Category Archives: Risk Management

by | December 20, 2012 · 9:57 am

Hospitality Industry Property Risks: Minnesota Restaurant Kitchen Fire Results In Extensive Equipment, Inventory And Water Damage

An insurance adjuster was on the site to assess the damage…based on how the bids come in to repair damage and replace equipment and inventory, the determination would be made about fixing and opening again.

Restaurant Fire“…the Red-wood Falls Fire Department called Thursday night to put out the fire and then called back Friday and Saturday to address persistent smoldering… the sprinklers went off water damage also became an issue…three inches of water that had to be removed…”

At 6:30 p.m. this past Thursday, a Christmas party was being held at The Rusty Bucket. About that time Oman noticed something that would dramatically change what she would be doing for the next few months. “I noticed there were flames coming out from behind the broiler,” she said.

After attempts were made to put the fire out with a fire extinguisher, it was determined the fire was not going down.
So, everyone in the facility was sent out of the building, and Oman called 911. Just four days later Oman stood looking at the damage that fire caused to the entire restaurant and bar.

For more:  http://www.redwoodfallsgazette.com/article/20121219/NEWS/121219465/1001/NEWS

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by | December 18, 2012 · 7:40 am

Hospitality Industry Insurance Risks: Workers' Comp Insurance Fraud Costs Businesses $7.2 Billion Annually

In 2007 State Fund discovered Safehome Inc. was under reporting their employee payroll to avoid paying the proper premium. An audit was completed and indicated that Safehome Inc. had failed to pay the proper workers compensation insurancepremiums for their workers’ compensation policy in the amount of $477,285. Additionally, State Fund determined the business was operating out of its classification, and related payroll was never reported to either State Fund or EDD, according to investigators.

“…the three types of most common workers’ comp fraud – injured worker fraud, provider fraud and premium fraud – haven’t changed much…”

Workers’ compensation fraud costs businesses $7.2 billion annually, roughly a fifth of all workers’ compensation payments, according to the National Insurance Crime Bureau.

In the past, it’s been challenging to prosecute workers’ compensation fraud, but recently passed legislation is making it easier for agencies like State Fund to work together to fight fraud. In June, as a result of a joint task force that included State Fund, more than 100 enforcement actions were taken against companies for failure to comply with state contracting, insurance and payroll requirements.

And earlier this year, State Fund partnered with other agencies on a fraud case that resulted in a conviction with restitution orders to both State Fund and the Employment Development Department.

For more:  http://www.insurancejournal.com/news/west/2012/12/12/273777.htm

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by | December 17, 2012 · 7:00 am

Hospitality Industry Property Risks: Superstorm Sandy "Flood Insurance Claims" In New York And New Jersey Exceed Total For Hurricane Katrina In 2005; Federal Flood Insurance Program Only Product Available

The NFIP provides insurance for homes and businesses in flood prone areas, such as Cape May County. Created in 1969 to fill the gap after private insurers declined to continue coverage for property owners in flood-prone flood insuranceareas, it now covers more than 5.6 million policyholders in 21,000 flood-prone communities.

“The federal flood insurance product is the only product available,” 

By the end of the second day after Superstorm Sandy’s powerful storm surge overwhelmed coastal areas of New York and New Jersey, the National Flood Insurance Program had already recorded more flood claims than the total for Hurricane Katrina, a storm that devastated the Gulf Coast in 2005.

William McMahon III, president of the McMahon Agency Insurance in Ocean City, said Sandy has since far surpassed the notorious Katrina.

Katrina, he said, delivered both flood and wind damage. Sandy’s damage was primarily from flooding. Few claims, he said, have been filed for wind damage.

Not long after Katrina, Hurricane Wilma tore across southern Florida, causing massive destruction.

“Wilma was a small storm. It came across the state from the gulf blowing about 70 mph, but the wind did major damage by the time it hit Miami,” McMahon said. “The wind ripped through all the high rises with 100 mph winds.”

In the wake of those two storms, barely two months apart, insurance companies bailed out of writing property and casualty insurance policies in some areas of Florida. The state of Florida, he said, instituted its own carrier, Citizens, now the largest underwriter in the state.

Florida and Louisiana, he said, are the two most difficult states to obtain property insurance. While flood insurance is available in Florida, it is expensive, particularly close to the coast.

For more: http://www.shorenewstoday.com/snt/news/index.php/ocean-city-general-news/32569-flood-insurance-claims-from-sandy-top-katrina.html

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by | December 15, 2012 · 12:59 pm

Hospitality Industry Legal Risks: Restaurant Owners Should Provide Comprehensive Employee Handbooks That Describe Employees' Rights, Expectations And Company Obligations

Small Business AdministrationAn employee handbook is an important communication tool between you and your employees. A well-written handbook sets forth your expectations for your employees, and describes what they can expect from your company. It also should describe your legal obligations as an employer, and your employees’ rights. This guide will help you write an employee handbook, which typically includes the topics below.

Anti-Discrimination Policies

Compensation

Work Schedules

  • Work hours and schedules
  • Attendance, punctuality and reporting absences
  • Guidelines for flexible schedules and telecommuting.

Standards of Conduct

  • Dress code and ethics
  • Legal obligations

General Employment Information

Safety and Security

For more: http://www.sba.gov/content/employee-handbooks

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by | December 14, 2012 · 7:05 am

Hospitality Industry Security Risks: Hotel Electronic Door Locks In "Various Stages Of Being Repaired"; "Mechanical Caps And Security Screws" Provided To Block Hackers

In October, hotel insurance-related company Petra Risk Solutions issued its hotel clients an alert headlined, “Crime Alert – Onity Guestroom Door hackers are for real.”

Onity Electronic LockIn Florida, Petra loss prevention expert Todd Seiders said he received reports that a hacker had been seen carrying a laptop and using a key card – possibly connected to the laptop – to open locked guestroom doors.

The locks on more than 1 million guestroom doors are in various stages of being repaired, following the revelation this summer that they may be vulnerable to hackers.

The New York Marriott Marquis, the biggest hotel in Manhattan, for instance, just completed updating all of its nearly 2,000 door locks. The hotel is one of thousands of properties with guestroom locks manufactured by Onity, a division of United Technologies. An Onity website also shows Sheraton, Hyatt, Holiday Inn, Fairmont, Radisson and other well-known hotels from Paris to Perth as also having its locks updated.

The hacking tool, according to Petra’s alert, could be made for about $50 in easy-to-acquire electronic parts.

“Please train and notify your hotel staff that these burglaries are spreading across the country,” Petra’s alert cautioned hoteliers. “Hotel staff should be vigilant while they are on the guest floors and paying attention to guests walking through hallways…Take time to watch guests walking through your hallways to ensure they are going to a room and entering it. Be very suspicious of someone carrying a laptop or small bag wandering the hallways. Greet guests and ask them if they need assistance.”

Onity did not immediately return an e-mail seeking comment about the issue. But in a statement updated for December on its website, Onity says that as of Nov. 30, it has shipped hardware to fix 1.4 million hotel door locks. The hardware includes mechanical caps and security screws that “block physical access to the lock ports that hackers use to illegally break into hotel rooms.”

For more:  http://www.usatoday.com/story/hotelcheckin/2012/12/14/hotels-fixing-flaw-that-made-room-locks-vulnerable-to-hackers/1769081/

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by | December 11, 2012 · 6:50 am

Hospitality Industry Legal Risks: New Jersey Hotel Sued For "Negligence" By Man Who Suffered Brain Damage In Pool Incident; "Staff Wasn't Prepared To Handle Drowning Emergency"

“…the plaintiff’s attorney, said his clients’ case also is based on a claim that the hotel’s staff wasn’t prepared to handle a drowning emergency. Hotels aren’t required to employ lifeguards but they must designate someone Pool safety No Lifeguard Signas a “certified pool operator.” In this case, the pool operator, an assistant manager, was present when plaintiff went under…but because plaintiff was unresponsive on the pool bottom by the time the pool operator pulled Brianna out of the water, and because the pool operator himself couldn’t swim, he was unable to rescue Smith before he suffered brain damage…”

A Georgia man who suffered permanent brain damage while trying to save his daughter in a hotel swimming pool was the victim of negligent owners who failed to ensure the pool area was safe, a lawyer for the plaintiff said Monday during opening arguments in the civil trial.

Robert A. Smith, 40, was overcome by water on July 4, 2009, when he tried to save his 11-year-old daughter, Brianna, after she drifted into the deep end of the Ramada Inn poll in Rochelle Park. Safeguards that should have been in place – such as visual cues indicating the water’s depth and a “life line” separating the shallow and deep ends – were missing. In combination with a pool bottom that was steeper than it should have been, the result was a “perfect storm” for hotel guests who couldn’t swim, said Greg Haddad, an attorney for Smith’s family.

“This facility, its pool, were operated in a negligent manner,” Haddad told a jury in state Superior Court in Hackensack on Monday. “The focus of this company and these people was to make money at the complete disregard for [the safety of] customers.”

The family of Robert Smith, who remains in a “minimally-conscious state” in a nursing home, is suing the owner of the Ramada Inn, Ratan R. Park, LLC., for damages, said Haddad.

In a recording of the 911 call reporting the drowning, the caller tells the emergency operator, “Somebody’s drowning inside the water. … Nobody can swim here.” Eventually, another hotel guest dove in the water to save Smith.

Smith’s condition is stable, Haddad said, and his doctors believe he could live for another 20 or 25 years. His family is asking for at least enough money to cover his medical expenses, which will amount to $7 million over his lifetime if he is cared for at home, and $12 million if he remains in a nursing home, Haddad said.

For more:  http://www.northjersey.com/news/Lawyers_debate_Rochelle_Park_hotels_liability_in_swimming_pool_case.html

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by | December 10, 2012 · 7:05 am

Hospitality Industry Property Risks: California Restaurant Fire Caused By "Improperly Stored Oily Rags" Catching Fire; 10 Propane Tanks Explode

“…Oily rags ignited a Sunday morning fire that caused several propane tanks to explode at the Gingham restaurant owned by a celebrity chef…the rags were balled up and tossed in a bin when they should have been Restaurant Firelaid out to dry and stored in a properly approved container…”

Most of the estimated $50,000 in damage occurred in the exterior courtyard between Gingham and the shop next door, McCrea Music Company. The businesses reside between La Mesa Boulevard and Allison Avenue.

Initial reports at 5:48 a.m. were of a rubbish fire behind the restaurant. When fire crews arrived three minutes later, the flames were 10 feet high and firefighters witnessed multiple explosions of propane tanks. In all, as many as 10 of the 35 tanks stored behind the restaurant exploded.

Battalion Chief Bent Koch said it appeared that the cleaning rags from the restaurant, which were stored in a container outside, had spontaneously combusted.

For more: http://www.nctimes.com/fire-at-la-mesa-s-gingham-restaurant/article_a596c7f7-4b96-5250-8d65-5e8532cf6144.html

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by | December 9, 2012 · 7:29 am

Hospitality Industry Health Risks: Iowa Restaurant Linked To Meat Contaminated By E. Coli That Nearly Killed Woman; Beef Processing Plant Used Mechanical Tenderizer

“…Although blading and injecting marinades into meat add value for the beef industry, that also can drive pathogens — including the E. coli O157:H7 that destroyed Lamkin’s colon — deeper into the meat…if it isn’t Risks of E. coli contamination in restaurant beefcooked sufficiently, people can get sick. Or die.

Big Beef and other processors are co-mingling ground beef from many different cattle, some from outside the United States, adding to the difficulty for health officials to track contaminated products to their source. The industry has resisted labeling some products, including mechanically tenderized meat, to warn consumers and restaurants to cook it thoroughly.

Three years ago, at age 87, Lamkin was forced to begin wearing a colostomy bag for the rest of her life after a virulent meat-borne pathogen destroyed her large colon and nearly killed her. What made her so sick? A medium-rare steak she ate nine days earlier at an Applebee’s restaurant.

Lamkin, like most consumers today, didn’t know she had ordered a steak that had been run through a mechanical tenderizer. In a lawsuit, Lamkin said her steak came from National Steak Processors Inc., which claimed it got the contaminated meat from a U.S. plant run by Brazilian-based JBS — the biggest beef packer in the world.

“You trust people, trust that nothing is going to happen,” said Lamkin, who feels lucky to be alive at 90, but beef companies “are mass-producing this and shoveling it into us.”

The Kansas City Star investigated what the industry calls “bladed” or “needled” beef, and found the process exposes Americans to a higher risk of E. coli poisoning than cuts of meat that have not been tenderized. The process has been around for decades, but while exact figures are difficult to come by, USDA surveys show that more than 90 percent of beef producers are now using it.

Mechanically tenderized meat is increasingly found in grocery stores, and a vast amount is sold to family-style restaurants, hotels and group homes. The American Meat Institute, an industry lobbying group, has defended the product as safe but recently said it can’t comment further until it sees results of an assessment by the meat safety division of the U.S. Department of Agriculture.

Read more here: http://www.star-telegram.com/2012/12/08/4469815/mechanical-tenderizers-linked.html#storylink=cpy

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by | December 4, 2012 · 8:02 am

Hospitality Industry Legal Risks: Kentucky Restaurants Sued By Cities For "Multiple False Alarms"; Thousands Of Dollars In Unpaid Fines

“…The city has filed 37 lawsuits in recent weeks — with at least 13 more pending — against the most egregious offenders, seeking thousands of dollars in unpaid fines and hoping to send a message about fixing alarms that False_Alarmswaste police time and cost taxpayer dollars…”

More than 40 times since 2008, Louisville Metro Police Department officers have made emergency runs to the Taco Bell on East Broadway, only to find they were responding to a false alarm.

Under a policy enacted in June 2005 that aims to crack down on residents and businesses who have multiple false alarms, the city has fined the Taco Bell — repeatedly — up to $500 per false alarm.

But the restaurant, like some others, has not paid its fines, which now total $10,700, according to city records.

Before police began charging fees for false burglary and hold-up alarms in 2005, officers were responding to more than 40,000 false alarms a year, Gibson said. Since then, that number has fallen dramatically, with less than 20,000 false alarm runs through October of this year.

For more:  http://www.courier-journal.com/article/20121203/NEWS01/312030096/City-sues-collect-false-alarm-fines?odyssey=nav|head

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by | December 1, 2012 · 7:18 am

Hospitality Industry Legal Risks: Hotels Warned By Federal Trade Commission (FTC) For "Deceptively Low" Estimates Of Room Costs; Undisclosed "Resort Fees" May Violate Law

 “One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or internet access, sometimes referred to as ‘resort fees.’  FTCThese mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions.”

The Federal Trade Commission has warned 22 hotel operators that their online reservation sites may violate the law by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms.

The warning letters cited consumer complaints that surfaced at a recent conference the FTC held on “drip pricing,” a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process.   The warning letters also state that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate.

“Consumers are entitled to know in advance the total cost of their hotel stays,” said Federal Trade Commission Chairman Jon Leibowitz.  “So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers.”

The letters strongly encourage the companies to review their websites and ensure that their ads do not misrepresent the total price consumers can expect to pay.

For more:  http://www.ftc.gov/opa/2012/11/hotelresort.shtm

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