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Workers Comp Premium Auditor Fraud Is Hard To Detect

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Workers Comp Premium Auditor Fraud

Workers Comp premium auditor fraud is very hard to detect.  The auditors possess such a high level of fiduciary responsibility as they review millions of dollars in premium every week.  This fiduciary responsibility came to light with the recent West Virginia case.

Statement Workers Comp Premium Auditor Fraud list
Wikimedia Commons – Nick Youngson

A Brickstreet premium auditor had been charged last month with numerous counts of insurance and coal-related fraud.  The auditor allegedly received kickbacks from employment agencies that provided workers for the coal industry.

How does a workers comp insurance carrier avoid this situation?  Insurance premium audit fraud is very hard to detect as there is a level of trust that the carrier or auditing company must-have for their auditors.

Hand Showing Money Workers Comp Premium Auditor Fraud On Small Tree
StockUnlimited

The likely  way to discover this rare type of fraud would likely be internal auditors better known as “auditing the auditor.”  Brickstreet should really not shoulder too much of the blame.  It was their employee.  However, the only way that this could ever be detected is through an internal audit.

Most insurance carriers have an internal audit department.  Almost all of them do not audit workers comp auditors.  This may now change somewhat with the recent West Virginia case.

The majority of these audits are performed in person.  How can an internal auditor know their field premium audits are accurate without having to re-visit most of the employers?   The West Virginia case was even more difficult as the companies in question were employment agencies.

Employment agencies are very difficult companies in which to determine the proper premium as there are so many classification codes.   Their E-Mod rating and premium audit sheets can look similar to a novelette.

Workers Comp claim departments are audited by many different entities including their internal audit departments.  Premium audit departments may receive the same scrutiny in the near future.

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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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