DWC Releases Report on 2013 Claims-Handling Practices of Workers Comp Administrators

The California Department of Industrial Relations Division of Workers Compensation (DWC) Audit Unit has released a report to the state legislature on 2013 audits that specifically focuses on the claims-handling practices of workers comp administrators. The report finds that 70 claims businesses representing California workers comp carriers and self-insured employers failed to pay a total of more than $400,000 in compensation to injured workers in 2013.

The average amount owed works out to just over $1,000 per injured worker, according to the report. In some cases the unpaid compensation was several dollars while in others, thousands remained unpaid. Most of the claims audited were selected randomly; however, the report also covers audits launched because of a complaint from an injured worker or his or her representative. The results show that in just six of the complaint cases, the injured workers were owed nearly $81,000, an average of $13,473 each.

The majority of the unpaid compensation, more than $315,000, was for unpaid temporary disability or salary continuation payments. Another approximately $49,000 was owed for permanent disability indemnity benefits, while claims adjusters failed to pay more than $42,000 in self-imposed penalties for late payment.

Overall, auditors from the DWC medical unit found that an injured worker was owed compensation in more than 11 percent of the claims it reviewed, with much of the compensation owed by two claims businesses: Acclamation Insurance Management Services and Berkeley Specialty Underwriting Managers.

The City of Torrance had the best score of any claims shop reviewed. Only one claim with unpaid compensation was found; it amounted to just over $2,200 owed. Applied Risk Services office in Omaha and the Sacramento location of Zenith Insurance Company were the next best-performing adjusting locations.

The worst performing claims administrators, according to the audit, were Acclamation Insurance Management Services in Santa Clarita and Berkeley Specialty Underwriting Managers. DWC says that they were the only two locations to fail the initial profile audit review and then fail a more in-depth review of claims files. Acclamation owed more than $41,000 in compensation to injured workers, while Berkeley adjusters had failed to pay more than $37,000 in compensation, according to DWC.

Acclamation faces fines of more than $252,000 for the violations. Berkeley has been issued over $139,000 in penalties, the majority of which are for failing to pay, or paying compensation to injured workers late. Both companies are disputing the findings, and none of the penalties against either company have been collected as the audit report release in late January.

The report also finds that overall, the amount of penalties cited was down for the fourth year in a row.