Taking Stock: Risk Management Insight for the Retail/Wholesale Industry

Posted: September 6, 2013

Sudden cardiac arrest is a major risk in the United States to both individuals and many companies, including retailers and wholesalers. CardioReady CEO John Ehinger shares his insights on how businesses can manage this unique risk…

More than 300,000 people in the United States die from sudden cardiac arrest (SCA) each year, making SCA one of the leading causes of death in America.i As SCA can strike anyone at any time, this growing health issue is particularly relevant to retail companies and quick service restaurants (QSR), whose establishments are frequented by millions of customers each day.

SCA is not a heart attack, which is caused by a disruption of blood flow to the heart. SCA is an electrical problem with the heart itself that causes heart rhythm to become chaotic and ineffective. SCA is a stunningly lethal condition — less than 8% of its victims survive.

With the odds of SCA survival plummeting approximately 10% with each minute that elapses, reliance upon emergency medical services to arrive in time to provide required therapy is impractical in nearly all circumstances due to logistical realities. Instead, the use of automated external defibrillators (AEDs) to deliver prompt defibrillation combined with CPR yield the best path to both SCA survival and avoidance of permanent damage. AEDs are designed for use by lay persons, and include visual and audible prompts to guide the user. Notably, AEDs will not permit delivery of a shock unless the victim’s heart is in an abnormal rhythm. Most importantly, AEDs are highly effective, with research noting survival rates north of 70% for those in “shockable” rhythms when treatment is delivered within three minutes.

While SCA incidents are not age-dependent, the risk of an event occurring is highly correlated with age. Fueled by a 19% increase in the number of individuals 65 and older, those over the age of 45 are projected to account for more than 40% of the US population by 2015.iv Existing — and often undetected — heart disease is also the leading cause of SCA.

Overlaying age factors in the workforce and general population with degrading health trends, such as the proportion of the population considered obese exceeding 35.7%,v SCA presents a growing problem for many businesses. Increased awareness surrounding SCA is creating both greater exposure and opportunity for commercial enterprises — particularly those with significant public-facing activities and high customer traffic, such as retailers and restaurants.

LEGAL LANDSCAPE

With the exception of the airline sector, the majority of regulations surrounding AEDs are at the state and municipal level, and all states have enacted mandates to require the placement of AEDs in particular classes of business. To date, the retail/QSR sector has not been subject to many of these requirements, save a handful of notable exceptions (Oregon, for example).

Mandates notwithstanding, liability issues still merit consideration in view of plaintiff bar activities surrounding public cardiac arrest. Roughly 50% of the AED-related cases that we track and follow involve circumstances where there was no AED and no statutory obligation to have one. vii While the case law is unformed in comparison to other more common causes of action, such as slip and fall claims, the plaintiff’s bar is active in the space, and 16% of the cases in our database emanate from incidents at retail and hospitality establishments. We are also aware of other matters that have been settled by insurers and/or defendants before reaching the public domain, several of which resulted in very substantial dollar payments to plaintiffs.

Although the circumstances of each case differ, a common argument made by plaintiffs follows a line of reasoning that AEDs are now an expected duty of care for commercial invitees at an establishment. Customary plaintiff bar hyperbole and posturing aside, what is notable is both the pursuit of this line of argument and its reception in the courts. In fact, late last year, the US Court of Appeals for the 9th Circuit directed a case involving a large national retailer to the California Supreme Court to determine whether the standard of care reasoning is congruent with California law and statute. Notably, this path of litigation is also being pursued in suits filed in jurisdictions that historically have been viewed as more benign, such as Montana.

In terms of outcomes, again, the sample is comparatively small, but our data shows that of the SCA-related cases with visible status, 39% were settled or adjudicated in the plaintiff’s favor and 36% resolved in the defendant’s favor, with the balance still pending. Of more favorable note from the business perspective, several recent cases have affirmed protection for defendants under state good samaritan laws when proactive steps had been taken to address the SCA exposure.

BENEFITS BEYOND “SOCIAL RESPONSIBILITY”
Obviously, there are humanitarian and social benefits associated with improving the ability to save a human life. The topic of SCA presents an interesting situation where these considerations intersect with business realities. Legal liability concerns often receive the greatest attention, as their impact on bottom line results is quickly and easily visible. But companies that have adopted AED programs can and do realize meaningful and tangible benefits that extend beyond the programs’ life protective value.viii

Several research studies have demonstrated the positive correlation between proactive risk management and firm value. Further, well-constructed AED programs enhance the perception of the enterprise in the eyes of third parties, including customers and other visitors. Third parties wield substantial influence on brand perception and value, particularly in an age where social media and the internet increase the pace, scope, and permanence of information available to the public. This perception resonates both prospectively and retrospectively.

When visible and proactive protection is installed, consumers realize a higher safety value at a given location — a point of particular relevance to the retail and QSR sectors, where business locations are the most visible manifestation of, if not equivalent to, a company’s brand. A successful lifesaving response can also generate positive and brand-reinforcing press for an organization.

Understandably, the converse applies here as well, as the inability to generate a favorable outcome can yield unfavorable press and commentary and long-lasting negative perceptions. Underscoring this point, a recent CEO survey by Burson-Marsteller indicates that, on average, it takes companies 3.2 years to recover from a crisis.

Not to be overlooked in this discussion is the favorable impact that protection also has on employee morale and performance. Research by the American Society of Safety Engineers (ASSE) Foundation found a strong positive correlation between companies’ safety efforts and employee morale. Thus, there are benefits to be captured from use of AED programs outside of customer-accessible locations, such as wholesale and retail distribution centers where high concentrations of works exist.

CHALLENGES AND SOLUTIONS

AED program deployment is not a difficult endeavor. But, like many other protective measures, AED programs require planning and regular attention. Without reasonable diligence, various issues can arise, impairing safety and increasing liability exposure.

In the retail and QSR space, trained responders tend to dominate as the greatest point of concern. Given the industry’s relatively high employee turnover, it can be more challenging to maintain a current set of responders than in other, “more stable” sectors. Additionally, a generally younger employee demographic can cause some enterprises to question whether proper response would be delivered in an emergency.

Nevertheless, there are straightforward resolutions to these issues. Proper planning (e.g., targeting site manager cohorts for designation as the core responder set) and regular monitoring minimize the turnover issue. Additionally, with factors outside of the workplace driving a growing prevalence of CPR-trained individuals, oftentimes there are a number of qualified responders already employed by an organization.

Equally importantly, AED usage is not difficult. In fact, a study conducted by Gundry et al examined the ability of untrained 6th grade students to correctly use an AED in a mock cardiac arrest scenario. Despite the fact that none of the students were trained, all participants were able to properly deploy the AED, taking, on average, only 23 seconds longer than the emergency medical technicians in the control sample.

BEST PRACTICE

AEDs are eminently easy to use, but adherence to a core set of best practices will enhance an enterprise’s ability to provide lifesaving assistance when needed, reduce legal liability, and protect its reputation and brand. The following reflect some guiding principles to weigh in structuring an AED program:

  • Begin with a clear, robust, and well-documented plan.
  • Provide for appropriate quantity and locations of AEDs to ensure the ability to reach a victim within three minutes.
  • Ensure compliance with state and federal regulations.Most jurisdictions require filings with local EMS. Additionally, some states require physician oversight of AED programs.
  • Adhere to manufacturer recommendations, including regular readiness checks to ensure that manufacturer warranty and indemnity provisions and state-level good Samaritan protections are not compromised.
  • Ensure a sufficient number of trained responders with current CPR/AED qualifications, considering factors such as turnover, work patterns, and locations to provide sufficient redundancy of protection.
  • Put a system in place to track, maintain, and document key elements of the program, including battery and pad life as well as trained responder qualifications.
  • Regularly review, test, and independently verify readiness procedures.
  • Establish a post-event protocol in advance of an event. Do not wait for something to happen before considering how you will react.
  • Communicate the existence of your program and its key parameters to employees, customers, and other guests, which will improve efficacy and ensure the capture of goodwill and brand value.

CONCLUSION

The human benefits of AED programs are self-evident, and the matter is becoming an increasingly dynamic business issue. There are emerging liability trends that merit close monitoring, particularly with respect to the retail and QSR sectors. Additionally, with a growing awareness of SCA risks and the benefits of AEDs, public perceptions and expectations surrounding AEDs are changing, creating both risk and opportunity for commercial enterprises.