“Patent trolls”? No thanks, says Apple…probably

I once took an Uber in Fairfield, Ohio. As we sat at a light, the driver pointed to an empty big box storefront.

“What’s that building look like?” he asked. I said it looked like an empty big box storefront.

“That’s right. You know where it went?” I said no, confused. He pointed down the street a few hundred yards away to a brand-new big box store.

“There it is. You know why they moved down the street? Taxes. Lower sales tax across the county line.”

I was reminded of that story of fiscal competition at its finest when reading about Apple’s recent decision to close two of its stores in the Dallas suburbs.

Or more accurately, as Ars Technica reported, Apple’s decision to close two stores within the federal court jurisdiction of the Eastern District of Texas. Rumor has it that Apple’s move could be in response to intellectual property litigation. Per Ars Technica:

The Eastern District is known for its extremely patent-friendly judges, and so for decades patent plaintiffs have set up shop there and sued defendants located all over the country. Prior to 2017, the law allowed a plaintiff based in the Eastern District of Texas to sue defendants there if defendants had even tenuous connections to the district. And, of course, a company of Apple’s size has business ties to every part of the country.

These plaintiffs are often called “patent trolls,” which the Electronic Frontier Foundation defines as companies or individuals that cheaply purchase patents (often “overbroad and vague” patents, at that) and then threaten expensive litigation against companies allegedly in violation of said patents:

These letters threaten legal action unless the alleged infringer agrees to pay a licensing fee, which can often range to the tens of thousands or even hundreds of thousands of dollars.

Many who receive infringement letters will choose to pay the licensing fee, even if they believe the patent is bogus or their product did not infringe. That’s because patent litigation is extremely expensive — often millions of dollars per suit — and can take years of court battles. It’s faster and easier for companies to settle.

The Eastern District has been a favorite venue for this kind of litigation – even after the Supreme Court sought to rein in so-called “venue shopping” in a 2017 decision. Ars Technica explains:

[U]nder the Supreme Court’s 2017 TC Heartland decision, a defendant can only be sued in a district where it “resides”—meaning where it was incorporated—or “has a regular and established place of business.”

Apple’s two stores in the Eastern District would likely count as “regular and established places of business” for patent-law purposes. So under the new rules, continuing to operate the stores makes it easier for patent plaintiffs to sue Apple in the Eastern District.

Apple has not confirmed that its move is related to patent-troll litigation. But, tellingly, the company is replacing its two shuttered stores with a new store…directly across the border of the Eastern District. Sometimes, the best offense is a good defense.

Medical marijuana is not a prescription drug

marijuana is a drug, but not a “drug”

I’m going to get a little wonky here, bear with me.

The standard homeowners insurance policy only explicitly mentions the word “marijuana” once: to exclude it from liability coverage. Basically, the policy says that the insurer won’t pay for any bodily injuries or property damage to another person arising out of any controlled substance, including marijuana.

But there’s an interesting wrinkle to this. The exclusion also states the following: “However, this exclusion does not apply to the legitimate use of prescription drugs by a person following the orders of a licensed physician.”

“Wait,” you say. “Isn’t there a conflict here? Wouldn’t the policy cover damages from medical marijuana, since it’s a prescription drug?”

Sorry to rain on your parade, but the answer is no.

All together now: Medical marijuana is not a prescription drug

You can be forgiven for thinking that medical marijuana is a prescription drug. After all, that’s how it’s often described by news outlets the world over: Wall Street Journal, New York Times, Washington Post, etc.

But medical marijuana is not a prescription drug under any state’s current medical marijuana program.

Physicians don’t “prescribe” marijuana like they do painkillers and other drugs. Rather, physicians will “certify,” “recommend,” or “authorize” (the exact wording depends on the state) that a patient qualifies under a state program to purchase marijuana products. Often this qualification depends on whether a patient suffers from any of a list of “qualifying conditions” – which vary by state.

With a “recommendation” in hand, the patient can then purchase medical marijuana products from a dispensary, subject to various state-specific limitations (like how much marijuana they can buy in any given month).

“Prescription”, on the other hand, has a specific meaning. The Kansas City Medical Society notes that medical drugs are supported by years of study that can provide guidelines for dosages and plans of care. The U.S. Food and Drug Administration regulates these drugs. Patients with a prescription receive these drugs from a certified pharmacist.

Not so with marijuana. Though some states do require physician dosage recommendations, these are not well understood. The FDA has “not approved marijuana as a safe and effective drug for any indication.” Medical marijuana dispensaries are not pharmacies. They don’t employ pharmacists. The people selling the marijuana are basically like knowledgeable sommeliers at a fancy liquor store.

As we saw above, this distinction has insurance implications. As another example, consider workers’ compensation insurance: do these policies reimburse for an injured worker’s medical marijuana? The answer is far more complicated than you’d think.

One more time: medical marijuana is not a prescription drug.

I.I.I./ICM Presents Recruitment and Retention: Best Practices and Paths Not Taken

 

Presentation Date
February 20, 2018 at 12:00 p.m. est

Synopsis

In this hour-long live session, part of February Insurance Careers Month, a panel of experts shared insights and best-practices for engaging top young talent from non-RMI backgrounds and optimizing recruitment, onboarding and retention to better contend with emerging disruptive forces (Insurtech, virtual workspaces).

Speakers

  • Tony Cañas, CPCU, MBA, of Jacobson Group and Insurance Nerds (InsNerds.com)
  • Tara N. Spain, Vice President of the Travelers Foundation and Second Vice President of Community Relations at Travelers
  • Bruce Soltys, Second Vice President, Strategic Sourcing and Talent Acquisition at Travelers
  • Dr. Steven N. Weisbart, CLU, Chief Economist and SVP Research and Education, I.I.I.
  • Noelle Codispoti, CEO, Gamma Iota Sigma

Following are links to resources that were mentioned during the session.

Videos

Websites

Jacobson Group Whitepaper

Travelers/Diversity and Inclusion programs

Travelers Roadtrip Nation campaign

I.I.I. Economics and Employment reports by Dr. Steven Weisbart

Click to download the presenters’ slides

From the I.I.I. Daily: Our most popular content, February 15 to February 21

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Latest Driverless Vehicle Roadblock: Bicycles

I hope he’s wearing a helmet.

As someone who (perhaps unwisely), likes to bike around New York, I’ve long looked forward to driverless cars. They can’t drive drunk. They won’t drive like reckless teenagers. They won’t threaten to beat me up for ringing my bell (true story).

Even better: they’ll be able to see and avoid me even on a dark and stormy night.

Or so I thought.

As it turns out, bicycles could slow driverless vehicle deployment. Case in point: Holland, land of bicycles.

According to a recent KPMG report, the Netherlands is the country most prepared for autonomous vehicles. The country is actively working to begin autonomous truck platooning on highways; a legal framework has been developed for testing AVs on public roads without a driver; and the country is even preparing a drivers license for AVs.

But whether AVs will ever operate in Holland’s cities is an open question. Because, as an executive quoted in the report put it, “We have a lot of bicycles.” That’s an understatement. According to The Guardian, there are an estimated 22.5 million bicycles for a population of 17 million people.

And unfortunately, as the article notes, bicyclists are unpredictable: “the varying sizes and agility of cyclists, with their sudden changes in speed and loose adherence to the rules of the road, present a major challenge to the [AV] existing technology.”

Such a major challenge, in fact, that KPMG suggests forgetting about ever integrating AVs into a bicycle-heavy environment: just keep AVs and bicyclists separated entirely.

We don’t have as many bicyclists in New York. The city estimates somewhere in the ballpark of 1.5 million casual riders.  But that’s probably enough cycling on our already-crowded, dilapidated streets to put a hold on my dream of a safe, driverless vehicle future. (AVs in Phoenix, meanwhile, have an entirely different problem…)

In the meantime, you would do well to wear a helmet and stop texting!

Insurance Careers Month: Show some love

By Lynne McChristian, I.I.I. Non-resident Scholar and Media Spokesperson

The first slide of my presentation to a group of college students on Valentine’s Day last week was an image of an “I Love Insurance” button. Absent the foresight to bring such buttons for all, Plan B involved bringing heart-shaped chocolates. It fit in a way many of us in this profession would understand, as pathways into insurance are often a Plan B. Many universities are interested in helping students make a career in insurance their A-Game Plan, and that is exactly the type of student group I met with last week at the Gies College of Business at the University of Illinois at Urbana-Champaign (UIUC).

More than 20 students are participating this semester in the University of Illinois’ AXIS Risk Management Academy. In a partnership with global specialty insurer/reinsurer AXIS Global Holdings, UIUC established the Academy to interest students from various disciplines in the myriad of career paths available in the insurance industry. Students in this year’s Academy are studying actuarial science, math and finance, financial planning and atmospheric science. Bringing professionals into their meetings to discuss jobs and career paths helps them see the opportunities, and it demonstrates how someone with a degree outside of insurance and risk management can put those skills to work within the insurance field.

I typically start a presentation to insurance newbies with the negative perceptions of the industry. It’s the “elephant in the room” that needs to get out of the way. Using images from various recent natural disasters, I talk about what happened, who was affected, how much it cost, what we learned – and spend time pointing out what is obvious to many of us but not so much to neophytes; simply, that too often people are surprised by the devastation because they are in denial about their risks. With that message conveyed, I can show that insurance is a people business, in which we help people recover from whatever disaster befalls them.

Insurance is personal, and that is a theme that resonates with Gen Z. How do I know? It’s not deep research on my part, but when students come up after a presentation with spark of light in their eyes that shows you’ve got their interest? That’s proof enough.

 

Lynne McChristian is the director of the Office of Risk Management & Insurance Research at the University of Illinois at Urbana-Champaign, where she is also a senior instructor teaching insurance and enterprise risk management classes. 

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REMINDER: WCRI ANNUAL ISSUES AND RESEARCH CONFERENCE

Looking for an excuse to brush up on your knowledge of workers’ compensation insurance and maybe catch a Cactus League baseball game? Look no further.

The Workers Compensation Research Institute (WCRI) is holding its 35th Annual Issues and Research Conference on February 28th at the Renaissance Phoenix Downtown in Phoenix, AZ. (You can register for the conference here).

Particularly interesting will be a session on the opioid crisis and its impacts on workers’ comp. WCRI will present its findings on correlates of opioid prescribing practices to injured workers, which could help predict which injured workers are likely to receive opioids.

Another important agenda item you won’t want to miss is the “State of the States” session, in which WCRI will discuss performance measures for various state workers’ compensation systems.

Anyone working to improve workers’ compensation systems or seeking to manage a changing environment would benefit from attending these and the other sessions in the conference agenda.

Data Analytics Comes to the Legal Profession

there are insights in there somewhere

Did “data analytics” ruin baseball? Depends on whom you ask: the cranky old man in a Staten Island bar or the nerd busy calculating Manny Machado’s wRC+ (it was 141 in 2018, if you cared to know).  

What is indisputable, though, is that the so-called “Sabermetrics revolution” rapidly and fundamentally changed how the game is played – this is not your grandpa’s outfield! 

And data is eating the whole world, not just baseball. Now it’s coming for the legal profession, of all places. The Financial Times recently published an article on how law analytics companies are using statistics on judges and courts to weigh how a lawsuit might play out in the real world. One such company does the following (per the article):  

The sort of information that might be analysed includes how many times the opposing lawyer has filed certain types of lawsuit, in which court, with what success rate, who they have represented, and which attorneys they have faced. Once a judge has been assigned to the case, legal research companies can provide statistics on his or her record as well.  

Another law analytics firm “shows the litigation history of judges, lawyers and law firms, including win/loss rates for trials that are benchmarked to competitors, the success rates of different types of motion in individual courts and a database of who sues and gets sued most often.” 

Proponents reportedly argue that this is a) a more efficient way to go about the business of law and b) a way to identify where the legal system is inconsistent.  

That being said, it’s not yet all sunshine and roses for legal system Sabermetricians. As the FT notes, most litigation is dropped or settled, which means there are no public court documents for those cases. Which means no data to be mined. How many cases get dropped or settled? Perhaps as many as 90 percent. Big data is hard when most of the data don’t exist.  

So that means doing things the old-fashioned way. One law firm identified by the FT supplements data gaps by using (quel horreur!) real human lawyers to assess how a case might fare during the legal process.  

Another issue is whether anything useful can be gleaned from what little data there are. One gentleman quoted in the article put it thus: “The judge analytics demonstrations I have seen to date oscillate between the blindingly obvious and the statistically irrelevant.”  

Nonetheless, as the datasets grow, it doesn’t seem impossible that the ability to assess lawsuits will only improve. Which leads me to wonder: will judges change their behavior in response? The baseball data revolution didn’t just reveal information – it changed how players actually played in response to that information. Data isn’t passive, turns out. It remains to be seen how shining the light of data on the court system could change the court system itself.

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