Winning The Gold…Audit Unit Updates

COSIPAPresented by Cora Lee

Southern California Supervisor

DWC-Audit Unit

3/11/10 and 3/25/10

Winning the Gold…

Labor Code (LC) §129. Audits– To assure prompt and accurate

provision of benefits

– Audit insurers, self-insured employers, and third-party administrators … at least once every five years

– Routine and / or target audit to annual performance standard

Winning the Gold…

LC §129.5 Administrative and Civil Penalties, Schedule of Violations– Administrative penalties cited

• Undisputed indemnity, due and unpaid• Violations of 8CCR §§10100 -10115.3

– Civil penalty may be assessed for action knowingly committed as a general business practice

Winning the Gold…

The Annual Performance Standard is set by industry performance in five areas of claims administration– Payment of accrued and undisputed

indemnity– Late first payment of TD / first notice of SC – Late first payment of PD, VRMA, and DB– Late subsequent indemnity payments– Provision of QME/AME, NOPE and SJDB

Winning the Gold… 2010 Performance Standards

●Exhibit 1A (PAR): 1.75630 or greater fails

●Exhibit 1B (FCA-1): 2.08063 or greater fails

●Exhibit 1C (FCA-2): 2.08063 or greater fails

Winning the Gold… Performance Factors

Violations for late-paid indemnity affect the factors for the performance rating of a PAR audit subject

Factor #2 - Late first or resumed payment of TD [8CCR§10107.1(c)(3)(B)]

Factor #3 - Late first or resumed payment of PD, VRMA, DB [8CCR§10107.1(c)(3)(C)]

Factor #4 - Late subsequent (scheduled) indemnity payments [8CCR§10107.1(c)(3)(D)]

If 10% self-imposed increase (SII) is owed, it is to be paid with the late paid TD or PD [LC§4650(d)]

Winning the Gold… Performance Factors

Failure to comply with regulations for the provision of the AME/QME and/or SJDB advice affects Factor #5 for the performance rating of a PAR audit subject 8CCR§10107.1(c)(3)(E)

Faulty Benefit NoticesThere is exposure for penalty: Failure to provide Late provision Inaccurate or incomplete information

Note: As of April 9, 2008, there is exposure for provision of AME/QME advice in many of the benefit notices

Winning the Gold… Performance Factors

• Failure to pay indemnity is Factor #1 for PAR audit subject’s performance rating [8CCR§10107.1(c)(3)(a)]

Unpaid indemnity frequently results from failure to:• Investigate and document earnings• Properly analyze a wage statement for calculation of

the injured workers’ average weekly wage• Reimburse the EDD• Pay waiting period• Pay SII• Pay accrued uncontested PD

Avoid unpaid indemnity

Winning the Gold… New regulations

Revised (c)(5) When a PAR rating fails to

meet or exceed the PAR performance

standard, the AU will provide written

notification of intention to proceed to a

FCA of indemnity files. The audit

subject must provide factual basis for

dispute of the rating within 2 working

days of receipt of rating or during the

post-PAR conference.

Winning the Gold… New regulations

(c)(3)(B) The factor for the late first payment of temporary disability indemnity shall be determined by dividing the number of randomly selected claims with violations involving the late first payment of TD by the number of randomly selected claims in which TD payments were issuedor in claims that involve salary continuation, by dividing the number of randomly selected claims involving a failure to comply with the requirements for first notices of salary continuation bythe number of randomly selected claims in which TD payments or first notices of SC were required.

• In any claim with TD and SC, each benefit type will be considered separately

Winning the Gold… New Audit regulations

Revised (h) The AU will not assess

penalties for violations of failure to

make payment of indemnity due if the

total indemnity is less than twenty-five

dollars ($25.00) aggregate per claim.

Although penalties may not be

assessed, the audit subject shall pay all

indemnity due.

Winning the Gold… New Audit regulations

Revised (a)(10) When failing to comply with an award or order of the WCAB, RU or AD● New Penalty amounts will be increased

by 100% but will not exceed $5000 except as provided by LC §129.5(c)(3)

●New When the award is stated as a lump sum, penalty amount shall be determined based on equivalent amount of indemnity as assessed under 8CCR§(a)(2), (a)(3), or (a)(4)

●New Penalties assessed separately for late compliance and/or failure to pay

Winning the Gold… New Audit regulations

Revised (b)(10) The penalty for failure to pay or object, as required by law or regulation, to a bill for medical treatment provided or authorized by TP●Penalty amounts from $100 to $500

based on amount of each bill●New Includes treatment provided

pursuant to LC§5402(c)●New Any penalty assessed for a bill for

treatment that has been authorized through a utilization review process shall be doubled

Winning the Gold… New Audit regulations

Revised (b)(24) The penalty for failure fully and/or timely comply with any final award or order of the WCAB, the RU or the AD not assessed under 8CCR§10111.2(a)(10)●New $100 for each late payment of

interest required pursuant to LC §5800●New $500 for each failure to pay

interest required pursuant to LC §5800●New Payment of an award within 20

days of issuance, unless award expressly allows more time, plus 5 days for service by mail

Winning the Gold… New Audit regulations

New (b)(27) The penalty for failure to comply with the SJDB notice requirements of 8CCR§10133.51●New $100 for each materially

incomplete or inaccurate notice relating to the SJDB

●New $100 for each failure to send the SJDB notice by certified mail

●New $100 to $500 for each failure to send the SJDB notice; penalty amount based on period late or failure to issue

Winning the Gold… New Audit regulations

New (b)(28) The penalty for failure to issue the voucher for education-related training/skill enhancement in accordance with 8CCR§13133.56(c) unless employer complies with LC §4658.6

●New $100 to $500 for each failure to issue the voucher; penalty amount based on period late

●New $1000 for each failure to issue the voucher within 51 days

Winning the Gold… New Audit regulations

New (b)(30) For claims reported on or

after April 19, 2004, regardless of

the date of injury, the penalty for

each failure to authorize medical

treatment for which the employer is

responsible under LC §5402(c) is

$2,500

Winning the Gold…

1. Obtain a wage statement and adjust benefits accordingly

2. Issue benefits through the date of the check

3. Proper calculation of benefits

4. Verification of periods and amounts owed

Winning the Gold…

5. Pay SII on late indemnity payments

6. Pay interest and increase on late-paid medical treatment and medical-legal expenses

File documentation and investigation of all issues

Winning the Gold…Notes from the Auditors

• If any of the public entities have the Carve Out program, make sure they have the pamphlet that outlines their procedures and contracts.

• If injured worker is released to return to work modified duty with wage loss – overtime should be considered if the employee is not maximum for TD.

• Employer’s date of knowledge of injury or disability, not the CA.• The notices for salary continuation must be sent out when salary

continuation is paid.• Prompt and accurate wage statement calculation. • Adhere to payment schedules – every 14 days.• Paying the self imposed increase with the late payment. (avoid

waiting for management or client approval to process payment)• Paying all benefits due with the first payment. (example 3/1/10 -

3/16/10 paid on 3/18/10 and paying only through 3/16/10. Violation will be assessed for failure to pay all indemnity due. (3/1/10 – 3/18/10 on 3/18/10)

Winning the Gold… Utilization Review

• Adjuster Denial: Only a physician may delay, deny or modify. There is a $25,000 penalty for a non-physician denial. 9792.12 (a)(6) Exceptions: denied cases and denied body parts.

• Failure to send a request through UR: if it is a concurrent request the fine is $2,000, 9792.12(a)(12); prospective request the fine is $1000.00, 9792.12(a)(13); and for a retrospective it is $500.00 9792.12(a)(14).

• Adjuster authorization: a verbal authorization must be followed with a fax or letter to meet the written notification requirement, 9792.9(b)(3).

• Timeliness: The clock starts from the time the RFA is received by the CA or the URO, whichever one is first. The time frame varies based on the type of request.

Winning the Gold…Utilization Review

• Content: A notice to Modify, Delay or Deny, must include all elements 9792.9(b)(4)(E)

• Distribution: Notify all appropriate parties. Notification needs to go to the requesting physician, not only the IW or the PT place or the pharmacy. Varies on the type or decision.

• Document calls for additional information. If there is no documentation indicating that additional information was requested, a penalty will be assessed, 9792.9(b)(4)(B)

• Document calls giving verbal authorization, 9792.9(b)(5)(B)A faxed answer to the requesting physician fulfills the verbal and written requirements. Keep a copy of the transmittal sheet.

• Authorization means assurance that appropriate reimbursement will be made.

• Some administrators deny the bills anyway, (8 CCR §9792.6(b)).

Winning the Gold… Q’s & A’s from Industry

• I recently attended the DWC Conference in Los Angeles at which time I understood the presenters to indicate that you need to advance 100% of your self-rating. Our practice has to been to hold 15% in the event they do obtain an attorney but more importantly it was used as a carrot to get the employee to sign their Stips or continue the process such as a QME. We do advance 100% of a rating if it was done by the DEU. Also, since we are not the DEU it also gave us a leeway in case we over estimated their PD, and to avoid overpayment of their PD.

• Please advise. Do we need to go through all our self-ratings and advance the remaining amounts? Would there be some type of late penalty that we need to assess? Would this be a violation in PAR audit?

• D/L  4/20/09.  EE is disabled released to return to full duties on 5/1/09.  Saturday and Sunday are days off EE return to work on Monday, May 4th, 2009.  Do we owe benefits for the 2nd and 3rd?

• If the Employee is released on 5/1/09 but the Employer can not get the Employee on schedule until 5/7/09 or later, do we owe TD benefits until the Employer can get the Employee back on schedule.

Winning the Gold…

DWC ~ Audit Unit

320 West Fourth Street, 9th Floor; Los Angeles, CA 90013

Tel: (213) 620-2312 Fax: (213) 620-6133(213) 576-7428 (Cora’s direct line)

1515 Clay Street, Suite 1800; Oakland, CA 94612Tel: (510) 286-0930 Fax: (510) 286-7170

160 Promenade Circle, Suite #340; Sacramento, CA 95834

Tel: (916) 928-3180 Fax: (916) 928-3183

E-mail: dwcauditunit@dir.ca.gov