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WASHINGTON -- The Clinton administration this week will propose legislation that would require employers to count toward pension eligibility and vesting the time employees take off under the Family and Medical Leave Act.

That change, which would require congressional approval, would have its biggest impact on employees who work part-time during a year and might not meet the 1,000-hour threshold for counting service during a year towards pension vesting and eligibility.

The administration also is expected to propose that employers offer in their pension plans a 75% joint and survivor benefit. Currently, plans typically offer a 50% joint and survivor benefit, though many plans offer additional survivor options.

The recommendations will be unveiled at a White House event that will focus on Social Security and women. That event had been scheduled for last week but postponed because of President Clinton's involvement in Middle East peace negotiations.

RIMS targets privacy proposals

NEW YORK -- Several federal and state proposals to ensure employee health information privacy would lead to poorer health care, slower claim payments and added administrative costs, the Risk & Insurance Management Society Inc. says.

In a position statement on the issue, RIMS says current proposals to protect worker health data will create problems for employer health insurance and workers compensation programs.

For example, the National Assn. of Insurance Commissioners' model law on health information privacy -- approved by the NAIC last month -- would restrict employers' access to experience and loss data and "preclude the employer from making informed decisions regarding both health and workers compensation claims."

"With little power to verify employees' injuries or monitor treatment, employers might be forced to drop group health coverage or deny workers compensation claims because they cannot make an informed decision on a timely basis," RIMS warns.

Limiting information also could prevent employers from learning of workplace safety problems early enough to correct them and prevent future injuries, the statement says.

In addition, while many privacy proposals require employee authorization for releasing information, most make no provision for what happens if that authorization is withdrawn, RIMS said. Thus, an employee could withdraw authorization after he or she begins receiving benefits, and the employer would have no choice but to continue providing the benefits with no way of monitoring the employee's recovery.

According to RIMS, restrictions on health care data should:

* Not impede treatment and vocational rehabilitation in workers comp and other property/casualty claims.

* Be aimed at the recipient's use of health information and not on whether the information can be accessed.

* Be flexible enough to accommodate the different ways employers provide coverage.

Ergonomics rule not blocked

WASHINGTON -- Congress has declined to block the Occupational Safety and Health Administration's efforts to develop an ergonomics standard.

OSHA Administrator Charles Jeffress said late last week that although lawmakers appropriated $890,000 for a National Academy of Sciences study of ergonomics in the omnibus budget bill, Congress "has made clear that by funding another NAS study, it in no way intends to block or delay OSHA's proposal." That is in marked contrast to previous recent Congresses, one of which appropriated money for OSHA only under the condition that the workplace safety agency not spend any funds to study ergonomics, let alone to promulgate an ergonomics rule.

Employers have been skeptical of any ergonomics regulation, fearing such a rule would follow a "one size fits all" approach that would ignore the differing conditions and exposures of various industries. Mr. Jeffress has pledged to develop "flexible, common-sense ergonomics regulations" that could be published as early as next summer.

Aon merges units into one TPA

JAMESBURG, N.J. -- Aon Services Group, the specialty insurance unit of broker Aon Group Inc., has consolidated its nine third-party administration units into one company.

The new entity, called Cambridge Integrated Services Group Inc., joins together such specialized TPA operations as Martin Boyer Co. Inc., IRISC Inc., and PLCM Group. Based in Jamesburg, N.J., Cambridge is headed by Tracey A. Carragher and Stephen Eisenmann, who serve as chairwoman and president, respectively.

Cambridge represents "a year's work of pulling these companies together, and it's only the beginning of what you can expect to be a large and core strategy of the corporation," Ms. Carragher said. "We recognize that there is no (claims management) firm in the industry that does everything, and we intend to be that firm."

As a combination of the nine units, Cambridge houses specialties in workers compensation, general liability, property, automobile liability, medical malpractice, lawyer professional liability, assumed and ceded reinsurance, environmental and toxic torts, product liability, transportation, auto warranty, structured settlements and construction.

"We think it's an opportune time to get into the business," said Mr. Eisenmann. Because Cambridge has the financial backing of Aon Corp., it can invest in the right technology, systems, people and specialties to grow in the changing environment, he said.

That changing environment includes becoming a global player.

"Bringing together the businesses in the U.S. is the first step to becoming a global organization," he said.

Lloyd's expects to get captives

LONDON -- The chairman of Lloyd's of London is hopeful that captives will be admitted to the market by Jan. 1, even though a formal regulatory framework for the entities has not yet been introduced.

"Lloyd's has no reason to believe that it will throw up any problems,' said Chairman Max Taylor. "The timing of this process is not, because of the many factors involved, completely within our control," he added.

Even so, he stressed, "we are still committed to the admission of captive syndicates into the Lloyd's market from the first of January 1999."

The Council of Lloyd's in July approved in principle allowing captives within the market. But despite a Jan. 1 admission date, the Council has yet to sign off on the regulatory framework governing how captives will operate.

Mr. Taylor said Lloyd's would be an attractive location for captive owners from U.K. multinationals and for European and U.S. multinationals wanting London market access. It also could attact captives owned by corporations in emerging markets where the Lloyd's name "has a strong brand appeal," he said.

Separately last week, Mr. Taylor announced that Lloyd's annual charges for corporate syndicates -- including captives -- will be reduced by 0.65% at the beginning of next year to 2.45% as part of Lloyd's ambition "to provide a service that was cost-effective and responsive to the requirements of our customers."

Court: Schools can be liable

SAN FRANCISCO -- Public school districts must not ignore racial harassment of students, or they can be held liable for damages, a federal appeals court panel unanimously ruled last week.

The Oct. 19 ruling by the 9th U.S. Circuit Court of Appeals in Kathy Monteiro vs. The Tempe Union High School District overturned a U.S. District Court dismissal of a lawsuit brought against the Tempe Union High School District in Arizona. The U.S. District Court for the District of Arizona had found that ignoring students' discriminatory acts was not enough to hold a school district liable.

But the three-member appeals court panel disagreed, saying a school district that is deliberately indifferent to a student's right to an environment free of discrimination and racial hostility is liable. The case now goes back to federal district court in Arizona.

The lawsuit was brought by a mother who alleges the school district failed to respond to her complaints that white students called her daughter and other African-American students a racial epithet and scrawled the word on school walls.

However, the appeals court rejected the plaintiff's request to be able to sue the school district because it required her daughter to read "Huckleberry Finn" and other books that contain the epithet.

Briefly noted

The European Commission has approved Marsh & McLennan Cos. Inc.'s merger with Sedgwick Group P.L.C. Meanwhile, M&M has extended its offer for Sedgwick shares until Nov. 3. The initial offer was set to expire Oct. 20. M&M also reserved its right to reduce the percentage of Sedgwick stock it seeks in the tender offer to a minimum of 50.1% from 90%. As of last week, M&M held 70.1% of Sedgwick. . . .Vail Resorts Inc. would not comment on insurance for the seven fires that destroyed three buildings and four chairlifts, causing an estimated $12 million in damage last week. An environmental group called Earth Liberation Front claimed responsibility, saying the fires were in protest of the ski resort's expansion project. . . .President Clinton has signed legislation that will provide companies attempting to fix the Year 2000 computer problem some immunity from liability lawsuits and relief from antitrust strictures when they share information to solve the problem (BI, Sept. 21). . . .U.S. District Court Judge Richard Stearns in Boston is expected to rule this week on whether federal law pre-empts a Massachusetts statute and regulation that requires HMOs providing coverage to Medicare beneficiaries to offer either unlimited or no prescription drug benefits. Meanwhile, Tufts Health Plan, the largest Medicare HMO in the state, says it intends to offer a zero-premium plan with a $500 annual cap on prescription drugs. . . .Chicago-based CNA Financial Corp.'s CNA Risk Management unit has created a new risk management services organization, called RSKCo. In forming RSKCo, CNA unified its two claims services organizations, Alexis Risk Management Services Inc. and Servco, and combined the unified entity with CNA Risk Management's cost management, loss control and risk management information service functions. . . .U.K. multiline insurer CGU P.L.C. plans to shut nine offices in England and Scotland. CGU anticipates the 230 staff affected will be redeployed, though some may be lost through attrition and early retirement. . . .London-based broker Heath Group has sold its U.K. retail branch operation in the last stage of its corporate disposal program. The retail operation was sold to management and follows the sale of Premium Search last year and Anthony Kidd Agencies Ltd. in April. The proceeds of the sale will be used to develop Heath's overseas network in Eastern Europe, Latin America, Southeast Asia and the Middle East. . . .A lawsuit filed in U.S. District Court in Philadelphia against the tobacco industry last week claims the companies targeted African-Americans with advertising designed to entice them to smoke more-dangerous menthol cigarettes. The suit, which seeks class-action status, was filed under federal civil rights laws. . . .Goldman Sachs & Co. will pay the Orange County (Calif.) Transportation Authority $4.8 million to settle a lawsuit the agency filed against the firm in the wake of the 1994 collapse of an investment fund run by Orange County in which the transportation authority participated. . . .The Internal Revenue Service officially confirmed that the maximum 401(k) deferral limit in 1999 will be $10,000, unchanged from this year. . . .The New Orleans Saints have rejected offers to settle a $650,000 lawsuit filed by a football player who claims he was injured during a training camp hazing incident. The lawsuit filed last week by Jeff Danish in U.S. District Court in Madison, Wis., claims he suffered a broken hand and a gash to his arm and hand in the incident at the team's spring training camp earlier this year in La Crosse, Wis. The suit says he and other rookies were beaten as they ran through a line of players.