First 2015 Employer Charged Over Alleged Workers Comp Premium Fraud

For those keeping score at home, here is the first news report I've spotted in 2015 about an employer being criminally charged for allegedly under-reporting payroll to lower Workers Comp insurance premiums.

As I've written before, this is a growing trend, and represents quite a change from those long-ago days when I was coming up in the wonderful world of Workers Comp insurance. Back then (when dinosaurs ruled the earth) it was not utterly uncommon for some employers to take a sort of "all's fair in love and Workers Comp) kind of attitude and if they thought they could get away with pulling a fast one on their Workers Comp insurer they would do it, justifying their actions by telling themselves that insurers took unfair advantage whenever they could so why shouldn't a poor beleaguered businessman play the same kind of game?

It was never right, of course, or fair. but criminal prosecutions seemed pretty rare back in those days. Nowadays, not so much, as they say. Prosecutors seem far more open to charging employers for allegedly cheating on Workers Comp insurance premiums, and so employers need to more careful than ever to avoid doing anything that gives the impression of fraud.

Of course, I would note that I am unaware of any insurance company having been criminally charged for overcharging on Workers Comp insurance. I mean, AIG got nailed by Eliot Spitzer and then got sued by NCCI and then Liberty Mutual and other insurers over deliberate and systemic practices that allegedly cheated on taxes, assessments and increased costs for the rest of the industry, but I don't recall any criminal charges ever being filed. Sauce for the goose isn't always sauce for the gander, I guess.

Florida Upholds WC As Exclusive Remedy

In a fairly important ruling, the Florida Supreme Court has upheld the "exclusive remedy" aspect of Workers Compensation in that state.  In Moreles v. Zenith Insurance Company, the court has now ruled that the exclusive remedy provisions of the law and the Employer Liability coverage form.
This is an important win for insurers and employers, not so much for the widow Morales. Florida is still wrangling with some other important court cases concerning Workers Comp, though, including the question of whether recent "reforms" shatter the grand bargain between employers and employees that rests at the heart of Workers Compensation that justifies the exclusive remedy doctrine.

Stay tuned, it seems there will be more to come on this subject. Although the Florida Supreme Court appears to have given a pretty clear notice here about how it views this dispute.

Workers Comp Issues in 2015

Interesting article here, about possible issues that could impact Workers Compensation in this new year. One of the items here that piques my interest is that of "opt-out", that is, states giving employers the legal right to go without traditional Workers Compensation coverage. Texas has had it for years, of course, and more recently Oklahoma enacted a version of it, a version that allows employers to forego regular Workers Compensation coverage if they put in place an alternative program that offers the same benefits.

Now, it seems to me that the devil will really be in the details there. If the alternative program really and truly offers benefits that are the same as "real" Workers Comp, where exactly are the opportunities for cost savings? And if these alternative programs don't really and truly offer the "same" benefits, how does that all shake out for employers?

I know of one case where a state allowed certain kinds of employers to opt out if they provided an "alternative" plan that provided essentially similar benefits. And I know of an employer who hired some broker who specialized in such alternative programs to come up with one for them, and everything seemed fine until some workers were seriously injured. Then everything hit the fan, the lawyers earned some significant fees, and ultimately an appeal court determined that the alternative program had not really offered benefits sufficient to meet the (vague) statutory requirements, so the employer ended up being saddled with really expensive claims plus large penalties for failing to meet the statutory requirements, along with very hefty legal bills.

I'm just saying, there aren't many genuine short cuts in the world of Workers Compensation, and things that look they are sometimes don't turn out that way, when push comes to shove.

A Report Card For Insurance Regulators

An interesting attempt to quantify and grade insurance regulatory efforts by the various states can be found here.  Not sure if I necessarily agree with their criteria in all cases, but this is an interesting approach. I may have more once I digest this report card more fully. In the meantime, take a look and form your own opinions.

Shameless, Stan Lee-Type Plug

When I was a kid, Stan Lee was the master of self-promotion over at Marvel Comics, then kind of an underdog to DC. Any way, this being January, the time of year when all good premium auditors are planning their annual extravaganza of field audits, I thought I would steal a page from Stan's old playbook and indulge myself in an unabashed self-serving plug for my book, Workers Compensation: A Field Guide For Employers.

The Field Guide explains everything business owners and managers need to know about Workers Compensation insurance audits, classifications, experience mods, and various and sundry other topics, including how to guard against and/or correct the common errors made by premium auditors that raise premiums unnecessarily.

You can find out more here, and even order a copy, if you so desire. Trust me, it contains enough valuable information that you'll count it as the best bargain you've ever found on Amazon.

There. Stan himself couldn't have done it better. Excelsior!