A Win For The Books in Georgia

 We just received notification of a win for a client down in Georgia over proper Workers Comp classification of their business. And this one is one for the books.

I had made a presentation on behalf of this client down at the Workers Compensation Appeal Board about a month ago. I thought we had a rock-solid case. I advocated to reverse a recent NCCI inspection that had assigned a much more expensive classification to this client. I made a strong case that the newly-assigned classification was wrong and that the Appeal Board should assign the less expensive class that this client had for years and years, before the inspection.

In spite of what I thought was a very persuasive case, we lost. The Appeal Board instead ruled that the much more expensive class should stand.

I was honestly surprised. And we were assisting this client with the further appeal of that decision when this notification arrived today. From the Georgia Department of Insurance.

The Georgia Department of Insurance overruled the Appeal Board and reinstituted the cheaper class I had been advocating for. Without the necessity of our even filing an appeal.

In all my years of doing this kind of work, I have never seen something like this. I have never seen a Department of Insurance overturn a decision by a Workers Comp Appeal Board without our having to even make an appeal of that decision.

I'm delighted by this turn of events, of course. And I'm intensely curious regarding what the heck happened, behind the scenes. I mean, the Department of Insurance had a representative at the hearing, a voting member of this Appeal Board. So someone at the department knew the arguments I had made and had heard the testimony of the business owner.

So now, on to my next case. Cases, actually, as in the plural. We keep getting phone calls and emails just about every day from small and medium-sized businesses, across the country, who need help disputing Workers Compensation insurance classifications and premium audits. Got two this morning, from different parts of the country. So I'm going to be a busy little insurance consultant, it seems, without too much time for resting on my laurels after this unexpected notification. But that's fine by me.

The Kind of Thing That Makes Me Angry

 I'm currently working on behalf of a small construction company. On their last Workers Comp audit, the insurance company couldn't be bothered to send out an auditor. So they instructed the policyholder to fill out a self-audit form. And the construction guy, trying to do the work of a trained premium auditor, made some mistakes. He caught them after he sent in the form, but the insurer wouldn't revise the audit. So he hired us.

As a first step, we went to the Dispute Resolution process offered by NCCI. I explained the problems--a guy who belongs in the clerical code got assigned to the carpentry class. Plus, I found that this company didn't even belong in the carpentry class--they are a painting company, and properly belong in the cheaper painting classification.

Insurance company just gave their official reply to NCCI. They told us to pound sand. 

Now, this galls me, because I know from experience that insurance companies routinely change these audits when it benefits them, sometimes years later. But when the policyholder wants to fix things, because construction guys aren't so well trained as premium auditors, the insurance company says "No takebacks."

My own initial first response is something less polite and more of an Anglo-Saxon type of exclamation. But that won't get us anywhere.

So now I have to roll up my sleeves, put on my thinking cap, and figure out how best to fight this. Because NCCI has kind of just shrugged at this non-response by Pekin Insurance and asked us if we can prove our assertions. And we're certainly looking into this.

But the thought occurs to me that is a classic example of how the system is not a level playing field. and how the insurance oversight system is not exactly a consumer-friendly system, in spite of places like NCCI having some very dedicated and helpful people. The system just is designed to put the burden of proof on the policyholder, Instead of insisting that insurance companies actually have to bear the expense and effort of getting these audits right, the system tends to push that off onto policyholders. Kind of like a mandatory self-checkout lane at Wal-Mart. Where the scanner sometimes reads a bag of apples as a vacuum cleaner.

Well, the game is afoot, I suppose. Time to see if I can make Pekin Insurance do the right thing. Stay tuned.

Interesting Settlement in an Expert Case of Mine

 I had recently been retained as an expert by the attorney for a specialized staffing company that had been fighting with a major insurance company for about a decade over Large Deductible Workers Comp premium charges. Prior to my retention, the case had not been progressing well for the policyholder. It was now in arbitration, and in spite of repeated attempts at settlement by the attorney, all such offers had been rebuffed by the insurer.

Interestingly, this was an insurer that had retained me as their own expert over the years, in multiple cases also involving Large Deductible Workers Compensation insurance policies for staffing companies. So I had some significant experience with the unique aspects of these policies and how this insurer underwrote those kinds of policies.

But it had been years since I had last done any work for this insurer and so I felt free to accept this assignment, although I still had to treat all my prior work and documents with confidentiality. 

Nonetheless, I was able to offer a preliminary report about issues with how these particular Large Deductible premium charges had been computed.

And interestingly, once I was disclosed as the expert retained by the policyholder, and the particular areas about which I would be testifying, a curious thing happened.

The insurer settled the case, on terms described as very favorable by the attorney who had retained me.

I don't know any more than that, really. I have no clue why the insurer elected to settle this case at this time, after having fought tenaciously for so many years. I would like to think my involvement in the matter played some part in this, but I will never really know.

Still, I believe a just settlement was reached, and that's what matters. Of course, because this case settled before I could provide any sworn testimony, it won't even appear on my CV. But still, I feel good about this case, and my involvement in it.

The Self Checkout Lane for Workers Comp Audits

 Today, I spent an hour or so helping a small business properly complete the self-audit forms their insurer had asked them to complete for Workers Comp and General Liability insurance. It wasn't particularly difficult but there were technical issues that were straightforward for someone trained in premium auditing but that were not so straightforward for a small business owner who didn't work in insurance.

We got the whole thing hashed out in a little over an hour and he was very grateful. But it put me in mind of something I heard a week or so ago, when I gave a presentation at the Midwest Insurance Auditors association. Some of the auditors present mentioned that their insurers are increasingly turning to remote audits or self-audits for smaller accounts.

The drawbacks of those developments are illustrated by my small business client I helped today--there are technical issues about what remuneration should properly be reported for WC, how that payroll properly gets allocated among classifications, and different technical aspects for the GL audit.

Insurance companies asking policyholders to self-audit reminds me of the increasing use of self-checkout lanes at Wal-Mart and other retailers. It's an aggravating action by large corporations to hold down their costs by asking the customer to do some of the work normally done by employees of said corporation.

Mind you, it's creating a new line of revenue for us, so perhaps I shouldn't complain about it. But it rubs me the wrong way. And when some aspect of the insurance industry rubs me the wrong way, I tend to write about it here.

So if your company gets one of these self-audit forms, or if the insurers says they want to do a remote audit (which can create similar but slightly different problems) keep in mind that Advanced Insurance Management can help, at very modest cost, to make sure you aren't inadvertently overcharged when you use the insurance industry's self-checkout lanes.

As I often like to say, in a perfect world I shouldn't be able to make a living doing what I do. Audits should always be done correctly and premiums should always be calculated correctly, by trained insurance professionals paid by the insurance industry.

Alas, we don't live in a perfect world. But at least we here at AIM can help make sure businesses aren't overcharged because of those imperfections.

A Sweet Win at the Illinois Department of Insurance

 We just learned today we prevailed at a legal hearing at the Illinois Department of Insurance, on behalf of one of our consulting clients. This small biz client had been overcharged by Sentry Insurance, by way of using a wrong classification code (and thus wrong manual rate.) At the hearing, Sentry argued that, because this insured had accepted a proposal that used the wrong classification code, this meant that the clear policy provision that stated that Sentry would ultimately use the correct class for premiums, even if different from what was originally used, was null and void.

The hearing officer found this argument unpersuasive, it seems.
Kudos to my son and biz partner Scott Priz who ably handled this legal hearing. (It's nice to have a brilliant lawyer as part of our firm, one who also has twenty years' experience with the fine details of the classification system used for Workers Comp insurance. This wasn't a huge case in terms of our fee--but it was a huge win nonetheless, against an insurer who seemed determined to avoid returning significant premium overcharges to a small company.

The Florida Nightmare for Employers and Workers Comp Premium Disputes

 A while ago, I wrote about how, in Florida, there apparently is case law that establishes that a Florida employer that has been sued by an insurer over unpaid Workers Compensation insurance premiums cannot, at trial, raise the issue that the insurer calculated those insurance premiums incorrectly, unless the employer disputed those premium charges, before litigation, through the administrative process in Florida.

I've had the dubious pleasure of trying to raise such an administrative complaint on behalf of a Florida employer and have found it to be an administrative nightmare right out of Kafka.

NCCI, the non-governmental insurance industry outfit that writes manuals of rules used by insurers, has said they cannot accept this particular dispute. So I turned to the Office of Insurance Regulation. They in turn said I had to go to the division of Consumer Services, who in turn referred this to the Florida Department of Financial Services, Division of Workers Compensation--who in turn said they can't handle this, and said I should call OIR--the Office of Insurance Regulation--the people I had first filed this administrative complaint with, back in June.

So, Florida courts say that employers must go through the administrative process if they want to be able to later raise the issue of their insurance company screwing up the premium calculations, when that insurance company sues them. But that administrative process is not particularly well designed to actually let employers file such administrative complaints!

I'm recommending my Florida client reach out to his state representative to see if perhaps that can cut through this bureaucratic game of hot potato, but it's enough to make one suspect that perhaps the state of Florida just doesn't want employers to be able to dispute premium overcharges with insurance companies. 

Stay tuned for further developments.

How Florida Screws Over Employers Who Have Been Overcharged for Workers Comp Insurance

 The state of Florida have a (to my knowledge) unique no-win scenario that handicaps Florida employers who have been overcharged on their Workers Compensation insurance. If the employer declines to pay a Workers Comp insurance bill because the employer feels it is excessive and incorrect, and the insurer files suit against the employer, existing case law in Florida mandates that the employer cannot raise the issue of the insurance company miscalculating the premiums---unless the employer had earlier attempted to dispute the overcharges by going through the Florida administrative appeal process.

Now, I'm not an attorney, so keep that in mind when I write about matters involving legal issues. But I often serve as an expert witness in litigation over Workers Compensation insurance premiums, so I have recently had the opportunity to witness a Florida court making exactly such a determination.

Every state has some kind of administrative appeal system for Workers Compensation insurance. Usually employers have an extremely limited awareness of the existence of such an appeal process. But in Florida, if the employer doesn't attempt to use that administrative appeal process BEFORE THE INSURANCE COMPANY FILES SUIT OVER THE PREMIUMS the employer cannot raise the issue of any errors by the insurance company in computing premiums, no matter how egregious and excessive those overcharges are.

In my own view, understandably, this is a disastrous situation for employers in Florida, as overcharges in Workers Compensation insurance premiums are far from uncommon. So these precedents in Florida case law essentially give insurance companies carte blanche to overcharge employers on Workers Comp insurance, as long as the insurer can get to the courthouse before the employer realizes there even exists an administrative appeal process.

My only advice for Florida employers is to be keenly aware of this situation and to be aware of the administrative appeal process. As Florida is an NCCI state, this means for most (but not all) disputes over Workers Compensation insurance premiums, the administrative appeal process would involve the Workers Compensation Appeal Board jointly administered by NCCI and the Florida insurance regulators. But NCCI appeal boards are limited in the kinds of technical issues they can hear. Typically, NCCI appeal boards can hear disputes over classifications, experience modification factors, payroll audits, and other NCCI manual rules. 

But for other issues that can sometimes arise over Workers Comp premiums, including application of state statutes, NCCI appeal boards cannot provide relief. Those would have to be filed with the Florida insurance regulators, the Florida Office of Insurance Regulation.

And employers in Florida should make sure to reach out to those appeal mechanisms as soon as there is any dispute over Workers Comp premiums, lest their insurance company close the door on such administrative remedies by filing suit. Once suit is filed, administrative remedies cannot be sought and thus the employer is, to use a technical term, SOL.