Effective Monday May 5, 2014, Royal Caribbean will create a new risk management department which will be managed by a certified public accountant, Tom Burke. Mr. Burke joined the cruise line in 2003 and most recently worked as the Vice President of Audit and Advisory Services. He was previously a manager at the accounting firm KPMG in Miami.
The creation of the new risk management department will require the reshuffling of a number of in-house lawyers and employees of the cruise line's crew medical department.
Claims handling and litigation matters are currently handled by the company's legal department managed by General Counsel Bradley Stein. With that responsibility being transferred to Mr. Burke next week, the Associate Vice President of Litigation, Paul Hehir, will be assigned to the newly created risk management department. He will manage five in house lawyers, six crew claims adjusters, and four passenger claims adjusters.
Members of the crew medical department will also transition to the new risk management department. Vince Warger, Penny Shifrin, Dr. Fabio Acevedo and LaShawn Knight will move to risk management, as well as eight crew medical managers and coordinators. A new team leader will be hired to supervise the medical group and report to Mr. Burke.
Associate Vice President of Guest and Employee Legal Services,Tony Faso, will remain under Mr. Stein.
The new risk management department is the idea of Chief Operating Officer (COO) and President of Royal Caribbean Cruises, Ltd., Adam Goldstein (photo above right), who recently replaced Richard Fain (now Chairman) at the helm of the cruise line.
We anticipate that this restructuring will have an impact on the medical treatment of crew members and the management of the legal claims asserted against the company by passengers and crew members.
Over the recent years, we have watched Royal Caribbean make dramatic cost-cutting steps. In 2001, Royal Caribbean fired 500 employees. In 2008, it fired around 400 employees in its headquarters (including many senior female managers in its legal department). And last year, it terminated the employment of another 100 employees in its shore-side offices.
Officers in the Royal Caribbean fleet complained last year of job and cost cuts, additional work and lower compensation, while shipboard tip earners (cabin attendants and waiters) have complained that the cashless, pre-paid gratuity was really a scheme to divert tips from the guests into the cruise lines' coffers to defray the costs to the cruise line of paying the salaried ship employees.
We have most recently witnessed a renewed effort by the cruise line's crew medical department to refuse to authorize significant medical treatment, needed by sick crew members, in order to save money. Some of the cases are heart breaking, including the abandonment of ill crew members who need surgeries and ship employees stricken with cancer who have been sent home with no arrangements for chemotherapy.
The transfer of medical managers & coordinators responsible for providing medical treatment to ship employees, as well as the re-positioning of lawyers & adjusters responsible for crew injuries and medical claims, to a new department overseen by an accountant may signal an effort to further reduce costs.
COO Goldstein's plans for his new risk management department specifically envision cost reduction. We predict that fewer benefits to the ill and injured crew members will be the net result.
Photo Credit: Merco Press