Archives for August 2011

Medicare Set Asides Cause Claim Counts To Spiral?

August 31, 2011 By JL Risk Management Consultants

Medicare Set Aside Claim Counts

I was reading a few articles this week on the rise of Workers Comp claim counts. I was astonished at the number of open Workers Compensation claims. Are some TPA’s, employers and insurance carriers deciding to leave their clams open for a longer period of time, if not indefinitely?

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I thought I would research the numbers further, using public information rating agency data. A report by NCCI dated 02/12/11 reported that the TTD period is presently lengthening between 2006 and 2009 due to a 12.3% increase during that time period. This could have counted for the increase in the number of open claims overall. However, TTD is not necessarily adding to the claim counts. TTD, by definition, is a temporary benefit figure.

NCCI has also said that the average cost for the medical benefits on lost time claims had increased from $23,000 to $28,000 in the aforementioned time period. This is an overall increase of 21.7% for all four years combined.

The number of Workers Comp claims likely increased by 3% nationwide in 2010, but the number of claims decreased over 2006 – 2009 by 16.2%. In a nutshell claims decreased by 16.2% cumulatively however the medical benefits per claim increased by 21.7% over the same time period. Those are very eye-opening numbers.

Does this mean MSA’s are changing the Workers Comp landscape? I will cover that next time.

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Hybrid Workers Comp Premium Audits – New Trend?

August 25, 2011 By JL Risk Management Consultants

Hybrid Workers Comp Premium Audits Now More Popular

Hybrid workers comp premium audits seem to be rising in popularity very quickly. I noticed this term popping up on websites and premium auditing company booths at conferences. Two years ago, an auditing company at a conference started explaining this new (?) method of performing audits. I had written this definition on hybrid premium audits some time ago.

Icon Auditor magnifying glass Hybrid Workers Comp Premium Audits blocks

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Almost all employers now have scanning and email abilities. The need for in-person on-site audits by insurance carriers will very likely incur a reduction over the next few years. Some employers will require an in-person audit regardless.

The main driver behind hybrid workers comp premium audits is the cost of obtaining an audit of an employer’s operations. Costs such as travel are easily reduced using this type of audit. As carriers’ profit and investment incomes have fallen, any method that will reduce overhead has to be heavily considered overall.

Hybrid workers comp premium audits are actually nothing new. The carriers and audit companies are basically mimicking the practice that has been in place for years with companies that perform Workers Comp premium audits for employers. As I mentioned before, certain employers and organizations will require an in-person audit. I see the need for in-person on-site audits shrinking rapidly.

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Even the small employers have now become very sophisticated in their record keeping. Many employers can provide spreadsheets of almost any type on demand. I think insurance carriers and the auditing companies they hire will very likely move to hybrid audits for employers that had the same premium auditor on a past audit, unless of course the employer has changed some of their job functions.

I have never been too keen on telephone audits as an alternative to on-site premium audits. We have seen too many mistakes made on this type of audit. Self-reporting audits made by the employers have also caused many problems.

I will write another post on this area within a year. I will look back over the year to see if hybrid audits are more popular.

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Five Ways That Workers Comp Is Affected In Bad Economy

August 24, 2011 By JL Risk Management Consultants

Five Ways A Bad Economy Affects Workers Comp

A Bad Economy affects Workers comp premiums in varied ways. I have read a few articles on the effect that our current sour economy has had on insurance such as an upcoming hard market, lowering claim numbers, etc. I thought I would cover five ways that Workers Comp is being affected presently.

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Employers may be severely overpaying for their Workers Comp premiums upfront at the time of policy renewal. I have written a few prior posts (one here) on policy premiums. As an employer you can possibly be giving your insurance carrier a 0% interest loan for a year. If your payroll is decreasing are you basing your payroll numbers on prior years? That could be a costly error.
Insurance carriers and state insurance departments have become more aggressive in classifying independent contractors as employees. This beckons the question, “Is the subcontractor independent or really an employee?” As in #1, I have written a number of posts on this subject. The most recent one for subcontractors is here. I realize that all states have their own set of independent contractor laws. The IRS has been deciding this conundrum for many years.
Employers are searching more heavily than ever for alternatives to the traditional first dollar Workers Comp insurance policies. This blog contains many posts on alternative programs. Your company does not have to be huge to be eligible for other Workers Comp insurance programs. PEO’s, captives, large deductible, and others are becoming more popular now.
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Claim numbers are down, but the cost per claim has increased to offset the claim number reductions.. Along with this fact is the small claim number “bumps” that have appeared in every state. These bumps may likely be due to laid-off workers filing claims for injuries they have been working with over the years and just put up with them or laid off workers have run out of unemployment benefits and are just trying to make ends meet.
Insurance personnel such as premium auditors, claim adjusters, underwriters, and others are much more overloaded than in the past. Insurance companies have to cut back as all employers have over the last two years. I saw in one study where there was a 4.9% decrease in Workers Comp premiums when compared to last year. A cut in premiums of this magnitude will only snowball as the insurance carriers’ rate of investment return plunges to new lows. Is your company or organization not receiving the same level of service as in the past?

The quickest way to combat these effects is by becoming more involved with your Workers Comp insurance plan. That is and has always been the quickest way to reduce your insurance costs.

©J&L Risk Management Inc Copyright Notice

Self Insured Edition – 5 Ways Workers Compensation Programs Fail

August 23, 2011 By JL Risk Management Consultants

Self Insured Edition – Workers Compensation Program

Our readership on the 10 Ways To Tell If Your Workers Compensation Program Is In A Failure Spiral spiked very heavily last week. Some of our self insured clients asked if there were any differences for the self insureds than the regular first dollar insurance that I referred to in my last three posts.

Picture Of Calculator Self Insured Workers Compensation Program With Money

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I thought I would begin with how to tell if a self insureds Workers Comp program is failing. Reading over the list of 10 for first dollar insureds may also be beneficial.

The five ways to tell are:

Your company or organization has not had a Loss Development Factor (LDF) calculated with a benchmark comparison to similar companies. How can your Workers Comp program be analyzed without knowing how well you are performing presently? There are many organizations (including ours) that calculate LDF’s for our clients. Most businesses and organizations that pay first dollar insurance have an E-Mod to use for comparison purposes. You should have one calculated ASAP if you do not have one in your possession. One caveat is that unlike the E-Mod, there are various inputs that may need to be altered before calculating the LDF.
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You do not have a check limit or reserve limit in place for your TPA. This keeps your Workers Comp program from sustaining a major adversity without your knowledge. Without a limit in place, you may not realize you are paying for very large bills or have a huge reserve increase until your receive your loss run. There is no one set number to put in place. An email from the claims adjuster or supervisor can save your company many surprises now and in the future.
Your Request For Proposal (RFP) allows prospective bidders to bundle costs. Many self insureds including our clients are now unbundling costs such as rehabilitation nurses, bill review, and other costs. I have seen public employers bid each function out separately with an RFP for each TPA function or have each TPA function listed separately and allow companies to bid on one or a mix of the various functions. This may seem like a large task. The cost savings will pay for the effort in the long run.
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Not auditing your TPA’s claims processing function per each contract. I was very surprised to learn how many self insureds are not having their Workers Comp claims reviewed by an outside auditor such as us or having a claims audit performed sporadically. How can you guarantee Senior Management that all is well with the TPA that you have chosen and are administrating over the TPA’s claims handling abilities? One of the most critical variables that you need to know is reserve adequacy.
Not recovering any subrogation funds. Check here for an article I wrote on subrogation. If your company or organization is large enough to be self insured, you are almost 100% likely to have claims where another party is fully or partially responsible. We call this at J&L – leaving cash on the table and walking away. You do not have to hire a battery of attorneys to recover the funds. Quite often, a few well placed letters and a few negotiations can result in having money recovered on the files. Unlike first dollar insurance, this is your $ that can go right back into your Workers Comp program.

#5 has reminded me of the largest area of concern that we have with our self insured clients. I will post on that next time.

©J&L Risk Management Inc Copyright Notice

Top Five Ways To Tell If Your Workers Comp Program Is Successful

August 19, 2011 By JL Risk Management Consultants

WC Program – Top Five Ways To Gauge Success

Below are the top five ways to assess the success of your Workers Comp program. In my last two posts, I covered how to tell if your Workers Comp program is in trouble. There are many successful programs in place among private and public employers. I thought that I would cover the top five ways today.

Picture of Sunset Top Five Ways Shadow Dollar sign and Man

Your E-Mod is below 1.0 or is decreasing each year. Many people including myself have a few problems with the E-Mod systems as being too general, does not take into account enough years of data, and other concerns. However, your E-Mod is the best way to tell if your safety and claims programs are functioning well. If someone asks me about their company the first question I ask is “What is Your E-mod?” The most disturbing thing I hear when talking to employers is the executive or owner does not their E-Mod.
You have a successful light duty program in place. This is one of the variables that have changed over time. When I first started in Workers Comp, there were scant numbers of employers that had a light duty program. Starting a light duty program from scratch is a very arduous task. If one is in place, and just not on paper, a company’s E-Mod will decrease over time.
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You question everything such as your policies, premium audits, any changes made to your policy during the year, etc. This is the quickest way to reduce your Workers Comp expenditures is to have a full justification of all premiums spent on your current and last three year’s policies. Why is a very powerful word.
An injured employee and their supervisor know exactly the location of the doctor or clinic is that treats Workers Comp injuries for your company. The first doctor visit is so important as it sets the tone for the claim. This will lower your E-Mod more quickly than any other recommendation. I have seen it happen again and again.
You know the name of your Workers Comp adjuster, agent, underwriter, premium auditor, and loss prevention rep. There is a team of professionals out there that can assist you with your Workers Comp program. The main thing to do is ASK for help. Most companies that have followed this recommendation were shocked at the level of the help that was available.

This was a rather quick list. There are other ways to tell – the bottom line being that your company is paying less Workers Comp premiums.

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10 Ways To Tell If Your Workers Compensation Program Has Failure Spiral

August 17, 2011 By JL Risk Management Consultants

10 Ways To Detect Workers Comp Program Failure Spiral

Your WC program failure spiral usually cannot be reversed after a few years of spinning out of control.

One of my favorite books on entrepreneurship is The E-Myth by Michael Gerber. I have borrowed one of the terms he invented concerning how a company fails over time. I decided to use it to describe a Workers Comp program that is failing and may cost a company greatly or even cause it to totally fail. My Top 10 are:

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Senior management or ownership view Workers Comp as a quasi-tax or just a part of doing business. This is a slippery slope to paying significantly higher premiums. The old adage of “Who is minding the store?” comes to mind. This has to be the first fix if this problem exists or the other nine will be a grand waste of time. Turning this over to your agent is just the wrong thing to do to save $. This is and has always been my first recommendation when analyzing a company’s Workers Comp situation.
Your company uses subcontractors that do not have Certificates of Insurance. Who do you think will pay when it comes time to pay an injured subcontractor that has no insurance? See my previous articles on The Ladder Of Insurance here and here. One caveat is that all certificates must be valid for the length of the job. An expired certificate of insurance is worthless. Keeping a schedule of when the certificates expire is priceless.
You do not know what your E-Mod is this year and what the E-Mod has been for the last few years. Your agent can supply you with these if NCCI or The State Rating Bureau has not mailed you a copy. If your E-Mod has increased greatly and the explanations that you have been given go against your gut feeling, you should seek out expert help quickly.
You or no one in your company has ever reviewed your Workers Comp loss runs on a monthly basis. You are basically throwing away $$ if you are not doing this on a schedule. I have posted on this so much over the last three years. It is even better if your insurance carrier allows you to look at the claims online. This will also save your company $$ if you decide to have an outside company perform a claims review.
Your company has cut back the Risk Management and/or safety staff to a point of dysfunction. This is one cause for a failure spiral that I see very often in this economy. Companies are looking to cut back any non-essential positions. I have seen this even affect governmental agencies and schools. This one goes hand-in-hand with #1 on the list. Ranking Risk Management and safety as non-essential will save $ in the short run, but will cost your company dearly in the long run. What happens if your safety program suffers and then the economy improves in the coming months (or years)? You will most certainly have a higher E-Mod when paying Workers Comp premiums in better times. For instance, if your E-Mod goes above a 1.0, most companies will not hire your company as a subcontractor as you are considered a bad risk overall. Go here for how your E-Mod is like a credit score, but worse.

Not reviewing your Premium Audit statement and bill.This is one of the main subjects covered in this blog. If you look over your premium audit bill and have questions or have the “gut feeling” that something is wrong, it is time to ask a series of questions.
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One of the old mottoes of this blog was to “Stop just writing checks.”This still applies today.In this tough economy, one cannot just pay a bill without at least reviewing it.If you feel you are in over your head, you may want to seek out a non-agent consultant to help you with this matter.

Sustaining an E-Mod increase of more than 10%. Experience Modification Factors will usually increase and decrease over time.That is a natural part of the workers compensation insurance process.If your E-Mod increases more than 10%, there may be a trend that could possibly increase your E-Mod over the next two years.

One bad accident will not necessarily increase your E-Mod significantly.A series of what may look like minor accidents can wreck your E-Mod. One of the tactics to preventing this from happening is in the blog post before this one.Reviewing your loss runs on a monthly basis will uncover the reserves that have been increased on certain claims.

Not seeking out various bids on your Workers Comp program and alternate types of insuring your employees. There are many types of insurance alternatives beside the regular first-dollar insurance program. There are programs such as:

Self Insurance
Large Deductible
Small Deductible
PEO’s
Carve-out programs
Captives
Risk Retention Groups
Group packages

These are but a few of the different insurance coverages under Workers Compensation.There are many alternatives that are legal and may provide your company with insurance at a lower cost.

Not following the Six Keys to Workers Comp Savings that is in this blog very often. Check out the keys I am referring to here. The keys are my recommended actions once a clam occurs from the second it happens. I have performed studies over the years on large groups of claims. The keys are what I have found will usually cost employers 1600% more on their claims if not followed closely.
Not going with your “gut feelings.”No one company or person knows your business better than you do overall.If you feel your Workers Compensation insurance situation is somehow not right, there is likely something wrong. Most employers that contact us do not necessarily have a specific problem.The company owner or risk manager just feels there is something amiss in their Workers Comp program.

Did your company have any off the Top Ten Failure Spiral list? If your company has more than two, the alarm bells need to sound before more off the list are added to the likelihood of a failure spiral.

©J&L Risk Management Inc Copyright Notice

NC Workers Comp Reform – One Huge Area Of Concern

August 12, 2011 By JL Risk Management Consultants

Area Of Concern – NC Workers Comp Reform

This is a major reform to NC Workers Comp Vocational Rehabilitation. As I had posted last time, there is one area of concern with the NC laws that were updated on June 24, 2011.As I also mentioned in my last post,I have handled, audited, or administered over claims in over 40 states.

Picture Of NC Workers Comp Employee Sitting Row

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This is from the law firm Teague, Campbell, Dennis, and Gorham’s summary of the so-called reforms.Please see my last post for a link to the summary.

Vocational Rehabilitation

A major compromise with the plaintiff’s bar led to inclusion within the reform act of N.C.G.S. § 97-32.2, a new statutory provision dealing with vocational rehabilitation. In response to a concern that, with the new 500 week cap on total disability benefits and the fact that wages will no longer be a factor in resolving the issue of suitable employment, injured employees might be placed in low paying jobs without having received either vocational rehabilitation or job retraining, the new statutory provision states that “if the employee (i) has not returned to work or (ii) has returned to work earning less than 75 percent of the employee’s average weekly wages and is receiving benefits pursuant to G.S. 97-30, he may request vocational rehabilitation services,” including “education and retraining in the North Carolina community college or university systems so long as … [it is] reasonably likely to substantially increase the employee’s wage-earning capacity following [its] completion.”

Picture Of Chief Talking To NC Workers Comp Army Injured

Wikimedia Commons – U.S. Department of Defense Current Photos

I may be paranoid, but this looks very similar to the California Workers Comp Statutes of the 1990s and early 2000s. The vocational rehabilitation laws in CA were more liberal than what I have read in these new additions. As well all know, it is the interpretation of the statutes that are the most important.

Vocational rehabilitation benefits in CA ran rampant.There were a large number of cases that took the statutes from something similar to this to a file needing Voc.I worked with Voc Rehab companies in CA that were so busy they could not hire enough workers.

As I said earlier, I could be wrong, but it is better to be prepared now than later.

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North Carolina Workers Compensation Reform – Was It Worth The Effort?

August 11, 2011 By JL Risk Management Consultants

North Carolina Workers Compensation Reform – Nine Changes

Raleigh is our home base. I wanted to wait until the North Carolina Workers Compensation reform filtered out after Governor Perdue signed the bill into law on June 24, 2011. The best summary that I have seen on the Workers Comp reforms is from the Teague, Campbell, Dennis & Gorham law firm.

Map of North Carolina Workers Compensation Reforms

One of their attorneys, George Pender, did a nice job covering the Workers Comp law changes at a recent NC PRIMA meeting in Greensboro last month.

The major parts of the supposed reform are:

Ended the make-work prohibition in return to work situations
Temporary Total Disability capped at 500 weeks
Temporary Partial Disability increased to 500 weeks
Directed medical care by the employer
Independent medical exams
Communication with physicians
Attendant care
Vocational rehabilitation
Scope of settlements

Businesspeople At North Carolina Workers Compensation Conference Table

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I wanted to quickly cover some of these points without just glossing over them. I will likely cover them in the next post or two as to not make the posts too long or boring. From the employer point of view, there are some wins and losses here. As Attorney Pender pointed out, the statute updates were a meeting of the minds between Republicans, Democrats, defense bar, plaintiff bar, employers and other players in the Workers Comp system.

As I have worked with claims in over 40 states, I wanted to compare other states with the same laws that were matched by the reforms. Some are great, while others concern me greatly. The North Carolina legislature did not “reinvent the wheel,” as most of these laws are already in place in different states.

The most important initial point is that almost ALL of the law changes pertained to claims that happened on or before June 24, 2011.

I will post on the bullet points next time with my opinion if it was a LOSS or a WIN for employers, TPA’s, and insurance carriers.

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Liability CLaims MSA Reporting Now Due To CMS

August 9, 2011 By JL Risk Management Consultants

Liability Claims MSA Report Now Required By CMS

The Liability Claims MSA reports are now due. The data for Workers Comp Medicare Set Asides (WCMSA or MSA) were supposed to be reported to the CMS by January 1, 2010 by insurance carriers, TPA’s or employers. There was a little confusion as to which claims were to be reported.

Picture Of Female Doctor Reading Liability Claims Medical Report

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The next group of claims that must be reported by January 1st, 2011 is all liability claims MSA. The “liability claims” moniker has caused confusion on which claims need to be reported. In other words, what does the CMS consider a liability or a no-fault claim?

This is straight from the CMS regs:

Liability insurance means insurance (including a self-insured plan) that provides payment based on legal liability for injury or illness or damage to property. It includes, but is not limited to, automobile liability insurance, uninsured motorist insurance, underinsured motorist insurance, homeowners’ liability insurance, malpractice insurance, product liability insurance, and general casualty insurance.

No-fault insurance means insurance that pays for medical expenses for injuries sustained on the property or premises of the insured, or in the use, occupancy, or operation of an automobile, regardless of who may have been responsible for causing the accident. This insurance includes but is not limited to automobile, homeowners, and commercial plans. It is sometimes called “medical payments coverage”, “personal injury protection”, or “medical expense coverage”.

Graphic Of Chain Bundle Money Liability Claims MSA

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The CMS has self insurance for liability covered very well:

Self-insured plan means a plan under which an individual, or a private or governmental entity, carries its own risk instead of taking out insurance with a carrier. This term includes a plan of an individual or other entity engaged in a business, trade, or profession, a plan of a non-profit organization such as a social, fraternal, labor, educational, religious, or professional organization, and the plan established by the Federal government to pay liability claims under the Federal Tort Claims Act. An entity that engages in a business, trade, or profession is deemed to have a self-insured plan for purposes of liability insurance if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.

I think they have it covered for the most part. I do not see CMS allowing any exceptions. They even have homeowners’ liability listed. The self insurance part includes self insurance even if there was a failure to obtain insurance.

Workers Compensation is a little more straightforward in this area. The liability requirements are very complex. If you are not sure if your claim or set of claims should be reported to the CMS, please feel free to email me at [email protected]

Sad But Inspiring Story

August 4, 2011 By JL Risk Management Consultants

ABC News Inspiring Story

An inspiring story at ABC News about clean water but so sad.As you know, I have never had any advertising on this blog and rarely recommend companies. This post is an exception. A little girl with a big heart put up a website to provide developing nations with clean water.

Picture of Forest River Inspiring Story ABS News

She had just celebrated her ninth birthday. Unfortunately, she passed away after being in a very serious auto accident. I and tens of thousands of people have donated in her honor. Her goal was $300. Due to the outpouring of sympathy for her and her family, almost $800,000 has been donated to her website for clean water.

The MSN story is here. At the bottom of the ABC article is a link to her website. Most people donated $9 or $9 per each of their children. Once you see her picture, you will be glad you clicked over to the article.

She was a special young lady. Even with all the rhetoric we have heard over the last few days, it is comforting to know that there are many good people worldwide willing to help out a great cause.

Premium Audit and Reserve Question – How Often Per Policy Year?

August 4, 2011 By JL Risk Management Consultants

Reserve Question And Premium Audit = Not The Same Thing

We received this reserve question earlier this week. I thought I would address it now as there seems to be some confusion on the premium audit and reserving process for Workers Compensation. The emailed question was – How often should we do premium audit and/or reserve reviews on our Workers Compensation claims?

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I thought it would be best if I separated the question in two parts. As an employer, you do not have to do a premium audit with your insurance carrier more than once per year. The premium audit is more of an audit of the mechanisms that result in your Workers Comp earned premium. Your insurance carrier will audit your company’s premium with 30 – 60 days after your policy expires.

The best answer would be immediately after the results of your premium audit are provided to your company by your Workers Comp insurance carrier. Once the premium audit bill is sent to you, the clock starts running on how long your company has to dispute or even question the premium audit.

As I have posted very often in this blog, most states allow your company to have the audits for the last three years reviewed by either you or a company that has an expertise in this area – shameless plug for J&L.

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One of our areas of concern is that we are contacted by most employers just after their policy has expired. That concerns me and our auditors very heavily as that means if an error is found, your company just lost 1/3 or more of your possible premium overcharge recoveries. At the expiration of each policy, the policy from three years ago can no longer be reviewed along with the audit.

I will cover reserve reviews in the next post.

Premium Audit Bill Payment Question From Employer

August 3, 2011 By JL Risk Management Consultants

The Premium Audit Bill Arrives Without Explanation

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We receive this premium audit bill question quite often. I wanted to reiterate what how an employer should handle the situation.

The question is – Our company received a workers compensation premium audit billing from our insurance carrier. We did not receive any audit results, just a bill. How do we handle this situation?

The premium auditor will sometimes leave his/her results with you at the time of the audit. This is rarer now than in the past. Usually, you will receive the results of the audit approximately 14 – 30 days after the premium auditor visits your business.

The premium audit billing will usually arrive 30 – 60 days after the auditor has performed the audit. The bill will usually ask for payment within 10 days. The audit billing may have a copy of the audit attached to the bill as your first notice of the premium audit results.

If you only receive a bill without having seen any of the results, I recommend writing the insurance carrier (certified return receipt) and ask for a copy of the audit results. The carrier will usually provide an address for questions. You should receive the audit results back from your request letter within two weeks. Written documentation is very important.

I do not recommend calling your insurance carrier. You are legally entitled to the audit results – including any auditor workpapers. You are not actually disputing the audit by asking for the supporting documents. If you decide to dispute the audit, that is another matter.

Each workers comp insurance carrier has their own audit process schedule. The audit process is somewhat dictated by state law and the NCCI or State Rating Bureau. One of the easiest places to find the audit rules is actually in your policy. There are very specific time lines the carrier must follow in the premium audit process.

Premium Audit Errors and Overcharges Are Not Just For Private Employers

August 1, 2011 By JL Risk Management Consultants

Overcharges And Premium Audit Errors

Overcharges and premium audit errors are not only for private employers. Premium audit and policy errors can affect any employer, no matter the size of the business. One of the largest premium errors I have seen was pointed out in a few articles last week.

People Icon with Big X Audit Errors Concept

For some odd reason, the Armed Forces through the Defense Base Act (DBA) decided to pay Workers Compensation premiums instead of self-insuring. I find that astounding with the large amounts of money that were involved in the program.

From what I gather, the main contractors were supposed to supply their subcontractors with insurance. The DBA was supposed to reimburse the contractors for the Workers Comp coverage they provided for their subcontractors.

CNA (Continental Insurance) was the company hired by the government to oversee the program with a price tag of $225 million since 2005.

The audit recommends requiring Continental Insurance to provide additional reporting and undergo periodic independent reviews. It also recommends the Defense Department agencies get back the money owed the government. Does this not sound like the premium audit services that we provide for employers?

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The audit shows the Army Corps of Engineers agreed to pay Continental Insurance higher premium rates than warranted, leading to being overcharged $9.9 million. One area of the audit by the Inspector General’s office that showed inaccuracies was that Continental mixed the billing and reimbursement funds together and did not keep the funds in at least two separate accounts.

The government had basically no way to track the refunds that were owed by Continental. The internal audit set the amount possibly owed at $60 million. Continental’s response was that they had done nothing wrong and had followed the contract they had with the DBA.

The takeaway from the figures is that without a premium audit of sorts being performed, the overcharging situation would have continued without anyone ever noticing that premium refunds were due overall.