and long-range domesticic – Visas transports may be subject to additionalnal – Proof of citizenship costs such as foreign ground handlingg fees and taxes, over- – Crew photos aand licensure (fl ight crew and seas air traffi c control charges, over-fl ight permits, crew medical professionals) overnight expenses, and relief pilot positioning via com- – Declaration and immigration forms for crew and mercial airlines. Th e customer must verify which items, if passengers any, are included in the price quotation. – Internationally approved immunization records Often the customer may contact an individual to or documentation (for specifi c information, obtain service, without realizing the individual is not part please refer to the World Health Organization at of an air ambulance provider’s operation. A customer www.who.int and/or Centers for Disease Control may also contact a company that appears to be an air at www.cdc.gov/travel) ambulance provider, yet in reality does not own or operate Not having the documents as requested may result in aircraft at all. Th is company may then act as a broker on fi nes or citations, civil and/or criminal penalties, or even the customer’s behalf by seeking an ambulance program denial of entry or exit in certain countries. Flight crews to provide the service—but charge the costs (in addition with proper ID are exempt from many of these regula- to a broker fee) to the customer. Brokers may be helpful tions, but exemptions vary between foreign destinations.

URMIA Journal 2007–08 63 Medical teams are not recognized as fl ight crew in many power, oxygen delivery systems and adapters; or insuf- areas and should be prepared to present as many of the fi cient training by the ground ambulance provider. It requested documents as possible. is imperative that accommodations be made by the air Pre-departure communication directly between the transport service to minimize these risks. Accompanying transferring facility, receiving facility, and the transport the patient to the hospital on the ground unit and using team is essential to obtain a clear and accurate evaluation the service’s own medical transport equipment during of the clinical status of the patient. Language barriers may the ground transport phase may help. Th is is commonly cause diffi culties in receiving accurate patient information described as a bedside-to-bedside transport, where the prior to arrival. Many air ambulance providers skilled in provider insures continuity of care for the patient and international medical transports have discovered that the compliance with federal laws that regulate the level of use of bilingual medical team members provides an eff ec- care provided. Plans must also be made for powering the tive communication tool and eases the challenges often equipment, servicing and administering the oxygen, and experienced when working with diff ering cultures and operating suction and monitoring devices that allow nor- foreign locations. Th e use of interpreters mayy be benefi - mal operations throughoutg every aspect of the transport. cial, especially if they are local to the transferringtransferring facility. Th ese provisions maymay require the use of the medical Language barriers must be addressedd tteam’seam portable oxygen systems, battery- and all necessary arrangements madee to ppoweredowe suction units, transport moni- facilitate the transfer of care from thee Duty time of the ttor,or, anda transport ventilator. treating professionals to the transportrt LLastly, practiced international air medical team without any disruptionn in medical team is aambulancembu providers have established the treatment plan. equally important aalternativeltern plans to allow for the removal In addition, pre-departure com- aandnd ttransfer of the patient to an interim munication must also include confi r- for safe, quality facilifacility, if the medical team or aircraft is mation of the accepting physician andd nnotot aappropriately equipped to provide bed assignment at the receiving facility.ty. patient care. ooptimalptim care. Th is may become neces- Pre-admission information provided sarsaryy ifi the patient’s condition deteriorates prior to the patient’s arrival may also eaeasese dduringurin fl ight, or if the aircraft or an es- the transition during transfer of care.. PrePreparationparation bbyy tthehe sential piecepiece of medicalmedica equipment experiences a mechani- receiving facility to provide apposite care depends on the cal failure. communication received from the transferring facility and the transport medical team in preparation for the patient’s Crew Duty and Rest Requirements arrival. Frequent communication during the transport by Compliance with FAA fl ight crew duty-time regulations the medical team is also essential for providing the receiv- necessitates assiduous fl ight planning and strategic crew ing professionals with updates on the patient’s condition, positioning to complete each fl ight without interruption, for making necessary provisions to minimize changes in and to provide required rest for the crew prior to the treatment regimens, and for facilitating the transfer of care aircraft arrival. upon arrival to the receiving facility. Communication may Duty time of the medical team is equally important for be enhanced with the use of satellite telephones and by safe, quality patient care, so rest periods must be allowed. implementing procedures that require the medical team On transports involving extended patient care times, to call the receiving facility during the scheduled technical positioning medical team members and transferring care stops of the aircraft. during the aircraft technical stop may be required. Th e ground transport between the aircraft and the In addition to duty-time provisions, travel arrange- referring and treating facilities poses the most risk for the ments and accommodations must also be considered patient due to the possible lack of medical supplies and for safe travel of the fl ight and medical crews. Providers oxygen; incompatibility of medical equipment, electrical may employ agencies to monitor travel warnings and to

64 URMIA Journal 2007–08 assist with the safe travel of their crews. At the very least, such transports, as are extended periods of time outside a systematic monitoring of resources (such as the U.S. State major medical facility. Preparations for adequate medical Department’s lists of travel warnings and safe travel prac- supplies, medications, and, most importantly, oxygen must tices) is necessary to insure the team’s safety at all times. be arranged to meet the patient’s needs for the duration of Reputable air ambulance programs adhere to all of these the transport, with consideration to any potential delays regulations. that might be experienced. Th e medical team must be familiar with and diligently monitor the battery life of Medical Crew Staffi ng and Equipment essential equipment and available supply of medical gases All medical staff should be appropriately licensed, age- throughout the transport. specifi c Advance Cardiac Life Support (ACLS) certifi ed, and current in their specialty. All medical personnel must Conclusion have training in altitude physiology, infection control, Air medical evacuations require conscientious plan- stress recognition and management; patient care capabili- ning, especially when such transports involve extended ties and limitations during transport; and aircraft safetyy times outside a medical facility or traverse international procedures, including depressurization.on. bboundaries.oundaries. Th e safetysafety of the fl ight and medical crew, the When selecting the medical team ppatient,atie and all passengers is integral to for a particular fl ight, the needs of thee ththee pplanning process and must remain patient, requests of the transferring andnd A minimum of ththee priorityp throughout all phases of receiving facilities and physicians, lengthngth ttransport.rans Knowing the facts will prepare of the transport, and cross-cultural teameam two medical yyouou ffor the selection process when an air composition must be considered. Forr personnel is aambulancembu is needed. example, some cultures do not recognizenize the expertise of critical care or fl ight recommended AAboutbou the Author nurses and/or paramedics. Many fi xed-ed- Denise Treadwell, CRNP, wing air ambulance providers replacee thethe for all air MSN, CEN, CFRN, more traditional nurse/paramedic fl ightght ambulance fl ights. CMTE is Executive Vice team with nurse/respiratory therapistt President for AirMed teams, especially on transports involvingving International. She is ventilator-dependent patients. Physi-- internationallyinter recognized as one the cians may also complement the team for patientspatients rerequiringquiring toptop transporttransport nurses iinn the fi eld of air medical transports, a certain level of care during transport, or at the request having participated in hundreds of missions to six of the treating and receiving physician. Team members continents. At AirMed, the country’s leading fi xed-wing should be selected based on their level of skill and should air ambulance company, she is responsible for managing augment the other team members’ expertise. Although 50 medical professionals, including trauma and emergency medical staffi ng for a transport should be made in con- physicians, emergency and critical care trained nurses, junction with the client’s medical department, the fi nal respiratory therapists, and paramedics. Her experience determination of an appropriate staff rests with the air was instrumental in developing AirMed’s emergency ambulance provider. A minimum of two medical person- response procedures for medical evacuation services. nel is recommended for all air ambulance fl ights. It is Ms. Treadwell is the past president of the Air and Surface essential that the medical team confi guration be planned Transport Nurses Association; an active member of the to account for changes in the patient’s condition during Emergency Nurses Association; and an interim instruc- the transport. tor for the Nurse Practitioner and Advanced Paramedic Meticulous planning is required for any long-range courses at the University of Alabama at Birmingham fl ight, but especially for transports involving international (UAB). She holds two masters’ degrees in trauma nursing operations. Lengthy patient care times are correlated with and family nurse practitioner from UAB.

URMIA Journal 2007–08 65 References Federal Aviation Administration: Federal Aviation Regulations. Available at www.faa.gov. Federal Aviation Administration: International Flight Information Manual. Available at www.faa.gov/ats/aat/ifi m. Federal Aviation Administration: Notices to Airmen (NOTAMS). Available at www.faa.gov/NTAP. Federal Aviation Administration: Minimum Navigation Performance Specifi cations. Available at www.faa.gov/ats/aat/ifi m/ifi m0108.htm. Federal Aviation Administration: Reduced Vertical Separation Minimum. Available at www.faa.gov/ats/ato/rvsm1.htm. U.S. Department of Homeland Security: Transportation Security Administration. Available at www.tsa.gov/public. U.S. Department of Homeland Security. Available at www.dhs.gov/dhspublic. U.S. State Department. Available at www.state.gov. Centers for Disease Control and Prevention: Travelers’ Health Team. Division of Global Migration and Quarantine. Available at www.cdc.gov.travel. World Health Organization: Health Topics: Immunizations. Available at www.who.int. Holleran, R. S. Flight Nursing: Principles and Practice. 3rd ed. St. Louis: Mosby, 2003. Treadwell, D. Standards for Critical Care and Specialty Fixed-Wing Transport. Denver: Air & Surface Transport Nurses Association, 2004. Holdefer, W. F., D. Treadwell, and J. T. Tolbert. “International air medical transport, program profi le.” International Air Ambulance 7 (1998): 36. Holdefer, W. F., D. Treadwell, and J. T. Tolbert. “International air medical transport ventilator dependent patients.” International Air Ambulance 9 (1999): 22.

66 URMIA Journal 2007–08 If earth in any quarter quakes Or pestilence its ravage makes, Thither I fl y.

—JOHN H. FINLEY (1863–1940), “THE RED CROSS SPIRIT SPEAKS” In cases of defense ’tis best to weigh The enemy more mighty than he seems.

—WILLIAM SHAKESPEARE (1564–1616), HENRY V, ACT II, SCENE 4 The Mixed Motive Instruction in Employment Discrimination Cases: What Employers Need to Know

David Sherwyn, J.D., Steven Carvell, Ph.D., Joseph Baumgarten, J.D.

Abstract: In litigation regarding employment discrimination, are focusing too much energy on a relatively meaningless the burden of establishing proof has continued to shift. As a question. Th e issue is not meaningless to those who have result, employers and legal counsel need to be aware of the found themselves the target of litigation, however. For status of what they and human resources professionals should those parties, the way that courts assign the burden of consider when an employee alleges that the employer has vio- proof may, in fact, determine the probability of a damage lated federal discrimination statutes. Th e original standard of award and the amounts of the damages awarded. Th us, proof required the plaintiff to establish that the employer dis- a change in the allocation of the burden of proof can af- criminated against that person. Many cases still involve that fect the number of cases fi led, the amount of settlements approach, giving the plaintiff the burden of creating a prima agreed upon, and the fate of thousands of cases. facie case. However, another line of rulingsulings by the U.S. In contrast to the view that burden of proof is immate- Supreme Court added an alternative mmethodethod fforor addressinaddressingg rial, we note the holdiholdingn in Desert Palace d/b/a Caesars discrimination litigation, known as thee PalacePalac Hotel & Casino v. Costa. In this mixed motive approach. Th e two-prongg opinion,opini the United States Supreme mixed motive case requires the employeeee A change in the CourtCour set a new standard for determin- to demonstrate that a protected character-ter- ing whetherw plaintiff s can get a “mixed allocation of istic (e.g., race, sex, national origin) wasas a motive”motiv jury instruction in discrimina- substantial factor in an employer’s adverseerse the burden of tiontion ccases.1 Th is case represents a major action. If that is established, the employeryer shshiftift in the balance of power in discrimi- then has the burden of proving that thee de- proof can affect natinationo lawsuits. In fact, as we explain cision would have been made in any event,vent, bbelow,elow it is possible that Costa’s eff ect the number of regardless of the employee’s protected char-har- will beb so great that employers should acteristic. As a practical matter, employersyers cases fi led. rarelrarelyy go to trial in discrimination cases facing litigation of this type must considerder bbecauseecau the cost of losing will be so high whether and how to defend such a case.e. and tthe odds of winning so low. Know- Even a “win” can be expensive, becausee in iningg tthis,h plaintiff s’ lawyers will be apt to cases where there is a divided decision, theemployermustthe employer must take increasingly margmarginal cases and will demand higher pay the plaintiff ’s attorney fees and court costs, as well as its settlements. If our analysis is correct, Costa will have own. Moreover, since the Civil Rights Act of 1991 places fundamentally changed the face of discrimination cases discrimination cases in front of a jury, a divided decision is by transforming marginal cases into huge liabilities for seemingly more likely. Although that presumably gives both employers. sides a win, it still means a large expense for the employer. In this report we analyze the eff ect of the shifting burden of proof, particularly in the wake of Costa. Un- Th e burden of proof in discrimination cases has been the fortunately, as we explain below, neither an analysis of subject of at least eight Supreme Court cases, hundreds published legal opinions nor any other traditional method of lower courts cases, and thousands of law review pages. of legal research will answer the question. Because the Some might consider the time spent on this topic to be a precedent in Costa is relatively recent, a survey of lawyers prime example of a situation in which the Supreme Court, is unlikely to answer this question with any certainty. numerous lower court judges, lawyers, and academics Th us, to analyze the eff ect of Costa, we have developed our

URMIA Journal 2007–08 69 own data from a test sample. In addition to a discussion guilty of murder. Th e defense, on the other hand, was not of the cases leading up to the Costa holding, this Center required to prove anything. For instance, Simpson needed Report presents the results of a study that we conducted neither to prove that he did not kill the victims nor did to determine the eff ect of Costa on the outcome of dis- he need to prove that someone else did. Rather, Simpson crimination cases. Our discussion of Costa begins with an simply had to prevent the prosecution from successfully examination of burden of proof, describes the two diff er- proving its case by attacking the prosecution’s assertions. ent methods of proof in discrimination cases, clarifi es how For example, the prosecution presented blood from the these two methods of proof have developed, and sets forth crime scene, claiming it belonged to Simpson. Instead the employer’s options in discrimination cases. of proving that the blood did not match his, however, Simpson merely presented evidence to show that the chain Understanding the Burden of Proof of custody was broken, and therefore the evidence was To understand the two diff erent methods for proving unreliable. When the prosecution presented bloody gloves, discrimination, it is necessary to explain how burdens of Simpson discredited this evidence by demonstrating that proof work. When a case reaches the trial stage, one party the gloves did not fi t him. Again, Simpson only needed to bears the burden of proof, and therefore must convince the attack the prosecution’s evidence; he never had to prove factfi nder that its position is correct. In contrast, the other his innocence.2 side need not prove anything. As a result, the primary task of the party without the burden is to prevent the other Why a Case’s Outcome side from proving its argument. To better understand the May Depend on Burden of Proof concept of burden of proof, imagine a football fi eld. Th e Th ere are two methods for proving intentional employ- job of the off ense is to score and the defense’s job is to pre- ment discrimination: (1) the McDonnell Douglas method; vent the off ense from scoring. In a legal context, the side and (2) the “mixed motive” method. Based on the circum- with the burden of proof is the off ense, with the other side stances of the case, the judge determines whether to clas- being the defense. While it would be nice for the defense sify a matter as being a “mixed motive” case. to score, it does not have to. Similarly, while it would be nice for the litigant without the burden of proof to prove McDonnell Douglas: Burdening the Plaintiff its case, it does not have to. It simply must prevent the In McDonnell Douglas Corp. v. Green, the Supreme Court other side from meeting its burden. set forth a standard of proving discrimination in which Depending on the type of litigation, the party with the the burden of proof remained with the plaintiff at all burden of proof will face one of three standards of proof. times.3 Under the McDonnell Douglas approach, plaintiff s Th ose are (1) preponderance of the evidence, (2) clear and must fi rst prove a “prima facie case” by showing that they: convincing evidence, and (3) beyond a reasonable doubt. (1) are members of a protected class; (2) were minimally Continuing the football analogy, to satisfy the prepon- qualifi ed and either applied for or held the job; (3) suf- derance standard, the “off ense” must get the ball past the fered an adverse employment action; and (4) either the job fi fty-yard line into the other team’s territory. Th e clear and remained open, was fi lled by someone outside the class, convincing standard requires the ball to fall within easy or similarly situated employees outside the protected class fi eld-goal range near the goal line. Last, establishing a case engaged in similar conduct and did not suff er the same beyond a reasonable doubt is comparable to a touchdown, adverse action. Plaintiff s that prove these four elements, in that the factfi nder must be almost certain of the facts which typically are not diffi cult to establish, create a being adduced. presumption of discrimination. Th e defendant must then An eff ective way to explain the operation of the burden rebut this presumption. is to look at one of more famous criminal cases of the 20th In Texas Department of Community Aff airs v. Burdine, century: People of California v. O. J. Simpson. In Simpson, the Supreme Court “clarifi ed” how employers may rebut as in all criminal cases, the prosecution carried the burden the presumption created when the plaintiff proves a prima of proving “beyond a reasonable doubt” that Simpson was facie case.4 Burdine held that the employer does not have

70 URMIA Journal 2007–08 to prove that it hired the best applicant or that it did not Th e Hopkins Court was presented with a peculiar discriminate. Instead, the employer only has the burden of set of circumstances. Because there were both legitimate “articulating” a non-discriminatory reason for the employ- and illegitimate reasons for the employer’s decision, the ment decision. Th is requirement is not, however, a burden Court held that the McDonnell-Douglas method was not of proof. Instead, the employer’s burden is merely one of appropriate for resolving the case. In a hotly contested production. Th e employer must set forth the reason for split decision, Justice O’Connor’s concurring opinion, its decision, but need not prove that the reason given is which most courts accept as the case’s holding, set forth a true. If the employer indeed satisfi es its burden of produc- new standard of proof for so-called “mixed motive” cases. tion, the employee, according to Burdine, could then take Under O’Connor’s opinion, the mixed motive standard further steps to prove discrimination in one of two ways. of proof requires an employee to prove by “direct evi- First, the plaintiff can prevail by demonstrating that the dence” that the protected characteristic, such as sex, was real reason for the decision was discrimination (notwith- a substantial factor in the employer’s decision-making standing the reason given by the employer).ployer). Alternatively,Alternatively, processprocess.. If the employeeemploy fails to meet this burden, the case the plaintiff could prevail by proving that the reason is over. If, however, thethe employee satisfi es the substantial articulated by the employer was pretextext factfactoro test, the burden of proof shifts to (unworthy of belief ). In either situation,ion, ththee eemployer, which now has to prove the plaintiff , according Burdine, wouldd The mixed (rat(ratherh than merely assert) that it would prevail as a matter of law. motive instruction hhaveave made the same decision regardless ooff ttheh employee’s protected characteris- Mixed Motive: was only available ttic.ic. AAn employer who meets this burden The Burden Begins to Shift aavoidsvoid liability and precludes the plaintiff Seven years after Burdine, in Price-Water-Water- when the frofromm receiving an award. Conversely, if house v. Hopkins, the Supreme Courtt de- employee had tthehe eemployer fails to prove it would have veloped a second method for provingg in- mmadeade the same decision regardless of the tentional discrimination.5 Th is methodod is direct evidence of pprotectedrote characteristic, the plaintiff re- referred to as the “mixed motive” method.hod. cceiveseive back pay, reinstatement, attorney’s In Hopkins, the plaintiff alleged she waswas discrimination. fees, and litigation costs. denied partnership at Price-Waterhouseuse OO’Connor’s opinion emphasized because she was a woman. To prove herher ththatat thet mixed motive instruction was case, the plaintiff presented evidence tthathat ppartnersartners made onlonlyy available wwhenhen ttheh employee had direct evidence a number of discriminatory comments to her, including of discrimination. Examples of direct evidence include statements that she: (1) “was too masculine”; (2) “should statements, documents, or other tangible examples of dis- wear more make-up”; and (3) “should go to charm school.” crimination. Alternatively, circumstantial evidence, which Th e Court held that basing employment decisions on a consists of facts put together to create an inference of failure to live up to a sexual stereotype constituted dis- discrimination, did not entitle a plaintiff to a mixed motive crimination. Accordingly, the plaintiff would prevail if the method of proof. employer relied on these discriminatory reasons for deny- ing Hopkins partnership. Th e employer did not deny the How Hicks Confused Matters alleged discriminatory reasons, but presented additional With its shifting burdens of proof, Hopkins created a reasons for the decision not to promote the plaintiff . For model that was easy to follow. Employees with direct example, the employer presented evidence that the plaintiff evidence of discrimination could argue their case was a was disliked by staff members and had diffi culty getting “mixed motive” case and shift the burden of proof onto along with colleagues. In addition, the employer argued the employer. On the other hand, if there was no direct that it previously denied partnership to male employees evidence of discrimination, plaintiff s would be required to with defi ciencies similar to those of the plaintiff . prevail under the McDonnell Douglas formula. Th is “nice

URMIA Journal 2007–08 71 and neat” model lost some of its appeal after the Supreme being part of a protected class. Accordingly, even though Court decided St. Mary’s Honor Center v. Hicks.6 the mixed motive method redirected the burden of proof, In Hicks, the plaintiff proved that the employer’s stated employers could still prevail if they were able to convince reason for terminating the employee was a pretext. Th e the judge that they had not discriminated. Th e passage Court of Appeals for the Eighth Circuit held that prov- of the Civil Rights Act of 1991 drastically changed the ing pretext entitled the plaintiff to a judgment as a matter mixed motive landscape by: (1) allowing jury trials in Title of law. Th e Supreme Court, however, reversed the Eighth VII cases,11 and (2) changing the standards and damage Circuit and held that while factfi nders may infer discrimi- scheme for mixed motive cases. nation from a fi nding of pretext, plaintiff s are entitled to Before jury trials were permitted in Title VII cases, judgment as a matter of law only if they prove both that an judges were the factfi nders in cases relating to discrimina- employer’s articulated reason was a pretext and also that tion by race, sex, color, religion, and national origin. In the real reason for the decision was discrimination. Com- many of these cases, the plaintiff s’ lawyers would argue that mentators refer to this standard as “pretextretext plus evidence,evidence,” the case was a mixed motivem case and the employer would or, more simply, “pretext plus.” Not surprisingly,urprisingly, plaintiff s’s’ ararguegue it was not. A jujudged who was unsure whether the case advocates were outraged by this holding,ing, warrwarranteda applying the mixed motive while those representing managementnt metmethodh could appease the plaintiff and were delighted by the decisions.7 The passage of the prevprevente a successful appeal by labeling the Although a discussion of the mer-- Civil Rights Act of case “mixed“ motive” but then holding that its of Hicks is beyond the scope of thisis tthehe employere satisfi ed its burden. report, its eff ect on discrimination litiga-tiga- 1991 drastically tion is profound and must be addressed.sed. ChargingChar the jury Before Hicks, the two diff erent burdensens changed the mixed AfterAfter the CRA of 1991, however, the of proof created a simple coherent model.odel. motive landscape. qquestionuest of whether a case warranted ap- Employees with no direct evidence off pplicationlicat of the mixed motive method had discrimination used the McDonnell a profoundpro eff ect on the matter of who Douglas formula and employees with wouwouldl be the factfi nder. From that point direct evidence asked the court to considernsider thethe casecase toto be on, thethe judge’s decisiodecisionn regarding whether the case is to be mixed motive. After Hicks, cases without evidence were decided according to the McDonnell Douglas rules or the considered “orphan” cases.8 Plaintiff s’ lawyers did not want mixed motive approach manifests itself in instructions to a to invest years of time and money into a case that required jury. A judge who labels a case as being a mixed motive case a factfi nder to infer discrimination. Instead, it made more must instruct the jury that the employer must prove that it sense to take on only those cases with actual evidence.9 did not discriminate. Because of the diffi culty of proving a If there was direct evidence, plaintiff s’ lawyers would negative, whether the judge instructs the jury with a mixed contend that they were entitled to a mixed motive instruc- motive standard rather than a McDonnell Douglas standard tion. Still, a model did survive: direct evidence involved may determine the result of the case. Placing the burden of St. Mary’s v. Hicks, while circumstantial evidence invoked proof on employers leads one to believe that employers will McDonnell Douglas. fi nd it diffi cult—perhaps impossible—to prevail in mixed motive cases, especially given the perception that juries Civil Rights Act of 1991: More Complications favor employees over employers.12 While the formulas of proof were important, their real To make matters worse for employers, the CRA of eff ect was limited for the following two reasons. First, 1991 made the mixed motive instruction more “plaintiff Title VII of the Civil Rights Act of 1964 (CRA) did not friendly” in the following two essential ways. First, the permit jury trials.10 Second, under Hopkins employers statute made it easier for a plaintiff to obtain the judge’s could prevail in mixed motive cases by proving they would determination that the case involved a mixed motive. have made the same decision regardless of the plaintiff ’s Under CRA of 1991 plaintiff s no longer have to prove

72 URMIA Journal 2007–08 that the protected characteristic was a substantial factor in How Costa Redefi ned the Landscape the employer’s decision. Instead, the new standard is that Returning to the case originally known as Costa v. Desert the protected characteristic be a “motivating factor” in the Palace, the Ninth Circuit diverged from other circuits employment decision, which is an easier test to satisfy. by holding that either direct or circumstantial evidence Second, the act changed the damage scheme to the was suffi cient to warrant a mixed motive instruction. To point where litigating these cases becomes foolish for em- resolve the split among the circuits, the Supreme Court ployers. We make this conclusion because judges can now agreed to hear the case, issuing its decision in 2003, award attorney fees, litigation costs, and declaratory judg- as Desert Palace d/b/a Caesars Palace Hotel & Casino ments to plaintiff s who met the “motivating factor” stan- v. Costa.14 Th e issue in Costa was whether direct evidence dard, even where the employer meets its burden of proving of discrimination was required for a plaintiff to receive that the decision would have been made anyway. Th us, a mixed motive instruction or whether circumstantial employers who successfully prove that the business decision evidence would suffi ce. would have been made regardless of discrimination are still In arguing for diredirect evidence, the employer in Costa subject to huge expenses and damages.s. contended thatthat JusticeJustice O’Connor’s concurring opinion in Th e eff ect of awarding costs and fefeeses HopkinsHopk , which required direct evidence, is profound because they are the majoror was tthe holding of the case and still the damage component of most discrimina-na- After 1991 law.law. Th e plaintiff , on the other hand, tion cases. In large cities like New Yorkrk employers were arguedargue the CRA of 1991’s language was and Chicago, management lawyers reportport cclearlear and did not require any specifi c type that their fees for a discrimination casese well advised to ooff evidence.ev Rather, it merely stated that will almost always exceed $150,000 andnd tthehe pplaintiff had to prove that discrimina- have often been well over $500,000.133 settle mixed ttionion mmotivated the employer. While plaintiff s’ lawyers’ fees awards areare motive cases. IInn a unanimous decision, the Court almost always less than management’ss helheldd that the CRA of 1991’s language fees, they are still considerable. After thethe was uunambiguous and did not require di- CRA of 1991, mixed motive cases becamecame rect eevidence. Th us, any type of evidence costly because employers who “won” stilltill might have to pay of discrimination maymay enable a plaintiff to receive a mixed their attorneys’ fees and often the plaintiff ’s fees. Accord- motive instruction. Th is decision could change the face of ingly, it could easily cost an employer over $500,000 to discrimination law because a plaintiff with any evidence “win” a mixed motive case. Th is fi gure does not include out- of discrimination can now receive a mixed motive jury of-pocket litigation expenses for each side, lost employee instruction, which, as we said above, may be tantamount and management time, and the bad publicity that accompa- to winning the case. nies both the trial and subsequent judgment of discrimina- tion. As a result, after 1991 employers were well advised The Mixed Motive Instruction to settle mixed motive cases, because the costs of “winning” versus the Pretext Instruction would almost always greatly exceed the settlement demand. To clarify this distinction, let’s compare a sample mixed Th e solace for employers was that mixed motive motive instruction with a typical pretext instruction. instructions were relatively unusual. Th e majority of Each court may fashion its own specifi c jury instructions, jurisdictions held that a mixed motive instruction would as long as they are in accordance with settled law. Some only be given in cases with direct evidence of discrimina- jurisdictions, however, established model jury instructions tion, which is hard to come by. Indeed, decision makers that are used in the most cases. Th ese instructions are rarely make discriminatory remarks in writing or in front accompanied by what are referred to as “special jury verdict of employees who might testify against the company. sheets.” With that caveat, the pages to follow give sample Th us, the mixed motive instruction was unavailable in the instructions from the United States Court of Appeals for most discrimination cases. the Seventh Circuit and sample special verdict sheets.

URMIA Journal 2007–08 73 Th e diff erence between the two instructions may seem “MIXED MOTIVE” INSTRUCTION: minimal and meaningless, but the diff erence is large when Plaintiff bases his lawsuit on Title VII of the Civil Rights Act one considers the contention made several years ago by of 1964, a law that makes it unlawful for an employer to fi lm director Spike Lee, who stated that race motivates discriminate against an employee on the basis of national a part of every decision. Regardless of whether Lee was origin. To succeed on this claim, Plaintiff must prove by a correct, it is possible that a substantial number of poten- preponderance of the evidence that his national origin was tial jurors agree with him. It is also possible that there a motivating factor in Defendant’s decision not to offer him are those who feel the same way about sex, color, national a promotion. A motivating factor is something that contrib- origin, religion, age, and disability. Lee’s contention is im- uted to Defendant’s decision. portant because anyone who subscribes to this theory will If you fi nd that Plaintiff has proved that his national fi nd that virtually any plaintiff in a discrimination case has origin contributed to Defendant’s decision not to offer him satisfi ed the initial burden in the mixed motive scheme. a promotion, you must then decide whether Defendant Th e problem with that observation, however, is that after proved by a preponderance of the evidence that it would the CRA of 1991, the employee would receive costs and have not offered him a promotion even if Plaintiff was attorney fees based on nothing more than that determina- not of his particular national origin. If you fi nd that the tion, even if the jury then decided that the employer’s Defendant has proven that it would not have offered him a decision would have been the same if race or other pro- promotion even in the absence of discrimination, you must tected classes were not involved. Th is situation infuriates still enter a verdict for the Plaintiff but you may not award management lawyers. Jurors do not know that their belief him damages. that discriminatory factors always motivate decisions

means that they will unwittingly award the plaintiff costs SPECIAL VERDICT SHEETS and fees, regardless of the employer’s intentions. Pretext Cases: 1. Did plaintiff establish by a preponderance of the evidence that defendant discriminated against him in violation of A Comparison of Jury Instructions in a Failure- Title VII of the Civil Rights Act of 1964 on the basis of his to-promote Case Based on National Origin national origin with respect to the decision not to offer him a promotion in December 2003? “PRETEXT” INSTRUCTION: Yes ____ No ____ Plaintiff bases his lawsuit on Title VII of the Civil Rights Act If you answered “no” to Question 1, sign the special of 1964, a law that makes it unlawful for an employer to verdict form on the last page. If you answered “yes” to Ques- discriminate against an employee on the basis of national tion 1, plaintiff is entitled to recover back pay damages. The origin. To succeed on this claim, Plaintiff must prove by parties have stipulated that the total amount of back pay to a preponderance of the evidence that he was denied a be awarded to plaintiff is $50,000. Check the box below to promotion by Defendant because of his national origin.* To signify that the plaintiff is entitled to damages of $50,000 determine that Plaintiff was denied a promotion because of and then sign the special verdict form. his national origin, you must decide that Defendant would have promoted Plaintiff had he not been of his particular Mixed Motive Cases: national origin but everything else was the same. 1. Did plaintiff establish by a preponderance of the evidence If you fi nd that Plaintiff has proved by a that his national origin was a motivating factor in the deci- preponderance of the evidence each of the things required sion by defendant not to offer him a promotion in Decem- of him, then you must fi nd for Plaintiff. However, if you ber 2003? fi nd that Plaintiff did not prove by a preponderance of the Yes ____ No ____ evidence each of the things required of him, then you must You should answer the next question only if you fi nd for Defendant. answered “yes” to Question 1. If you answered Question 1 “no,” you should not answer any further questions but sign

74 URMIA Journal 2007–08 this special verdict form on the last page and return the form to the clerk. Alternative Jury Instruction 2. Did defendant establish by a preponderance of the evidence MIXED MOTIVE INSTRUCTION WITHOUT THE “SECOND PRONG” that the defendant would have treated plaintiff the same way even if the plaintiff’s national origin had not played any Plaintiff bases his lawsuit on Title VII of the Civil Rights Act role in the employment decision? of 1964, a law that makes it unlawful for an employer to Yes ____ No ____ discriminate against an employee on the basis of national If you answered “yes” to Question 2, sign the special origin. To succeed on this claim, Plaintiff must prove by a verdict form on the last page. If you answered “no” to Ques- preponderance of the evidence that his national origin was tion 2, plaintiff is entitled to recover back pay damages. The a motivating factor in Defendant’s decision not to offer him parties have stipulated that the total amount of back pay to a promotion. A motivating factor is something that contrib- be awarded to plaintiff is $50,000. Check the box below to uted to Defendant’s decision. signify that the plaintiff is entitled to damages of $50,000 If you fi nd that Plaintiff has proved that his national and then sign the special verdict form. origin contributed to Defendant’s decision not to offer him a promotion, you must enter a verdict for the Plaintiff, even * Our example involves national origin, but it could be any of the other six protected classes: namely, sex, race color, religion, age, or disability. if you believe that there were other motivating factors that would have caused the Defendant not to offer him a promo- tion even in the absence of any discriminatory motivation. One “Management Lawyer’s” Special Verdict Sheet without the Second Question Method for Avoiding the Unintended Fees 1. Did plaintiff establish by a preponderance of the evidence Considering this two-part test, coauthor Joe Baumgarten, that his national origin was a motivating factor in the deci- of the law fi rm of Proskauer, Rose, raised another con- sion by defendant not to offer him a promotion in Decem- cern. He hypothesized that to suit their sense of “fair play,” ber 2003? juries that are presented with a two-prong decision would Yes ____ No ____ “split the baby,” as follows. Th ey fi rst would hold that the If you answered “yes” to Question 1, plaintiff is entitled protected class motivated the employer. Th en they would to recover back pay damages. The parties have stipulated determine that the employer would have made the same that the total amount of back pay to be awarded to plaintiff decision regardless of the protected class. Once again, such is $50,000. Check the box below to signify that the plaintiff a jury would have no idea that it had just awarded costs is entitled to damages of $50,000 and then sign the special and fees to the plaintiff . Baumgarten sought to eliminate verdict form. this problem by taking the issues in stepwise fashion. Rath- er than off er both prongs of the mixed motive instruction, Baumgarten suggests simply having the jury determine whether the protected class motivated the employer’s deci- What Does This All Mean for Employers? sion. He argues that a jury might be less inclined to fi nd Although courts are still divided on whether the pretext such motivation if that is the only question asked and if jury instruction is dead, it is clear that after Costa, more they knew that the fi nding of “yes” meant that the employer and more cases will receive mixed motive instructions. had to pay damages. Because the second prong involves an Consequently, employers need to know how to deal with employer’s defense, the employer can determine in advance this situation. Beyond that, we must examine whether the whether to present it. Th us, Baumgarten proposed a third judge’s instructions to the jury matter or whether certain set of instructions and special jury verdict sheet. In this language in the instructions has led to cases being settled instruction he eliminated the second prong of the mixed for an amount greater than might otherwise occur. Th en motive instruction and the second question on the special there’s the question we raised at the beginning of this verdict sheet. Th us, the instruction and the verdict sheet report, of whether employers should forget litigation and would appear as shown at upper right. settle all mixed motive cases. If not, should employers use

URMIA Journal 2007–08 75 the Baumgarten rule and eliminate the second prong? Exhibit 1 None of these issues can be resolved defi nitively, due Mixed Motive (MM) versus Pretext (P) Decisions to the pervasive problems associated with trying to use

Not promoted because of testing techniques common in social science to answer national origin or national ______GROUP ______legal questions, as well as certain problems that are specifi c origin not a motivating factor MM P Total to the matter of jury instructions. Whenever legal scholars No Count 42 57 99 seek to answer questions using research methods from Expected Count 52.3 46.8 99.0 social science they battle a number of issues. First, not Yes Count 34 11 45 all cases are reported and those that are reported do not Expected Count 23.8 21.3 45.0 refl ect a random sample. Second, even if all cases were re- Total Count 76 68 144 Expected Count 76.0 68.0 144.0 ported there is still a problem when trying to draw specifi c conclusions from diff erent cases with diff erent sets of facts Asymp.Sig. and diff erent issues of law. Value (2-sided) Th e issues we discussed here face even more problems Pearson Chi-Square* 13.626* .01 than those related to sampling and idiosyncrasy. First, w/ Continuity Correction* 12.329 .01 most settlements are confi dential, making it essentially Likelihood Ratio 14.167 .01 impossible to measure the eff ect of Costa on settlement Linear-by-Linear Association 13.531 .01 size. Second, while a large number of discrimination Notes: Pearson Chi-Square and continuity correction are computed only for opinions are published, the results of jury trials are not a 2x2 table; N of valid cases = 144. the issues that make it into the court reports. Instead, most of the reported cases feature the judges’ opinions on Exhibit 1A summary judgment motions (which occur before the case Mixed Motive with Affi rm Defense (MM w/AD) goes to a jury) and appeals. Th e appeals cases are only versus Pretext (P) Decisions relevant if the type of jury instruction is the issue being

Not promoted because ______GROUP ______examined (a small percentage of appeals). Finally, looking of national origin MM w AD P Total at the results of jury trials is not helpful because the jury No Count 70 57 127 instructions are often not available so it is often impossible Expected Count 67.0 60.0 127.0 to know whether the case was a mixed motive case. Yes Count 6 11 17 Expected Count 9.0 8.0 17.0 Experimental Testing Methodology Total Count 76 68 144 Since no data are available to answer the questions we Expected Count 76.0 68.0 144.0 have sought to address here, we conducted an experiment.

Asymp.Sig. Like many large law fi rms, Proskauer occasionally tests a Value (2-sided) case on a mock jury before the case goes to trial. Because Pearson Chi-Square* 2.364* .124 of the cost of a full mock trial, however, Baumgarten and w/ Continuity Correction* 1.636 .201 his team of lawyers sometimes test their case by having Likelihood Ratio 2.381 .123 the mock jury hear a statement of the case only, rather Linear-by-Linear Association 2.348 .125 than mock testimony or other evidence. Proskauer refers Notes: Pearson Chi-Square and continuity correction are computed only for to these statements, which are combinations of an opening a 2x2 table; N of valid cases = 144. statement and closing argument, as “clopenings.” Armed with the clopenings from the plaintiff and the defense on a * Our example involves national origin, but it could be any of the other six protected classes: namely, sex, race color, religion, age, or disability. sample case, we were able to conduct our experiment. First, Proskauer videotaped two of its lawyers delivering the clopenings. Next, Proskauer videotaped Baumgarten delivering the following three diff erent jury

76 URMIA Journal 2007–08 instructions: (1) pretext instructions; (2) the two-prong acknowledging these problems, we believe that the experi- mixed motive instruction, with the affi rmative defense; ment has merit. While our 219 students may not be repre- and (3) the single-prong mixed motive instruction, sentative of typical pool, they are, in fact, potential jurors. without the affi rmative defense. Armed with the tapes, we had to then fi nd potential jurors. Unfortunately, the Study Results same people who will happily watch a Law and Order Despite the fact that our sample is clearly skewed in the marathon are reluctant to take part in a law-related study. ways we just described, we found that jury instructions Th us, we asked students attending Cornell University to strongly infl uenced the outcome for our particular sample. be our mock court jurors. Th e raw numbers show that a disparity did seem to ex- ist between the fi ndings of the diff erent groups. Jurors Study Design found for the plaintiff and awarded damages in 22 of the We designed our controlled study as follows. On three MMWO cases (29%) and 11 of the pretext (P) cases separate nights, we had between 50 and 100 students (16%). Th e mixed motive instruction is more complicated, sit in a particular auditorium and watchtch the clopeninclopenings,gs, as the two pronprongsgs can lead to the following three diff erent for a total of 219 students. We then results:resul (1) no damages; (2) costs and randomly assigned each student to onene attorneys’attor fees; or (3) full damages. Th is of three roughly equal groups, each off We conducted groupgroup of students awarded either costs which heard one of the test jury instruc-uc- andand ffees or full damages in 34 of the MM tions. One group of 76 students was a statistical ccasesases (45%); that is, they awarded only labeled MM, for mixed motive (the full,ull, analysis of the ccostsosts and fees in 28 of the cases (37%), two-prong test); a second group of 755 aandnd ffull damages in six of the cases (8%). students was called MMWO, for mixedxed data by analyzing A ququick look at these raw numbers leads motive without the affi rmative defensese oonene tto believe that employers are better (the single-prong idea); and the third,d, each set of ooffff withw a pretext instruction than either comprising 68 participants, was groupp P, decisions against ooff theth mixed motive instructions and, for pretext. After hearing the jury instruc-truc- ddependingepe on the amount of damages tions, each student received and fi lledd each other. aandnd ccosts and fees, better off with the out the designated jury verdict sheet. singlsingle-pronge mixed motive instruction Like actual jurors, the MM students diddid (MMWOMM ). Th ese raw numbers are not know that if they answered yes too nnot,ot, however,h indicative of statistical question one and yes to question two ttheyhey were awardinawardingg sisignifignifi cance and it is popossible that the diff erences are just costs and fees. Again like actual juries, the MMWO and a matter of chance. To get a full and clear picture of the the P students, on the other hand, knew that they were connection between jury instructions and the awarding of awarding all or nothing based on their answer to the one damages we conducted a statistical analysis of the data by question on their verdict sheet. analyzing each set of decisions against each other. Th e results were remarkable. Before we discuss those results, however, we must add the caveat that we make no Mixed Motive versus Pretext Decisions claim that our sample is representative of the juror pool We began by testing whether there are diff erences in at large. First, our pool of 18- to 22-year-olds is substan- the jury’s decision when we compare the fi rst prong of tially younger than normal jury pools. Second, we like to the mixed motive (MM1) against the one-prong pretext believe Cornell students are well above average in terms instruction (P). Specifi cally, we wanted to learn whether of intelligence and education. Finally, most participants the number of mixed motive jurors (34) who found that were students at the Cornell University School of Hotel national origin did motivate the employer was signifi cantly Administration, who would undoubtedly be biased toward diff erent than the number of pretext jurors (11) who management when it comes to employment disputes. Even found that the employer was liable. As can be seen from

URMIA Journal 2007–08 77 the results in Exhibit 1 this diff erential was highly signifi - Exhibit 2 cant, at the 99-percent level of confi dence.15 In other words Mixed Motive Without (MMWO) whether the mock jury was given a pretext instruction or versus Pretext (P) Decisions mixed motive instruction produced a signifi cant diff erence

Not promoted because across the groups as to the fi nding of the fi rst prong of the of national origin mixed motive instruction versus the pretext instruction. or national origin ______GROUP ______not a motivating factor MMWO P Total Next, we compared the entire mixed motive in- No Count 53 57 110 struction—comprising both prong one and prong two Expected Count 57.7 52.3 110.0 (MM2)—against the pretext instruction. Specifi cally, we Yes Count 22 11 33 wanted to fi nd whether there was a signifi cant diff erence Expected Count 17.3 15.7 33.0 between the six (of the 76) mixed motive jurors who found Total Count 75 68 143 that the employer would have acted in the same manner Expected Count 75.0 68.0 143.0 regardless of national origin versus the 11 (out of 68) pretext jurors who found for the company. Using the same Asymp.Sig. statistical tests, we found no signifi cance between the full Value (2-sided) mixed motive fi nding and the pretext fi nding. Th us, before Pearson Chi-Square* 3.478* .062 the law changed in 1991 we could argue that whether the w/ Continuity Correction* 2.776 .096 Likelihood Ratio 3.540 .060 judge used a pretext instruction or a mixed motive instruc- Linear-by-Linear Association 3.453 .063 tion was irrelevant. Th e change in the law, however, means Notes: Pearson Chi-Square and continuity correction are computed only for that while the ultimate fi nding is insignifi cant, the costs a 2x2 table; N of valid cases = 143 and fees component (prong one) is signifi cant.

Exhibit 3 Mixed Motive Without (MMWO) Mixed Motive (MM) versus Mixed Motive versus Pretext Decisions (P) Without (MMWO) Decisions Th e next question we examined was whether the results of

Prong-one question is a pretext (P) instruction question diff ered from the results ______the only decision for GROUP of the mixed motive instruction without the second prong both MM and MMWO MM MMWO Total (MMWO). Th e raw numbers were as follows: 11 of the No Count 42 53 95 jurors (16%) found for the plaintiff in the P cases, and 22 Expected Count 47.8 47.2 95.0 Yes Count 34 22 56 of the jurors (29%) found for the plaintiff the MMWO Expected Count 28.2 27.8 56.0 cases. Th e results of this analysis are seen in Exhibit 2. Total Count 76 75 151 As in the last comparison we estimated both the pair- Expected Count 76.0 75.0 151.0 wise comparison chi-square tests and the likelihood ratio and linear-by-linear test to determine the pair-wise and Asymp.Sig. individual group diff erences. Th e results show that this Value (2-sided) diff erential was found to be marginally signifi cant. Spe- Pearson Chi-Square* 13.626* .050 cifi cally, we found the diff erence between the MMWO w/ Continuity Correction* 3.207 .073 and P group to be signifi cant at the 90-percent level of Likelihood Ratio 3.861 .049 confi dence. Th is means that it is unlikely that this dif- Linear-by-Linear Association 3.813 .051 ferential is due to chance, although an outcome by mere Notes: Pearson Chi-Square and continuity correction are computed only for a 2x2 table; N of valid cases = 151; No cells have an expected count less chance is possible. Th us, employers faced with a mixed than 5; the minimum expected count is 27.81. motive instruction and who choose not to have the second

* Our example involves national origin, but it could be any of the other six prong will, all other things being equal, likely have a more protected classes: namely, sex, race color, religion, age, or disability. diffi cult time prevailing under this instruction than they would under the pretext instruction.

78 URMIA Journal 2007–08 Mixed Motive (MM) versus Mixed Motive Without (MMWO) Exhibit 4 We also looked at how jurors answered the prong-one Mixed Motive (MM) versus Mixed Motive question in the two diff erent instructions. Remember, Without (MMWO) Decisions question one is same in both instructions. Th e only Prong-one decision on both and ______GROUP ______diff erence is that the MM group faces a second ques- prong-two decision for MM only MM MMWO Total tion that is thought to aff ect the outcome. Here we are No Count 70 53 123 assessing the likelihood of a diff erent decision for the Expected Count 61.9 61.1 123.0 two groups simply because the MM group has an option Yes Count 6 22 28 created by the existence of the prong-two question that Expected Count 14.1 13.9 28.0 the MMWO group never sees. MM jurors answered yes Total Count 76 75 151 (discrimination motivated the employer) in 44 percent of Expected Count 76.0 75.0 151.0 the cases, while MMWO answered yes in 29 percent of Asymp.Sig. the cases. As in the last comparison we estimated both the Value (2-sided) pair-wise comparison chi-square tests and the likelihood Pearson Chi-Square* 11.486* .01 ratio and linear-by-linear test to determine the pair-wise w/ Continuity Correction* 10.111 .01 and individual group diff erences. As can be seen from the Likelihood Ratio 12.070 .01 results in Exhibit 3, this diff erential was also found to Linear-by-Linear Association 11.410 .01 be marginally signifi cant. Th us, the MM1 and MMWO Notes: Pearson Chi-Square and continuity correction are computed only for groups made diff erent decisions with a 90-percent level a 2x2 table; N of valid cases = 151. of confi dence. Based on this fi nding, employers who are * Our example involves national origin, but it could be any of the other six faced with low back pay, but high costs and fees should protected classes: namely, sex, race color, religion, age, or disability. defi nitely think about limiting the mixed motive instruc- tion to one prong, as suggested by author Baumgarten. Th e fi nal question we looked at is whether the Assuming facts that could go either way, employers have MMWO jurors will provide a diff erent fi nal result than a substantially equal chance of prevailing in pretext and the MM jurors once the MM jurors hear both prongs. mixed motive cases, but there is signifi cant chance that a Based on the earlier data discussion we know that for full mixed motive instruction will result in cost and fees being liability MMWO found for the plaintiff in 29 percent of awarded. Employers therefore are better off with a pretext the cases and MM2 jurors found for the plaintiff in seven instruction than a mixed motive instruction. If, however, percent of the cases. Once again using the statistical tests, the judge orders a mixed motive instruction, the employer as shown in Exhibit 4, this diff erence was found to be has a diffi cult choice. Th e MMWO instruction will more highly signifi cant. Th ese results now provide a clear indica- likely yield a complete victory for the plaintiff than will tion that the presence of the second prong in the jury’s the MM. On the other hand, the chance of the full mixed instruction will produce signifi cantly diff erent decisions, motive instruction resulting in an award of costs and fees compared to an instruction that off ers only prong one. Th e is greater than the likelihood of the one-prong mixed mo- inclusion of the second prong in the jury instructions will tive instruction, resulting in a complete plaintiff victory. likely have a signifi cant and positive impact on the decision Th e question that arises is whether the employer should from the employer’s perspective. Based on this fi nding, off er the second-prong defense if the judge orders a mixed employers faced with a large amount of back pay should motive instruction. We believe that the answer depends on include the second prong of the mixed motive instruction. the case. If the case is a “fees case” (low liability, but high attorneys’ fees),16 the employer should go with the one- Conclusion prong MMWO. If liability is high, the employer should Our results point strongly to the principle that the stick with the full two-prong mixed motive. Both of these legal theories contained in jury instructions matter. options, however, are worse than pretext instruction.

URMIA Journal 2007–08 79 Th e CRA of 1991 made the mixed motive instruction Endnotes much more detrimental to employers. Costa made the 1 Desert Palace d/b/a Caesars Palace Hotel & Casino v. Costa, 123 S. Ct. 2148 mixed motive instruction much easier to obtain. As plain- (2003). tiff s’ lawyers become more familiar with the mixed motive 2 In contrast, Simpson was found liable for wrongful death in a civil case instruction they will request it more often. Employers where the standard was preponderance of the evidence. 3 McDonnell Douglas Corp. v. Green, 411 U.S. 792, 793 (1973). should argue against that approach, but if the judge orders 4 Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 256 (1981). it, employers then need to assess the true costs of their 5 Price-Waterhouse v. Hopkins, 490 U.S. 228 (1989). case. If it is a fees case our study suggest employer should 6 St. Mary’s Honor Center v. Hicks, 509 U.S. 502 (1993). 7 use the MMWO. In a case where the potential for sub- In many ways Hicks makes sense, because employer should be found guilty of discrimination only when the factfi nders believe that the employer stantial back pay is high employers should present the full actually discriminated against the employee. Title VII is not a truth-in- two-prong mixed motive defense. employment act, and there are times when employers, despite their best efforts, may not know why a decision was made. About the Authors 8 See: Samuel Estreicher, “Saturns for Rickshaws: The Stakes in the Debate over Pre-dispute Employment Arbitration Agreements,” 16 Ohio St. J. on David Sherwyn, J.D., is associate professor Disp. Resol., 559 (2001). of law and academic director of the Center 9 Id. for Hospitality Research at the Cornell 10 In contrast, the Age Discrimination in Employment Act of 1967 (ADEA) University School of Hotel Administration. always allowed for jury trials. 11 Subsequent to the 1991 Act, Congress passed the Americans with Disabili- His research focuses primarily on labor and ties Act, which also allowed for jury trials. employment law issues relevant to the hospitality indus- 12 David Sherwyn, J. Bruce Tracey, and Zev J. Eigen, “In Defense of Mandatory try, specifi cally, mandatory arbitration of discrimination Arbitration of Employment Disputes: Saving the Baby, Tossing out the Bath lawsuits and sexual harassment. Water, and Constructing a New Sink in the Process,” 2 U. Pa. J. Lab. & Emp. L. 73. 13 Id. Steven Carvell, Ph.D., is associate dean 14 Supra. and an associate professor of fi nance at the 15 We fi rst ran a Pearson Chi-square test (with and without a continuity cor- School of Hotel Administration. Among rection) to determine whether there are differences in the attribution of motivation across the two instruction sets. We then ran both likelihood other topics, his research develops models to ratio and linear-by-linear association tests to determine whether this dif- incorporate real options, risk analysis, and ference was statistically signifi cant. debt capacity into hotel feasibility analysis. 16 Sometimes back pay is marginal because the employee found another job, but the litigation costs may be hundreds of thousands of dollars. Other times, both the back pay and the fees are high. It is rare for a case to Joseph Baumgarten, J.D., is a partner at the involve high back pay and low fees. New York offi ce of Proskauer, Rose, a law fi r m w i t h d i v e r s i fi ed corporate law practices, where he is a member of the fi rm’s labor and employment practices group and where he focuses on employment discrimination, traditional labor law, arbitration, and other forms of alternative dispute resolution.

Reprinted with permission from Cornell University. Cornell Hospitality Report, Vol. 7, No. 1, 2007. Cornell Center for Hospitality Research, www.chr.cornell.edu

80 URMIA Journal 2007–08 Sometimes I feel discriminated against, but it does not make me angry. It merely astonishes me. How can any deny themselves the pleasure of my company? It’s beyond me.

—ZORA NEALE HURSTON (1903–1960), AMERICAN FOLKLORIST AND WRITER It is the land that freemen till, That sober-suited Freedom chose, The land, where girt with friends or foes A man may speak the thing he will; A land of settled government, A land of just and old renown, Where Freedom slowly broadens down From precedent to precedent. . . .

ALFRED, LORD TENNYSON (1809–1892), “YOU ASK ME, WHY” Risk Manager as a Grievance Petitioner? Manage Lobbying Risks or Lose

Pamela J. Rypkema, Risk Manager, Gallaudet University

Abstract: While the 501(c)(3) status of many nonprofi t Jack Abramoff (convicted lobbyist), J. Steven Griles organizations (including colleges and universities) limits (convicted administration offi cial), and Robert Ney partisan political activity because of federal tax exemption, (convicted congressman).3 When the public fails to pay it is important for risk managers to know what is permis- attention, graft and corruption can fl ourish. Citizen sible institutional involvement in the legislative process and involvement enhances accountability, and nonprofi ts bring what constitutes lobbying. Th is article defi nes lobbying and more eyes to the legislative process, genuine concern about examines its implications under the standards of the Internal the public, and a reasoned debate of the issues. Revenue Service, and off ers advice on the management and Are you a “grievance petitioner,” or should you be? avoidance of the risks associated with lobbying. What are the risks of inserting college or university em- ployeesployees into the govergovernmental decision-making process? Eff ective governance depends upon WhWhata are the risks of failing to do so? communication between the governmentment Th is article will help risk managers and its citizens. To ensure that such The term bbetterette understand and manage lobby- necessary communication can occur, ing rrisks.i It addresses only federal law the Bill of Rights to the United Stateses “lobbyist” evolved aandnd oonly those nonprofi t organizations Constitution guarantees that: ddesignatedesig tax-exempt under Internal Congress shall make no law . . . from a descriptive RevRevenuee Code (IRC) 501(c)(3) (most 4 abridging the freedom of speech,h, reference to one URMIAURM institutional members). State or of the press; or the right of thehe enforcementenfor of parallel limitations people peaceably to assemble, andand of Washington’s may be more aggressive, and the great to petition the government for a diffdiff erenceser between state laws are not redress of grievances.1 most important includedinclu in this article. Schools within Lobbying is part of our democraticic professions. a churchchu or religious congregation may tradition and has become the most have special rules, and public institu- eff ective way to petition the govern- tionstions are treated diff erently in some ment for funds, action, or new legisla-a- respectsrespe than private ones. Th e article tion. Th e term comes from a 19th-centuryntury ppracticeractice at is not intended to be a legal treatise, especially because the Willard Hotel, located just around the corner from this topic is becoming a controversial issue for the 110th the White House in Washington, D.C. Th e Willard was Congress.5 URMIA members are advised to consult with Washington’s fi nest hotel. Many government offi cials lived legal counsel on questions about this topic. at the hotel, and others (including the president) ate there frequently. Petitioners, or their agents, waited to but- Understanding Lobbying tonhole government offi cials as they passed through the In exchange for an exemption from federal taxation, hotel’s ornate lobby. Th e term “lobbyist” evolved from a which also allows donors to deduct their contributions descriptive reference to one of Washington’s most impor- to the organization, 501(c)(3) nonprofi ts agree to limit tant professions.2 lobbying activities. Limits to this form of advocacy are Recent news accounts have sullied the reputation designed to maintain the integrity of the tax system and of lobbying and lobbyists. Consider the convictions of to avoid public subsidies to partisan political activity.6

URMIA Journal 2007–08 83 Th is risk cannot be avoided. People express themselves Nonprofi ts can provide fair and balanced facts about on and off campus. Current events, and upcoming elec- all candidates, or sponsor a fair and neutral forum for tions may tempt passionate people to push boundaries all qualifi ed candidates with an impartial moderator and further—claiming that the “end justifi es the means.” a broad range of topics. Fundraising for any candidate Th ose with opposing views will complain of real or is prohibited. Unbiased and nonpartisan summaries of perceived infractions of Internal Revenue Service (IRS) voting records and position statements are not consid- regulations, and both sides, righteously indignant, may ered campaign activity. It is the bias toward a particular debate before the waiting press and prompt the IRS to candidate and partisanship that makes these educational take action. What cannot be avoided must be managed, practices illegal.9 so anticipate that some petitions to the government from Colleges and universities cannot support or oppose a your campus may constitute lobbying. Good risk manage- person’s bid for offi ce. Th e IRS recently strengthened its ment keeps the institution out of trouble. guidance with a revenue ruling to help nonprofi ts stay What is lobbying? Not every communication with the within legal requirements when involving candidates, federal government is lobbying. Access to the courts is educating and registerregistering voters, and organizing vote never lobbying, though supporting orr opposinopposingg a judicijudicialal drives.drives.10 NoteNote tthathat nonott all contact with an elected offi cial candidate for Senate confi rmation is is consideredcon campaigning just because always lobbying according to the IRS.. thethe personp is running for re-election. It A truthful response to a congressionalal Some petitions to maymay be acceptable to invite the offi cial subpoena will never violate the law, andnd toto a ribbon-cuttingr ceremony, an event participation in the regulatory processs is the government toto receiverec or give an honorary award or not considered lobbying activity by thehe from your campus degree,degre or a speaking engagement at a IRS.7 Th e risk exposure depends uponon governmentgover class on campus or an educa- which branch of government receives the may constitute tionaltiona program. When in doubt, consult advocacy and why. withwith an attorney. Limitations to a 501(c)(3) organiza-za- lobbying. tion’s petition to the government fall with-with- Infl uencingu Legislation: in two categories: “political” (campaigningning AcceptableAcce Within Limits and electioneering) and “legislative” (proposing,proposing, supporting,supporting, Th e IRSIRS permits lobbyinglobby as long as this activity is not a and opposing legislation—including appropriations). “substantial” part of the 501(c)(3)’s operations. A petition to any legislative branch of government (local, state, or Campaigning for a Candidate: federal) is considered lobbying, as is communication with Prohibited Political Activity presidential offi cials who participate in the formulation Political campaign activities are absolutely prohibited.8 of legislation. Congress often expresses broad goals in a Th ere is no de minimus exemption, nor is there a defense statute, which is then implemented by an administrative based on ignorance of the law. Any distribution of state- agency, but participation in administrative rulemaking ments (oral or written) on behalf of, or in opposition to, a is not considered lobbying (though the advocacy role is candidate and all campaign contributions are prohibited. much the same). Expenditures for lobbying, to exert infl u- A school employee may promote a candidate, even ence over actual legislation, are limited by the IRS. work on a campaign, if “off -the-clock” when the employee Th rough the Lobbying Disclosure Act LDA( ), dis- is serving in a personal capacity. However, no 501(c)(3) cussed below, Congress also requires a registration for employer supplies or resources can be used in the en- lobbyists so that interested individuals can easily discover deavor. Designated institutional spokespersons must also who is lobbying for what interests. Th is adds an element be very careful. Defending “personal” speech or activity of transparency to the process. Th e lobbying defi ni- becomes increasingly diffi cult when the personal views can tion extends to a broader scope of offi cials than the IRS get confused with institutional views. provisions, but is limited to federal contacts. State laws

84 URMIA Journal 2007–08 may require disclosure of state-level lobbying. Th e LDA Overall, election under 501(h) simplifi es requirements requires disclosure of contacts, not expenditures, and a (described in IRS Form 5768), off ers a clearer measure of general summary of each is below. “substantial,” makes expenditure tracking and recordkeep- ing easier, and gives the IRS more favorable fl exibility 1. IRS/Treasury Regulations when sanctioning a rule violation.14 Lobbying is a form of advocacy, but not every advocated For instance, a volunteer’s eff orts are not lobbying un- opinion or position constitutes lobbying. Treasury regula- less he or she is reimbursed for expenses or uses nonprofi t tion excludes:11 resources and supplies (offi ce, computer, server, paper, • Nonpartisan research and study: Data collected phone, etc.). It is the expenditure of money (directly or from unbiased questionnaires or surveys, and indirectly) that transforms the free speech into lobby- evaluation of data, is permitted even if a position is ing activity. For any communication that combines both expressed as long as people can form an independent educational speech and legislative advocacy (perhaps a opinion or conclusion about the issue. Th ere can newsletter with articles on varying topics), the college or be no call to action, or encouragementgement for people to university must allocateallocat expenditures between purposes. contact their legislators. However, thethe organizationorganiza sets the rules. Th e IRS permits • Government-requested technicalal greatgreat fl exibility with allocation if the advice: Reports or testimony of-f- schoolschoo articulates and adopts a reason- fered on a nonpolitical, bipartisanan Participation in able mmethod in good faith, and if the al- basis at the government’s requestst locationlocat is fair. To continue the example, are not considered lobbying. administrative a nenewsletterw has 10 articles, but only one • Self-defense: If the institution’ss rulemaking is consideredconsi to be lobbying. Allocating 10 existence, powers, duties, or percentperce of the newsletter’s cost for lobby- tax-exempt status is in jeopardy,dy, not considered inging expenditurese might be appropriate. communications with legislatorsors ExpenditureE thresholds diff er or the general public is not consid-nsid- lobbying. betweenbetw two categories: grassroots/ ered lobbying. indirectindir lobbying and direct lobbying. • General public interest: Th e institu-stitu- In theth former category, petitioners urge tion is permitted to consider, andnd tatakeke a thethe generalgeneral public to ccontacto legislators. Th is typically position on, broad social or economic issues if it involves education about the issue and advocacy of a social does not refer to or encourage particular action with or economic position (perhaps through direct mail or an respect to pending legislation. Active citizenship is advertising campaign), but it also involves a “call to action” not considered lobbying. that defi nes the communication as lobbying. Grassroots Th e only complete prohibition when infl uencing legis- lobbying has a lower expenditure cap than direct lobbying. lation is that you cannot use federal money from grants or In the latter category—direct lobbying—petitioners contracts, in whole or in part, to attempt to lobby or infl u- communicate directly with legislators. Th is contact may ence legislation to receive the award.12 As for other money, include personal meetings, letters or postcards, faxes, e- there is fl exibility for truthful advocacy unless it devotes a mails, or other forms of communication. If citizens serve substantial amount of its activities towards lobbying. as legislators by voting directly on an initiative or referen- “Substantial” is subject to interpretation, and even dum, then trying to infl uence public opinion is considered limited lobbying by an infl uential or prestigious institu- “direct” lobbying for expenditure thresholds.15 tion may be considered substantial by the IRS. Th e IRS allows a nonprofi t to elect a specifi c defi nition under IRC 501(h),13 in which “substantial” is determined by the level WHAT IS PERMISSIBLE? of expenditure (which is broadly defi ned) on lobbying In the government arena, the good news is the analysis rests upon activities. Schools should opt for the certain standard. facts and circumstances that the college or university can control.

URMIA Journal 2007–08 85 The bad news is the analysis also rests upon facts and circum- links to the CLP website, which is subsequently changed to stances subject to reinterpretation with the benefi t of hindsight. endorse Congressman Doe for re-election. This endorsement Consider the following examples with your school’s lawyer: may be considered “campaigning” by Ingrid for John Doe • President Pam writes a feature article for an alumni maga- and a problem for the 501(c)(3). zine called My View. In this edition of the magazine, she en- • Adam Alumni Director runs against John Doe for the dorses John Doe, who is running for re-election to Congress congressional seat. He refrains from campaigning at work, from the 62nd District of Virginia. John is an alumnus and though he always wears a button supporting his candidacy. personal friend. Pam offers to pay the entire publication Adam uses his school laptop to draft speeches, manage expenses for this edition of the magazine from her personal mailing lists (copied from the school alumni list), and to bank account “to prevent trouble with the IRS.” coordinate his work and campaign calendars. But he only While announcing someone’s activities in an alumni works on his campaign at home. Occasional fundraising magazine is not campaign activity, endorsing a candidate is. calls are made from his offi ce, but only on breaks and with A personal connection, or paying from a p,personal account, no toll or longg distance charges to the campus. Still, Adam is not likely to placate the IRS. Pam iiss campacampaigning,igning, whwhichich iiss hashas created troubletrouble for himself and the school. The button prohibited. She does have First Amend-end- isis ono his person, not attached to campus ment rights to speak, but not in thiss property,pro but may be the only way he com- regular forum which is offered to herer While announcing pliesplie with the law. Use of his offi ce, phones, as president and spokesperson of thehe computer,com university-owned software, and institution. Perhaps if she chose anotherother someone’s anyany other nonprofi t resources is illegal. forum and specifi ed that her person-n- activities in an MailingMai lists can be sold at fair market value, al—not institutional—opinions werere butbut free distribution is, in effect, an illegal expressed, her endorsement might nnotot alumni magazine campaigncam contribution even if the same affect the institution. Consider, though,ugh, contributioncon is given to all candidates. the range of non-lobby risks that thisis is not campaign • ClarissaClar Clerk holds Adam in high esteem. public opinion may create for the school.chool. activity, endorsing SheShe wants to contribute to his campaign, • Director Dan heads the university pressress butbut she forgot her checkbook and ATM card. at the same campus, knows John Doe,oe, a candidate is. ClarissaClar “borrows” $50 from petty cash and but thinks Congressman Doe is a disastersaster plansplan to replace the money the next day. for the country. Dan personally payss fforor In additiona to theft, depending upon the a full-page ad in the local communityty circumstances,circ she possibly has caused the paper, which is steeply discounted for primeib space because institutioni tit ti to t violate i l t the federal IRS prohibition—even if of the relationship between the two publishers. The ad ac- she eventually returns the money. curately describes Doe’s voting pattern, but some language • Dr. Vocal Volunteer is a member of the political science fac- accuses the congressman of hatred for the press and open ulty, and he supports Adam’s bid for offi ce. Dr. Volunteer’s debate. Payment is made from Dan’s personal account, and offi ce is plastered with signs, bumper stickers, and other the ad clearly states the views to be Dan’s personal opinion. campaign paraphernalia. He openly opposes John Doe’s Past performance, without reference to the upcoming vote on war funding at department meetings and whenever election, is appropriate for public debate. But Dan used his he sees people in the hallway. Dr. Volunteer has written nonprofi t contacts for this personal endeavor, and use of countless articles and letters to the editor about the war this “nonprofi t resource” may trouble the IRS. The ad is also vote, and he encourages his classes (and anyone within likely to be a divisive distraction to the campus community. earshot) to do the same. However, he is probably not cam- • International Ingrid is the study abroad coordinator. She paigning. Paraphernalia is in a personal space and obtained went to school with John Doe, but does not follow politics. with personal funds. Discussion with his colleagues during The Council for a Limited Press (CLP) wrote an excellent work hours is likely to be insuffi cient grassroots outreach, article for journalism students who study abroad. Ingrid and his activism tools fall squarely within the content and

86 URMIA Journal 2007–08 purpose of his courses. However, from a non-lobbying per- before a committee or subcommittee), or if communica- spective, his excessive advocacy might cause students with tion is required by grant or federal contract. Disclosure opposing views to question the fairness of Dr. Volunteer’s is probably required if he comes under the Act and if treatment of them. Responsibility accompanies academic visits were to discuss an appropriations bill earmarking freedom, and his intensity may cause other problems that funds for the institution.18 For those who socialize with need to be addressed.16 Hill staff , might brief discussions about legislation with • Dr. Paula Freedom is asked to testify as an expert before the a Senate staff er during a child’s soccer game count as a House Judiciary Committee about a pending bill supported “contact”? by CLP (H.R.123), sponsored by Representative Jane Roe, Many had criticized the Act’s generosity for gifts and from the 99th District of Montana. Dr. Freedom will incur travel and omission of entertainment and fundraising expenses to prepare the testimony and travel to Washing- activities. In other words, there was full disclosure except ton, D.C., but these probably are not lobbying expenses. Dr. for the circumstances that off er great temptation for cor- Freedom is responding to a government request, possibly by ruption. New ethics rules and changes to the LDA ban subpoena. As discussed in the next section, her activities are gifts to members and their staff members, put limits on also not likely to make her a lobbyist under the Lobbying entertainment, impose new rules on employing/retaining Disclosure Act. lobbyists, and change the disclosure reporting format and frequency.19 Talk to your institution’s legal counsel about any gifts, travel or entertainment expenses, or fundraising 2. Lobbying Disclosure Act activities for a government offi cial or about any close re- First Amendment protections make direct regulation of lationships with legislative staff . Th ose free tickets to the professional lobbyists diffi cult. In 1995, Congress enacted championship basketball game for a congressional staff er the Lobbying Disclosure Act17 to increase transparency may not be so innocuous, nor might the expensive dinner to contacts with legislators (grassroots is not included) at the trendy nightspot or a ride off ered to a senator in through a registration and reporting system. If at least one the university plane. employee spends 20 percent of his or her time on lobbying activities, and if the organization spends at least $24,500 Assessing the Risk every six months on lobbying activities, the college or Th e legal risk of noncompliance is high and the potential university comes under the Act. consequences catastrophic. Th e IRS evaluated a small Lobbying is defi ned by contacts, not expenditures, number of nonprofi t organizations (all 501(c)(3), but not and it includes any oral or written contacts with: (1) a all schools) after the 2004 election. Its conclusions are member of Congress (House or Senate) and his or her startling: 75 percent of the organizations were engaged staff , and (2) senior-level presidential offi cials (regardless in some level of prohibited political activity. Th e IRS has of participation in the legislative process). Contacts with many ways to punish campaigning and excessive lobby- state or local offi cials do not need to be disclosed. Contact ing, and revocation of an institution’s nonprofi t status is disclosure is required if made to infl uence: (1) federal the most devastating.20 legislation; (2) federal rules, executive orders, or policy Expenditures for lawyers and media consultants positions; (3) negotiation, award, or administration of during the investigation may pale in comparison to any a federal program, contract, grant, loan, or license; or resulting lost (or delayed) donations to the institution. As (4) nomination subject to Senate confi rmation. a small consolation, these self-preservation contacts may Once the LDA applies, disclosure of lobbying contacts no longer constitute lobbying. But beyond donations, the by non-lobbyists may be required. For instance, College blow to the institution’s reputation for its alleged failure President visits Capitol Hill. Preparing for the discussions to manage its aff airs within the confi nes of the law may and travel to the Hill involve costs. Disclosure may not be result in decreased enrollments and an inability to hire required if the visit was educational or at the government’s the best and brightest faculty for years to come. Battling request (for instance, to speak to a large group, or testify the IRS is also likely to invite further scrutiny by other

URMIA Journal 2007–08 87 interested parties: media, other regulators, collaborat- who have a valuable perspective), facilitates constitution- ing institutions, vendors, etc. All of this distracts from ally encouraged comment, and helps campus petitioners the university’s central mission: educating students and stay within legal limits. conducting research. To demonstrate, consider a regulatory example (which Colleges and universities are also uniquely at risk due is not considered lobbying) of a regulation of hazardous to the degree of decentralization, academic freedom tradi- substances. Th e business lobby supported the regulation tions, and the perceived innocuousness of the conduct by as better than the alternatives. Businesses used only a few those not familiar with the complex rules. Many legislative diff erent substances, but in great volumes, so compliance issues also aff ect a faculty member’s profession, scope of was easy. But a local college had a laboratory that con- research, and ability to fulfi ll his or her service require- tained small quantities of a large number of hazardous ments for tenure evaluation. For instance, it would be non- substances. Compliance for the college would have been sense for the chair of the social work department to refrain costly and time consuming given the diversity of substanc- from weighing in on licensure of social workers and practi- es. Th e chair of the chemistry department viewed speak- cum requirements for his students. However,However, it would be ing up as beyond hherer jjob description and talents, and she dangerous for him to extract a pledgee was ttoo busy to fi gure out the process. from a candidate to support a certainn EverEveryoney loses if she does not participate position on social work issues (implieded Decisions are in theth initial rulemaking. endorsement) and then to encourage his IInvolvementn with government students to support the candidate. better when ddecision-makingecis can also improve our Enormous opportunity costs existt instiinstitutions.t Getting involved exerts for not speaking up out of ignorance representatives somsomee control over the legal environ- or fear—institutions can be forced too of regulated menment—blockingt legislation and regula- operate in the legal environment cre- ttionion tthat does not make sense, and refi n- ated in our absence. Imagine a world industries or iningg legislativele and regulatory language so where nonprofi ts are silent and no onene ththatat compliancec is practical and realistic. speaks for intangible interests unless it professions It fafacilitatesc compliance and prevents is profi table for business to do so. Doesoes speak up. llegalegal trouble. It can bring campus depart- this reduce the value of our missions to a menmentst together and create opportunities mere cost/benefi t analysis after calculat-lat- for teamworkte and collaboration. ing the rate of return necessary on thee tuition expenditure? Does an educateded ppopulaceopulace off er MManaginganaging “Petition“Petition”” Risks, and Including other benefi ts to society? Silence deprives the government Risk Management in the Process of a more balanced perspective—including the value of How does an institution manage its government petitions intangible benefi ts that are diffi cult to measure in the com- and involve itself in governmental decision-making? Risk mercial marketplace. It is important that we know what is managers are a valuable resource as the college or univer- allowable under the law. sity manages these petition risks, but as a member of a Silence may waste time and money, as well. Congress, much larger team. Colleges and universities should keep and the agencies trying to implement public policy with the following strategies in mind. practicality and without undue burden, recognize that political discourse is more eff ective with expert participa- Centralize the Management of Lobbying Risk tion, and that decisions are better when representatives Trustees delegate general operations and spokesperson of regulated industries or professions speak up. As risk duties to the president—this is where lobbying risks managers, we know it is always better to do something should be managed and will receive greatest respect from right the fi rst time rather than fi x it later. Campus educa- the campus community. It is also easy to remember a tion empowers those who are not typically advocates (but single offi ce for any questions or approvals. If the policies

88 URMIA Journal 2007–08 are unclear, people may go ahead, speak on behalf of the • Your institution’s philosophy and policies on govern- institution, rationalize that it is easier to ask for forgive- ment aff airs. ness than to obtain permission, and potentially jeopardize • Issues appropriately resolved through governmental the school’s tax-exempt status. Clear policies minimize action. Th e government is not the source of all rem- noncompliance, but if an infraction still occurs, it is more edy, and lobbying on the wrong issue will just waste likely to be an isolated event (considered by the IRS when your time and money. Technology, staff training or determining sanctions). reassignment, or another strategy may be a better Th e president’s offi ce, however, is well-advised not to solution to the problem. manage and control these risks alone. A government rela- • General services that are available from lobby fi rms, tions committee can quickly tap a diverse range of exper- to ensure eff ective retention of outside professionals tise from across campus to maintain campus policies and if appropriate. procedures, fi eld questions, and investigate complaints. Committee members can keep a watchful eye for legisla- Include the Campus Risk Manager tive developments in professional literaturerature tthathat ppoten-oten- Th e campus riskrisk managermana is a valuable resource to the tially aff ect the school. Th ey can decidede to ccommittee.omm He or she may become aware participate in governmental deliberations,ions, ooff troublingtro allegations while working or plan corrective action to comply withith Team involvement oonn campus,ca through observation or a evolving requirements. Th is can even be ccomplaint.omp Allegations of campaigning as informal as an internal listserv. can prevent good, oorr aacceptablec lobbying may be men- One person on the committee cann ttionedione during venting, or as an aside. serve as an expert on legislative process,ess, but uninformed, RisRiskk management spans the campus, and can track bills that the school caresres intentions from and tthe risk manager is the centralized about, but all committee members ooffiffi cece that works with every department should know: creating a poorly and ccoordinates these risk management • Th e names of the institution’s eeffff ororts.t Th e risk manager can be the ears geographic representation—bothth written law. and eeyes of the committee. senators and representatives onn thethe BeyondB appropriations, many legisla- federal level, and all representativestives tivetive iissues have operational implications at the state level. of whichwhich tthehe presidenpresidentt may not be aware or as expert. For • Th e names of the institution’s jurisdictional repre- example, there has been discussion on Capitol Hill about sentation—for higher education, at the federal level, creating a parallel reporting statute to the Clery Act for target all members and key staff of the Labor, Health fi re safety.21 Risk managers bring a practical, operational and Human Services, and Education committees. perspective to proposed language and can help develop a • Th e names of any members with a special interest more reasoned position. Team involvement can prevent in the school—a caucus along race (the Black Cau- good, but uninformed, intentions from creating a poorly cus) or gender (the Women’s Caucus) or geography written law (one that then will need to be thrown out (the State or Rural Caucus); alumni from your by the courts, after much legal expense). Practical citi- institution; congressional members who have family zen input results in better legislative decision-making members currently at your institution; and anyone and a better use of public resources, and this input gives already sympathetic to, or who already advocates for, risk managers a chance to practice what they preach by your cause. addressing a situation when it is small and manageable • Th e basic process for making legislation, and the rather than waiting for a crisis. points within the process where lobbying might be Typically, a campus risk manager can add insight useful (where you can block or modify proposed and resources on issues such as building sprinkler legislation). requirements, hazardous waste disposal, construction,

URMIA Journal 2007–08 89 laboratory safety, industrial hygiene, animal research, to tracking insurance deductible expenses. Why reinvent security, emergency preparedness, statutory indemnifi - the wheel? cation, immunity statutes, dispute resolution, intellectu- Finally, the risk manager has developed outsourcing al property risks, study abroad, student internships and expertise from retaining brokers, lawyers, safety consul- practica, athletic safety, worker safety standards, driver tants, contract drivers, or other vendors or professionals. qualifi cation requirements, and employment practices. A request for proposal (RFP) tool may be helpful when Insurance itself is an important legislative issue. selecting a professional lobby fi rm, too. Documenting pro- Coastal schools understand the importance of insur- cesses already exist to check qualifi cations and references, ance to continued viability, but private insurance still negotiate the contract, and arrange for payment after might need support from the federal government after satisfactory completion of the work. Again, why reinvent a disaster. A lack of insurance for terrorism after 9/11 the wheel? required congressional help.22 A movement to national- ize regulation of insurance is also underway, with both Educate: What Schools Do Best benefi ts and drawbacks to the commercial insurance On this issue, everybody on campus must comply so pre- purchaser. When insurers fail to honornor promises, or vention must be campcampus-wide. Education is one tool that when a whole-scale jurisdictional changehange ccollegesolleg and universities already deploy. is proposed, legislators often hear fromom InstiInstitutionalt policies can serve as notice, private homeowners but less from com-om- Educational efforts bbutut aalso resource documents. Clearly mercial buyers. However, purchasingg dede-- proprohibith what is prohibited under the cisions, recovery expectations, and claimlaim increase law, anda disclaim any institutional re- complexity diff er signifi cantly betweeneen ssponsibilitypon for illegal speech or conduct. compliance, and the two types of insurance purchasers.rs. CreCreatea a workable process to approve Legislators do not always understandd such efforts also and ttrack lobbying expenditures. Assign insurance products, so risk managersrs tthehe taskta of monitoring expenditures to a need to keep up, speak up, and protectect demonstrate your partiparticular position or department. Th en the institution’s interests. ttailorailor guidance documents for diff erent due diligence. Education removes paralysis fromm ccampusamp constituencies. A general written fear and empowers a risk manager too ssummaryumm may be suffi cient for profes- respond to regulatory developments.s. ssionaliona and other staff , but off er more ex- Although not lobbying, risk managersers who do not knowknow ttensiveensive trainintrainingg to departmentdep chairs, budget directors, or the distinction may shy away from shaping regulatory other supervisory employees. Also consider how to involve issues that sometimes have a greater impact on the col- and equip the institution’s board of regents or trustees. lege or university than legislative enactments. Commit- Ultimately, conservation of the institution’s resources tee involvement provides such an education and makes is the board’s responsibility. Consider other awareness it easier to speak up and to be eff ective.23 programs and e-mail reminders (such as when passions Existing resources are more easily expanded than are high before an upcoming election). Expand Constitu- new programs created from scratch. Risk assessment, tion Day24 to educate faculty and staff . Educational eff orts legal compliance, training, and education tools are increase compliance, and such eff orts also demonstrate already in the risk management toolbox. Can these your due diligence. tools be expanded to identify government interaction risks? Many risk management offi ces are equipped with Outsource Where Appropriate systems to collect, organize, track, and report on exten- It is likely that part of this risk will be outsourced or sive data for insurance purposes. Perhaps another use transferred to others. Th is is not an easy process, and for these systems is to track lobbying expenditures and consideration of the issues will take quite a bit of the avoid exceeding the IRS limits—a process similar government relations committee’s time. Outsourcing also

90 URMIA Journal 2007–08 does not mean there is no role for the institution and its 3. TO A PROFESSIONAL LOBBYING FIRM employees. To the contrary, any good lobby fi rm will con- Federal lobbyists do not have licenses or permits, and sider ways to eff ectively use campus resources in the ad- there is a wide variety of skill and experience that each vocacy process: testifying, personal visits to congressional one brings to the profession. First, defi ne your long- and offi ces, letter-writing campaigns, strategically placed letters short-term goals and scope of work. To illustrate, the hor- to the editor, press conferences or releases, etc. In essence, ror at Virginia Tech prompted a quick legislative proposal you are outsourcing the leadership of lobbying activities to to amend the Family Educational Rights and Privacy a fi rm with greater expertise and resources. Act (FERPA) and to prevent future shootings. However, language proposed would achieve the opposite of Con- 1. TO A SEPARATE CAMPUS ENTITY gress’ intent. A short-term goal may be a public relations If you anticipate extensive lobbying, it may be advisable to campaign to block the bill. A long-term plan may be to set transfer the entire risk to an affi liated organization, per- up a judicial challenge if the bill is enacted. For the former, haps a 501(c)(4) or 527 nonprofi t organization. Although you may need a PR fi rm that does lobbying and govern- these entities are nonprofi t, people cannot deduct from mental work. For the latter, you may need a law fi rm that their taxes any donations to these entities.tities. hhasas a government practice.prac Th e institution can control the lobbybby PProfessional fi rms can off er a variety activities, but it must respect the arms-ms- ofof services,ser and what you buy depends length relationship between the schoolol Professional fi rms uponupon your goals. You get more bang and the separate entity. Any shared for youryo lobbying buck if you have a personnel, facilities, or resources mustst be can offer a clearclear idea what you need before retain- allocated between the school and separatearate ing a fi rm. Th e university’s options may variety of services, entity, and the separate entity must payay includeinclu a fi rm to: its fair share.25 Full analysis of this risksk and what you • GiveGi access to infl uential members of management strategy requires the assis-sis- keykey committees (such as Appropria- tance of an experienced tax attorney. buy depends upon tions)tio and open doors. Typically, these fi rmsrm have hired people with direct your goals. 2. TO PROFESSIONAL ASSOCIATIONS accessacc to key Capitol Hill offi ces. Most professional staff , and almost allll • OOffff er specialized expertise to frame faculty, belong to a professional associa-cia- the public issue or governmental tion or trade group. Many are “nonprofirofi t” under IRCIRC question and tthenhe advocate for your institution’s 501(c)(6), which means that donations are not tax-de- position within this new framework. ductible but that resources (human and fi nancial) can be • Keep you abreast of developments on Capitol Hill, aggregated to lobby. Legislators also like to see existing perhaps off ering a newspaper clipping service, invit- consensus of insurance or higher education professionals ing personnel to speak to campus leaders and fi eld on an issue. questions, and enlisting clerical support to manage Professional associations tend to involve members in direct mail. the lobbying eff ort, and these members are also employees • Manage grassroots campaigns— one familiar with of your institution. Th e school’s policy should address buying television and other media time, organizing when the employee is an agent working on behalf of the direct mail, writing and distributing newsletter outside association, and when the employee acts on behalf alerts and advertising content, maintaining databases of the institution. Reimbursement of expenditures should and grassroots networks, and conducting phone come from the sponsoring entity for these lobbying activi- bank operations. ties, and communication should also appropriately identify • Provide a network from which to build and the entity (for example, use association letterhead rather manage coalitions around a public issue for greater than institutional letterhead for association business). lobbying impact.

URMIA Journal 2007–08 91 • Keep the school in compliance with the legal counsel, invite members or staff from Capitol Hill to lobbying laws. campus events. Share helpful nonpartisan studies or suc- Second, defi ne what you want in the lobbying team. cess stories from the school. Send press releases that may Good interpersonal skills are a must: integrity, honesty, be of interest to his or her constituents. For a particular ability to patiently listen, diplomacy, creativity, thoughtful bill, help draft a bank of questions for an upcoming hear- thinking, persuasive advocacy, and responsiveness to the ing. If you are seeking legislative help, off er more than one client (you). Consider whether you want the fi rm to have possible solution that might fi x it. Give your congressional experience with other colleges and universities. delegation positive information and constructive solutions Th en the team must develop a suitable strategy and that can be used to serve you well. have the resources to devote to achieving the desired goals. On any given issue, is it better to lobby Congress or the Developing Better Institutional Risk Management executive branch (President and cabinet)? Will a mix of Our democracy requires citizen input, and input from direct and grassroots lobbying be eff ective, or should the your campus gets moremor diligence from legislators, better school go with either direct or grassroots?oots? WWhathat is thethe value from invested timetim and money, some control over plan to capture the interest of particularular ththee llegale environment, and new opportu- senators and representatives—those nitnityy ffor campus collaboration. Failure to chosen for party and infl uence, or becausecause Give your mmanageana the risks may result in loss of the they can infl uence a regulatory agency?y? sschool’schoo tax-exempt status. congressional Is it equally important to cultivate sup-p- RRisk managers also may fi nd it easier port among enthusiastic staff ers in thehe delegation positive ttoo ididentifye and manage more routine congressional offi ces? Is a bipartisan risrisksks because petition-related risks often approach better than a partisan one? information and ddovetailovet into risks of daily concern. Regardless of strategy, make sure the fi rmr m EarlEarlyy involvement allows time to shape constructive keeps you in the loop as it represents propproposed changes and to implement your interests. solutions that can ccomplianceomp plans when the legal environ- Th ird, negotiate an engagement letteretter mmentent changes. It potentially increases the with the fi rm. Th e letter will describee thethe be used to serve interinteraction with various campus con- scope of work, but also how and whenn sstituencies,titue and the more known about you well. you will compensate the fi rm. Contin-n- ccampusamp activities and pending develop- gency payments are prohibited in manyny mments,ent the better position from which to states, though the federal law is not clear.lear. eevaluatevalu the adequacy of the institution’s Th ink through whether an external incentivencentive is necessary insurance safety net. IfIf a department must comply with to obtain eff ective services from the fi rm. new regulations, the risk manager can also help spot and Finally, be generous with “thank-yous” and follow-up manage other risks created during the changes. Any suc- correspondence. Members of Congress and their staff cess stories or positive anecdotes collected can be shared hear complaints 99 percent of the time. Notes of apprecia- with insurers and used in claim situations. tion are time consuming, but you will distinguish your However, to be a valuable resource, risk managers school from the complaining crowd if you write them. cannot be tethered to just those risks covered by insurance Th e outside lobbying fi rm may off er clerical help for (which are not likely to be lobby-related risks), nor be pas- this purpose.26 sive recipients of governmental news. Risk managers must actively keep abreast of legislative and regulatory issues Be Proactive, not Just Reactive and speak up when appropriate. Th ey must care about all Lobbying should not just be blocking or reshaping fl awed the risks of the educational enterprise, and be part of the bills. Th is is analogous to limiting visits to the doctor team to make both the institution and the United States when someone is sick. After appropriate consultation with of America the best that they can be.

92 URMIA Journal 2007–08 About the Author 9 IRS Rev. Rule 86-95, 1986-2 C.B. 73, IRC Section 501(c)(3); IRS Publication Pamela J. Rypkema is the risk manager at 557. The United States Supreme Court recently struck down part of a campaign fi nance law because it interfered with free speech. In Wisconsin Gallaudet University in Washington, D.C. Right to Life v. The Federal Election Commission, Docket 04-1581 January She expresses great appreciation to her 2006 (www.supremecourtus.gov/opinions), Chief Justice Roberts said that: colleagues who contributed to this article, “[w]here the First Amendment is implicated, the tie goes to the speaker, not the censor.” Although this decision may cause re-evaluation of cam- including: Gary Andreas, Vice Chairman paign speech, it is unlikely to grant permission for nonprofi ts to speak. The of Public Policy and Research (Dutko Worldwide); decision looked at FEC, not IRS, rules, and the two regulatory frameworks Caleb Burns, Attorney (Wiley Rein LLP); Ada Meloy, are vastly different. The recently proposed amendment to S.1642, refer- General Counsel (American Council on Education); Tom enced in endnote 6, demonstrates congressional support for the existing IRS regulatory position. Rudin, Senior Vice President for Advocacy, Government 10 IRS Rev. Rule 2007-41, 2007-25 I.R.B. (June 18, 2007). Relations, and Development (College Board); Ben 11 Treasury Regulations 53.4945-2(d). In addition, each federal agency may Wallerstein, Vice President and Counsel (Dutko World- have special regulations aimed at controlling lobbying with the agency. wide); and Joel Wood, Senior Vice President, Government 12 31 U.S.C. Section 1352 (Byrd Amendment); 34 C.F.R. Part 82. See OMB Circular A-21; A-122 (relocated to 2 C.F.R Section 230); A-133. Aff airs (Th e Council of Insurance Agents & Brokers). 13 Tax-exempt organizations under 501(c)(3) may elect safe-harbor rules to govern lobbying expenditures under Section 501(h), which gives a specifi c formula for determining permissible lobbying activities and allows the Endnotes organization to rely on the limitations in Treasury Regulation 56.4911 1 United States Constitution, Amendment I. et seq. 2 J. Baran, “Can I Lobby You?,” Washington Post, January 8, 2006; History 14 A nonprofi t organization in the IRC 501(h) safe harbor may benefi t under of the Lobbying Disclosure Act (Public Citizen 7/23/07). the Lobbying Disclosure Act too. Entities that elect the 501(h) defi nition of 3 See Wikipedia online at www.wikipedia.org/wiki/Jack_Abramoff; www. “substantial” do not need to keep two sets of books or establish two com- wikipedia.org/wiki/J.Steven_Griles; www.wikipedia.org/wiki/Bob_Ney. pliance procedures, but instead can opt for the IRS defi nition. Section 15(a) 4 See www.npaction.org/article/articleview/48/1/227 for a list of nonprofi t of the LDA permits an organization in the safe harbor to attach a copy classifi cations. of its IRS Form 990 to the required lobbying disclosure report. Compli- 5 See S.1642 (Kennedy-Coburn Amendment to the Higher Education Act of ance under the vague “substantial” standard imposes a double reporting 1965 Reauthorization, which restates the IRS campaigning and lobbying process: one to the IRS and one to the secretary of the U.S. Senate (sopr. regulations). The issue remains political. In addition to the institution’s senate.gov) and the clerk of the House of Representatives (clerk.house. lawyer, consult with any employed or retained lobbyists for interpretation gov). See Guide to the Lobbying Disclosure Act at lobbyingdisclusre.house. and guidance as legal requirements evolve. Information concerning bills gov/lda_guide.html; J. Tenenbaum, “Top Ten Myths about 501(c)(3) referred to in this article can be obtained from www.house.gov or Lobbying and Political Activity,” ASAE (May 2002). www.senate.gov. 15 The Nonprofi t Lobbying Guide, Second Edition, Independent Sector. See 6 Congress confi rmed the right of nonprofi t organizations to undertake www.independent sector.org/programs/gr/lobbyguide.html. legislative advocacy, P. L. 94-455 (1976), and reaffi rmed the right in 1987 16 See Garcetti v. Ceballos, 126 S.Ct. 1951 (2006) (the First Amendment does when amending the Act. Regulatory jurisdiction is delegated to the IRS, not insulate a public employee from discipline for offi cial statements); and the regulatory framework was completed in 1990. See 26 U.S.C. Sec- Pomona College v. Superior Court, 53 Cal. Rptr.2d 662 (Cal. App. 1996) tion 501(c)(3); Hernandez v. Commissioner, 490 U.S. 680, 699–700 (1989) (tenured teacher is not immune from termination; discharge is appropri- (501c3 balance is least restrictive way to accomplish compelling interest ate if personal conduct substantially impairs the person’s fulfi llment of of preserving integrity of tax system); Regan v. Taxpayers With Representa- his or her responsibilities). tion of Washington, 461 U.S. 540, 546 (1983) (Congress not required by 17 The Act applies to both for-profi t and nonprofi t organizations. See P. L. First Amendment to subsidize lobbying); United States v. Harriss, 347 U.S. 104-65 (Dec. 19, 1995); 2 U.S.C. Section 1601; clerkweb.house.gov/lrc/pd/ 612 (1954) (restrictions do not violate freedoms guaranteed by the First lobby/lobby.htm; www.senate.gov/legislative/common/briefi ng/lobby_ Amendment—freedom to speak, publish and petition the government); disc_briefi ng.htm. Forms are available from the Senate Offi ce of Public IRS Publication 557; IRS Form 5768. Records and the House Legislative Resource Center. 7 Congress delegates rulemaking authority to administrative agencies. These 18 Non-lobby contacts may count under Section 3(10) of the Act. Lobbying agencies depend on comments from those regulated and solicit these includes planning and background work necessary for the contact, as well comments by holding hearings (formal rulemaking), accepting comments as coordination with the efforts of others. See J. Tenenbaum, “Lobbying by letter, fax, or e-mail (informal rulemaking), or creating a focus group of Disclosure Act of 1995: A Summary and Overview for Associations,” ASAE sorts to create a workable regulation (negotiated rulemaking). See 5 U.S.C. (June 2002). Sections 551, et seq. (Administrative Procedures Act). 19 See 2 U.S.C. section 1601; www.independentsector.org/programs/gr/lobby- 8 See The Revenue Act of 1954, P. L. 83-91; 26 U.S.C. Section 1 et seq.; IRS reform.html; Election Law News (February 2, 2007) at wileyrein.com. Publication 557. Public employees also may be barred from political 20 See IRS Rev. Rule 2007-41, 2007-25 I.R.B. (June 18, 2007); IR-2006-36 activity under federal law. www.osc.gov/ha_fed.htm. (news release) FS-2006-17 (fact sheet) at www.irs.gov/newsroom; Branch

URMIA Journal 2007–08 93 Ministries v. Rossotti, Order No. 995097A (D.D.C. 2000); IRS Publication 557. 21 Congress is wading into more traditional risk management areas. Legisla- tion was proposed after the Seton Hall fi re in 2000 (“Campus Fire Safety Right-to-Know,” H.R. 2637, a Senate version passed on July 24, 2007). On June 20, 2007 the Committee on Health, Education, Labor, and Pen- sions passed a proposal to impose on colleges and universities 100 new reporting requirements concerning a range of operational issues. 22 The Terrorism Risk Insurance Act of 2002, recently extended (signed fi ve days before the Act expired), provides a temporary federal terrorism insurance program. See www.ustreas.gov/offi ces/domestic-fi nance/fi nan- cial-institution/terrorism-insurance/pdf/hr3210.pdf. Other issues include: insurance regulatory reform (H.R. 1065/S.929); fl ood insurance reform (H.R. 920); and technical requirements to block fi le sharing (H.R. 3746). To track insurance legislation, risk managers might want to use the resources of The National Conference of Insurance Legislators (www.ncoil.org), and the Risk and Insurance Management Society, Inc. (www.rims.org). 23 On a regulatory front, the U.S. Department of Homeland Security may alter federal hazardous chemical regulation because proposed rules would be too burdensome for colleges and universities. L. Smith, “Federal Panel Will Discuss Modifying Chemical-Security Regulations to Suit College Needs,” Chronicle of Higher Education (July 25, 2007). Speaking up saves time and money. 24 P. L. 108-447, Consolidated Appropriations Act of 2005, requires any institution receiving federal funds to hold an educational program for students on September 17th each year about the U.S. Constitution. Ongo- ing compliance efforts can easily be expanded to reach a faculty and staff audience, too. 25 See Regan v. Taxpayers With Representation of Washington, 461 U.S. 540(1983); and the list of various nonprofi t organizations from the NP Ac- tion website in endnote 4. For general information, see the Campus Legal Information Clearinghouse at Catholic University, http://counsel.cua.edu. 26 Excellent resources include: • American Council on Education (www.acenet.edu) • American Society of Association Executives (www.asaecenter.org) • Center for Lobbying in the Public Interest (www.clpi.org) • Independent Sector (www.independentsector.org) • League of Women Voters (www.lwv.org) • NP Action (www.npaction.org) • National Council on Nonprofi t Associations (www.ncna.org) • Public Citizen (lobbyinginfo.org)

94 URMIA Journal 2007–08 Remember, man, ‘The universal cause Acts not by partial, but by gen’ral laws;’ And makes what happiness we justly call Subsist not in the good of one, but all.

—ALEXANDER POPE (1688–1744), “AN ESSAY ON MAN: OF THE NATURE

AND STATE OF MAN WITH RESPECT TO HAPPINESS” The sweets of Pillage can be known to no one but the Thief, Compassion for Integrity Is his divinest Grief.

—EMILY DICKINSON (1830–1886), “PART FIVE: THE SINGLE HOUND,”

COMPLETE POEMS Identity Theft and Data Loss on Campus— Minimizing and Addressing Risk

James A. Keller, Esq., and Melissa Hill, Esq., Saul Ewing LLP

Abstract: Th e dawn of the cyber age has brought the Th is reality has unfortunately hit home at some of our development of new methods for obtaining, transmitting, fi nest and seemingly best-prepared institutions: Ohio and storing amounts of information more vast than the University (OU), Th e University of California at Los human mind can fully comprehend. Yet these advances in Angeles (UCLA), and Th e University of Colorado (CU), technology have also introduced their share of challenges, to name a few. While the specifi cs of each attack varied especially for colleges and universities who can now keep slightly, the basic pattern was the same: hackers improp- hundreds of thousands of constituent records in computerized erly accessed protected information, including Social systems. For these institutions, the threat of such information Security numbers and fi nancial aid information, from becoming compromised is very real. Th is article will discuss university ddatabases.atabases. what is happening in regard to breacheses of security, how it is happening, and whathat NowNow Happening at a preventive measures institutions may em-em- While you can UniversityUniv Near You ploy to minimize the likelihood and impactmpact OhioOhio University had a tough 2006 on of these cyber attacks. store and quickly thethe ITIT front. On April 21, a cyber attack struckstruc OU’s Innovation Center’s Tech- Remember fi les? Th ose heavy metal access amazing nolonologyg Transfer Department. Th irty- things that stored paper, and that youu amounts of fi ve studentss had their Social Security could literally lock up behind a door?? numnumbersb exposed in that data theft.1 Just Once secured, it would take a Watergate-gate- information, so threethree days later, another breach occurred. ian eff ort to get at those papers—andd re- Th e OUO Alumni Relations database was ally, who would go through that trouble?ble? can the bad guys. ththee ttargeta of that data theft, and detailed Th e information storage situationn infoinformationr for more than 300,000 on your campus today is meaningfullyly alualumnim and friends of the school was diff erent. You store everything electronicallyonically (perhaps wiwithth exexposed.posed.2 Less than ttwow weeks later, the university discov- a hard copy backup), bolstered by pass code protection, ered a third incident of data theft in the school’s health encryption, or whatever the latest security audit suggests. center, exposing more than 60,000 individuals’ personal And while this security has become quite good, it is, none- information.3 In each instance, the hackers accessed and theless, “virtual.” Unlike a physical lock and key, virtual potentially “stole” names, Social Security numbers, and an security can be compromised remotely by sophisticated array of other confi dential information. Collectively, the ne’er-do-wells from almost anywhere on the planet, at any 2006 events at OU comprised one of the largest cyber at- time. And in a fi nal irony, while physical limitations of tacks ever infl icted upon a college or university. hard copy fi les necessarily limited your storage capabilities, Th e fall of 2006 brought the cyber attack scourge the incredible memory capabilities of today’s sophisticated to UCLA. On November 21, 2006, technicians discov- systems allow you to store every detail about your thou- ered a security breach in a database containing personal sands (or hundreds of thousands) of students, employees, information of approximately 800,000 people. Worse yet, faculty members, alumni, donors, and contacts. So, while investigations revealed that the database had been illegally you can store and quickly access amazing amounts of accessed on a routine basis since as early as October 2005.4 information, so can the bad guys. UCLA offi cials announced the news on December 12, and

URMIA Journal 2007–08 97 issued notifi cation letters to potentially aff ected individu- recently as June 2007, both the University of Virginia als, advising them of precautionary steps they should (UVA) and the University of Iowa (UI) were in the take to minimize the risks of identity theft and misuse of process of sending notifi cations to students and faculty personal information.5 Following an extended investiga- members to advise them of security breaches. At UVA, tion, UCLA confi rmed that these breaches resulted in a hacker broke into the school’s network on 54 separate the illegal retrieval of approximately 28,600 per-reference days, and the records, including names, Social Security Social Security numbers. Th e university sent follow-up numbers, and birth dates, of almost 6,000 faculty mem- notices to those individuals on January 10, 2007, clarifying bers were accessed. At UI, various electronically-stored that the illegal retrieval of information did not necessarily records, including the Social Security numbers of approxi- mean the individuals were victims of identity theft, or that mately 1,100 per reference faculty members, students, the Social Security numbers were being misused. None- and applicants to a graduate program were compromised. theless, UCLA’s acting chancellor reiterated, by separate Both universities announced that they would take steps to letter, suggestions for preventing credit fraud and related notify aff ected parties and enhance network security.14 crimes.6 UCLA then went a step further and established a website providing facts, investigation updates, notifi cation How They’re Getting In (and Why) information, and fraud prevention tips.7 Similar breaches occurred throughout 2006 and early Around the same time in Boulder, Colorado, while 2007 at various colleges and universities across the coun- students were fi nishing fi nals and packing to leave for try, from the University of Delaware15 and the University winter break, university offi cials faced similar problems. of Texas,16 to Vanguard University17 and Johns Hopkins.18 On December 15, 2006, CU announced the discovery of a computer attack on one of its servers, exposing personal How? information of approximately 17,500 individuals.8 Th e Simply put, the cybercriminals are fi nding a way in, and university notifi ed those potentially aff ected, issued a press the information is getting out. From hacking into sophisti- release, and provided identify theft prevention information cated technical servers, to compromising private informa- to its community via an informational website.9 tion placed on public or non-secure websites, to the simple CU was attacked again in May of 2007. Th is time, a theft of a laptop and its fi les, schools are being attacked college of arts and sciences database was hit with a virus, from a variety of diff erent angles. Here are some of them. exposing the names and Social Security numbers of Th e Unknown Server: In one of the most egregious almost 45,000 students.10 CU technology security inves- OU attacks, hackers accessed a server in the alumni rela- tigators discovered that the virus entered the university’s tions offi ce that computing offi cials believed was offl ine. server through a vulnerability in anti-virus software that As the university learned following an investigation, the was compounded because a security setting was not server had never been properly shut down and hackers properly confi gured. In response, the university issued a discovered the active server still connected to the network. press release,11 sent precautionary letters to anyone whose Although the hackers used the server primarily for sharing information was stored on the server, and established a music fi les, it was connected to the broader OU network, website informing students of how to protect themselves and personal alumni and staff information was at risk of from identity theft.12 exposure the entire time.19 Th e drumbeat continued in April 2007, when admin- Th e Persistent Impostor: In the spring of 2007, a hack- istrators at the University of California, San Francisco er retrieved personal information from more than 22,000 (UCSF) began notifying both current and former students current and former University of Missouri at Columbia and employees about a possible computer data breach13 students through an online help desk. Th e hacker discov- after learning a server in the offi ce of the president had ered an online form used by students to post information been compromised. Th e server was immediately taken requests and track the status of those requests. Posing as offl ine, notices were mailed to the aff ected individuals, a student, the hacker inundated the server with a num- and an identity theft website was established. Finally, as ber of online inquiries seeking to obtain campus-related

98 URMIA Journal 2007–08 information, and ultimately was provided with a report your institution’s primary focus should be on enhancing that included the names and Social Security numbers of the protection of its computer network. Th is protection students who had worked in on-campus jobs.20 could include physical improvements to computer security, Th e Security Flaw: In the UCLA incident, the hacker policy changes, and, possibly, “cyber insurance.” Th ese will discovered and exploited a fl aw in database software that be addressed in turn. computer security technicians had not detected. Th e hacker continued to access the database for more than Physical Techniques to Improve Security24 a year, seeking and retrieving Social Security numbers Firewalls: A fi rewall is a barrier that keeps outsiders and throughout the process.21 their viruses from accessing your computer network. A Th e Lost or Stolen Device: In 2006, a thumb drive fi rewall should be installed at every point where the com- containing student rosters was stolen from a professor at puter system may come into contact with other networks, the University of Kentucky, and that simple theft exposed even via e-mail. personal information from eight years of class rosters.22 Bsystem Tests/Cyber Audits: ConductingConducting vuvulnerabilitylnerabil tests will help quantify your Why Us? institution’sinstit level of data security risk. While it is hard to say for sure, one canan ExperiencedExpe outside consultants can off er several reasons why campuses haveave Your institution’s bebe retainedre for the specifi c purpose of become a favorite target of hackers. actingactin as hackers—they will attempt to Funding: Unlike for-profi t corpora-ra- primary focus hack into your computer networks and, tions, for whom data loss can mean a hit in theth process of doing so, can deter- to their bottom line, non-profi t educa-a- should be on minemine where the systems are vulnerable tional institutions have been historicallyally enhancing the and rrequire upgrades. Th ese tests, also less inclined to devote signifi cant spend-nd- knownknow as “cyber audits,” can also include ing to secure their information or to protection of its website-basedwebs customer self-assess- upgrade and improve systems that collectllect ments,ment interviews with IT and security and store a wealth of information. computer network. personnel,perso and remote network scans to Social Security Number as ID: Manyany testtest vvulnerabilities in a system’s fi rewalls, schools have historically employed Socialocial servers,serve and other network devices.25 Security numbers as a student’s identifitifi cation number, Encryption/ScramblingEncryption/Scram Personal Information: or for a password that is used for everything from class Personal information such as Social Security numbers, registration to purchasing lunch. Th is increases the risk of birthdates, and addresses should be encrypted and/or fraud and identity theft. separated from other sensitive information.26 Allowing Your Students May Be Putting You at Risk: College third parties to access students’ records and view all per- students have become sophisticated users of the latest sonal information exposes the university to a signifi cant computer technology and spend money on hardware and risk of identity theft. Experienced IT personnel, including software faster, and in larger quantities, than the typical those already on your campus, should be able to help here. computer user.23 Th is means more computer interaction with off -campus sources and, by extension, more points Policy Changes to Improve Security of vulnerability. If these students are making these con- Draft or Revise Your Data Security Policy27: An institu- tacts while connected to your server, the vulnerability of tion-wide data security policy should be implemented, one can become a vulnerability of all. outlining methods by which individual employees and students can secure the computer network. Th is should Prevention and Mitigation include the creation of unique passwords (combination of If you have been fortunate enough to avoid a cyber letters and numbers, small caps and large caps), password attack—or if the dust has just settled from an attack— changes on a routine basis, and an immediate process for

URMIA Journal 2007–08 99 deleting user names and passwords of matriculated losses resulting from funds paid to terminate the threat of students and discharged employees. a computer attack; (4) any expenses incurred as a result of Limit Use of Social Security Numbers: A very basic a computer security breach; and (5) any cost incurred by method to minimize illegal access to personal information an insured to restore information that is corrupted.29 is using identifi ers other than Social Security numbers, Th ese policies are, for most underwriters, in their particularly for students. Hackers are aware that student infancy. Premium calculations can be diffi cult, and wheth- ID numbers are often nothing more than a Social Security er all underwriters will off er these policies, or whether numbers with an additional attached digit. they will off er them to what may be seen as “high-risk” Preferred methods would be the use of partial Social educational institutions (and on what terms), remain open Security numbers (e.g., the last four digits), a combina- questions. Early indications are that the cost will be linked tion of other personal information (prior street addresses, to the size of the student body. A 4,000-student institu- parents’ birthdates, etc.) jumbled together to create a tion, for example, may spend approximately $5,000 per unique identifi er, or creation of a randomly-selected, year for $1 million in coverage.30 A school with as many institution provided ID number that doesdoes not correlate to as 20,000 students mmaya be able to obtain $3 million in anything else. To move in this direction,on, coveragecover for $50,000 a year.31 And in a some institutions have drafted Sociall slslightlyight more complex policy structure, Security number policies intended too A number LLloyd’sloyd of London issued a cyber policy limit, and ultimately eliminate, the usese with a $70,000 premium to a non- of Social Security numbers on campusus of insurance ddisclosedisclo 11,000-student private except where absolutely necessary. Th e ccollege.olleg Th e policy limits were $1 mil- companies have University of Pennsylvania, for example,ple, llionion ffor claims brought by the school on has adopted a draft policy (soon to bee begun offering iitsts oownw behalf—typically for property fi nal) that “calls on staff , faculty, contrac-rac- ddamageama to its computer system caused tors, and agents of the above to inventoryntory “cyber insurance” ccreatedreat by a virus or attack—and up to their online and offl ine Social Securityty $$33 millionm for claims brought by third for organizations numbers and reduce the above risks [[as-as- ppartiesarti against the school for identity sociated with SSN# use] by, in priorityty seeking protection. ththeft/dataeft loss, etc.32 order: (1) eliminating this data altogeth-eth- IIff you are considering cyber insur- er, (2) converting it to PennID [a uniqueque aance,nce, you should have a security audit campus ID], (3) truncating the data ttoo pperformed,erfo as that likely will be a pre- capture and display only the last fourr digitsdigits, [or] (4) when condition for coveragecoverage. In addition to campus head count, the complete SSN is clearly necessary, ensuring strict your premium is likely to vary based on the outcome of security controls to protect the full data.”28 Th is sliding the audit, and a low security score may result in denial scale plan—with complete elimination of Social Security of coverage or in an unpayable premium.33 numbers as the ultimate (but perhaps unattainable) goal, Th ere are other risk mitigation products to consider. and strict controls on their usage as the minimum require- Following a security breach involving a stolen USB drive, ment—makes good sense. Louisiana State University (LSU) entered into a year-long Cyber Insurance? Of course, any discussion of risk agreement with a credit agency to provide its students, mitigation must include insurance. A number of insur- faculty, and staff with free credit report monitoring and ance companies have begun off ering “cyber insurance” for up to $2,500 in identity theft coverage. LSU will pay the organizations seeking protection in the event of data loss, credit agency $150,000 for the one-year agreement.34 data theft, or security breaches. To date, these policies may cover the following: (1) legal liability to the organiza- Your School Has Been Hit, So Now What? tion for security and privacy; (2) crisis management and You have performed a cyber-audit, adopted new data notifi cation costs associated with a security breach; (3) any protection policies, analyzed your coverage options,

100 URMIA Journal 2007–08 and tightened up your servers. Despite these eff orts, your Electronic Signatures Act institution was just struck by a cyber attack. Now what? • Substitute notice through e-mail, website publica- tion, or major statewide news media if the costs of Notifi cation providing notice would exceed a certain threshold In the event of a cyber attack on campus, an immediate (such as $250,000), or if more than a certain num- investigation and response is critical. Th e faster students, ber of individuals are aff ected, or if the institution alumni, and faculty know of potential exposures, the faster does not have suffi cient contact information they can act to protect their identity and their credit. In • Th e institution’s own notifi cation system, if it meets addition to being good policy, in some states notifi cation the timeliness requirements of the security breach is legally mandated. Many states have enacted security notifi cation law in question breach notifi cation laws that dictate when and how to Destruction of unneeded sensitive information: notify potential victims of data security breaches. Institutions that no longer have a reasonable business or By enacting the California Security Breach Informa- educational purpose for collecting and storing personal tion Act in 2003, California became tthehe fi rst state to information must taketake reasonable measures to destroy mandate consumer notifi cation for dataata oorr eencryptn the information so that it is security breaches where personal infor-or- unreunreadablea and undecipherable.38 mation has or may have been improperlyperly In the event of accessed.35 Th e California Act defi ness P.R./HandlingP.R./ the Media “personal information” to include Socialcial a cyber attack on In aadditiond to fi xing your campus system, Security numbers, medical information,on, youyou maym well need to fi x your campus. A campus, an imme- driver’s license numbers, bank accountnt datadata breach will engender great conster- numbers, or credit card numbers. Califor-lifor- diate investigation nationnatio among your students, faculty, and nia requires notifi cation to aff ected indi-ndi- alumni,alum and if it is a meaningful breach, viduals of all security breaches involvinging and response thethe pressp may also get involved. You must unencrypted data.36 bebe prprepared to appease apprehensions is critical. More than half of all states have sub-sub- andand ddeal with the media. sequently enacted similar statutes basedsed Th ere are several ways to attack this. on the California model.37 While not ForFor example,e following a security breach identical, these laws share common attributes:ttributes: in April 2006, thethe UniversityUni of Texas opened a call center What is covered: “Personal information” is almost and assembled a response team to address inquiries and uniformly defi ned as California fi rst defi ned it, and a “data concerns.39 Other schools have established websites to breach” is commonly defi ned as an “unauthorized acquisi- provide pertinent information and updates, as UCSF did tion of computerized data that compromises the security, in April 2007 in response to its attack.40 And when the confi dentiality, or integrity of personal information main- press calls, you want to be able to point to the panoply of tained by a person or business.” protective measures you already had in place and those Timeliness of notice: In the event of a breach, institu- that you are putting in place, and be able to do so quickly. tions that own the compromised personal information It is imperative to know what security you have, what it must provide prompt notice to an aff ected state resident. can (or cannot) do, and who is responsible for these issues In addition, if the breach occurs while the data is in the on your campus. care of someone or an entity other than the data’s owner, prompt notice must be given to the owner of the data. The Fallout of An Attack Methods of notice: Typically, the state laws provide that Financial Loss notice may be satisfi ed by: Institutions faced with security breaches may suff er more • Written notice through the mail than just the loss of data and reputational harm. First, the • Electronic notice in conformity with the Federal actual cost of responding to the attack takes a toll. Ohio

URMIA Journal 2007–08 101 University estimates that it has spent more than $77,000 In another recent case, a federal district court in simply distributing letters to those individuals aff ected,41 Arkansas dismissed class action allegations of failure not to mention the cost of operating a response website to protect personal data brought against a data storage and hotline, and investigating the breach. Because inci- company. Th e court found the injuries alleged were merely dents of data theft often bring to light fl aws, holes, and speculative. While the breach had occurred, plaintiff had vulnerabilities in a university’s data security systems, costs no evidence nor could she assert that her personal infor- associated with upgrading technology and enhancing mation was actually used in a way that harmed her. Th e security are also inevitable. case accordingly was dismissed because of plaintiff s’ lack of standing.50 Lawsuits While the small body of case law to date is favorable, Civil lawsuits related to data theft are becoming more as the problem of identify theft and data loss continues common, as state statutes designed to protect personal to grow in the public consciousness, the legal landscape information and prevent identity theft are giving rise to may change as well. It is not much of a stretch to see a civil claims. Employees have sued employers,42 customers negligence claim making it to trial: by requiring (employ- have sued fi nancial institutions43 and data storage com- ees/faculty/students) to use the university’s servers, the panies,44 and, at Ohio University, two graduate students university assumed a duty to make those servers safe. sued the school for privacy violations stemming from An alleged failure to secure those servers resulted in a data thefts from school computers.45 Th ose students are cyber attack and was a breach of that duty. Because of seeking to have the litigation certifi ed as a class action, and that breach, harm resulted to the (employees/faculty/ are demanding that the university pay for credit monitor- students). Th e case may not yet exist in your jurisdiction, ing systems for the approximately 137,000 people whose but it is coming. personal information was compromised in the data theft.46 While claims are being fi led, courts appear reluctant, Conclusion at least for now, to recognize a cause of action for failure to Cyber attacks are nearly impossible to prevent, but that protect personal information. reality will not appease concerned students, faculty, or In one federal court action, bank customers sued alumni. Just as colleges and universities routinely take the bank and four of its employees in connection with steps in the “real world” to protect their campus, an the alleged improper use of plaintiff s’ personal fi nancial expectation is growing for identical protection in the information. Th e customers asserted violations of state “virtual world.” And it can be done. and federal consumer protection statutes, violations of As discussed, protecting against identity theft and the federal Racketeer Infl uenced and Corrupt Organiza- data loss is ultimately not unlike other risk mitigation tions Act (RICO), as well as basic common law claims on campus: identify the bad guys, identify what they are for conversion and negligence.47 More specifi cally, the doing and how, and then take proactive steps to ward customers complained that the bank failed: “to implement them off . While this is particularly diffi cult in the world and follow the security procedures; to protect the confi - of electronic data, where the technology is constantly dentiality of customer information; to guard against the changing, it is a necessary eff ort that will require your misuse of that information; and to detect, report, and stop legal, IT, and risk managers to work together. Hopefully suspicious activities of employees.”48 Th e federal district this article provides some assistance in that eff ort. court dismissed these claims, noting that the statutes at issue did not expressly provide for a private right of action About the Authors to enforce privacy obligations, but instead left enforcement James A. Keller, Esq. is the Chair of the to state and federal regulators. Finding no legislative intent Higher Education Practice Group at Saul to create a private right of action, the court refused to Ewing LLP, and a partner in its litigation imply one in the statutes or in common law and dismissed department. He has handled a wide array plaintiff s’ claims.49 of litigation matters arising out of complex

102 URMIA Journal 2007–08 business disagreements, and has particular experience Health Center Data Theft,” May 11, 2006, available at http://www.ohio. edu/datatheft/student/index.cfm. defending colleges and universities and advising higher 4 UCLA identity alert, available at http://www.identityalert.ucla.edu/index. education institutions on liability issues. Mr. Keller con- htm. sistently handles the defense of major premises liability 5 UCLA notifi cation letter, Dec. 12, 2006, available at http://www.identity- actions, ERISA claims, white-collar criminal matters, and alert.ucla.edu/ID_alert_letter.pdf. 6 UCLA follow-up letter, Jan. 10, 2007, available at http://www.identityalert. reinsurance disputes. He has also served as an adjunct ucla.edu/ID_alert_followup_letter.pdf. professor at the University of Delaware, where he taught 7 See http://www.identityalert.ucla.edu. undergraduate law courses. 8 “CU-Boulder Reports Security Breach In College Of Arts And Sciences Advis- ing Computer,” Dec. 15, 2006, available at http://www.colorado.edu/news/ releases/2006/437.html. Melissa Hill, Esq. is an associate in the 9 See “Facts About Identity Theft,” available at http://www.colorado.edu/its/ litigation department and a member of the security/awareness/privacy/identitytheft.pdf. Higher Education Practice Group at Saul 10 See “CU Boulder Arts and Sciences Server Hacked on May 12,” May 22, Ewing LLP. 2007, available at http://www.colorado.edu/news/releases/2007/224.html. 11 Id. 12 See “CU Boulder Responds to Computer Security Incident,” available at http://www.colorado.edu/its/security/aac052007/. 13 “Data Thieves Hit University of California, San Francisco,” consumeraf- Endnotes fairs.com, Apr. 5, 2007, available at http://www.consumeraffairs.com/ 1 Terms like data theft, data loss, and hackers have become part of everyday news04/2007/04/uc_data.html. language in the fi eld of data theft prevention. “Data loss” occurs when 14 “Two Universities Hit by Security Breaches,” June 11, 2007, available at data is lost from a data-storage device in any manner, including misplace- http://www.informationweek.com/software/showArticle.jhtml;jsessionid=J ment, human error, hardware or software failure, or theft. See “What is UBS1B3C4D454QSNDLQCKICCJUNN2JVN?articleID=199903218. Data Loss?,” available at http://www.bostoncomputing.net/consultation/ 15 “Public Safety Reports Computer Security Breach,” UDaily online, databackup/dataloss/. May 23, 2006, available at http://www.udel.edu/PR/UDaily/2006/may/ “Data theft” is used to describe an incident in which information is breach052306.html. illegally copied or taken from a business, institution, or individual. This 16 “Unauthorized Access of Computer Records Discovered at The University type of information typically includes Social Security numbers, credit card of Texas at Austin,” Apr. 23, 2006, available at http://www.mccombs.utexas. information, and other personal information. See defi nition for data theft, edu/datatheft/release_4.23.06.asp. available at http://www.computerhope.com/jargon/d/datathef.htm. 17 Vanguard University identity alert, Jan. 26, 2007, available at http://www. “Identity theft” refers to the crime in which an impostor obtains critical identityalert.vanguard.edu/notifi cation.htm. personal information, such as Social Security or driver’s license numbers, http://www.ci.costa-mesa.ca.us/docs/pdpress/2007-01-26-Grant-Theft.pdf . in order to impersonate someone else. See “What is identity theft?,” avail- The above reference has expired (NPW) able at http://searchsecurity.techtarget.com/sDefi nition/0,290660,sid14_ 18 “Johns Hopkins Loses Data; Congress Afl utter,” consumeraffairs.com, Feb. gci801871,00.html. 7, 2007, available at http://www.consumeraffairs.com/news04/2007/02/ Acts of data theft and identity theft are often committed by jhu_data_breach.html. “hackers,” a slang term for a computer enthusiast with knowledge of 19 See Paula Wasley, “More Holes Than a Pound of Cheese,” The Chronicle of computer programming. Hacker has taken on a more pejorative meaning Higher Education, at A40, Sept. 29, 2006. and often refers to individuals who have gained unauthorized access to 20 See “Hacking the Help Desk,” May 9, 2007, The Chronicle of Higher computer systems and databases. See defi nition of hacker, available at Education, available at htttp://www.chronicle.com/wiredcampus/index. http://www.webopedia.com/TERM/H/hacker.html. php?id=2056. A database can refer to any collection of electronically stored informa- 21 See Brock Read, “UCLA Warns 800,000 That a Hacker May Have Obtained tion. See defi nition of database, available at http://www.webopedia. Personal Information,” The Chronicle of Higher Education, at A31, Jan. 5, com/TERM/D/database.html. 2007. When a hacker or other individual illegally accesses a database, the 22 See Vincent Kiernan, “Two Incidents Put More Than 200,000 Students at personal information stored on the database is said to be “compromised.” Risk of Data Theft,” The Chronicle of Higher Education, at A21, Jun. 30, 2006. In other words, when it is known or suspected that the personal informa- 23 See James Martin and James E. Samels, “10 Trends to Watch in Campus tion has been viewed or accessed by someone unauthorized to do so, that Technology,” The Chronicle of Higher Education, at B7, Jan. 5, 2007. information has been compromised. 24 See Nick Brookins, “Seven Ways to Prevent Computer Hacking,” Detroit 2 Alumni & Faculty/Staff Data Theft, May 1, 2006, available at Regional Chamber, available at http://www.detroitchamber.com/detroiter/ http://www.ohio.edu/datatheft/alumni/index.cfm. articles.asp?cid=49&detcid=130; and Paul Freudenberg, “Take Precautions 3 “Ohio University Continues to Take Steps to Secure Computer Systems to Prevent Computer Hacking,” Portland Business Journal, July 27, 1998, Against Attempts to Breach University Databases,” May 11, 2006, avail- available at http://www.bizjournals.com/portland/stories/1998/07/27/ able at http://www.ohio.edu/outlook/05-06/May/485n-056.cfm; “Hudson focus8.html.

URMIA Journal 2007–08 103 25 NetDiligence is one such company that provides such “cybersecurity 38 Catherine M. Bump, et al., Summary of State Data Security Laws as of assurance services.” See http://www.netdiligence.com/services.htm. March 2006, 865 PLI/Pat 39, 43-44 (2006). 26 Encryption is a process whereby individuals illegally viewing information 39 http://www.mccombs.utexas.edu/datatheft/index.asp. on the computer network will not be able to view the personal informa- 40 “UCSF Establishes Identity Theft Website, Hotline,” USCF Today, Apr. 4, tion because it will be in an unreadable text, only viewable through the 2007, available at http://pub.ucsf.edu/today/cache/news/200704043.html. permitted key. Freudenberg, supra note 27. 41 Jim Phillips, “OU Has Been Getting an Earful About Huge Data Theft,” 27 A data security policy establishes policies for management of a university’s Athens News, June 12, 2006, available at http://www.athensnews.com/ data and defi nes responsibilities for the protection of the data. Examples issue/article.php3?story_id=25220. of adopted data security policies may be found at http://www.gsu.edu/ 42 Mannacio v. General Electric Co., Cal. Super. Ct., CV-065227 (Dec, 5, 2006). security, Georgia State University’s Security Awareness and Incident The plaintiffs, employees of the corporation, claimed that a stolen laptop Prevention leafl et; and Institution Data Resource Management Policy, resulted in theft of the unencrypted personal information of approximate- The University of Michigan Standard Practice Guide, at 601.12, available ly 50,000 employees. The employees brought a class action suit asserting at http://spg.umich.edu/pdf/601.12.pdf. claims of negligence against their employer. The complaint alleged that 28 See http://www.upenn.edu/almanac/volumes/v53/n34/fc-ssn.html. the notice provided by the corporation of the breach was inadequate in 29 Dan Briody, “Online Indemnity,” Inc.com, April 2007, available at that it did not provide suffi cient information for those affected to protect http://www.inc.com/magazine/20070401/technology-insurance-sidebar. themselves from improper use of the stolen information. The complaint This link has expired. sought full disclosure of the type of information accessed, as well a 30 Andrea L. Foster, “Worried About Hackers? Buy Some Insurance,” compensation for costs plaintiffs incurred in protecting themselves from The Chronicle of Higher Education, at A42, Oct. 13, 2006. identity theft. See “Data Breach Class Action Filed for Negligence Related 31 Id. to Stolen Laptop,” Jackson Lewis, Dec. 14, 2006, available at 32 Id. Outside claims are typically claims concerning confi dentiality with www.jacksonlewis.com/legalupdates/article.cfm?aid=1039. unsecured private information. 43 Smith v. First Century Bank, No. 3:04 CV 591 (E.D. Tenn. 2005); 33 Id. at A42. see discussion infra at p. 15, n.53-54. 34 Andrea L. Foster, “LSU Arranges Identity-Theft Insurance for Students and 44 Bell v. Acxion Corp., No. 4:06CV0485, 2006 WL 2850042 (E.D. Ark. Oct. 3, Employees,” The Chronicle of Higher Education, at A33, Sept. 22, 2006. 2006). Defendant’s information storage database was hacked and client 35 Cal. Civil Code § 1798.82 (WEST 2007) fi les were compromised. The plaintiff, a client of the defendant, fi led an 36 Unencrypted data is at greater risk of being stolen and used for illegal action seeking damages, alleging defendant’s lax security put her at risk purposes. of receiving junk mail and becoming a victim of identity theft. Id. at *1. 37 An Act Requiring Consumer Credit Bureaus To Offer Security Freezes; 45 “Who’s suing OU right now, and why?” Jim Phillips, Athens News, C.G.S.A. § 36(a)-701(b) (Effective Jan. 1, 2006) [Connecticut]; Computer Mar. 29, 2007. Security Breaches, 6 Del. C. § 12B-103 (Effective June 28, 2005) [Delaware]; 46 Id. Unlawful Use of Personal Identifi cation Information, F.S.A. § 817.5681 (Ef- 47 Smith v. First Century Bank, No. 3:04 CV 591, 2007 WL 956652, *1 (E.D. fective July 1, 2005) [Florida] (providing for monetary penalties for failure Tenn. Mar. 29, 2007) (The district court dismissed plaintiffs’ claims under to meet notifi cation requirements); Personal Information Protection Act; the RICO statute for failure to allege suffi cient evidence to establish IL ST CH 815 § 530/15; (Effective Jan. 1 2006) [Illinois] (act applies only to necessary elements of RICO violations.). “data collectors,” defi ned to include such persons as government agencies, 48 Smith v. First Century Bank, No. 3:04 CV 591, 2007 WL 1035125, at *2 (E.D. public and private universities, and fi nancial institutions, among others); Tenn. Mar. 30, 2007) (alleging violations of the Gramm-Leach-Bliley Act Act to Protect Maine Citizens from Identity Theft, Notice of Risk to Personal (GLBA)). Data, 10 M.R.S.A. § 1348 (Effective Jan. 31, 2006) [Maine]; Identity Theft 49 Id. at *3-4. Prevention Act, N.J.S.A. § 56:8-163 (Effective Jan. 1, 2006) [New Jersey] (act 50 Bell, 2006 WL 2850042, at *2. The district court did not address the specifi c also imposes data disposal requirements and limits the use of residents’ question of whether a claim to recover damages resulting from a data Social Security numbers); Information Security Breach and Notifi cation security breach could survive had plaintiffs been able to demonstrate Act, N.Y. Gen. Bus. § 899-aa (Effective Dec. 7, 2005) [New York] (violators standing. of act subject to legal action by the state Attorney General); Identity Theft Prevention Act, N.C.G.S.A. § 75-60 (Effective Dec. 1, 2005) [North Carolina] (expanding defi nition of personal information to include bank account numbers, credit and debit card numbers, personal identifi cation or PIN codes, and fi ngerprint and biometric data); Breach of System Contain- ing Personal Information, Oh. St. § 1349.19 (Effective Feb. 17, 2006) [Ohio] (narrowing notifi cation requirement to only in instances when it is reasonably believed that the breach caused or will cause a material risk of identity theft); and Breach of Personal Information Notifi cation Act, 73 P.S. § 2301 (Effective June 20, 2006) [Pennsylvania] (narrows breach requiring notifi cation to only incidents that are believed to have caused or will cause injury to a resident of the Commonwealth).

104 URMIA Journal 2007–08 Last night a thief came to me And struck at me with something dark. I cried, but no one could hear me, I lay dumb and stark. When I awoke this morning I could fi nd no trace; Perhaps ’twas a dream of warning, For I’ve lost my peace.

—D.H. LAWRENCE (1885–1930), “THIEF IN THE NIGHT” URMIA Presidents

1969–1970 James R. Gallivan 1989–1990 Thomas R. Henneberry University of Illinois Massachusetts Institute of Technology

1970–1971 Robert M. Beth 1990–1991 Leta C. Finch Stanford University Champlain College

1971–1972 Warren R. Madden 1991–1992 Benning F. Jenness Iowa State University Washington State University

1972–1973 Stanley R. Tarr 1992–1993 Kathy M. Van Nest Rutgers University Duke University

1973–1974 Donald L. Thiel 1993–1994 Murray C. Edge University of Michigan University of Tennessee

1974–1975 Irvin Nicholas 1994–1995 Gregory P. Clayton University of California University of Nebraska

1975–1976 George A. Reese 1995–1996 Linda J. Rice Temple University Clemson University

1976–1977 James McElveen 1996–1997 George H. Meeker Louisiana State University Cornell University Medical College

1977–1978 James A. White 1997–1998 Gary H. Stokes University of Illinois University of Delaware

1978–1979 David N. Hawk 1998–1999 Glenn Klinksiek Kent State University University of Chicago

1979–1980 Dale O. Anderson 1999–2000 Larry V. Stephens University of Iowa Indiana University

1980–1981 Charles D. Emerson 2000–2001 Leo Wade, Jr. University of Kentucky University of Southern California

1981–1982 Martin Siegel 2001–2002 Larry V. Stephens New York University Indiana University

1982–1983 Truman G. Pope 2002–2003 Steven C. Holland Ball State University University of Arizona

1983–1984 Alex J. Ratka 2003–2004 William Payton University of Southern California University of Missouri

1984–1985 William O. Park 2004–2005 William Payton Northwestern University University of Missouri

1985–1986 Eugene D. Marquart 2005–2006 Mary Dewey California State Universities University of Vermont

1986–1987 Thomas C. Halvorsen 2006–2007 Allen J. Bova University of Wisconsin Cornell University

1987–1988 John H. Walker 2007–2008 Ellen M. Shew Holland University of Alabama—Birmingham University of Denver

1988–1989 Mary Breighner Columbia University

106 URMIA Journal 2007–08 URMIA Members Emeriti

Robert Beth, CPCU, CSP Benning F. Jenness James R. Roesch 905 Mears Court 1077 Showalter Road 510 East Beaumont Road Stanford, CA 94305-1041 Moscow, ID 83843-9199 Columbus, OH 43214-2271 E-mail: [email protected] Mike Klein William F. Ryan Isaac Charlton Pennsylvania State University 2548 Cross Country Drive 4027 Birch Lane Port Orange, FL 32128 Sandra LaGro Fairbanks, AK 99709 230 Larchwood Drive Martin Siegel Ernest L. Conti Bowling Green, OH 43402 36 Country Club Drive 102 Coventry Court Phone: (419) 352-5400 Jericho, NY 11753 Moon Township, PA 15108 Fax: (419) 372-0331 Stanley Tarr, DHL Phone: (412) 299-6881 Email: [email protected] 19 Hedge Row Road Fax: (412) 299-6880 Jack Leavitt Princeton, NJ 08540 Mary Donato 311 Corey Lane Email: [email protected] University of New Mexico Middletown, RI 02840-5661 Donald Thiel Gerald Duncan Claudina Madsen 3660 Miller Road 1639 1st Street SW 678 Arrowwood Court Ann Arbor, MI 48103 Minneapolis, MN 55112-3362 Los Altos, CA 94022 Email: [email protected]

Murray C. Edge, ARM, CSSD Eugene D. Marquart Kathy M. Van Nest, CPCU 518 Shalamar Place 11270 Crocker Grove Lane Duke University Irving, TX 75061-9408 Gold River, CA 95670 Leo Wade Phone: (972) 313-9724 William O. Park, MS, MBA, CPCU, ARM University of Southern California Email: [email protected] 111 Franklin Street John H. Walker *Charles D. Emerson Geneva, IL 60134-2739 273 Zodiac Drive Lexington, KY Email: [email protected] Alpine, AL 35014-6021 James R. Gallivan Janet Parnell, ARM Jerre Ward 1517 Waverly Drive 1142 Deercroft Ct. 1812 Tupelo Trail Champaign, IL 61821 Ft. Collins, CO 80525 Fax: (303) 871-4455 Holt, MI 48842 Thomas C. Halvorsen, ALCM, ARM, Email: [email protected] Email: [email protected] AU, CPCU, BBA Robert B. Williams, CPCU, ARM 24415 Amberleaf Court Patricia J. (Fowler) Payton, CPCU, ARM 7 North Shaffer Drive Leesburg, FL 34748 Michigan State University New Freedom, PA 17349 George Harland William A. Payton, DRM Phone: (717) 235-0502 6248 Willow Avenue University of Missouri Email: [email protected] Williamson, NY 14589-9706 Truman G. Pope Barbara M. Wolf Email: [email protected] 5400 South Burlington Drive 5216 Haskell Street Alice Horner, ARM Muncie, IN 47302-9606 La Canada, CA 91011-1842 138 CO, Rt 14 Email: [email protected] *Deceased Fulton, NY 13069 *Alex J. Ratka Thomas Henneberry Vancouver, BC CANADA M.I.T. Harry E. Riddell *William Hustedt 8333 Seminole Boulevard DeForest, WI Apt. 507B Seminole, FL 33772-4394 Email: [email protected]

URMIA Journal 2007–08 107 Distinguished Risk Managers

No Date Eugene D. Marquardt 2002 Larry Stephens California State University System Indiana University Lee Stenquist 2003 Paul Clancy Utah State University Boston University 1989 John Adams Mary Dewey Robert M. Beth University of Vermont Stanford University 2004 Christine Eick William O. Park Auburn University Northwestern University Elizabeth Carmichael John H. Walker Five Colleges University of Alabama, Birmingham 2005 Jill Laster 1990 Thomas C. Halvorsen Texas Christian University University of Wisconsin, Madison 2006 Linda Rice Stanley R. Tarr Clemson University University of Evansville Bill Payton 1992 Mary Breighner University of Missouri Columbia University 2007 Allen J. Bova Charles Emerson Cornell University University of Kentucky 1993 Murray C. Edge University of Tennessee The URMIA Journal is published annually by the University Risk Leta Finch Management and Insurance Association (URMIA), P. O. Box 1027, University of Vermont Bloomington, IN 47401-1027. URMIA is an incorporated nonprofi t 1994 Benning F. Jenness professional organization. Washington State University The 2007–08 URMIA Journal was edited by Jessica L. Allen, Wheaton Claudina Madsen College, 501 College Avenue, Wheaton, Illinois 60187; designed by Ellen Rising Morris of Eighth Day Creations, Wheaton, Illinois; and printed at CPSJ Insurance Group Indiana University Printing Services, Bloomington, Indiana 47405. William J. Wilson, Jr. There is no charge to members for this publication. It is a privilege of Howard University membership, or may be distributed free of charge to other interested Truman G. Pope parties. Membership and subscription inquiries should be directed to the National Offi ce at the address above. Ball State University © LEGAL NOTICE AND COPYRIGHT: The material herein is copyright 1995 James A. Breeding March 2008 URMIA; all rights reserved. Except as otherwise provided, Rutgers University URMIA grants permission for material in this publication to be Donald Thiel copied for use by nonprofi t educational institutions for scholarly or instructional purposes only, provided that (1) copies are distributed University of Michigan at or below cost, (2) the author and URMIA are identifi ed, and (3) all 1996 Michael G. Klein text must be copied without modifi cation and all pages must be Pennsylvania State University included; (4) proper notice of the copyright appears on each copy. If the author retains the copyright, permission to copy must be obtained Thomas R. Henneberry from the author. Massachusetts Institute of Technology Unless otherwise expressly stated, the views expressed herein are 1997 Kathy M. VanNest attributed to the author and not to this publication or URMIA. The Duke University materials appearing in this publication are for information purposes only and should not be considered legal or fi nancial advice or used as Charles Cottingham such. For a specifi c legal or fi nancial opinion, readers should confer University of Missouri with their own legal or fi nancial counsel. 1998 Leo Wade, Jr.

University of Southern California URMIA would like to recognize these contributors: 1999 George H. Meeker Jenny Whittington, URMIA Harsh S. Dutia Cornell University Medical College Executive Director Anne N. Gregson 2000 Glenn Klinksiek COMMUNICATIONS COMMITTEE: Lorna Jacobsen University of Chicago Donna Smith,© Chair Corrinne Kjelstrom Rebecca Adair, Past Chair Vincent Morris John E. Watson URMIA MEMBERS: Jordana Ross Pepperdine University Regina Beer Fitzroy A. Smith Allen J. Bova Nigel Wilson 2001 Rebecca L. Adair Iowa State University

108 URMIA Journal 2007–08 When you reach the end of your rope, tie a knot in it and hang on.

—THOMAS JEFFERSON (1743–1826)

Back cover: Washington, D.C.: host city for the 2008 URMIA Conference, September 10–14. (Photo courtesy of Arlington Economic Development)

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