Let me share a little detail from a new case of ours, involving Workers Comp audits for policies in the New Jersey Assigned Risk Plan. This detail illustrates the kind of extreme, one-sided thinkiing that all-too-often we see in Workers Comp audits by insurance companies.
In this case, the insurer has retroactively moved all payroll for five past years into the very-expensive roofing classification. The reason, per the audit notes: out of $454,0,000 in payroll, there was a single $800 check that was labelled as being for "roofing labor".
That was it, that was the basis for all payroll being retroactively moved to a classification with a rate double the rate originally used for this client. Even though it's fairly obvious that most work done by this policyholder properly belonged in the cheaper class. But because insurers know that the obscure manual rules that govern Workers Comp policies, rules not spelled out anywhere in the actual policies themselves, can be retroactively interpreted to allow such behavior, insurers often pull this kind of "Shock Audit" sleight-of-hand. Years after the policies have ended.
So policyholders who get hit like this think their Workers Comp costs will be one thing, only to be informed years later that the insurance company is insisting the actual cost is twice what the policyholder was originally led to think.
And when the policyholder doesn't pay these revised bills, the insurer typically files suit. And that's when someone like me becomes necessary. Because insurance companies routinely produce affidavits and testimony from their own employees that all these premiums are properly owed for the policies.
And since most people who understand the arcane and obscure rules that govern Workers Comp premiums work for insurance companies, disputing those premium charges requires someone who also knows those arcane and obscure rules. Someone who is not employed by the very same insurance company seeking those substantially higher premium charges.
It reminds me of something I used to tell folks. Would you let the IRS figure your tax bill, without having your own expert independently review those calculations?
When large sums of money have been calculated and sought based on complex and technical rules, rules not generally well understood, I think it makes sense to have an independent expert review those calculations. And that's where I and my team at Advanced Insurance Management come in. I've been doing this kind of independent review of Workers Comp insurance audits and premiums since the early 1980s, and I've found that self-serving errors of judgment by insurers are alarmingly common.
I've worked with employers large and small, all across these United States, and the frequency of these self-serving errors of judgment regarding Workers Comp audits and premium charges has consistently and persistently been shockingly high.
What was that Russian proverb Ronald Reagan once cited? Trust, but verify.
