Michigan’s owner is scheduled to speak to the team.
The owner of a Michigan insurance agency has been charged with embezzling money from employees by misappropriating payroll deductions, announced Attorney General Dana Nessel.
Nancy Caviston, 76, of Superior Charter Township, was arraigned Thursday on charges of embezzlement and wage and benefit violations before the 35th District Court in Wayne County. Caviston is owner of The Caviston Agency in Plymouth, a suburb of Detroit.
Caviston is alleged to have misappropriated payroll deductions of two long-term employees meant to serve as IRA contribution withholdings toward her personal and business expenses, it is alleged. Caviston also allegedly failed to make the required employer matching contributions toward those IRA accounts.
The U.S. Department of Labor’s Employee Benefits Security Administration conducted the investigation into Caviston.
Caviston faces two counts of Embezzlement by an Agent, $1,000-$20,000, a 5-year felony, and two counts of Wages and Fringe Benefits Violations, a 90-day misdemeanor.
Caviston was given a $5,000 personal recognizance bond and will next appear before Judge James Plakas in the 35th District Court for a probable cause conference on February 2nd, 2024, the Attorney General’s office announced.
“Payroll fraud is an insidious offense that can go undetected for years without the victim employee becoming aware,” said Nessel. “Working Michiganders should be able to trust that their deductions are going toward their rightful purposes, especially retirement funds they intend to rely on in their post-career years.
The Caviston Agency was founded in 1981 and has access to over 50 carriers from property, liability, health, life and long-term healthcare insurance. The agency has four employees on its staff including Caviston, according to its website.
A federal appeals court has ruled that a Massachusetts hospital is entitled to coverage for losses due to COVID-19 under a health care endorsement in its policy from Continental Casualty Co.
The First Circuit Court of Appeals concluded that Lawrence General Hospital (LGH) was subject to decontamination orders during the pandemic and thus has a legitimate claim for coverage under a health care endorsement it purchased that covers losses and costs incurred as a result of complying with government decontamination orders related to COVID-19.
The ruling reverses in part a dismissal of the LGH’s claims by a district court. The First Circuit remanded for reconsideration of the hospital’s claims under the endorsement.
However, in keeping with other COVID insurance rulings, the First Circuit rejected LGH’s companion claims that its other policy provisions for associated business-interruption losses and related expenses should also cover its losses due to COVID. The policy provided primary coverage of up to $563 million for “direct physical loss of or damage to covered property.”
The hospital tried to argue that the virus chemically bonded with its property, resulting in physical damage. But the First Circuit upheld the district court dismissal of these damage claims and affirmed a trio of cases (See Verveine, 184 N.E.3d 1266; SAS, 36 F.4th 23; Legal Sea Foods, 36 F.4th 29) already decided under Massachusetts law rejecting such theories of “direct physical loss of or damage to property” in the context of the COVID-19 pandemic.
Federal Court Denies Massachusetts Hospital’s Covid-19 Business Insurance Claim
The additional health care endorsement that LGH purchased includes disease contamination coverage. This coverage is triggered by an “evacuation or decontamination order at a covered location by the National Center for Disease Control (CDC), authorized public health official or governmental authority because of the discovery or suspicion of a communicable disease or the threat of the spread of a communicable disease.” It says that Continental will pay for “direct physical loss of or damage to covered property,” a variety of “necessary and reasonable costs,” and lost business income “due to the evacuation and decontamination order.”
Under the endorsement, the policy provides coverage of up to $1 million per occurrence. LGH alleged that it was subject to many occurrences triggering coverage under the endorsement. The federal government and state of Massachusetts each declared a COVID-19 state of emergency. The state issued a memorandum requiring hospitals to postpone or cancel all nonessential, elective invasive procedures until the state of emergency was lifted. To resume, the hospital had to comply with various safety, cleaning, disinfectant, ventilation and environmental infection and other directives and conditions.
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Continental denied coverage, questioning whether LGH was subject to a “decontamination order” and argued that it was not. In Continental’s view, the directives by the Massachusetts Department of Public Health and the federal CDC cited by LGH were not mandatory orders at all. Further, Continental contended that the directives did not require “decontamination.” The terms “decontamination order,” “decontamination,” and “order” are not defined in the policy.
The First Circuit rejected both of these arguments, citing the “fair meaning” of the terms. The court said “fair meaning” of the term “order” is unambiguous and that an “order” must be compulsory. It found that was the case with the orders LGH faced.
“LGH’s compliance with the directives was not optional under any practical understanding of that term. Conducting the type of urgent elective procedures identified in the directives is important both to LGH’s mission of providing necessary care to its community and to its bottom line and ability to operate,” the court stated.
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The court said that LGH convincingly argued that the “choice” to comply with the stated conditions or forgo the ability to treat “the vast majority of its patients” for an indefinite period was “no choice at all.”
Further, the court added, Continental’s interpretation would be inconsistent with the purpose of the policy: insurance coverage so that LGH could continue to provide medical care to patients. “Following Continental’s argument to its logical conclusion, no evacuation or decontamination directive would ever be mandatory, because a facility would always have the option of ceasing to provide all or a subset of medical services instead of complying,” the court concluded.
Finally the First Circuit rejected Continental’s argument that the limited use of the term “decontamination” in the government directives “proves that decontamination was not the objective” of those directives. According to Continental, CDC’s document indicates with reference to one technique that it did not believe COVID-19 decontamination to be attainable. This, the court replied, was an “overreading” of the documents in which the CDC articulates a range of strategies to reduce the risk of contracting COVID-19 in indoor spaces, including improvements to ventilation systems and the use of ultraviolet germicidal irradiation lights.
Underwriters who thought the growing cyber risk landscape of the past several years would level off soon might want to think again. Woodruff Sawyer’s annual survey of cyber insurance carriers found all underwriters surveyed believe cyber risk will increase in 2024.
The survey, included as part of Woodruff Sawyer’s 2024 Looking Ahead Guide, sought underwriter perspectives on the current risk environment, risk appetite and future pricing expectations from a range of insurance carriers including domestic carriers, Lloyd’s syndicates and startup managing general agencies.
In fact, more than half—56%—of underwriters surveyed said they believe cyber risk will increase greatly in 2024. While the survey found 2024 is bringing a shift in concern for underwriters, with privacy violations and data breaches drawing more concern than last year, ransomware remains the most significant threat as 63% ranked it their No. 1 threat for 2024.
“Carriers started sounding the alarm as early as the second quarter of 2023, and by the end of the year, the trend was clear—ransom claims had risen to 2021 levels, the highest year of ransom claims on record,” the report said, adding that an increase in attacks relying on data exfiltration was also seen in 2023. “Attackers are exploiting a reality that many companies have discovered: Data is often most valuable to the company from which it is stolen.”
Other concerns noted in the survey include business email compromise and generative artificial intelligence. Indeed, Woodruff Sawyer predicted more companies will incorporate AI technologies into their internal processes or external products in 2024. While AI can introduce efficiencies for carriers, the report warned that carriers should proceed with caution as it can also introduce opportunities for error.
“Similarly, AI-powered cybersecurity tools will be used to protect organizations. Hackers will leverage AI to further their own causes,” the report said. “The battle will continue as it does today—with each side having an upper hand at different times.”
Woodruff Sawyer stated in its report that it doesn’t see AI substantially changing cyber risk, but it does believe the technology could exacerbate the severity of cyber issues when they arise.
“This will increase the importance of making an informed choice using data science and analytics when purchasing cyber insurance,” the report said.
That said, the cyber insurance landscape is changing along with cyber risk, as many carriers are exercising greater scrutiny and premiums have continued to rise. The survey indicated 44% of carriers believe underwriting scrutiny will increase slightly during the next 12 months.
“This may be bad news for insurance buyers already frustrated at the amount of information required to complete a cyber insurance application,” the report said. “However, it does prove the trend of higher scrutiny has staying power. With a risk as complex as cyber, higher underwriting scrutiny will become the norm.”
Although the hard market of 2021 and 2022 brought stricter underwriting standards with it, the report found a silver lining as more insureds are investing in the maturity of their cybersecurity standards. This is paying off on the insurance side, according to the report.
“Stronger cybersecurity controls strongly correlate to more carriers willing to offer insurance—creating the needed competition to drive premium savings,” the report said.
On the back of this trend, stability and moderation are likely on the horizon for cyber insurance coverage, according to the survey, with 75% of underwriters anticipating coverage to remain unchanged compared to 24% the previous year.
A growing percentage of underwriters believe cyber insurance premiums will continue to increase slightly, however, up 22 percentage points from last year. Only 19% said they expect premiums to remain unchanged, while none anticipated a decrease, the survey said.
“This suggests a notable industry shift toward higher premiums amid growing cybersecurity concerns,” the report said.
Along with these concerns, risk mitigation is top of mind for carriers, according to the report. Half of those surveyed said they believe companies should be more aware of their cyber risk. The survey showed a decrease in emphasis among carriers on strengthening security, down to 38% from 59% last year, while improvement of processes and procedures remained a crucial measure for 50 percent of carriers as the market continues to change.
“The cyber insurance market continues to evolve—the industry constantly faces new and serious risks,” the report said. “External factors continue to affect the market, including wars, federal and state regulations, and the rise of artificial intelligence.”
