Understanding Workers Comp Premium Audits

Workers’ compensation premiums, or the amount an employer pays to an insurance company in exchange for the carrier providing medical treatment and compensation to employees in the event of workplace accidents, are audited at the end of the policy term. Before the policy becomes effective, workers’ comp insurance companies prepare an initial estimate of premiums, based on the amount of payroll and the type of work the employer does, known as the “classification code”. Once the policy term ends, a premium audit is performed to account for any differences from the initial estimates. For example, if several employees left the company during the policy term and were not replaced, payroll would decrease and the amount the employer would pay to the insurance company would need to be adjusted. Also, if the type of work changed during the year, different classification codes may be utilized.

The Social Significance Behind Workers Comp Insurance

Workers’ compensation insurance, the nation’s oldest social insurance, protects employees and employers if an employee is injured while on the job. If employees get hurt or are sick because of work, an employer must pay workers’ compensation benefits, and those benefits are typically paid through insurance. Because this insurance affects nearly all California employers and employees, and it is often subject to disputes and litigation, it is important to understand what the insurance is, who must provide it, and how it works.

Self-Insured Employers in California

Under California law, employers must have worker’s compensation insurance policies in place to cover their employees. The state also allows certain employers to self-insure.  This is called a Self-Insurance Program (“SIP”). Which Employers Can Self-Insure? California has specific guidelines in place that determine whether an employer can self-insure. First, employers who want to self-insure must…

Workers Comp and Self Insured Employers

A self insured employer is one who self insures their workers’ compensation liabilities. If you are one such employer, you are not alone: California has the largest workers’ compensation self insurance program in the nation. As of January 1, 2014, nearly 10,000 California employers were actively self insured.

Employers may choose to self insure their workers’ compensation liabilities because it can be cost effective, allow the employers greater control over the claims program, and increase safety and manage loss control. Many employers contract with a third party administrator to supervise claims and perform other tasks. The alternative to self insurance is purchasing a workers’ compensation policy. Learn more about workers’ comp basics here.

Workers Comp Insurance – Can An Employee See His Own Doctor?

If your California employee was injured, or claims to have been injured on the job, they may want to visit with their own doctor or medical professional. While they are welcome to do so, they generally must also visit with an in-network doctor. Indeed, many workers comp insurance carriers include a Medical Provider Network (MPN) in their provision of services to their insureds and the insured employees.  Unless an employee has specifically elected to be treated by their personal physician in writing, and only if the designated physician has agreed to provide medical care for worker’s compensation injuries and illnesses in writing and the designation was made prior to the injury or illness, an injured employee must treat within the medical provider network.

Not surprisingly, many workers’ compensation disputes arise because the injured employee disagrees with the treatment recommended or provided by the doctor in the medical provider network.  Often, the insured claimant will see another medical provider who may recommend a different treatment or disagree with the diagnosis altogether, causing a legal and medical dispute with the injured employee. The quality and accessibility of the medical provider network is a factor an employer should consider when selecting an insurance provider.

Timing and Insurance Bad Faith Claims

Bad things happen to good businesses and to good people. Most businesses and individuals carry insurance for this reason. But what happens when the insurance carrier denies payment on the claim without a reasonable basis for doing so? Or, what if the insurer fails to properly investigate the claim in a timely manner? Where can you turn for help?

Although most states have enacted statutes to prohibit bad faith claims practices and also elect insurance commissioners to regulate and control insurance claim practices probably the most effective means for policyholders to enforce their rights is to file a civil lawsuit with the help of an experienced bad faith insurance lawyer alleging “bad faith” against their insurance company for denial of the claim or failure to reasonably investigate the claim in “good faith”.

In California, the insurer’s duty to act in good faith means the investigation of the insured’s claim must be reasonable and requires that the insurance company give at least equal consideration to the insureds’ financial interest as it gives to own interest. This also means the carrier must do a thorough, complete, fair and unbiased investigation before it can deny a claim.