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Will Workers Comp Funds Recovered Lower Our Mod?

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Will A Workers Comp Funds Recovered Lower Our Mod

Will a workers comp funds recovered lower our Mod this year?

Calculator Money Phone Funds Recovered Lower Our Mod Concept
StockUnlimited

This question was emailed in from a blog reader from Virginia.  The rest of the employer’s question pointed out that the file was six years old. The answer to the question is it depends on the timing of the recovery.Virginia, as in most states does not allow a Mod (Experience Modification Factor)  revision from more than four policy years into the past.   As the Workers Comp file was more than four years old, the subrogation money will be credited to the file.  However, a Mod from six years ago cannot be promulgated again.The funds are known as “in the money” for the Workers Comp carrier.  Strangely enough, the money is in a way pure profit for the carrier.


Self insureds are another matter.  The money should be immediately returned to the employer as the Third Party Administrator (TPA) had paid the claim from an account, not an insurance policy.   The funds that were recovered due to subrogation cannot be applied to the Mod after four policy years maximum.  This is due to the way that Mods are calculated by NCCI or the State Rating Bureau.

Hand Presenting Money Decrease Funds Recovered Lower Our Mod Concept
By StockUnlimited

In almost all cases, the Mods are promulgated from policies four, three, and two years prior to the current policy year.   The Workers Comp claims from the policy that expired in the previous year will not be charged to the Mod until the following year.

Over the past few years, there have been a number of lawsuits pursuing the Mod recalculations even though they were from files that were older than four years.   The lawsuits are/were alleging the carriers were too slow in recovering and applying the funds which caused higher Mods.

This situation is exactly why the employers should be very vigilant in tracking subrogation or any type of file refund such as an overpaid medical bill.   It is not recommended that your company leave it to the carrier to recover and apply the recoveries or refunds to the Mod.  

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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