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Understanding Liability Under the False Claims Act

Understanding Liability Under the False Claims Act

Over the years, government compliance requirements have grown and grown. They've become more intricate, too – as have the tools needed to enforce them. Using a wide array of enforcement methods, the federal agencies work to control and enforce compliance.

There is one tool the government uses that affect contractors more than others – the False Claims Act. While understanding the False Claims Act can be difficult, it's imperative for contractors and surety professionals. The risks associated with violating the Act are significant.

What is the False Claims Act?

Before we get too far in, let's break down the False Claims Act. While complicated, the Act boils down to this: the law imposes liability on companies and individuals who defraud any government program. The federal government uses the act as the primary litigation device in fighting fraud against the government.

Not Too Difficult?

Contractors are typically aware that defrauding a customer, company, or government is completely prohibited and illegal. The False Claims Act extends beyond full-on fraud. A doctrine known as the "false certification doctrine" states that a contractor who falsely states they have complied with a variety of compliance policies imposed by the government can be held liable under the False Claims Act.

Violating the False Claims Act is far easier than committing traditional fraud. The government doesn't have to prove any damages suffered. They simply have to find a contractor who has submitted a claim that was "known" to be false.

Due to how the Act is enforced and the "false certification doctrine" – it is incredibly simply to violate the False Claims Act. Once you do, the violations can add up. Most contractors find a violation can be exceptionally costly.

Volatile and Expensive

There are two different types of liabilities the government can dish out to violators of the False Claims Act. Both actual damages and statutory penalties can be lobbied against violators.

The penalties can be between $10,781 and $21,563 for each claim submitted by the government. As individual invoices are treated as separate claims, a large penalty can be enforced – even when the government hasn't suffered any actual harm.

Not only are the fines costly, but they can be unpredictable, too. Even subcontractors without a direct relationship to the government can be subjected to liability – just like federal prime contractors.

Due to the whistleblower provisions in the False Claims Act, individuals with knowledge of a company's operations can bring suit on the government's behalf. This clause often catches contractors flat-footed and unaware of the consequences that may be coming.

What Sureties & Their Contractors Should Know

Paying attention to the False Claims Act is mandatory these days. While it seems to be tougher and tougher to stay in compliance with the Act than ever before, the consequences for failing to do so continue to get higher and higher.

As a surety, it's imperative to educate contractors on the perils of the False Claims Act. Contractors can take a number of steps to ensure risks are minimized. For example, a contractor could:

  • Implement a mandatory independent review of every single invoice by a project manager before submitting and completing the project.
  • Continual communication with the federal government through counsel. Details of contractual difficulties that arise and compliance issue may be discussed.
  • Fully implementing a compliance, monitoring, and training program for all employees that covers a majority of significant contractual requirements.

On top of these ideas, a contractor may seek to consult with outside counsel regarding changes to federal regulations and implementation. By doing so, a contractor can limit exposure to liabilities under the Act. 

To learn more about liability under the False Claims Act and how this effects your business contact Skyline Risk Management, Inc. at (718) 267-6600.

Trends for 2017: Workers' Comp Edition

Trends for 2017: Workers' Comp Edition

Some brokers struggle to help clients these days. It's not easy. Rising health care costs seem to be an inevitable part of doing business today. While the skyrocketing costs cannot be ignored, there are ways to decrease risk and manage premiums in the wide world of workers' comp.

Workers' Comp Trends in 2017

As we enter 2017, changes and trends in the workers' comp world are coming. Brokers may have niche opportunities to help businesses and clients by keeping workers' comp costs in line.

Here are six workers' comp trends to pay attention to:

1. Rising Premiums

High claims typically lead to high premiums. This is the insurance industry in a nutshell. That's the bad news, but it gets worse. Certain insurance companies have seen more claims, longer breaks from work, and higher dollar amounts being claimed. That's a recipe for high premiums. And many predict these premiums will continue to go up due to increasing costs for prescription drugs and an aging workforce. If change is to happen quickly, most brokers note it'll come from within an organization – not to the system.

2. Bad Management

One way companies may control workers' comp costs is through better management of pharmaceutical benefits. Opioid use has continued to rise in the United States. As such, many employers require workers' comp claims using opioids to have a weaning off strategy at the start. Another way to manage benefits is limiting where employees can get pharmaceuticals. Getting drugs from the physician's office typically costs more than at an off-site pharmacy.

3. Plentiful Partnerships

Certain workers' comp programs have developed relationships with facilities that specialize in work-related injuries specific to their industry. While requiring workers' comp claimants to choose a particular occupational medicine clinic is barred, a recommendation is legal. Brokers can help make an introduction in these scenarios.

4. More Technology

Innovations in the medical field incorporate technology to give patients options. Telemedicine is one such trend. Instead of visiting a doctor's office, a patient can call in on a smartphone or iPad at any time during the day or night. This is especially useful for people who work nights and mornings. Other programs have incorporated a hotline that connects injured employees to a health care professional immediately.

5. Cultural Focus

A culture of getting back to work is essential to ensure the success of a workers' comp program. Employees who want to get healthy and get back to work can save a company a lot of money. One way to potentially get employees back faster is through support. Most companies don't contact employees while they're off on a workers' comp claim. A phone call or card from a supervisor could help an employee recover mentally and physically.

Many were surprised to learn that over 80% of a workers' comp program costs go towards 5% of the claims. This means employees away from the job for a long time eat up more costs than anything else. Getting these people back on the job on schedule can be significant for workers' comp programs.

6. Keep Things Safe

While workers' comp programs are in place for a reason, the easiest way to potentially control costs is through a safety program at the workplace. Many have found the costs of incorporating more safety programs and measures to be minimal compared to the cost of workers' comp when an employee gets injured.

Certain companies have found a large financial incentive to focusing on safety and doing things the correct way. A broker can play a significant role in helping companies manage workers' comp costs by focusing on safety. 

For more information regarding workers compensation contact Skyline Risk Management, Inc. at (718) 267-6600. 

It Finally Happened! 421-A Gets Extended

It Finally Happened! 421-A Gets Extended

It took months upon months. There was a lot of hand-wringing. Developers threatend to stop a number of multifamily developments if there was no tax abatement in place.

Luckily, that disaster was avoided. Finally, the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York came to an agreement. The extension of the lapsed 421-A program that offers tax exemption has been extended.

What It Means?

So what was all the fuss about? The 421-A extension means that eligible buildings in Manhattan must pay an average hourly wage of at least $60 – including all wages and benefits. Other buildings in Queens and Brooklyn are required to pay at least $45 per hour when all wages and benefits are taken into account.

The 421-A extension obligations only apply to buildings in certain areas that meet specific criteria. Only buildings in Manhattan south of 96th street qualify. In Brooklyn and Queens, only buildings in Community Boards 1 and 2 around one mile from the closest waterfront bulkhead qualify.

As well, only buildings with over 300 rental units are obligated to the pay stipulations. Buildings that have 50% or more of affordable housing units are also excluded from the obligations in 421-A.

If a project began before the effective date of the new 421-A agreement, then the project can choose to opt-in to the program if they want to. Of course, these projects must meet eligibility criteria, too.

Understanding the Benefits of 421-A

While the details are important, the reasoning behind the agreement shouldn't be overlooked. Many important people are thrilled with the agreement, especially regarding benefits for low-income New Yorkers. Governor Andrew Cuomo is one of them:

"The deal reached today between these parties provides more affordability for tenants and fairer wages for workers than under the original proposal. While I would prefer even more affordability in the 421-a program, this agreement marks a major step forward for New Yorkers.

The agreement extends affordability for projects created with 421-a for an additional five years–bringing affordability for these units to 40 years. It also allows lower-income individuals to qualify as it lowers the percentage of area median income needed to apply.

Additionally, this agreement rightly delivers fair wages for working men and women – providing a rate of $60 per hour in Manhattan and $45 for certain projects in Brooklyn and Queens. Most importantly until this agreement is finalized, the State Legislature has refused to release $2 billion in state affordable housing funds. I urge the Legislature to come back to Albany to pass desperately needed affordable housing and to sign the MOU to release these funds. We simply cannot allow the lack of resolution to stall affordable housing production for years to come. There is no excuse not to act."

More Info on 421-A

Governor Andrew Cuomo is excited about 421-A for a number of reasons, including:

1. Traditional Worker Standards: Many applaud the amendment for continuing to give construction workers the rights they deserve in New York City. The standards and benefits provided in 421-A go a long way towards keeping workers taken care of.

2. Affordable Housing: The 421-A amendment allows for the development of affordable housing for low-income individuals. This is critical in a city like New York City, which features some of the most expensive housing costs in the world. The 421-A program allows buildings complying with the regulations to stay in the program for 35 years with a property tax exemption. This incentive should keep units with income limitations in the program.

Finally Done!

Overall, the passing of 421-A is set to benefit a number of New Yorkers. The amendment ensures quality wages and benefits for construction workers. It also ensures affordable housing units are created in some of New York's most popular neighborhoods and areas. 

For more information about NYC insurance laws contact Skyline Risk Management, Inc. at (718) 267-6600.

New York Labor Law

New York Labor Law

  • What it means for property owners, their agents, managers and commercial tenants.
  • What you need to know to protect your assets.
  • How GNY can help.

New York Labor Law:

New York State’s Labor Law (NYLL) represents an onerous burden for property owners and managing agents in New York, making them financially liable for virtually any work-related accident on their premises. So as building owners and managing agents routinely hire contractors to do work on their properties, they routinely face huge liability exposures.
To insulate themselves from high-value lawsuits brought by injured workers, building owners and managing agents should enter into hold harmless and indemnification agreements, backed up by the contractors’ own insurance, which transfers liability for such injuries from themselves to the contractors and subcontractors whose negligence caused the injuries. Failure to do so can cost building owners millions of dollars.

GNY can help navigate this challenging landscape.

Three Key Sections:

1. Section 200 requires building owners and managing agents to provide workers with safe places to work.

2. Section 241(6) makes building owners strictly and vicariously liable for worker injuries at their buildings if improper or inadequate safety equipment causes a worker’s injury. Damages from resulting lawsuits can be reduced or eliminated if building owners can show that the injured worker was partially or fully responsible for his injuries.

3. Section 240(1), commonly known as the Scaffold Law, makes the building owners as well as their contractors and project managers “absolutely liable” for all gravity-related construction accidents at their buildings, subject to a few hard-to-prove exceptions. The building owner is liable even if it did not hire the injured worker or his employer, even if it did not know that the worker or his employer was working at the building, and even if the worker is partially or fully responsible for his own injuries. These lawsuits often result in summary judgment for the plaintiff on the issue of liability, leaving only the damages portion of the lawsuit to be tried against the building owner and property manager. Because these lawsuits often present serious injuries, verdicts in such cases can be quite high.

  • A good safety record will not protect building owners, managing agents and construction contractors from liability under any of these statutes. In addition, litigation can become a part of your loss history, which may drive up your insurance rates. Don’t let this happen to you.

  • GNY Recommends The Following Steps To Protect Your Business And Assets Under These Statutes: 


  • Verify the contractor is properly licensed, insured and experienced in the type of work it is being hired to perform.
  • Verify whether the general contractor uses subcontractors. If the general contractor uses subcontractors, find out how it screens its subcontractors and confirm with your contractors that its subcontractors are properly insured.
  • Verify there are written agreements in place between the building owner and its general contractor, as well as between the general contractor and its subcontractors, with proper indemnification and insurance-procurement clauses. The contractor and subcontractors should name the building owner and the managing agent as additional insureds on their liability policies on a primary and non-contributory basis.
  • Verify before entering into contracts with your contractors that the contracts make the contractors responsible for worksite safety and for having a safety-and-employee training program in place.
  • Verify contractors have obtained all necessary permits before they begin their work.
  • Verify your contractors and their subcontractors do not have a history of Occupational Safety and Health Administration Law violations.


Using written contracts to transfer the risk of liability and damages from you to your contractors can protect you from claims of serious injury and potentially large damage awards. The following clauses have proven successful:

  • Hold Harmless and Indemnification Agreements

Every contract between you and your general contractors, as well every contract between your general contractors and their subcontractors, must contain a clause requiring the general contractors and their subcontractors to “defend,” “indemnify,” and “hold harmless” the building owner and the managing agent from liability, loss or other damages that arise because of any of the contractors’ negligence. It is important that this agreement be properly worded, dated and executed before the work begins.

  • Insurance Procurement Requirement

Contractors and their subcontractors must agree to add building owners and their managing agents as additional insureds to their insurance policies for any liability arising out of their work. The limits of these policies should be at least $1 million for a primary commercial general liability (CGL) policy and $5 million for an umbrella policy. Also, the additional insured coverage should be written on a “primary and non-contributory basis.”

  • Insurance Requirements and Certificates of Insurance

While it is common practice to request a Certificate of Insurance (COI) from contractors and subcontractors, the certificate alone does not confer or prove the existence of additional-insured coverage on your behalf. A proven “best practice” is to require your contractors to submit a copy of their primary liability and umbrella policies for review by an insurance professional. All COI’s and insurance policies must be provided to the building owner or managing agent before the work begins. The COI and insurance policies should also show that the building owner and managing agent are named on the primary and umbrella policies as additional insureds.

GNY will review your contracts with your contractor or subcontractors free of charge. Simply ask your broker to forward the contracts and insurance policies to your GNY underwriter.




NYLL’s unfavorable liability provisions can adversely affect the owners of commercial buildings when tenants hire contractors to perform construction, alteration, repair or maintenance in their units, and those tenants are inadequately insured or indemnified by the contractors they hire.

As part of their commercial leases with tenants, building owners should use the same strategies suggested above for the transfer of risk from themselves to their contractors:

  • Obtain copies of the CGL and umbrella policies and COI’s from all commercial tenants and their contractors.
  • Set up a notification system alerting you to renewal dates for these policies.
  • Make sure tenants have sufficient CGL and umbrella policy limits.
  • Require tenants and their contractors to name the building owner and the managing agent as additional insureds on their CGL policies on a primary and non-contributory basis.
  • Require tenants to sign agreements indemnifying and holding the building owner and managing agent harmless for liability arising out any of the tenants’ work in their units.
  • Review your leases with an attorney to ensure these clauses have been included in the leases.

GNY will review the relevant contractual clauses and policy provisions for you free of charge. Simply ask your broker to forward the contracts and insurance policies to your GNY underwriter.


To protect the board, the shareholders and the co-op corporation, the same risk-transfer strategies mentioned above should be in place whenever a shareholder in a co-op has work done in his unit. This work ought to be done under an Alteration Agreement, which should require the shareholder’s contractors to indemnify and hold harmless the shareholder, the co-op and the managing agent, and to name these entities as additional insureds on the contractors’ general-liability policies on a “primary and non-contributory” basis.

The Alteration Agreement should also require the shareholder to indemnify the co-op and the managing agent and to have proper liability insurance in place to cover these exposures. The co-op must mandate, preferably in the lease agreement, that contractors cannot begin work in a unit until the shareholder submits to the co-op and the co-op approves all of these construction contracts and insurance policies.

Insurance companies insuring contractors have come up with broad exclusions and limitations designed to protect them from having to defend and indemnify you as additional insureds under their policies. This is very unfair to the co-op. By showing you what to look for in these policies, GNY can help protect you and your finances.

GNY will review the relevant contractual clauses and policy provisions for you free of charge. Simply ask your broker to forward the contracts and insurance policies to your GNY underwriter.

GNY can also supply you with an exemplar of an “Alteration Agreement” incorporating these conditions for the co-op, the shareholder and the contractors to sign.

Actual Cash Value (ACV) Vs. Replacement Cost Value (RCV)

Actual Cash Value (ACV) Vs. Replacement Cost Value (RCV)

Buying items is simple. Selling things is a little more difficult, but still fairly straightforward. As long as humans have been around, we’ve been giving value to certain items, whether it be monetarily or otherwise. “How much does it cost?” isn’t that complex of a question – until it is.

So when it pricing complex? Pricing becomes a problem when claims adjusters get involved. Finding a definitive price for an item not on the market, after depreciation, and so forth is an art form. Well, more like a science. So how do claims adjusters find the true or definitive price of an item?

The Basics

Enter actual cash value (ACV) and replacement cost value (RCV). Actual cash value is the cost to replace an item minus depreciation. Replacement cost value is the cost to replace the asset at the full present value.

While these concepts may seem straightforward, things can get complex quickly. Adjusters not only need to decide on the value of an item, but there are also numerous local and state laws that can impact how ACV and RCV are calculated.

Diving Into Differences

Each state tends to handle ACV and RCV a bit differently. For instance, California includes an interesting tidbit in their legislation regarding these issues. In California:

“Actual cash value is the amount it would cost the insured to repair, rebuild, or replace the item lost or injured less a fair and reasonable deduction for physical depreciation based on its condition at the time of the loss.”

While seemingly fair, this leaves pre-loss condition in a tough situation. Many adjusters have found themselves between a rock and a hard place due to this law. Often, it can be difficult to determine what an item actually is – much less its exact condition at the time of the loss.

Unique or Obsolete

Furthering confusing things, an adjuster has to work with obsolete and unique items. Not even item loss will be easily purchased on No, there will be a variety of items that hold a unique value for the owner. Many of these items will be tough to find pricing for.

This Honus Wagner baseball card sold for 2.1 Million in 2013

This Honus Wagner baseball card sold for 2.1 Million in 2013

As an adjuster, understanding that one man’s trash could equate to another’s treasure is paramount when dealing with these unique cases. When dealing with these cases, communication is key. The adjuster must work to understand the insured and what he or she places value on. You need to understand the insured and the item before placing a value on it.

When dealing with these items, begin by understanding what exactly the item is, how it was used, and if the insured still values it. Many times, an adjuster will need to dig deep and do some research before giving value to a unique or obsolete item.

If an adjuster is struggling to price an item properly, try:

  • Consulting experts in the field. Look for a certified consultant who can help you give value to a unique, obsolete, or high-priced item. Always verify these individuals’ credentials.
  • Use the Internet. While Internet pricing isn’t the most accurate, you’ll often be able to gather a working knowledge of the item and its value by going online.

Overall, the best way to determine value for an obsolete or unique item is to find a similar item already on the market. Finding a similar kind and like item can ensure fair pricing and valuation for both parties.

Understanding Antiques

Antique items open a whole other bag of worms for adjusters. Not every item that is older is considered a valuable antique. Most items are required to be a certain age and origin to qualify. A minimum of 100 years old is required for an item to be “antique” from an insurance perspective. Adjusters should handle antique items in a similar manner to obsolete and unique items.

Actual Cash Value Vs. Replacement Cost Value

Overall, understanding the actual cash value versus the replacement cost value isn’t that complex. Most homeowners will benefit from RCV more than ACV when an adjuster is looking into their claim. How a state handles these cases and individual policies will go a long way in determining how the claim is calculated.

For more information about Actual Cash Value (ACV) vs. Replacement Cast Value (RCV) contact Skyline Risk Management, Inc. at (718) 267-6600

Additional Insured Coverage Confirmed Limited to Contractual Privity in New York

Additional Insured Coverage Confirmed Limited to Contractual Privity in New York

The New York Supreme Court, Appellate Division, First Department decided that additional insured endorsement only provided additional insured coverage to an entity in direct contractual privity with the named insured. The decision reinforces the New York law, which controls policy language entitlement to added insured coverage.

Why the Confirmation?

The New York Supreme Court was forced to confirm this law due to a recent case. Brought to heed on Sept. 15, 2016, the case involved the Dormitory Authority of New York (DASNY), Gilbane Building Co. /TDX Construction Corp (a joint venture, or JV)., and Sampson Construction Company.

The contract between DASNY and the JV stated that all prime contractors retained by DASNY were to name the construction manager as an additional insured under the liability policies. This was a requirement.

Next, DASNY contracted with Sampson to retain its services as a prime contractor in all foundation and excavation labor. In this contract, Sampson agreed to name the construction manager as an additional insured on its commercial general liability policy. The company then purchases a commercial general liability insurance plan from Liberty Insurance.

The policy Sampson procured from Liberty contained the following information about additional insured endorsements:

WHO IS AN INSURED: (Section II) is amended to include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract, but only with respect to liability arising out of your operations or premises owned by or rented to you.

Moving forward – the work Sampson did on the job site allegedly created property damage to the building adjacent. Thus, DASNY filed suit against Sampson and the architect. Then the architect bought a suit against the JV, too. The JV then sought coverage under the Liberty policy that Sampson procured for the DASNY contract as additional insured.

Liberty denied coverage. So the defendants opened a declaratory judgment action against Liberty. Then Liberty made a play for a summary judgment, claiming that additional summary judgment would require some direct contractual privity with the named insured, Sampson.

The court then denied Liberty’s motion on the basis that the policy only required a written contract in which Sampson is a party. This requirement was satisfied when DASNY and Sampson entered a contract. However, this was overturned on appeal based on the additional insured endorsement.

While the Sampson and DASNY contract was evidence that Sampson agreed to provide coverage, the court ruled that this has no impact on the coverage Liberty agreed to provide them. This opened the door for the JV to pursue Sampson on a breach of contract clause, as a third-party beneficiary.

Nothing Has Changed

The concept that New York courts read closely regarding additional insured endorsements determined whether privity was required is nothing new. The Gilbane Court relied on numerous prior decisions with similar language, including:

AB Green Gansevoort, LLC v. Peter Scalamandre & Sons, Inc., 102 A.D.3d 425, 961 N.Y.S.2d 3 (1st Dep’t 2013) (requiring contractual privity where additional insured endorsement stated that “an organization is added as an additional insured ‘when you and such organization have agreed in writing in a contract or agreement that such organization be added as an additional insured on your policy.’”); Linarello v. City Univ. of New York, 6 A.D.3d 192, 774 N.Y.S.2d 517 (1st Dep’t 2004) (same). See also Zoological Soc. of Buffalo, Inc. v. Carvedrock, LLC, No. 10-CV-35-A, 2014 WL 3748545 (W.D.N.Y. July 29, 2014) (requiring contractual privity where additional insured endorsement afforded coverage to “[a]ny person or organization with whom you have agreed, in a written contract, that such person or organization should be added as an insured on your policy, provided such written contract is fully executed prior to the ‘occurrence’ in which coverage is sought under this policy.”)

The JV and courts attempted to distinguish the language in each policy, but the Gilbane Court clearly stated that privity between named insured and additional insured is required. 

For more information about Additional Insured Coverage, contact Skyline Risk Management, Inc. at (718) 267-6600

Cuomo Works to Revive 421-A Tax Abatement Program

Cuomo Works to Revive 421-A Tax Abatement Program

New York City building projects need to continue to keep the economy moving in the right direction; however, the 421-a tax abatement program that was encouraging building in New York City has expired. Governor Cuomo is offering union officials and developers a wage subsidy program to help revive the program. This plan is somewhat similar to the bill that was submitted to the Senate at the end of the legislative session, but that bill did not include a wage subsidy.

Trying to Keep Construction and the Economy Healthy

A bill, called 421-A, was submitted right before the end of the legislative session in June, but it failed to pass. In the bill, it detailed a $55 per hour average minimum wage for construction workers who were working on projects located south of 96th Street, which included more than 300 apartment units.

The wage subsidy program has a two-tiered wage for government-assisted projects of over 300 apartments on the waterfront: one tier for Queens and Brooklyn and another for Manhattan. For example, in Manhattan, a project south of 96th Street asks for a 421-a tax abatement would be required to pay at least $65/hour minimum wage, including benefits. Meanwhile, in Queens and Brooklyn, the wages would be at least $50/hour, in both wages and benefits. New York State would reimburse or subsidize 30% of the wages. Additionally, a developer would need to allot a percentage of the units for below-market rents.

The issue that many people are worried about is where the money is going to come from. After all, this subsidy could run into the tens of millions of dollars. Also, how will the funds be managed?

Thoughts from Governor Cuomo

During a speech at the New York State AFL-CIO 33rd Constitutional Convention, Governor Cuomo discussed the much-needed infrastructure repairs the state needs, including upgrades to the Long Island Railroad and JFK and LaGuardia airports. He then mentioned the 421-a program, admitting that this plan was largely about union wages. “That’s what this fight on 421-a is all about, and they try to make it complicated, but it’s very, very simple. I have two problems with the program; first, it’s an affordable housing program, but it doesn’t provide the affordability for long enough.” His second issue was with the city not paying the union wages. “Developers don’t want to be forced to use union labor, because if they are left on their own they want to use non-union labor, and at one time, in this city, you would never dream of building non-union construction. I want to pay more so we have union jobs because the government shouldn’t pay a poverty wage, that’s why I want to pay more.”

Keeping the economy moving in the right direction means keeping everyone working, and for construction workers, this means that they need projects to work on. This wage subsidy program is meant to keep them working at a wage that will allow them to take care of their family and their financial commitments. In addition, it offers more affordable housing for others, so they can move into the state, get jobs, and contribute to the economy. All in all, it works to help everyone. 

Worried about how the 421-A bill could effect your business? You can protect yourself with sufficient insurance protection. Contact Skyline Risk Management, Inc. (718) 267-6600 to voice your concerns. 

Keep Your Business Protected With Active Shooter Insurance

Keep Your Business Protected With Active Shooter Insurance

Sadly, we see it all the time. There are active shooter situations happening more and more frequently these days. Social media shows us new ones nearly every week. While this is sad for society, you have a business to run. So you have a responsibility to stay prepared and protect your hard work.

Enter active shooter insurance. As a business owner, your clients’ depend on you to provide them with a safe environment and to keep them protected from risks they could face at your business at any given moment. This means preparing your customers for active shooter situations.

The easiest way to do just that is by educating customers on the perils of these scenarios outside of the obvious – tragedy. Businesses need to realize that the fallout from these chaotic events can cost companies a lot of money.

Shooter Scenarios Rising

Over the past 10 years, we've seen the three most deadly shootings in United States history. These shootings were all active shooter situations. Scenarios where someone enters a confined or populated area with the intent to kill people, usually with the use of a firearm.

Typically, these attacks occurred at work or school. They stems from the fact that these shooters often relate their pain and anger to these places combined with the fact that many people can be found at these places, and a lot of damage can be inflicted quickly.

The United States has become a hotbed of active shooter situations. Over the last four decades, the U.S. has seen nearly 31% of mass public shootings throughout the world, but we only have 5% of the world's population.

How to Prepare

While getting an active shooter insurance policy can protect a business financially, most companies also feel a certain amount of responsibility for keeping their employees, students and customers safe while at these places. In legal terms, this is referred to as "duty of care" by most.

In addition, a business owner could be held liable if certain precautions are not in place before a situation like what was stated above were to occur. Insurance companies should work with business owners and organizations to stress the importance of implementing training regarding these types of situations. Another major key is to make sure emergency exits are easily accessed during open hours.

If you have a high traffic company, then hiring a well-trained security staff could be crucial in keeping your organization safe at all times. While this will cost resources, you'll find an increased customer safety and trust does benefit the bottom line.

Active Shooter Insurance For All

Active shooter policies are not an end all, be all. Nothing can eliminate the risk of an active shooter attacking a school or business. And nothing can prepare us for the potential that could result from such actions.

Still, businesses can mitigate these risks as much as possible by following the tips found here. Get an active shooter insurance policy. Train your staff, students, etc. to be prepared for the potential of an attack. Then focus on allocating any available resources to hiring a well-trained security staff.

Having an experience with an active shooter can be traumatizing to say the least. The effects of such an experience can stay with a person throughout their lifetime. Limit your risk and protect yourself. For more information about active shooter insurance, contact Skyline Risk Management, Inc. at (718) 267-6600 to voice your concerns. 

Oxford Health Plans Exits Commercial Market in New York

Oxford Health Plans Exits Commercial Market in New York

After conducting a review of their entire portfolio, the decision was made that Oxford Health Plans (NY) will exit the commercial market and not renew the OHP license in 2017.

The Changes

Not renewing the license means that Oxford Health Plans (NY) will not offer individual plans, small group OHP New York plans, or OHP New York POS products.

*All changes will begin at the clients' renewal date in 2017.

While Oxford Health Plans (NY) is withdrawing, Oxford Health Insurance (OHI) is not. OHI will still offer a wide selection of insurance offerings in New York. The OHI portfolio will still offer an extensive range of insurance coverage options for any and every employer regardless of size.

What the Changes Mean

You should have the opportunity to select a new OHI group plan before any current coverage runs out.

All groups and individuals who may be affected by this change will receive notice of the changes at least 180 days before the end of their 2017 coverage date. Notices will clarify all action that needs to be taken to ensure future coverage, along with different options.

How You Could Be Impacted

A few large group employers will end up needing to select new OHI plans for any and every affected employee. Most large group employers won't have to worry about the change, as only a small number of these clients will be affected.

Small group employers are more likely to be impacted. Many offer both OHP and OHI plans. These clients will find their plans automatically moved from the OHP HMO plan to an OHI program. Information on this change will be sent to affected customers. There will be no changes to the current OHI plans.

If a small group employer was only offering an OHP plan, then they will need to take action and potentially purchase a new OHI plan, as OHP plans will not be renewing. Groups like these will need to reapply as a new group with OHI to get coverage again.

Groups that qualify for Healthy NY group coverage will be offered a similar plan from OHI. These groups will not need to apply again; they only have to use the Healthy NY Recertification Form. The key requirement for any groups using this coverage is that they meet Healthy NY's requirements.

Individuals who have OHP will need to find new coverage. Working with your individual clients, you'll want to encourage them to seek coverage through "The Marketplace" from the New York State of Health.

How SKYLINE Can Help

Ultimately, this change may be confusing for many groups and individuals. Many will need to work with insurance consultants and/or agents to find the proper coverage options from OHI moving forward. 

If you need help finding comparable coverage for your Oxford health insurance plan please call Skyline Risk Management, Inc. (718) 267-6600, or email us at to voice your concerns.  

Affordable Care Act: A Year-By-Year Overview

Affordable Care Act: A Year-By-Year Overview

The Affordable Care Act, often referred to as Obamacare, although passed by the Congress in 2010, was designed to be phased in each year with 2016 marked as full implementation. Along the way there have been challenges by some of the states and challenges by Congress; but, alas, the full-blown Affordable Care Act (ACA) has arrived. Each year, portions of this massive healthcare reform act were implemented, and the most significant are as follows:


Patient's Bill of Rights - This provision was designed to protect U.S. consumers from alleged abuses of the insurance industry. It also called for free preventative services to begin for U.S. consumers who become insure. There was also an additional twenty changes included with the 2010 implementations.


Medicare members are offered key preventive services at no cost and receive a 50% savings on brand-name drugs while in the "donut hole." There are an additional eight components that were also implemented in 2011.


This year was all about improving healthcare quality and reducing paperwork and administrative costs in the healthcare industry. 2012 was also the year for the implementation of CLASS, a voluntary long-term care insurance solution. There were also four other major implementations in 2012.


This was the year when open enrollment began for the Health Insurance Marketplace and will be remembered for the many failures of the HealthCare.Gov online portal. There were also four other major implementations that went into effect.


2014 is considered by many to be the year of the consumer. Pre-existing conditions, annual limits of coverage, and clinical trial coverage were the highlights for 2014.


Physicians who provide a higher quality of care rather than volume of care will receive higher payments than physicians who provide a lower quality of care.


2016 is scheduled as the year for complete implementation of the employer mandate:

  • Any business that employs at least 50 full-time employees will be required to offer at least 95% of the full-time employees health insurance to avoid penalties.
  • The definition of "affordability" is changed to 9.66% of an employee's total household income.
  • Employers will be penalized for failure to provide minimum essential coverage to employees or offering an inadequate health plan. The new penalty under section 4980H(a) is increased to $2,160per full-time employee in excess of 30 employees.
  • If an employer offers minimum essential coverage the doesn't satisfy the requirements of "Minimum Value and Affordability," a penalty will be levied if a full-time employee receives a premium tax credit to buy insurance on an exchange as a result of the following:

1.      The employer health coverage did not offer "minimum value".

2.      The employer health coverage was considered "unaffordable."

Challenges Over the Years

Although the ACA was passed by the Congress, it was done so on a razor thin margin and therefore there were many who felt that the massive health care overhaul might not pass constitutional muster, and so challenges were certainly to follow:

  • Early on Republicans in 26 states challenged the mandate in the act, saying it was an unconstitutional expansion of federal power. The Supreme Court heard the case and in June of 2012 ruled that it was constitutional.
  • In June of 2014 after a case was filed by Hobby Lobby that complained that the ACA forced closely held businesses to violate religious convictions while being required to pay for contraception, the Supreme Court ruled against the ACA.
  • In another case in 2015, the Supreme Court ruled that health insurance subsidies could be awarded in states that set up their own and exchanges and in states that did not.

Whatever your feelings are regarding the Affordable Care Act, most can agree that it is a massive piece of legislation that is complex and confusing. To make certain that your business is adhering to the rules and regulations, contact an insurance professional at Skyline Risk Management  (718) 267-6600 to learn more about managing your employee benefits.

Health Insurance 101: Lowering Premiums

Health Insurance 101: Lowering Premiums

Obamacare Tax Penalties

Obamacare Tax Penalties

We’ve all been there, "My health insurance premium is too high and I am sick of paying every month for coverage I never use!" I have heard it a million times and when clients tell me that their health insurance it too high I don’t argue with them because THEY ARE RIGHT! Unfortunately since the emergence of Obamacare healthcare premiums increased.

ATTENTION: Did you know that since 2014 all Americans are required by law to have health insurance, and if they don’t have health insurance they have to pay an Obamacare tax penalty? It may not seem fair but the Affordable Care Act was implemented to make healthcare more affordable and accessible by obligating all Americans to purchase health insurance.

In response to these laws this article has been created to help Americans learn more about purchasing health insurance.

First off, what is a premium?

A premium is the cost a person pays to obtain insurance. Dependent on the type of insurance, premiums may be paid in a variety of ways including monthly or annual payments. Typically health insurance in New York is paid on a monthly basis.

Premiums should have an impact on a person’s decision to buy health insurance, however it should not be the primary factor dictating what plan you choose. In order to fully appreciate higher or lower premiums a potential health insurance purchaser needs to understand the premium, deductible and co-pay relationship.

A good health insurance broker will present three options when offering a health insurance plan. These plans include a high, medium, and low option, which are commonly referred to as Platinum and Gold for the high option plans, Silver for the medium option plan, and Bronze for the low option plan. A broker may not offer all plan tiers to a potential purchaser if the broker feels that the purchaser has no desire to purchase a certain plan, in which case they may elect to exclude it from the proposal. Regardless at the time of proposal three plan options are usually presented. 

What is a deductible?

A deductible is the specified amount of money that a person must pay before an insurance company will pay a claim. For example, I have health insurance with a $5000 deductible and I have a procedure, which costs $10,000. I am responsible for paying the $5000 deductible before my insurance kicks in and pays the difference.

A higher deductible means that in the event of medical necessity, a person must pay more money out of pocket than they would if they had a lower deductible.

What is a co-pay?

A co-pay is the cost associated with a health insurance policy, which a person must pay if they visit a doctor or specialist. For example, I have a health insurance plan which has a $20 co-pay for both my general physician and specialist. If I go to my physician or specialist I have to pay $20 because my copay is $20.

How the Premium, Deducible, and Copay Relate:

This diagram represents an example of some of the features presented on a health insurance proposal.

This diagram represents an example of some of the features presented on a health insurance proposal.

High Option:

  1. Deductible - $1,000
  2. Primary Care (Co-pay) - $25
  3. Specialist (Co-pay) - $40
  4. Premium - $750.40

This option has the lowest deductible at $1000 and has co-pays of $25 and $40 dollars. The reason that this option is the high option is because it has the highest premium, which is dictated by the plan's low deductible and low co-pays. This plan is good for someone who plans on visiting their doctor or specialist regularly throughout the year. Examples of medical specialists induce:

  • Addiction psychiatrists
  • Allergists
  • Cardiologists
  • Dermatologists
  • And more...

Medium Option:

  1. Deductible - $1,250
  2. Primary Care (Co-pay) - $30
  3. Specialist (Co-pay) - $60
  4. Premium - $747.27

The medium option has a deductible of $1,250 and co-pays of $30 and $60 dollars. This option is a good choice for someone who doesn’t visit the doctor’s office regularly but wishes to have a lower deductible in the event of a medical emergency.

Low Option:

  1. Deductible - $2,000
  2. Primary Care (Co-pay) - $40
  3. Specialist (Co-pay) - $70
  4. Premium - $654.16

The low option has a deductible of $2000 and co-pays of $40 and $70 dollars. This plan is good for a person who wishes to have health insurance instead of paying the Obamacare tax penalty and who doesn’t feel the need to visit their doctor or specialist regularly. This option has the lowest premium and has a higher deductible and higher co-pays. 

Wrap Up

                People are always complaining about the premiums of their health insurance plans. What they often fail to understand is that the premium reflects the deductibles and co-pays they elected in their coverage. BE SMART and ask your insurance broker about ways to strategically alter your health insurance to customize a plan with deductibles and co-pays that fit your budget.

If you have questions about health insurance and ways to lower your premium for yourself, or your business, contact Skyline Risk Management, Inc. today at (718) 267-6600 to voice your concerns. 

A Troubling Trend: Co-Insureds on a General Liability Insurance Policy

A Troubling Trend: Co-Insureds on a General Liability Insurance Policy


by Gregory J. Spaun, Esq.

In the ever competitive world for the insurance premium dollar, brokers are under increasing pressure to come up with novel ways to save their clients money. The typical way that brokers have accomplished this goal was to shop their client's policy at renewal time, and by examining their client's business so that they could tailor the policy to remove those coverages (generally by introducing exclusions to the policy) which are not specifically germane to the client's scope of work-such as by removing coverage for EIFS issues from a site contractor's policy.

With many policies already thoroughly shopped around, and with many others already tailored to remove unneeded coverages, some insurance brokers have started a troubling trend of placing a construction project owner and its general contractor, or a general contractor and its subcontractor, on the same general liability policy as co-insureds. This process is loosely modeled after what are commonly known as "wrap-up" programs, or owner (or contractor) controlled insurance programs (OCIPs/CCIPs). These OCIP/CCIP programs place the owner, the general contractor and all subcontractors on a construction project onto a project-specific group insurance policy. There are, of course, issues which need to be dealt with in the context of an OCIP/CCIP, such as, for instance, whether a contractor's off-site operations (at its fabrication shop) will be covered under the OCIP/CCIP program. However, by placing all parties to a construction project with a common insurance carrier, the inevitable cross claims asserted in a lawsuit (fighting over which contractor bears ultimate responsibility) are not as important to litigate because the claim is covered by the same OCIP/CCIP policy. By reducing, or even eliminating the need to engage in expensive in-fighting, the premiums for such programs tend to be lower.

With the so called joint policy, because not all parties to the construction project are intended to be co-insureds, the issue of cross claims remain. In order to get around the cross-claim exclusion common in most general liability policies, some carriers have attempted to draft amendments to the common cross suits exclusion which purport to not apply the exclusion to certain suits between Co-Insured A and Co-Insured B. A sample of such a form can be found by clicking here . Questions often arise as to whether a form such as the example sufficiently "excludes the exclusion". Even in the example form, the exclusion only applies to property damage claims (thus still excluding cross claims in personal injury lawsuits) and completed operations (thus still excluding cross claims in lawsuits where the co-insureds are still working). Regardless, these amendments are generally illegal in New York.

Chapter 11 of New York Codes, Rules and Regulations governs financial products, including insurance. Paragraph c of Section 153.3 of Chapter 11 of the NYCRR prohibits group policies from being issued, except where: 

1. the group is homogeneous in nature, based upon standards acceptable to the superintendent;

2. the group is formed for purposes other than obtaining insurance;

3. the group consists of at least ten group members engaged in similar activities giving rise to similar risks, based upon standards acceptable to the superintendent, except that a smaller number of members, but not less than five, may be covered on a group basis where each such member generates at least $5 million in annual revenues or annual premiums for such group total at least $500,000;

4. group members are either public entities or nonprofit organizations; and

5. coverage includes any kind of property/casualty insurance, but not a kind specified by section 1113(a)(16), (17), (21), (22), (23) or (25) of the Insurance Law.

Gregory J. Spaun, Esq.

Gregory J. Spaun, Esq.

Similar Articles

Welby, Brady & Greenblatt, LLP maintain a library of articles on our website.  Visit and bookmark for your legal reference.

About the Author:

Gregory J. Spaun is a Partner at Welby, Brady & Greenblatt, LLP, practicing construction and commercial litigation, insurance coverage litigation and real estate and property litigation. Mr. Spaun has handled cases such as Insurance Company of Greater New York v Clermont Armory, LLC, where he successfully rebuffed a property insurance carrier's attempts to expand a narrowly tailored "Earth Movement" exception to cover man-made earth movement and to include the work of third parties within the ambit of its "Your Work" exception to coverage.


 Clearly, a co-insured arrangement like the one referenced above: 1) is not homogeneous in nature (being comprised of a construction contractor and a non-contractor, or two different trade contractors), thus violating ¶ c(1); 2) is formed for the purpose of obtaining insurance, thus violating ¶ c(2); 3) does not consist of at least 10 members (or 5 under the conditions referenced), thus violating ¶ c(3); and 4) does not include group members who are public or nonprofit entities, thus violating ¶ c(4). OCIP/CCIP programs get around these prohibitions by virtue of the the fact that policies covering shared interests are not defined as group policies (but only to the extent of those shared interests). Since an OCIP/CCIP policy is project specific, the interests of the insureds are shared. By the same account, because the OCIP/CCIP policy covers only the one project, it covers only those shared interests.

On the other hand, the practice of simply placing both an owner and a general contractor, or a general contractor and a subcontractor on a single policy as co-insureds fails that "only to the extent" test because, unlike an OCIP/CCIP policy limited to one specific project, a joint policy insures both entities for all risks, whether shared or not. As such, it is defined as an impermissible group policy. Where brokers try to get around this problem by restricting the policy to a single project, thus ensuring that all risks are shared, the problem of the cross claims exclusion still exists. This problem most often surfaces where there is a potential for the injured party's claim to exceed policy limits (such as the young union construction worker who will never work again, where even "straight line" economic damages are easily into the millions of dollars). In such instances, it is likely that even where two entities are co-insured the owner entity will need to assert a cross-claim against the contractor (employer) entity, thus giving the carrier a reason to trigger the cross-suits exclusion and vitiate coverage. The carrier may also pre-emptively use this exclusion to deny coverage because of the possibility of such claims (and contend that such claims were not actually asserted solely to keep coverage intact). In practicality, the Co-Insureds may simply be buying themselves additional litigation against their carrier on the coverage issue-in addition to the underlying negligence action that they sought to be insured against in the first place. To truly deal with this problem, the cross claim exclusion needs to be removed from the policy in its entirety-something which carriers are loathe to do.

In sum, insurance brokers, insurance carriers and their clients would be cautioned against engaging in such joint policy practices. Of course, all would be well advised to consult with their attorneys to determine whether their insurance policy qualifies as a permissible OCIP/CCIP, an impermissible group policy that violates the above (or other applicable) regulations, or something in between.

Fair Labor Standards Act (FLSA) - Overtime Rule

Fair Labor Standards Act (FLSA) - Overtime Rule

One of the Largest Exposures Employers face today are Wage and Hour claims
"On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor's final rule updating the overtime regulations, which will automatically extend to over 4 million workers within the first year of implementation." - Department of Labor (DOL) 

What Does this Mean?

Previously, any employee making less than $23,660 a year and working more than 40 hours per-week was eligible for time-and-a-half overtime compensation. The new overtime rule has increased the minimum salary required for overtime pay from $23,660 to $47,476, or from $455 to $913 per week. The final rule will be enforced starting on December 1, 2016.

How Does this Impact Employers?

Scott Green, a partner specializing in employment and labor law at Rivkin Radler LLP, is of the opinion that the effects on employers can be minimized.  “If you have a class of exempt employees that do not meet the salary basis test, you can simply increase their salary. However, where that option is not realistic, employers can pay those employees an hourly wage. The key to controlling cost is to find an hourly wage, that, when accounting for overtime, pays the employee a wage this is on average equivalent to their prior earnings as a salaried employee.”


Whatever action you choose to take as an employer, mistakes can and will happen and the cost for these missteps is very high. The penalties for violating the new overtime rule include fines and in some cases even imprisonment. Under the new rule, “any employer” in violation of the unpaid overtime law can be held liable for both the deficit, liquidated damages and one of the largest expenses associated with a wage claims, legal fees.

What Can You Do?

In addition to consulting with your attorney for legal advice on this and other employment practice issues, an employer may be covered for the legal fees associated with a wage & labor claim under their Employment Practices Liability Insurance (EPLI).

EPLI policies typically protect employers against lawsuits filled by their employees for causes of action such as sexual harassment, discrimination, wrongful termination, breach of employment contract, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, wrongful infliction of emotional distress, and the mismanagement of employee benefit plans but usually exclude wage and hour claims.

The good news is that certain carriers offer a wage and hour coverage endorsement that affords coverage for the legal fees associated with wage and hour claims with a limit of up to $250,000, for a relatively low premium. Adding an EPLI policy, which protects employers against wage and hour claims is highly recommended if you believe your business will have to make changes to its compensation structure because of the new overtime rule. For questions about how you can better position yourself while adjusting to the new overtime rule contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns.