In the final days of its 2019-20 term, the Supreme Court issued a decision with potentially vast implications for religious organizations.  In Our Lady of Guadalupe School v. Morrisey-Berru, the Court ruled that parochial school teachers do not, for the most part, enjoy protections under federal employment laws.  This decision, and the potential for the Court to expand on it in the years to come, could have a major impact on insured claims against religious institution employers.

The Our Lady of Guadalupe School Case and Decision

The Our Lady case is actually a combination of two employment discrimination cases brought by Catholic school teachers in the Los Angeles area.  In both cases, the teachers argued the schools terminated them for discriminatory reasons.  The first plaintiff, Agnes Morrisey-Berru, claimed her former employer fired her based on her age.  The second plaintiff, Kristen Biel, argued her former school terminated her because she had breast cancer.

Before delving into the Court’s opinion in Our Lady, however, it is necessary to discuss a bit of background.  In 2012, the Supreme Court considered a similar case in which a terminated parochial school teacher sued her former employer for discrimination under the Americans with Disabilities Act.  In that case, the Court recognized a “ministerial exception” to federal employment laws rooted in the First Amendment’s protection of the free exercise of religion.   Specifically, the Court dismissed the plaintiff’s suit, holding that the ministerial exception precluded her claim given that she had received extensive religious training, was considered a minister of her church, and her firing fell into a category of decisions religious institutions make that are essential to their central mission.

Despite important differences between the two cases, the Court reached the same decision in Our Lady as it did in 2012.  In the 2012 case, the Court ruled the ministerial exception barred the teacher’s ADA claims based on evidence that the fired teacher had extensive religious training and was considered by her church to be a “minister.”  The same could not be said for the Our Lady plaintiffs, as the two teacher plaintiffs in the case did not have any specific religious education credentials, and one of them testified that she was not even a practicing Catholic.  However, according to the Court’s majority opinion, whether a teacher has religious training is

inconsequential to the ministerial exception analysis.  What mattered in Our Lady was that the teachers taught religious curriculum, prayed with their students, and accompanied them to mass.  Ultimately, in dismissing the teachers’ claims, the Court held that the schools had initially made the determination that the teachers knew enough about Catholicism to teach the subject, and “judges have no

warrant to second-guess that judgment.”

Now What?

Despite the fact that both the Our Lady decision and the 2012 case involved teachers, the rulings could have much broader implications.  In her dissent, Justice Sotomayor criticized the majority, arguing it had destroyed the existing standard of review for the ministerial exception and replaced it with a single consideration: “whether a church thinks its employees play an important religious role.”  Not only could this “strip[] thousands of schoolteachers of their legal protection,” according to Sotomayor, it could also extend to “countless coaches, camp counselors, nurses, social-service workers, in-house lawyers, media-relations personnel, and many others who work for religious institutions.”

If you or your agency have religious institution clients, this decision, and its progeny, could have a considerable impact on the scope of potential employment-related claims and litigation.  If lower courts consistently (or even more 

broadly) apply the holding from Our Lady, it could greatly reduce the amount (or at least the success) of employment discrimination claims against religious institutions. Moreover, if Justice Sotomayor’s dissent proves prescient, the opinion could serve as the backbone for future decisions dismissing discrimination claims brought by any employee of a religious organization, or even claims brought by parishioners involved in community outreach or charity work.

Conclusion

In Our Lady of Guadalupe School v. Morrisey-Berru, the Supreme Court expanded the ministerial exception to employment discrimination claims brought against religious institutions.  While the case involved teachers at parochial schools, the decision may impact claims brought by any employees of religious organizations.  Keep an eye on this column and updates from the IIAW for related developments.

In this week's Big I Buzz we are covering Allstate's push into the independent space, pro sports players associations stance on the Senate Republican stimulus proposal and we look into the states ranked by uninsured rates. 

Allstate's $4 billion push into the independent space

Allstate has announced that it will acquire National General Holdings for $4 billion in their attempt to step into the independent agent channel. According to Insurance Business America, "There is talk that Allstate is in the middle of a major restructuring that would see thousands of staff being laid off. News of a major acquisition deal despite Allstate's alleged internal issues raises more questions than answers, and some may wonder why the insurer went through with this deal."

Pro sports players associations come out against key McConnell stimulus priority

The executive directors of the NFL, NBA, NHL Major League Baseball and Major League Soccer players associations signed onto a letter raising concerns about the liability protections included in the Senate Republican proposal introduced last week. Read more about the proposals from both the Republican and Democratic parties here. The players associations were opposing the structure of the proposal because the legislation does not explicitly provide liability protections for those who engage in willful misconduct or grossly negligent behavior, providing a tighter scope on the bill's safe harbor than the players association asserts, according to CNN. 

States ranked by uninsured rates

Becker's Hospital Review has ranked the states by their uninsured rates. This report compared uninsured rates in 2018 to rates in May 2020 with information from the U.S. Bureau of Labor Statistics and the Urban Institute. Texas ranked at the top with the highest uninsured rate in the U.S - with 29 percent of adults uninsured as of May, according to a report from Families USA. The total number of uninsured in the U.S. climbed to 21 percent due in part to layoffs tied to the COVID-19 pandemic in recent months, according to Becker's Hospital Review. Wisconsin's uninsured rate sits at 10 percent at the time of this report. 

For more news, check out the Action News section of our weekly e-newsletter, Big I Buzz. If you aren't subscribed, click here to add your email to our mailing list. We hope that everyone has a great rest of their week!

2020 has become the year of the remote worker, courtesy of the coronavirus pandemic. Is your business one of the many that has transitioned to remote operations? Have you considered how that change affects your insurance liabilities as a business owner?

Your Trusted Choice Independent Insurance Agent® can help you reassess your risk picture. Managing a remote workforce may be new to you, but independent agents have rich expertise in helping business owners manage risk — whether employees work from home or on-site. And because they represent multiple insurance companies, Trusted Choice agents can offer you and your business customized coverage based on your unique and changing needs.

In addition, your Trusted Choice agent can offer you resources and advice for developing your company’s remote work program. It should address, at a minimum:

1. Safety guidelines for a home office setup.

2. Designated work, break, and lunch times.

3. Safety training.

4. Physical inspections of remote workers’ home offices.

5. The workers’ compensation rules for your state as they apply to remote workers.

Here are a few insurance questions your Trusted Choice agent can help you answer:

Does my commercial general liability policy cover remote employees?

As part of your business insurance package, general liability protects your business against financial loss resulting from bodily injury, advertising injury, and property damage caused by your business or employees. Your Trusted Choice agent can review your policy to be sure that you are still adequately covered while employing remote workers.

If your remote employee must meet business clients from home, it will be your commercial general liability policy that must cover any injury, not the employee’s homeowners insurance. Your agent may suggest additional coverages such as management liability insurance to protect you and your workers from this and other risks not covered by your commercial general liability policy.

Business property insurance protects the physical location of your business and any tools, equipment and inventory. Your business property policy may exclude or limit the coverage for property that is not located at your business premises. Your agent can help you determine if you need additional coverage for property used off-premises by remote workers.

An employee’s own homeowners policy usually will not cover the loss of business-owned equipment that is damaged or stolen in their home.

Are my remote workers covered by the workers’ compensation insurance my company purchases?

  It is incumbent on you as an employer to ensure a safe working environment for your employees — whether they work at your business location or from their homes. In general, your workers’ compensation insurance covers all of your workers for illness or injury arising out of or in the course of employment — no matter where they physically work.

However, ensuring a safe working environment for remote workers increases your responsibilities as an employer.

In addition, it is more difficult for a remote worker to demonstrate that an injury or illness “arises out of” or occurs “in the course of” employment — your telecommuting policies and procedures will be of critical importance. Will my cyber liability insurance cover remote employees? The answer to that question is not simple because cyber policies vary greatly and may contain exclusions that would affect remote workers. And a remote worker using a public or a poorly secured home network could put your entire business at risk and expose your customers’ private information. Your Trusted Choice agent can help you be sure you have appropriate cyber liability coverage. In addition, you must ensure that every device an employee uses is protected from cyber breaches. First, require that employees use only your business-owned devices for work; second, set every employee up with a secure connection from their home office to your business network. You may have to engage the help of an IT specialist, but the investment pales beside the potential costs of a cyberattack.

Let Trusted Choice help you keep your business and employees safe … anywhere they work.

For more help with your telecommuters, consult these articles:

Inspiring Productivity and Connection with Remote Workers

Ways to Keep Remote Workers Connected and Engaged 

By: Chris Boggs | Big "I" Virtual University Executive Director

This article was originally published in our February 2020 Wisconsin Independent Agent magazine. Click here to read our magazine, Wisconsin Independent Agent. 

Nearly 40 percent of Insurance Services Office’s (ISO’s) general liability class codes are, what some call, “dagger” codes. Currently, 474 of ISO’s general liability class codes are “dagger” classes; however, ISO regularly reviews these codes for continued inclusion.

A “dagger class” or “plus sign class” indicates that Products and/or Completed Operations coverage is included as part of and not separate from the Premises/Operations coverage. For lack of a better way to explain it, when an operation is classed as a “dagger” or “plus sign” class, bodily injury (BI) and property damage (PD) claims resulting from the insured’s legal liability are not segregated based on when or where they occur. All BI and PD claims are, in a sense, equal.

Additionally, there is no separate products/completed operations aggregate limit when an operation falls within a “dagger” classification. All liability losses are subject to the general aggregate limit. 

Lastly, products or completed operations coverage is provided at no additional premium when the operation is a “dagger” class. In “standard” or “non-dagger” class codes, a separate loss cost (rate) applies to both premises/operations and products/completed operations coverage; but “dagger” class codes have only one loss cost (rate) which is based almost exclusively on the premises/operations exposure. If there is a perceived products and/or completed operations exposure, the “rate” is included in the premises/operations “rate.”

Why Dagger Classes Exist

Understanding the “what” or effect of a “dagger” class is simpler when the “why” is known. The “why” is quite simple – actuaries and loss exposures. 

Statistically, operations assigned a “dagger” class have a negligible or even nonexistent products/completed operations loss exposure. Following are a few of the “dagger” classes that demonstrate the lack of a products/completed operations exposure:

• Airports

• Apartment buildings

• Archery ranges

• Beaches

• Churches

• Day care centers

• Fairs

• Fishing piers

• Golf courses

• Insurance agents

• Schools

• Warehouse

Consider each of these examples. While a products/completed operations loss may be possible, imagining one is very difficult. A products and/or completed operations loss is statistically improbable. Nearly every imaginable loss involves the premises or the on-going operations. 

Because a products/completed operations loss is statistically unlikely, there is no separate loss cost (rate) and no separate definition for a loss that might be considered a products/completed operations loss. In short, there is little relevant products/completed operations exposure. When there is such a negligible exposure, there is no need to define or provide a “rate” for the “exposure.” 

Contradictory Confusion

“Dagger” classes create confusion because of the seeming contradiction between policy wording and coverage rules. 

On first reading, the unendorsed commercial general liability (CGL) policy appears to specifically exclude products and/or completed operations losses for “dagger” classes. “V.16.b.(3)” reads:

16. “Products-completed operations hazard”:

b. Does not include “bodily injury” or “property damage” arising out of:

(3) Products or operations for which the classification, listed in the Declarations or in a policy Schedule, states that products-completed operations are subject to the General Aggregate Limit.

However, Rule 25.F.1. reads:

F. Symbols

1. Plus Sign

A plus sign when shown in the Premium Base column under General Liability insurance in the Classification Table – means that coverage for Products and/or Completed Operations is included in the Premises/Operations coverage at no additional premium charge. When this situation applies, the classification described in the policy schedule or Declarations must state that:

“Products-completed operations are subject to the General Aggregate Limit” to provide Products and/or Completed Operations coverage(s).

While the policy seems to exclude products/completed operations coverage in “dagger” classed operations, the rule states that coverage for products and/or completed operations is included in the premises/operations coverage. What could be more contradictory than this? Further, since neither the insured nor the claims adjuster get a copy of the rule, it seems the most likely scenario is the denial of any loss that may be considered a product or completed operations loss. 

However, a clear reading and interpretation of the policy language supports the rule rather than contradicts it. The supposed “exclusionary” wording serves only to remove any product or operation loss subject to a “dagger” class code from the definition of “Products-Completed Operations Hazard.” Removing the ability to classify any loss as a products/completed operations loss allows all losses to be classified as either “bodily injury” (BI) or “property damage” (PD) - regardless when or where the loss occurs.

According to the CGL’s Insuring Agreement, the CGL responds when the insured is legally liable for bodily injury or property damage. There is no mention of premises/operations or products/completed operations within the insuring agreement – only bodily injury or property damage. The premises/operations and products/completed operations concepts exist only to delineate exposures, exclusions and exceptions, aggregate limits, and loss costs (rates).

Further, because a loss can no longer be classified or defined as a product or completed operations loss (only a BI or PD loss), there is no need for a Products-Completed Operations Aggregate Limit. All losses become subject to the general aggregate when the “products-completed operations hazard” definition is nullified.

Lastly, this same policy wording that supposedly excludes products/completed operations losses specifically refers to wording found in all “dagger” class code descriptions. When an operation falls into a “dagger” class, the class code description specifies that products/completed operations coverage is included. This removes all questions of coverage.

CGL policy wording complements and supports “Rule 25.F.” And “Rule 25.F.” supports the CGL. When an operation is defined by a “dagger” class, products/completed operations coverage is included at no additional charge and all BI and PD losses are subject to the general aggregate limit. About these points, there is no debate. 

A New Additional Insured Endorsement Specifically for “Dagger” Classes

When there is no separate products/completed operations coverage, extending additional insured status for products and/or completed operations coverage is impossible. However, ISO learned that named insureds are often required to add another party as an additional insured for completed operations, even when the named insured is classed under a “dagger” classification (meaning there is no separate completed operations coverage).

Attempting to explain to the additional insured that products/completed operations coverage is included in a policy for an insured in a “dagger” class even though a separate coverage is not shown is like arguing with a stump. They don’t understand insurance, so saying, “Trust me, products/completed operations IS covered,” won’t get it done. The additional insured wants to see that it has coverage for completed operations. 

To meet the “needs” or “desires” of additional insureds and end the arguments, ISO introduced the CG 20 41 Additional Insured – Owners, Lessees Or Contractors – Completed Operations Subject To The General Aggregate endorsement. Modeled on the CG 20 10 and CG 20 37, this new additional insured endorsement grants additional insured status to the named party for both premises/operations, similar to the CG 20 10, and products/completed operations, similar to CG 20 37. However, the defined term “products-completed operations hazard” is not used within the endorsement because it is designed for use with “dagger” classifications which no longer utilize the term.

Without this endorsement, there is no way for the policy to extend additional insured status for completed operations when the named insured is in a “dagger” class. All other additional insured endorsements extended products and/or completed operations coverage (i.e. CG 20 37, CG 20 39, and CG 20 40) depend on the defined term “products-completed operations hazard” to extend additional insured protection. Because this definition is effectively “removed” from a policy written on a “dagger” class operation, no completed operations protection is extended to the additional insured. The new CG 20 41 remedies this gap.

ISO filed the CG 20 41 for use effective 12/1/19. 

Scabbarding the Dagger

“Dagger” classes are basically actuarial creations. Yes, products and/or completed operations losses – if the insured has any – are still covered when the operation is in “dagger” classes, but because the products and/or completed operations exposures presented by these operations is negligible at best, ISO chose to include the products-completed operations coverage without charging a separate premium, classify all losses as either bodily injury or property damage, and include all BI and PD losses in the general aggregate limit. 

Simply being a “dagger” class does not reduce the breadth of coverage provided to the insured. All a “dagger” classification does is rearrange where the products and/or completed operations coverage is found.

On this week's Big I Buzz, we're discussing the workers' comp rate decrease, a COVID-19 liability update from WCJC and how wearables have become important to doctors throughout the pandemic. 

Workers' Comp Rate Decrease

The Wisconsin Office of the Commissioner of Insurance approved an overall workers' comp rate decrease. See the Wisconsin Compensation Rating Bureau's Circular letter here. 

Wisconsin Civil Justice Council COVID-19 Liability Update

The Wisconsin Civil Justice Council released a new COVID-19 liability update. The updated discussed a Wisconsin Legislative Council brief on businesses' use of COVID-19 liability waivers. The mentioned brief reported that Wisconsin courts are "generally skeptical of liability waivers" and would likely refuse to uphold them in future cases. "With individual liability waivers likely off the table, it is even more important for Wisconsin to enact state-level liability protections for Wisconsin businesses facing COVID-19 lawsuits," the WCJC update read. 

The Future of Staying Healthy is Sitting on Your Wrist

As COVID-19 continues to spread throughout the U.S., many people are choosing to stay at home instead of seeing their usual doctors for annual check-ups. Instead of heading to the doctor's office for their appointments, people are turning to telemedicine. Prior to COVID-19, doctors couldn't do much with the information pulled from smart watches but now, the FDA has allowed certain Apple Watch models to take EKG for diagnosis on a telemedicine call.  According to protocol, "In the future, wearables will likely help us realize that we're sick even before we do - and help us prevent illnesses rather than treating them after the fact. Even with COVID, some early trials have suggested that data that existing wearables can collect could be enough to help people know when they've contracted the virus." 

For more news, check out the Action News section of our weekly e-newsletter Big I Buzz. If you aren't subscribed, click here to add your email to our emailing list. We hope that everyone has a great rest of their week!