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A LOOK BACK: 1977-1981


Pension consultants say there is no large-scale movement among big corporations to replace their defined benefit pension plans with defined contribution plans as a result of the Employee Retirement Income Security Act of 1974.

Three national health insurance bills are introduced in Congress, despite the Carter administration's warnings that it will not support such legislation this year.

The Chicago Transit Authority, operator of the antiquated elevated train system that suffered a tragic accident, leaving 11 dead and about 210 injured, is self-insured for the first $2.5 million. Above that retention, the CTA has $20 million in catastrophe insurance to cover losses from any one incident. Losses from this accident, the worst in CTA history, have not yet been determined.

One of the largest aviation losses in history is expected to result from the March 27 collision of Two Boeing 747s at an airport in the Canary Islands. Almost 600 people died. Both airlines, KLM Royal Dutch Airways and Pan American World Airways, have hull insurance totaling $63 million on the planes. It will be the largest hull loss insurers ever have had to pay for a single crash. That amount is likely to pale in comparison with liability claims, which observers predict could exceed $400 million.

The first round of what promises to be a long legal battle has gone in favor of 16 drug companies that marketed DES, a drug once prescribed for pregnant women to prevent miscarriages that now is being blamed for the health problems of the women's daughters. The suit was brought in Wayne County, Mich., by 144 daughters of women who had taken diethylstilbestrol during pregnancy. Because the majority of the daughters could not identify the manufacturers of the drug their mothers took, they sued the 16 companies they claim had dominated the market. A county court rejected the theory of industrywide liability.

The looting is over, the fires are out, the lights are back on. But New York is still in the dark about ultimately who will be liable for the worst power blackout in the city's history. The blackout is investigated by federal, state and city officials. Consolidated Edison, which is largely self-insured, says it is not liable for an estimated $1 billion in damages caused by the July 13-14 power failure.

The Internal Revenue Service formally rules that a U.S. company cannot deduct as business expenses premiums paid to an offshore insurance company wholly owned by the parent.

The Pension Benefit Guaranty Corp. officially asks Congress to raise the annual termination insurance premium to $2.25 per participant from $1. The hike is needed because pension plans have been terminating at a much higher rate than had been expected, and the PBGC's deficit already has hit $61 million, says Matthew M. Lind, acting executive director.

The Insurance Services Office Inc. files nationwide for exclusion of punitive damages in all liability coverages. Although the majority of ISO members vote in favor of the exclusion, some insurers say they will continue to offer the coverage. ISO acknowledges that some state insurance departments may balk at the exclusion.

State insurance regulators become alarmed by the rapid growth of employee benefit trusts operating under the Employee Retirement Income Security Act of 1974. Regulators' fears intensify following the bankruptcy of a large self-funded trust based in California, the National Multiple Employers Foundation. State insurance officials worry that more trusts will become insolvent, leaving thousands of employees with unpaid claims.

The Supreme Court rules in late January that it is unlawful to require women to contribute a larger proportion of their salaries to pension plans than men. However, the court said the ruling would not be retroactive because of the "devastating liability" that would involve.

Employees at American Can Co. in New York are testing a new flexible benefits plan. The pilot program was designed by Hewitt Associates and is being underwritten by Metropolitan Life Insurance Co. The program, considered the most flexible offered by any major corporation, consists of required core benefits and optional benefits.

The Supreme Court lets stand a lower court ruling that airlines can require flight attendants to stop flying as soon as they become pregnant. The previous summer, the 4th U.S. Circuit Court of Appeals ruled that United Airlines' forced-leave policy was justifiable because pregnancy "could incapacitate a stewardess in ways that might threaten the safe operation of aircraft."

A California Superior Court judge reduces a record $125 million punitive damage award against Ford Motor Co. to $3.5 million in a case involving the crash and explosion of a 1972 Pinto. The judge said the jury award was "excessive as a matter of law." He also awarded $2.5 million to the then-13-year-old victim of the crash, making the total award $6 million. The plaintiffs in the personal injury and wrongful death case charge that Ford placed the gas tank in the 1972 Pinto where the automobile manufacturer knew from its own studies that it would be apt to rupture upon light impact.

Congress gives final approval to a bill that would require employers to treat pregnancy as any other disability, and President Carter is expected to sign the bill into law.

Many employers are finding that day care is a benefit for them as well as for their employees. Employers that have implemented the benefit often say it helps them recruit workers and improve morale while reducing absenteeism and turnover.

All parties are denying liability for claims involving leakage near New York state's Love Canal, an incident that may evolve into one of the most complicated liability cases ever. Damages may eventually total $2.65 billion after the leakage of toxic industrial chemicals from an old landfill in the Love Canal section of Niagara Falls.

A class-action suit filed in Los Angeles seeks $1 billion in damages from 15 major U.S. producers of asbestos, claiming that the companies conspired to conceal and distort information on the hazards of asbestos. The suit, filed on behalf of 5,000 shipyard workers in Southern California, seeks "restitution profits," claiming that the asbestos producers were "unjustly enriched" by the profits of their continued production of asbestos.

A class-action lawsuit filed on behalf of Vietnam veterans who claim that they were injured by the herbicide Agent Orange could result in huge product liability for the manufacturers of the chemical. The suit claims the herbicide, which contains dioxin and was used as a defoliant to kill trees and clear ground cover in Vietnam, causes cancer. A plaintiff's lawyer says that if the herbicide is found to cause cancer, three chemical companies named in the suit -- Dow Chemical Co., Hercules Inc. and Northwest Industries Inc. -- could face liabilities "far in excess of their net worth combined."

Despite lawsuits challenging the practice, Blue Cross & Blue Shield plans say they will expand their move to deny claims for procedures they deem medically unnecessary. The Blues are urging member plans to curtail payments for the "admissions battery" of routine tests done before hospital admissions, which Blue Cross & Blue Shield says often are unnecessary.

Drafts of guidelines for a new law that treats pregnancy as any other disability indicate that if employers provide dependent medical coverage, they will have to cover the pregnancy-related expenses of employees' wives. In its guidelines, the Equal Employment Opportunity Commission says that because the new law requires employers to cover their employees' pregnancy as any other disability, they must extend such coverage to dependents.

The accident at Three Mile Island nuclear plant near Harrisburg, Pa., will be the worst commercial nuclear accident in history. American Nuclear Insurers paid out more than $600,000 in emergency claims in the first several days after the accident at the plant; that amount is almost as much as the total liability payments for the country's 73 nuclear plants over the past 22 years. Experts say the $600,000 will be dwarfed by the liability and property damage claims that ultimately will be filed.

A provision in a 1979 bill that would amend the Employee Retirement Income Security Act of 1974 would allow states to require employers to offer certain health care benefits. The Senate Labor and Human Resources Committee has approved the ERISA overhaul legislation, including the controversial provision that would overturn a series of federal district court decisions that a section of ERISA pre-empts states from imposing benefit requirements on employers.

A complex maze of liability litigation is likely after the crash of an American Airlines DC-10 in Chicago that killed 274 passengers and two bystanders, making it the worst U.S. aviation disaster. Involved in the possible dispute over liability, which experts say could reach $200 million, are the airline, the manufacturer of the aircraft and suppliers of components. These parties may be involved because the crash occurred when some malfunction -- caused perhaps by faulty design, manufacture or maintenance, or simply wear and tear -- caused the engine to fall off the left wing during takeoff.

The possible bankruptcy of Chrysler Corp. could trigger a sharp increase in the premiums that other companies pay for federal pension termination insurance. The Pension Benefit Guaranty Corp. could be left holding the bag for Chrysler's enormous pension obligations if the automaker were to fold. Even though the PBGC would have a lien on Chrysler's pension assets and a right to 30% of its net worth, the federal agency could still need more funds from other employers.

Both Illinois and Florida are considering forming insurance exchanges similar to Lloyd's of London and the recently created New York Insurance Exchange. In Illinois, a bill to create such an exchange unanimously passes the state Senate, which supports the idea as a way to bring money and jobs into the state. However, insurance companies in Illinois are more wary and would like to first see if New York makes a success of its insurance exchange. The Florida Legislature also has passed a bill calling for the formation of an insurance exchange, but only after the insurance commissioner establishes its economic feasibility.

Insurers say they may stop writing liability coverage for general admission rock concerts after 11 people are trampled to death before a concert by The Who in Cincinnati. The fans were killed when 7,000 general admission ticketholders stormed the glass doors outside Riverside Coliseum. Fireman's Fund Insurance Co. underwrote two spectators liability policies for the concert.

Lloyd's of London has called in Scotland Yard to help investigate the $84 million loss of the oil tanker Salem. Lloyd's believes the tanker's $60 million oil cargo was sold secretly to South African interests before it sank off the Senegal coast Jan. 17. Lloyd's suspects the tanker was scuttled to hide the theft. The tanker's cargo was 100% insured in the London market, with Lloyd's taking about 60% of the risk.

Newport News Shipbuilding & Dry Dock Co. of Newport News, Va., is challenging federal guidelines requiring employers to cover the pregnancy-related expenses of employees' wives if the employers offer dependent health care coverage. The suits seeks to overturn Equal Employment Opportunity Commission guidelines issued in March 1979.

The U.S. Supreme Court has ruled that workers cannot be fired or reprimanded for refusing to accept dangerous tasks, though employers do not have to pay them for time not worked. The court upheld a regulation by the Occupational Safety and Health Administration that allows employees to refuse to perform a task when they perceive a "real danger" of death or serious injury and there is not time to go through normal complaint channels.

A California Supreme Court ruling that women can sue DES manufacturers as a group has opened the door to the theory of industrywide liability. In the case, women are suing all manufacturers of diethylstilbestrol, a drug given to pregnant women to prevent miscarriage but alleged to have caused cancer in some of their adult daughters. Most of the daughters cannot identify the specific manufacturer of the drug their mothers took. The decision says that when a specific manufacturer cannot be established, all manufacturers must divide the liability based on their market share.

Insurance companies and state officials are trying to untangle the web of coverage questions surrounding the eruptions of the Mount St. Helens volcano in Washington. Total property claims from the disaster are expected to top $1 billion. The insurance commissioner of Washington has instructed insurance companies to adopt liberal guidelines in determining coverage for the disaster, though insurers are still debating what is covered.

The Internal Revenue Service will not impose the tougher pension vesting standards it had planned, but it intends to stop automatically approving some pension plans. The IRS action is part of its crackdown on plans that discriminate in favor of highly paid employees.

Employers are in the midst of an epidemic of wellness programs. Companies are using a variety of ideas, ranging from corporate spas to fitness seminars, to cut their health care costs by keeping their employees from getting sick in the first place.

Attorneys predict an avalanche of toxic shock syndrome lawsuits against manufacturers of tampons. At least 14 suits alleging tampon involvement in toxic shock syndrome, a potentially fatal illness, already have been filed against Procter & Gamble, maker of Rely tampons. Other tampon makers are named in other suits.

Experts agree that when President-elect Ronald Reagan and the conservatives who were elected to Congress take over in January, business will have a powerful new ally. Among other things, they say, the changing of the White House guard will be the death sentence for a national health insurance plan, long pushed by liberal Democrats.

Liability coverage of $30 million may not be enough to cover claims resulting from the fire at the MGM Grand Hotel in Las Vegas that killed 84 people. The first class-action negligence lawsuit filed after the disaster seeks $175 million in damages on behalf of about 375 Mexicans staying at the hotel.

Major health insurers say group medical insurance rates are up an average of 30% over the last year, and some rate increases may be as high as 60%. The insurers attributed the hikes to inflation and increased utilization.

The 52 American hostages freed from Iran are coming home to a bundle of tax-free benefits. The Hostage Relief Act of 1980 provides tax-free salaries and hazardous-duty pay, medical expenses and education benefits for dependents for up to two years for any hostages hospitalized for illness or injuries resulting from their captivity.

The major recommendation of the President's Commission on Pension Policy is that every U.S. employer should be required to offer a pension plan that immediately vests 3% of each worker's annual wage. The panel said that unless private pensions are made mandatory, a two-tiered system will develop. Those employees covered by private plans will prosper, but those with only Social Security benefits will face poverty in old age.

The Equal Employment Opportunity Commission will appeal a federal court ruling that employers do not have to offer equitable pregnancy benefits to spouses of male employees. In a landmark case, U.S. District Court Judge J. Calvitt Clarke Jr. overturns a 1979 EEOC guideline that says if an employer's health insurance plan covers the medical expenses of female employees' spouses, it must equally cover maternity expenses of male employees' wives.

The nation's air traffic controllers, threatening a nationwide strike for June 22, are demanding a 25% increase in retirement benefits. The 15,000-member Professional Air Traffic Controllers Organization says that PATCO's members need an increase in retirement benefits because so many suffer job burnout.

Under Vermont's new captive law, companies are allowed to form the kind of pools for product liability coverage that would be allowed under the long-delayed federal Risk Retention Act. The Vermont law is the first to create the domestic captive insurer category of industrial insured, which would allow pooling.

Only the owner and the operator of the Hyatt Regency hotel in Kansas City, Mo., appear to have anywhere near the liability coverage that will be needed to pay claims resulting from the July 17 collapse of skywalks at the hotel. Even if investigators ultimately find that the designers or builders are responsible for the tragedy, which killed at least 111 people and injured approximately 200, their coverage will not come close to the estimated $100 million in claims that is expected to result.

Although the Major League Baseball strike has ended, the dispute over strike insurance is heading into extra innings. Underwriters still are considering whether to reimburse baseball owners for their losses for the seven days of games that were canceled between the July 31 strike settlement and the end of the first week of August, when the insurance would have run out. Although a pact was reached July 31 in the 50-day-long strike, the professional baseball players had not ratified the deal before the end of the policy period.

The Illinois Insurance Exchange is off and running. Its three underwriting syndicates have a total of $9 million in initial capitalization.

The cost of providing employee benefits has risen 763% since 1951, according to the U.S. Chamber of Commerce. The annual cost of benefits provided to the average worker rose to $5,560 in 1979 from $644 in 1951. During the same period, the Consumer Price Index increased only 190%.

Employers are finding that wellness plans can save them money. Companies are discovering that they can save millions of dollars on absence and treatment costs by helping their employees stay healthy.