Thursday, February 12, 2015

Texas Audits

Texas looks good to the industry with low average combined ratios and good profitability.

That's not good for injured workers, though, if it comes at the expense of failing to provide mandated benefits.

The latest audit took only 64 cases to uncover $511,000 in underpayments of lifetime income and death benefit payments.

Workers’ Compensation Commissioner Ryan Brannan said in a press release that he is "concerned there may be other deserving claimants in the same situation. These results indicate that we need to continue these types of performance audits.”

I would be concerned too.

That's an average of nearly $8,000 per claim that wasn't paid. To the common working person at the lower end of the economic scale that's a significant amount of money.

Carriers selected for the audits were those for which the division either detected compliance issues, or carriers who were identified as poor performers in the Performance-Based Oversight program.

The division said in the release that the common compliance errors discovered during the performance audits included:
  • Failure to pay 75% of the average weekly wage.
  • Failure to obtain a complete wage statement from the employer.
  • Failure to properly calculate Average Weekly Wages.
  • Failure to include non-pecuniary wages in the AWW.
Trey Gillespie, senior workers’ compensation director for the Property Casualty Insurers Association of America, told WorkCompCentral that part of the issue may be in the fact that the wage statements submitted by employers covers only 13 weeks preceding injury or death and the AWW is calculated on that.
Bowzer is embarrassed and promises to do better.

And wage statements often only include wage benefits, without reporting the value of other benefits – which is also required as part of the calculation of the AWW.

But that explanation means only that carriers aren't doing a good job of ensuring accurate information from the employer - after all, part of the insurance premium that an employer pays is for the service of making sure that a claim is handled properly, which includes ensuring that the insured employer is passing along the right information.

John Pringle, an Austin attorney who does both claimant and defense work, seemed to agree, in his interview with reporter Joey Berlin, "what I see is adjusters will contact the employer, ask for a wage statement. And then when they get it, they’ll use it even though it may be obviously flawed on its face. They’ll still use it, because that’s what they got … until somebody makes an issue of it.”

Gillespie at least believes that scaring carriers into compliance is a good tactic:

“But it’s good to have these press releases and good to have these performance audits so that basically, insurance carriers, as they’re self-auditing themselves, are sure to have this on the checklist of things to look at.”

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