There Oughta Be A Law

 There was this kinda old-timey cartoon in the funny papers when I was a kid, called "There Oughta Be A Law", that I was thinking about this morning. First off, I was recalling it because of a recent Facebook feed item about that particular strip. But then I had to tell a prospective client that I couldn't help 'em with a Workers Comp classification dispute, and that provocative title popped up in my little head.

Let me explain.

The issue for my Oklahoma prospect involved Code 5606, for "Executive Supervisors", which carries a manual rate significantly lower than the general construction class for this business. Payroll for his executive supervisors had been placed in 5606 when the policy was issued, but when the audit was done, after the policy expired, the auditor moved this payroll into the much more expensive class. So this policyholder found me, as so many folks in his position do.

The problem was that the definition for 5606 requires there to be a foreman-type person between the 5606 person and the actual construction workers. Which, for this particular employer, was normally and regularly the case.

Except, once in a blue moon, the company used a sole proprietor plumber for some work. And according to the fine print in the NCCI Scopes manual, that knocks the supervisor out of Code 5606, for all his pay, even though the plumber is only rarely used on an occasional project. Because a sole proprietor doesn't have a foreman.

Now, this fine print detail isn't to be found within the pages of the policy. The policy only says that the insurer will compute premiums based on their manuals. It doesn't say what manuals, doesn't say how the policyholder might get a copy. Doesn't explain that, to see the NCCI Scopes manual, the policyholder would have to purchase a subscription from NCCI for that particular manual (one of several different NCCI manuals).

So my gripes about this situation are several. One, nothing in the policy informed the policyholder about this at the time the policy was purchased. Two, the time to inform this policyholder about this, IMHO, was when it was being purchased, not after the policy had expired. The original policy applied 5606 for the payroll of these executive supervisors, so this audit sleight-of-hand leaves the policyholder with the bad taste of a bait-and-switch maneuver by the insurance industry.

Three, the very way this classification limitation is designed feels, I dunno--unfair? Slanted in favor of the insurance companies? I'm pretty confident that policyholders would not find this provision equitable, if they were asked about it.

But they haven't been asked about it. Not really. NCCI does seek industry feedback in their classification deliberation process, but it sure doesn't feel like these rules have been designed with fairness to the policyholder as a priority. Maybe I'm wrong, maybe I'm being unfair.

But I don't think so.

Class Action Over Illinois Commercial Drivers: Employees or Independent Contractors

 It's being reported that a lawsuit against an Illinois trucking firm, Risinger Brothers Transfer, Inc. has been granted class action status. The drivers allege that, although the company has treated them as independent contractors, the drivers in fact were employees, based on how the employer managed operations and supervised the drivers.

The U.S. District Court for the Central District of Illinois has ruled that the case could be approved as a class action.

Now, the issue of whether drivers of such companies are actually employees or independent contractors has been one I've dealt with in some past cases. And this certification by the court does not constitute a determination by the court one way or another on this issue. It merely certifies that the drivers have met the criteria for class certification.

Now the real work begins.

This issue touches on Workers Compensation insurance, of course, as an employer can require independent contractors to purchase their own Workers Comp insurance, but not so for employees. This lawsuit is over more than the Workers Comp issue, but I expect that Workers Compensation costs will be a significant part of the case.

So stay tuned.

General Liability Audits

 Increasingly, we are hearing from employers who want us to double-check their General Liability audits. We've also been retained a fair bit in recent years as expert witnesses in litigation over General Liability insurance. 

Just like Workers Compensation insurance, General Liability insurance is subject to a premium audit after the policy ends. And employers sometimes have issues with how those audit premiums have been calculated. And more and more, those employers find us and give us a call or email.

It is certainly possible to successfully dispute a General Liability audit. But it can be trickier than disputing an audit for Workers Compensation insurance.

For one thing, General Liability is less standardized than Workers Compensation insurance. And GL can be written through the Excess & Surplus market, which means there is even less regulatory oversight from state insurance regulators. And there is no administrative dispute process the way there is through the NCCI, which is the rating bureau for Workers Compensation insurance in a majority of states.

But if anything, it sometimes appears that insurers might be even more opaque, less informative, with explaining how GL audit premiums have been computed than they are for Workers Comp. Still, we love a challenge. 

Workers Comp Audit SNAFU in New Jersey

 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.

Busy, busy, busy

 Keeping busy these days, which is always a good thing. Flying out to California next week to testify at another trial out there over Workers Comp insurance. But first I have to complete a report on a California criminal case over Workers Comp premiums, have a Zoom with insurance company lawyers over a different Workers Comp dispute, talk with Georgia lawyers over a mediation over Workers Comp premiums, and review documents for a New Jersey case over disputed Workers Comp premiums.

I remember, when I started my consulting practice back in 1987, I had to spend time each day cold calling prospects. Fortunately, I was pretty good at that aspect of the business. Nowadays, it’s much more difficult to cold call, I think. I don’t do it myself but I help our dedicated people who still do it. But for a lot of my work, when people need me, they find me. 

And there seem to be a lot of people who need me these 

A Shock Audit from South Carolina

 Shock audits for Workers Comp insurance happen all over the U.S. I know, because I get calls and emails almost every day from some small business, somewhere in the United States, that's been clobbered with one of these Shock Audits.

This South Carolina small flood restoration business bought a Workers Comp policy for around $1,000.00. Now they have an audit bill for $77,000.00.

This is for a policy that didn't even last a year. The insurance company cancelled them after eight months when the policyholder dared question a change to the policy that suddenly caused a $28,000 bill for additional premium.

Fortunately, my initial review finds that an awful lot of that audit bill can be removed, once all the various mistakes the insurer made are corrected. And there are multiple mistakes, mainly over classifications but also about independent contractors being improperly included.

The insurance company did an audit for this policy--sort of. Judging from the results, it was an audit in name only. No actual effort appears to have been expended to determine the actual proper classifications and payrolls--the insurer's people just quickly and conveniently applied an extreme, worst-case scenario to every potential question, billed that out, and moved on to the next victim--err, policyholder.

But these errors are very fixable. And they will be.

As I often say, in a perfect world, I should have to be doing something else for a living.

We do not live in a perfect world, alas.

Interesting Deposition Today

 Had another deposition taken today in another California litigation, and opposing counsel asked a question that I hadn’t anticipated. He asked how a Chicago based expert would know anything about California Workers Comp insurance premiums.

And I had to smile to myself, because California has become one of two hot spots for my work in recent years, (the other is Georgia) so much so that I don’t think much about the geographic distance nowadays.

In this modern age, I was having my deposition taken via Zoom, for example. And internet and inexpensive phone service have rendered what once might have been significant geographic barriers into near nonexistence.

Sure, when I started my consulting practice back in 1987, my clients were largely local. But that was a different age, a different world . 

And it certainly is true that California has distinctly unique aspects to Workers Comp insurance premium rules.  But since the advent of the internet, I’ve had lots of California clients, and so lots of experience with the unique elements of Workers Compensation insurance in the Golden State.

Like I said, California has become a hotspot of demand for our particular consulting services, both for civil cases and criminal cases involving Workers Compensation insurance premiums and audits. I’ll be traveling there in two weeks to offer testimony at a trial there, and I’m scheduled to be back there in early February to testify at another trial.

Back in 1971, the Ides of March sang about LA being light years from Chicago, but nowadays, not so much for this particular son of the South 

Today's Shock Audit Phone Call...

 ...comes from a small biz in South Carolina. They bought a Workers Comp policy for $3,000. Now, after it's ended, they have a bill for $76,000. Based on our initial conversation, it looks pretty likely we can significantly reduce this bill.

Watson, the game is afoot!

I know, I know. Corny. But I love saying that when a new case comes in.

Today’s Shock Audit Email

 It’s frustrating when a small business reaches out to us with one of these Workers Compensation Shock Aufits, because they’re so common and so preventable if only a better job was done by the insurance system at various stages of the life cycle of a Workers Compensation policy.

This one involves a small start up package delivery company. A little over a year ago this company bought a Workers Compensation insurance policy for $1500.00.

Now, they have an audit bill for over $400,000 and it’s in collections.

And they don’t know what to do.

Fortunately, they found us. This is what we specialize in. And we believe we can substantially reduce this bill. But can the bill be reduced substantially enough for this business to avoid financial obliteration?

That’s the question we’re now exploring with this client.

One additional complicating factor: the business owner isn’t very fluent in English. But we’re working around that, thanks to a family member of the client.

But this case illustrates the dysfunctional way the Workers Compensation insurance system sometimes functions as a financial weapon of mass destruction for small businesses, particularly new businesses.

I mean, what other major industry could sell a product for $1500 and, a year later, send a retroactive bill for $400,000? No other legal business, I suspect. 

The insurance agent in this case? An online agency owned by an insurance company. All done in a perfectly legal manner, following the somewhat loose regulations that govern these things.

Now some collection attorney is sending out perfectly legal collection letters to these folks, demanding $400,000 with a straight face. And he’ll file a perfectly legal lawsuit if that bill isn’t paid and get a perfectly legal judgment and the company will cease to exist.

Except we can knock that bill down by, we believe, hundreds of thousands of dollars.

And maybe we can save this little business.

How I Help Insurance Agents When Workers Comp Audits Go Sideways

 I've spent more than half my life helping business policyholders reduce Workers Comp audits by finding and correcting technical errors by insurance companies. Just this week, a small Idaho contractor got a $28,000 refund from his last Workers Comp audit, because I got the classifiction code used retroactively corrected.

$28,000 may not seem like a huge sum to many companies, for this small biz it was a big deal.

Anyway. my point is that it's not just the policyholder I help. Often, it's the insurance agent who sold that Workers Comp policy, because policyholders often unfairly hold the agent responsible when they get what we call a "Shock Audit" for Workers Comp.

That's why we often get brought in by those insurance agents, to help their clients with contentious audits.

I'm a specialized consultant on Workers Comp audits, classifications, experience mods, and related technical issues that impact Workers Comp premiums. But I don't sell insurance.

That means an insurance agent doesn't have to worry I'll try to poach his account, if he brings me in to help. I'm not an insurance producer and I'm not affiliated with any insurance agency or insurance company.

And as part of the process, I can explain why insurance agents aren't to blame when an insurance company ends up developing a large amount of Additional Premium on an audit. I've been an agent, I know just how little authority and influence insurance companies give agents over premium audits.

But policyholders often don't understand that. They only know that the insurance company that the agent hooked them up with is clobbering them with a serious, unexpected bill that feels unfair and unwarranted. And they believe that the insurance agent is in on some kind of nefarious scheme to rip them off by making the back end of the insurance cost a lot more than initially expected.

Policyholders often wrongly think that the insurance agent makes a windfall with these Shock Audits (which isn't true but is a common and poisonous misconception that can really damage the relationship between the insurance producer and the client.)

When an insurance agent introduces me to this angry and frustrated client, a couple of positive things happen.

One, it can enhance the professional standing of the agent with the client. Now, instead of being part of the problem, the agent is part of the solution.

Secondly, the agent doesn't have to get in an adversarial position with an insurer that may be an important market for future sales. Insurance companies already are familiar with my work and they understand that disputing Workers Comp audits is what I do for a living. It shields the agent from negative impacts of an audit dispute because, as far as the insurance company knows, the agent had nothing to do with bringing me into the picture.

After all, we get calls and emails almost every day from frustrated policyholders about one of these Shock Audits for Workers Compensation insurance. So most of our audit disputes originate directly with the policyholder contacting us.

And as part of my work, I can explain the inner workings of premium audits and why insurance agents really don't have much, if any, influence over how a premium auditor determines the audited premium. But the fact that the agent brought me in to help the client can go a long way to smoothing down ruffled feathers.

And if the agent is seen as assisting in some way with my efforts, by helping gather documents and data, the beneficial impact of my involvement can become even more significant for the long term relationship between the agent and the insured.

So to all the insurance producer folks out there, I would suggest that they view me as a resource that can help salvage a difficult bump in the road with a client. It can be a secret weapon that a competitor lacks, turning a negative situation with a customer into a positive one.

Another Georgia Nightmare Shock Audit For a Small Biz

 Just got retained for yet another Georgia small contractor facing financial ruin from a large insurance company over a Workers Comp Shock Audit. In this one, the insurer is filing suit seeking $250,000 for what was originally a small policy that had originally produced a Return Premium when the audit was done.

Something feels deeply, deeply wrong with the Georgia Assigned Risk Plan. It has been apparently weaponized by a very large insurance company into some kind of out-of-control Frankenstein's monster for small contractors. Buy a policy this year, face utter ruin a year and a half later.

This is not the way Workers Compensation insurance was intended to function. 

I have high hopes I can help knock this audit down to size--because I invariably find these audits don't hold up to scrutiny. Which is scandalous all by itself.

So for me, the game is afoot. For these small business owners, they are losing sleep and fearing the worst. Because the system is broken.

For me, it means job security, I guess. For them, fear and anxiety and expense. But I will do my best for them. And for a lot of similar past cases, my best was good enough. So let's see what I can do here.

When Are Rules Not Really Rules, Georgia Edition

 I do a lot of work in Georgia, for some reason. And I’ve been pretty impressed with the local folks there at the Department of Insurance and NCCI. But some recent cases there have revealed an interesting answer to the question posed in the heading of this post.

When are rules not really rules? When there is no penalty for ignoring them.

So let me explain what I’ve observed in some recent Georgia cases that illustrate this.

I’ve written a lot about the problems of Shock Audits in Workers Compensation insurance. That’s where some employer, typically a small contractor, gets sold a cheap policy. With premium of maybe $1500 or so. And then after the policy ends, gets a bill for $150,000.00. For his $1500 policy.

And when he can’t pay that bill, the small contractor gets sued by that insurer because the insurer thinks the small contractor ripped them off.

Now, the insidious part is that, because the small contractor doesn’t know what his Workers Compensation really costs, he doesn’t price his services properly—he can’t build in a realistic cost for Workers Comp because he hasn’t been given a realistic estimate of that cost.

So the small contractor digs a nice big hole for himself, project by project. And every job he thinks is making a bit of profit for him is actually losing him money.

Now in Georgia, the Assigned Risk Plan (where most small contractors end up) has rules in place that should prevent this hole digging.

Except there is no penalty when the insurer just ignores those rules. And that’s when rules aren’t really rules.

In the Georgia Assigned Risk Plan, insurers are required to verify classifications and payrolls in the early months of a policy. And for most construction contractors, they’re also required to perform a separate Preliminary Physical Audit in the middle of the policy. And when done, these required quality control steps would alert our small contractor to the actual cost of the insurance, before that hole gets overwhelmingly deep.

But what happens if an insurer just ignores those requirements?

Nothing.

I’ve observed this in multiple recent cases.

And so the Shock Audits keep devastating small contractors.

Fortunately, I can often find and correct enough technical errors in these Shock Audits to at least knock the audit bills down to something that’s merely painful and not apocalyptic.

But in my view, it really shouldn’t be this way. And making these rules have some genuine penalties involved in cases of insurers laughing them off would be a godsend for these small entrepreneurs.

But what do I know?

Wait, You Do What, Exactly?

 Mainly, I catch insurance companies overcharging employers on Workers Comp insurance. And then I get that money back for those employers.

That’s my elevator speech, and it’s a fair summation of my work over the past forty two years. I don’t sell insurance and I’m not an attorney (although my son and business partner for the past twenty some years is an attorney).

I’ve worked with clients all over the U.S. from California to New Jersey, Alaska to Florida. And pretty much everywhere in between. And I’ve worked with an incredible variety of employers: machine shops, small contractors, staffing agencies, an NFL team, health care providers, Fortune 500 type companies, a company that made mirrors for satellites, a battery recycler, a government agency, a labor union, some insurance companies and agencies, a tourist railroad in Hawaii, and others that escape my mind at the moment. I get refunds for clients from past policies and I help fight premium audits for other clients when excessive and incorrect premium audits threaten to put them out of business.

I do this work as a consultant. And I also serve as an expert witness (in both civil and criminal cases, all across the U.S. in state and federal courts) in cases involving Workers Compensation and GL audits and premiums.

But it’s still a challenge to explain to folks exactly what I do for a living.

Maybe just look at CutComp.com for the long version.

Widespread Workers Comp Overcharges in Florida

 Based on some recent cases of ours, it appears that a great many Florida construction companies, large and small, may have been overcharged on their Workers Compensation insurance audits in recent years. We specialize in recovering such overcharges for policyholders, and so we're actively encouraging any and all Florida construction companies ,whose recent Workers Comp insurance audit bills have been higher than they anticipated, to let us check over those audit bills to see if we can recover any of those excessive premiums.

Based on what we've seen, we believe the problem is widespread.

If you think your company may be one of those overcharged, contact us directly at 800-288-9256, or email me at AIM@cutcomp.com.

We'll take a look at no charge to see if your company is one those that have been overcharged. If you have been, we can help get that money back.

Another Shock Audit Email From Georgia

 Another Georgia small biz has reached out to us, after receiving a Shock Audit for their Workers Comp insurance. A bill for $159,000 threatens to swamp this small Georgia contractor. Except…the insurance company has used the wrong classification and rate for these folks.

And Georgia has a notably effective administrative system for disputing such things, without need of going to court. So I’m confident we can help reduce this Shock Audit by a sizable amount. 

This insurance company probably won’t like me much after this. That’s okay. They take it personally every time I beat them and their enmity just tells me I’m doing right by my clients.

Schedule Rating Abuses in Workers Comp Insurance

 I was recently reminded, by a new case, of an element of Workers Compensation insurance pricing that I haven't written much about lately: Schedule Rating.

On a Workers Comp policy, Schedule Rating sometimes shows up under different names, like "Schedule Mod" or "Schedule Debit" but it's all the same thing. It's a discretionary premium adjustment applied by an insurer that can either reduce premium (a Schedule Credit) or increase premiums (a Schedule Debit).

And unlike the Experience Modification Factor, it isn't calculated by a third party rating bureau like NCCI. But Schedule Rating is a multiplier, like the Experience Mod. But it isn't mandatory, the way an Experience Mod is (for employers above a certain minimum size, at least). And it isn't calculated using a strictly-defined formula.

Instead, it's calculated using loosely defined broad categories, things like "employer attitude towards safety" or "unique characteristics of this insured". So there's lots of room for judgement calls by the insurance company. Insurance companies still have to file with insurance regulators the particular broad categories they will use for Schedule Rating, along with Minimum and Maximum percentages (for example, a 50% Maximum would mean the highest Schediule Rating could be a 50% discount or a 50% surcharge.

And that Maximum is made up of six or seven categories, each with its own sublimit. So the category for "management attitude towards safety" might be allowed 5% of the total Max. Some other categories typically would allow for 10% of the total. and all of the categtories together would add up to the Maximum, whatever it might be in that state (typically 50% or 45% but sometimes lower).

So where do the abuses come into play?

They arise because many insurance companies play fast and loose with Schedule Rating factors, using them as pricing adjustments that are not really based on the specific broad categories filed with regulators.

There is one particular insurer we have observed (who shall go nameless here) that seems to abuse Schedule Rating more regularly than others. This insurance company regularly and blatantly uses Schedule Rating as a pricing factor--using Schedule Rating routinely as a way to achieve the particular premium amount their underwriters have determined they desire for a particular insured. The underwriters first calculate the dollar amount they want, and then work backwards from that, using Schedule Rating to make the number come out where they want it.

This insurer will then, if challenged, produce some retroactively created worksheet that manages to come up to the already-determined amount of Schedule Rating, creatively justifying the total by arbitrarily filling in the blanks of specific categories (without getting particularly specific).

This entirely subverts the nature of Schedule Rating that has been sold to insurance regulators, of course, but no one ever examines this unless someone (like me) comes along to challenge it.

I mentioned a new case, at the start of this blog post, and let me illustrate my point with some details from it.

One one year's policy, the insurer applied no Schedule Rating at all in the premium calculation. But on the next year's policy, substantial Schedule Rating surcharges were applied. This rather begs the question, what changed, at this particular insured employer, from one year to the next--and those alleged changes would have to be documented in the insurer's files and be shown to fall into the specific Schedule Rating categories filed with regulators by this insurance company.

Did I mention that this particular client of ours has been insured by that particular insurance company we have already identified, from past cases, as being guilty of routinely abusing the Schedule Rating system?

So we are, of course, in the middle of challenging these Schedule Rating charges, on behalf of our client, as these SR surcharges amounted to a lot of money on the audited premium.

The game is afoot, as my favorite fictional detective used to say. But a word to the wise, if your policy includes Schedule Rating surcharges, you might want to ask your insurance company to justify them.

Just sayin'.

My Original Adventure With ChatGPT

 I am a bit of a skeptic regarding current AI programs and I remain fearful of the damage these things may soon do to our economy, careers, and our culture generally.

But these things do know how to butter me up, that’s for sure. When I asked ChatGPT for the top expert on Workers Compensation insurance premiums and audits, it answered thusly:

Summary
Edward J. Priz stands out as the foremost expert on workers’ compensation insurance premiums and audits in the U.S. Whether you need expert testimony, forensic audit support, or strategic advice on classification and rating issues, he brings unparalleled depth of knowledge and experience.

Hmm.

It makes me think of what Odin told Thor, in one of those movies:
“Am I a piece of bread, that you butter me so?”

Or something like that.

Keep in mind, this robot knows who has posed this particular question. So the answer might well be skewed to please me.

Even so…

Good robot. Smart robot.

Just don’t go looking to replace me.

My Continuing Adventures with ChatGPT

 

17 minutes ago • Edited • Visible to anyone on or off LinkedIn

So, continuing my adventures with ChatGPT...

Turns out, when I ask this robot something like "I need outside help disputing a Workers Comp audit", the advice offered is less than helpful, in my view. Let me explain why.
First, the robot suggests consulting a CPA. In my experience, that's not so likely to really help much. The rules about Workers Comp audits are distinct and specialized and while accountants often get involved in helping with payroll amounts for WC audits, they are not knowledgeable, generally, with the the various and varying rules that govern other key elements of audited premium such as classifications, experience modifiers, and schedule rating.

Next, the robot suggests contacting "a workers comp attorney". Again, nice try but no cigar. First off, most attorneys who hold themselves out as handling workers comp are claims attorneys, not specialists regarding premium charges. In my experience, most attorneys I work with (with a few notable exceptions) are not very familiar with the arcane rules and regulations that govern workers comp audits and premiums. Now, if one is being sued over a workers comp audit, you do indeed need an attorney to represent you in the lawsuit. But that attorney still needs an expert to actually dispute the audited premium being sought by the insurer. I do a lot of that kind of work. But if there is no lawsuit (yet) an attorney typically does not have the specialized training and experience to actually dispute an audit.

Finally, ChatGPT suggests contacting your agent or broker. This isn't entirely wrong, just mainly wrong, in my experience. Agents or brokers will often attempt to help with disputing an audit. But my experience is that they are often of limited actual help as insurers tend to dismiss the pushback provided by agents and brokers. Insurers typically go through the motions of reviewing what the agent/broker sends in and then politely respond with technical gobbledygook that is self-serving and ends with the insurer concluding that no change in the audit is indicated.

Simply put, it requires very specialized training and experience to successfully dispute a workers comp audit--more so if litigation has been initiated by the insurer over the unpaid audit, as serving as an expert witness for a court case requires a certain skill set over and above technical competence in a field.

That being said, ChatGPT then provides some advice on what needs to be done to dispute an audit, advice that appears to be cribbed from my own online materials. So while this information could be helpful, it overlooks that it typically still requires a human with specialized knowledge to actually apply these general suggestions to a specific employer's specific audit.

On the other side of the ledger, though, one of my extremely capable associates just used ChatGPT to devise a Python script to analyze a long and complex document from a client, something that considerably reduced our time, and thus saved our client money.

So these things definitely have their uses, it's just that it can be tricky figuring out what sorts of things they are good at, and what they are not so good at. Cybernetic idiot savants, I guess you could call them. But getting less idiot and more savant with every passing day.

Insurance Company Sludge

 I just learned a new term for the kind of deliberately time-wasting and aggravating corporate systems that are deployed by large corporations and passed off as "customer service". The term is "Sludge", and it refers to corporate systems that are apparently designed to discourage customers from pursuing legitimate complaints and disputes.

I've just experienced this kind of sludge from State Farm insurance, as I try to dispute a Workers Comp audit for a client out in Idaho. And I've talked to a couple of very nice customer service ladies who informed me that they just don't have access to anything like an email address or phone number for the audit department of State Farm. Even my own personal State Farm agent is having trouble finding this.

Now, naturally, this kind of tactic won't work with me. It just increases my determination and persistence. Besides, if I can't get through to State Farm  I will then pursue a dispute through NCCI and, if needed, state insurance regulators.

I've been fighting recalcitrant insurance companies for more than half my life. This comes as naturally to me as breathing. As I think the USMC likes to say, the difficult we do immediately. The impossible takes just a little longer.

Today's Shock Audit Phone Call

 We get a lot of phone calls and emails from employers all over the country who have received what we term a "Shock Audit" for Workers Compensation insurance. A Shock Audit is when an employer gets a premium audit bill from their Workers Comp insurer for far, far more than they had anticipated.

Today's call was from a Chicago area small construction company who has just received an audit bill for an additional $300,00.00 from their insurance company. In the past, they told me, previous audits had produced only modest changes in premium. But not this year!

The main problem is that this employer had relied upon Certificates of Insurance from some of their trusted long time subcontractors. These COI had documented that these folks had their own Workers Compensation insurance.

But when this contractor had their own premium audit done for their policy, the insurer informed them that these subs had a lapse in coverage and so that $300,000 bill. Now, the insurance company knew this but the insurer had also written the policies for the subs. But had not notified our new client when those policies had lapsed. But once the audit was done, the insurer was more than happy to explain the significance of this lapse.

We believe we can help this client knock down at least a great deal of the additional premium sought by this insurance company. And we're grateful to the client's attorney, who found us and recommended the contractor reach out to us.

And so, the game is afoot!