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MASHANTUCKET, Conn.-The owner of the nation's largest resort casino hopes to control its workers compensation exposure by exercising an option beyond the reach of most companies headed down the self-insurance path.
The Mashantucket Pequot Tribal Nation, which owns the casino, has exercised its congressionally granted rights as a sovereign nation and created its own workers comp system, separate from Connecticut's.
While this opportunity isn't available to most of Corporate America, the idea of creating an autonomous workers compensation system could spread among other Indian tribes adopting risk management practices for their gaming operations. Mashantucket Pequot legal strategies are closely watched by others who admire the tribe's success.
The MPTN owns Foxwoods Resort Casino in southeastern Connecticut. The tribe is now Connecticut's third-largest employer and the state's largest source of revenue after the federal government. The 5-year-old casino attracts 50,000 visitors daily and employs about 11,000 workers. Another 1,000 employees work for the tribal government, and 2,000 more workers will be hired soon to help with the casino growth that is multiplying yearly, said Richard Paton, chief risk management officer for the MPTN.
Growth has come so rapidly that management is racing to keep pace, Mr. Paton said.
Efforts to heighten risk management include self-insuring workers comp losses and contracting with a third-party administrator that will staff an onsite claims-handling facility.
Under the tribe's workers comp system, cases will be adjudicated at a reservation facility practically next door to the casino. Appeals will go to a tribal court that also hears civil cases arising from casino patrons.
"We recognized that in order (to benefit from being) self-insured to the fullest extent, we needed to take on our own workers compensation system," said Patrice Kunesh, a staff attorney for the tribe who drafted the code creating the autonomous workers comp system. "And in looking at what kind of system we wanted to put in place, we recognized that there were a lot of areas where we could improve on the state system."
Employees complained the state workers comp system often took weeks or months to resolve their cases, Ms. Kunesh said. Backlogs led to frequent rescheduling and kept workers away from the job.
Under the tribe's new system, claims first will go to the onsite processing facility operated by ESIS Inc., a unit of CIGNA Property & Casualty. ESIS now will handle all of the MPTN's workers comp and auto liability claims. Having the third-party administrator on site will expedite the process.
Risk management and the use of improved claims handling has mushroomed among gaming companies, because their success depends on their service and therefore on the treatment of employees and customers. The concern with providing good service applies to all areas, including the proper treatment of incidents and claims, said Sandy Sampson, an expert in tribal gaming and vp for Aon Risk Services Gaming Group in Atlantic City, N.J. Aon places property/casualty coverage for the MPTN.
A gaming company's concern about the proper use of its insurance and claims-handling can be a more important cost-of-risk issue than the amount spent on insurance, she added.
"The casinos pay very close attention to taking care of their patrons and certainly the proper response to handling an incident in a facility has to do with the reputation of the facility itself as being patron responsive," Ms. Sampson said.
In order to win employees' acceptance of its new workers comp system, the MPTN is offering a slight increase in benefits over the amount employees received under Connecticut's system. For example, the maximum weekly benefit will rise by $14 to $670.
Otherwise, the MPTN used Connecticut's workers comp system as a model for its own legal code that as of July 1 establishes what its employees' rights and its own liabilities will be, Mr. Paton said.
Under the code, if employees are not satisfied with the initial handling of claims, they can submit the claims for informal hearings. If they still are not satisfied, they may consult the tribe's workers comp commissioner, who will soon be hired, Ms. Kunesh said.
Appeals of the commissioner's decision can be submitted to the tribal court, which also has an appellate branch. The tribe's sovereign immunity status allows it to hear cases in its own court rather than in state and federal courts. Both the commissioner and the court are located on the reservation near the casino.
The tribal court was created about five years ago when the casino evolved from a bingo hall. The tribe realized it would need a forum for legal disputes-such as those arising from slip-and-fall cases-once it began inviting thousands of patrons onto its property, Ms. Kunesh said. The court also handles other types of hearings such as minor criminal charges.
In civil cases there is a damages cap for pain-and-suffering equal to half of damages for tangible economic loss. There are no punitive damages or damages for loss of consortium. Strict liability is not recognized. Claims against the tribe or its enterprises must be filed within 180 days after the injury occurs.
The court does not have jury trials for civil cases. A judge rules on those matters.
Supporters say the court system is at the forefront of tort reform. But some Connecticut attorneys have criticized the tribe's court, saying it is merely a calculated move to limit liability.
The establishment of an independent workers comp system also has drawn fire. A state AFL-CIO leader and a legislative supporter in the state's Legislature have threatened to take the matter to Connecticut's attorney general. But a spokesman for the attorney general said last week that the office has not received a formal request for an investigation.
The critics believe the MPTN's system lacks adequate public review, such as the state Legislature's setting of benefits. Workers' rights may be violated, they said.
Casino officials see the criticism as an attempt by labor to make inroads into their operations.
For Mr. Paton, the implementation of an independent workers comp system is just the beginning of efforts to develop sophisticated methods of handling the MPTN's risks, he said.
"The first idea out of the box was this workers compensation statute, and I think that it is going to prove itself in terms of being a big success," Mr. Paton said.
Except for workers comp, the tribe now purchases coverage for all of its insurable exposures. Tackling workers compensation first was important because the high frequency of those losses represent the casino's biggest exposure, said Patrick E. Jewell, risk manager for Foxwoods casino.
He declined to reveal the number of claims filed at Foxwoods or by tribal employees.
"Suffice it to say there is a significant number of claims, given the fact that in the casino we have somewhere around 10,000 to 11,000 employees," Mr. Paton said. "You can conjure up what that number would be."
Some of the claims filed by Foxwoods' employees mirror those found in other industries. For example, employees handling large sums of coins suffer injuries found in other companies that require workers to bend over and lift heavy weight.
But there are plenty of claims peculiar to the gaming industry and to a Connecticut casino, Mr. Paton said.
For example, the way blackjack dealers stand, deal cards and control their tables can lead to repetitive stress injuries. At the same time, the nature of the game itself and individual state gaming regulations dictate how they perform those functions and potential solutions to injuries, Mr. Paton said.
"We've had some discussions with other risk managers," he said. "But gaming regulations in New Jersey are different from gaming regulations in Nevada, (which are) are different from gaming regulations here. There are a lot of similarities in terms of the same types of problems, but I don't think anyone has found one solution that can be applied universally."
In the future Mr. Paton foresees videotaping card table operators to find measures that might reduce employees' injuries.