Who Pays For WC Fines Penalties
Some state jurisdictions issue fines and penalties if state forms are not filed timely, if lost time benefits are not issued timely, or for frivolous litigation, etc. In our claim file reviews, we have found that many carriers charge these fines directly to the file as an expense.
These fines and penalties should be paid directly by the carrier or third party administrator if they were charged due to their lack of adherence to the state’s rules and regulations. The carrier or third party administrator should cover these costs under their errors and omissions coverage and not charge the costs to the file.
This may not be a large figure that would affect your company’s E-Mod in most cases. Fines and penalties are more prevalent in certain states. If you are a self insured, this may mean you have directly paid for expenses for which you are not responsible.
Fines and penalties being charged as an file expense is usually not a deliberate act by a carrier or TPA. It is mainly due to a lack of training by the bill paying or claims staff. Fines penalties cannot be eliminated completely.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.