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Home » Fines Penalties

Workers’ Comp Penalties and Fines – Paying Someone Else’s Tab?

February 6, 2020 By JL Risk Management Consultants

Workers’ Comp Penalties and Fines Are Paid By Responsible Party – who is that? 

If you want to start a debate in a claims office just ask who pays for the Workers’ Comp penalties and fines in certain cases.  Why does a seemingly insignificant payment amount cause so much chagrin in a claims file?  Let us look at two areas of great consternation. 

picture of Workers" Comp Penalties and Fines police car

Public Use License – GDPII

Responsible Party for Workers’ Comp Penalties and Fines 

One scenario looks like this – an employer reports a claim 9 days after injury and the Workers’ Comp Board fines the carrier for a late compensability decision and payment of benefits.   The carrier or TPA (self-insureds) is fined $500. 

 Does the claims department pay the fine under expenses or  Indemnity/Medical benefits?   The employer was nine days late, but the carrier was left with five days and two of those are the weekend?  Does the carrier/TPA take the hit and pay it under Expenses and not under a benefit type?

For self-insureds, sometimes the TPA’s have a fourth benefit type that is labeled,  such as TPA expense.  Please remember that Self-Insureds pay the toll for everything and then have to pay the TPA a fee to handle the files.  The fourth benefit type where the TPA has to eat the penalty or fine kicks in for these situations.  Does the data entry person know there exists a fourth type of payment category?

For large deductible plans, the carrier adds in a clause that states – the insured will pay 50% of the incurred claims handling expenses.  No, really, if you are a large deductible insured, check out that clause.  I have found it in hundreds of large deductible plans.  Could you be paying 50% of the fees that your company owes no responsibility? 

For voluntary market policies, sometimes the person that is coding the payment type has to make that decision and they are under incredible time pressures to provide fast data entry.   I have seen this happen more than seldom. 

OK, Why Do Small Payments Matter?

One has to look at this question from two viewpoints – 

Small But Numerous Payments – if 10 data entry personnel cutting checks all day, all use the same rule to pay fines in Indemnity, then that could turn into a real problem.    If they are all paid under Indemnity Benefits, then small payments add up to large payments over time. 

Until someone reviews and finds those mistakes (J&L does often). the insured may never know they have been paying a little extra premium or for self-insureds an extra benefit payment.  

Power of Workers' Comp Penalties and Fines attorney form

Wikimedia Commons – James D. Sims

Fines and Penalties Can Be Huge-  say that a $125,000 settlement check arrives at the claimant attorney’s office later than 14 days after the settlement is approved.  The claimant attorney files for a 10% penalty on the payment.   

That penalty tolls at an extra $12,500 the claimant attorney and his client receive by filing a late payment notice with the Workers’ Comp Board.  Yes, J&L has seen that in files.  Claimant attorneys watch that very closely. 

If that payment was paid under Indemnity instead of an expense, then that is a $137,500 payment for a $125,000 settlement check.  

A payment such as that can tick up an Experience Modification Factor or LDF (self-insureds) with just one misplaced payment type.  How about six or eight of those?  You get the idea without requiring more examples. 

Payment Categories Become Key – Why? – Expense payments made by carriers are considered an expense of handling the claims – these payments DO NOT AFFECT THE MOD.   Most states calculate your Modification Factor from Indemnity and Medical payments only. 

Paying for the carrier’s expenses under your Mod can quickly increase your premiums and may land your company in the Assigned Risk Pool.

You Cannot Always Assume Fault with the Carrier or TPA if the TPA, for example, did not receive approval and the funds timely from the carrier in my $12,500 example, which is to blame then? The debate rolls on.   When I worked for a TPA in the 1990s, I drove a check to the claimant attorney’s office as it was due that day.   I received authority from the employer that same day.  Postmarks do not make a difference as the fines are based on the date of receipt.   

The $12,500 example was actually from a real incident from the 1990s.   I drove the $125,000 check while the ink was dry to the claimant attorney office 1.2 hours away.   Yes, the self-insured employer did not give the authority to cut the check until the same day.  Whew!  

At least there was a great fast food restaurant near the claimant attorney’s office. 

Two Ways To Avoid Paying Penalties and Fines  – one easy and one hard 

  1. Easy way – always respond to your carrier quickly if the adjuster contacts you with an ASAP call or email.  Take my example from above; I could have just let the self-insured employer pay the fine and have mailed the check.  It was on them.  Do not place your Workers’ Comp ratings in jeopardy by delaying the inevitable.  Responding to the claims staff builds a good relationship and improves your Mod or LDF.  
  2. Hard way – reviewing payment screens will enable the trained eye to see if the right payments type were assigned to what should have been the Expense payments.  Each carrier and TPA has its specialized system and payment type notations.  No standards for payment types exist when looking at the payment screens.  Years of experience reviewing payment screens remains your best bet.

Sometimes paying Workers’ Comp penalties and fine are unavoidable – again – who really pays? 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Fines Penalties Tagged With: consternation, inevitable, labeled, notations, Workers' Comp Board

NY Daily News Workers Comp Watch – Ocasio Cortez Says Woops!

January 14, 2019 By JL Risk Management Consultants

US Representative Ocasio Cortez Fined – NY Daily News Workers Comp Article

The NY  Daily News Workers Comp article has been circulated around the blogosphere for mostly political means.  Many of my fellow Workers Compensation bloggers publish articles that are politically-based.   I try to avoid that as much as possible.

picture of ny daily news workers comp hummer traffic ticket

Wikimedia Commons – Specious

The article by Kenneth Loveth was the original source.  

How could an article on forgetting to pay your workers compensation premium bill not jump off the page?  Even a young Congresswoman that many consider a champion of the people (Socialist?) can forget to provide her campaign workers with the most basic of necessary benefits.   

The NY  Daily News workers comp article pointed out that she had forgotten to pay Workers Comp premiums for her campaign workers covering the month of April 2018.  

Did she receive any special forgiveness for her campaign’s oversight?   She definitely did not receive any special treatment.   The New York Workers Compensation Board fined her $1,500 for going without coverage.   What would have happened if one of her workers seriously injured themselves on the job?  

Of course, Ocasio Cortez was excoriated by both Democrat and Republican pundits.  This situation, unfortunately, rears its ugly head in the PR arena.  

Tina Fey paid a similar fine when she neglected to cover her workers a few years ago.  The same thing occurred as in this case.  However, Ms. Fey was originally fined $79,000.  The NY Workers Comp Board then realized she might have had at least partially adequate coverage. 

Ms. Fey and the Board agreed that her fine should have been reduced to an unreported amount.   

Both situations show two things:

  • Not paying your workers comp premiums will catch with you eventually
  • The NY Board shows no favoritism or mercy – pay premiums or pay a fine

We receive at least a call or email once per week where an employer has let their Workers Compensation lapse.   J&L Risk Management Consultants cannot fix an unpaid premium bill even if some of it was disputable.  

The bottom line  – do not forget to pay your workers comp premiums or your company may end up creating a column for the NY  Daily News Workers Comp. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Fines Penalties Tagged With: adequate coverage., no favoritism, ocasio-cortez, tina fey

Tina Fey May Have Had Workers Comp Coverage After All

April 1, 2014 By JL Risk Management Consultants

Correction on Tina Fey Article

Even Tina Fey has to have Workers Comp coverage.  A recent article in the Insurance Journal indicates that Tina Fey may have had continuous coverage.   I found an article last weekend which said she owed $79,000.

Picture of tina fey Pink pearl eraser

Wikipedia – Evan-Amos

However, the newest article did not say that WC coverage was found for a period from November 2012 to November 2013.

The New York Comp Board said that it was a clerical error.  I have rarely seen a WC Board admit to the press that a clerical error was made after fining a company for no WC insurance.

I rarely do previous article retractions of any type. However, I did not want to accuse anyone of not having WC coverage if , in fact, they did have a  policy in effect.

Even Tina Fey is not above the law when it comes to having WC coverage in place to cover any on the job accidents.   Many states such as North Carolina have been lax in enforcing the laws and rules which require WC coverage for employers.

The actress and writer could have been in hot water if one of her employees was injured on the job with no WC benefits.

©J&L Risk Management Inc Copyright Notice

Filed Under: Fines Penalties Tagged With: Clerical Error, tina fey

New York Workers Compensation Board Assesses Tina Fey $79,000 Fine

March 29, 2014 By JL Risk Management Consultants

 Tina Fey Fined By New York Workers Compensation Board

The New York Workers Compensation Board has fined a very unusual company- actually the actress Tina Fey.

According to an article in the Smoking Gun, Tina Fey of Saturday Night fame was hit with a $79,000 judgment by the New York Work Comp Board  (5 pages)  for having no Workers Compensation insurance.

Picture of New York Workers Compensation Board Actress Tina Fey

Wikimedia Commons – Mingle Media TV

The name of the production owned by Tina Fey is Little Stranger, Inc.  However, the judgment was in Fey’s name only.  The judgment was for failure to carry Workers Comp insurance.

It seems, as in many cases with this board, no one can exactly figure out how the $79,000 judgment was arrived at in the court documents.   However, all of  Fey’s appeals have now been exhausted which means it is pay-up time.

One has to wonder how the round number of $79,000 was arrived at in the judgment. A round number will usually mark an estimate, of sorts.   Payroll (remuneration) and the associated premium charges are very rarely round numbers.  This seems to be an estimate of charges.  Look for Tina Fey to settle this one as soon as possible.  Most Workers Compensation cases settle quickly regardless of the source. 

©J&L Risk Management Inc Copyright Notice

Filed Under: Fines Penalties Tagged With: remuneration, tina fey

Is Your Carrier or TPA Charging You For Their Mistakes?

October 4, 2012 By JL Risk Management Consultants

Carrier or TPA Overcharging You?  

Your Carrier or TPA could be charging you for their mistakes.  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.  This is a more common occurrence than in the past years as many states have added more rules on top of an already ominous amount of rules.  The number and amount of fines are increasing over time. 

Picture of Hand Pointing to Employee Carrier or TPA Concept

(c) 123rf.com

Workers Comp claims adjusting has become even more complicated than in the past.  States seem to be very motivated to fine carriers for new rules that have just been enacted.   The fining on the files also seems to be inconsistent from file to file.  

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.

Businessman Carrier or TPA With Heads in Hands

StockUnlimited

Charging fines to the file under the expense category will only increase an employer’s E-Mod or increase the WC budgets for self insureds.  The fines are usually denoted in the Expenses as being paid to the respective states Workers Compensation Commission or Department of Insurance.  

One cannot assume these payments are always for fines and penalties.  The WC Commissions very often assess fees for certain processing in the file. 

Some of the fines and penalties can be very large or occur multiple times in a file.  Your loss runs may be the first clue if the Expense category seems to be very large or has a large number of payments.   For reference, the three categories of payments are Indemnity, Medical, and Expense.   

©J&L Risk Management Inc Copyright Notice

Filed Under: Fines Penalties Tagged With: frivolous litigation, jurisdictions issue, lack of adherence

Fines Penalties in Workers Comp Claims – Who Pays?

October 28, 2011 By JL Risk Management Consultants

Who Pays For WC Fines Penalties

Some state jurisdictions issue Fines 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.

picture of Fines Penalties money cash

(c) 123rf.com

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.   They cannot be eliminated completely.  

©J&L Risk Management Inc Copyright Notice

Filed Under: Fines Penalties Tagged With: charge due, eliminated, omissions

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James J Moore
Raleigh, NC, United States

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:
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