7 CCR 1101-3-17-4 - Carrier Compliance
4-1
CLAIMS COMPLIANCE AUDITS
(A) Every insurer
shall submit to compliance audits of its claims. The purpose of compliance
audits is to examine whether claims are adjusted in accordance with the
Workers' Compensation Act and the Workers' Compensation Rules of Procedure.
(1) Identifying and underlying claim
information examined as part of a compliance audit is accessible only to the
insurer under review and shall not otherwise be open to any person except upon
order of the Director. If the Director issues an order in a specific claim the
order will be sent to all parties.
(2) Division personnel shall give advance
written notice of the compliance audit to the insurer and provide an initial
list of claims to be audited. Unless the Division determines that circumstances
warrant otherwise, the insurer will be given at least 15 calendar days
notice.
(3) The insurer shall make
the claims selected for the compliance audit and any requested information,
including training and procedure manuals, available to the auditor at the time
and place designated by the auditor. If the audit requires out-of-state travel
by the auditor, the insurer may be required to pay travel costs.
(4) Failure to make claims and/or information
requested by the auditor available to the auditor for audit shall be considered
willful refusal to comply with Division efforts.
(5) The insurer shall indicate the dates of
its receipt on all documents it files with the Division as well as on all
medical bills and reports. For those documents required to be exchanged, the
insurer shall indicate on the face of the documents or by some other verifiable
method, the date the documents were mailed or delivered and to whom they were
mailed or delivered.
(B)
A claim compliance level will be determined for each category examined during
the audit. A compliance level is the ratio of deficiencies found within a
category in relation to the total number of applicable audit inquiries reviewed
in that category. A deficiency is a failure to comply with statute or rule. The
categories to be examined during the claim compliance audit may include but are
not limited to the following:
(1) Reporting of
claims.
(2) Initial positions on
liability.
(3) Timeliness of
compensation payments.
(4) Accuracy
of compensation payments.
(5)
Medical benefit payments.
(6)
Termination of temporary disability benefits.
(7) Final Admissions.
(8) Average Weekly Wage.
(9) Waiting period.
(10) Document exchange.
(C) Fines will be imposed for the repeated
failure to demonstrate satisfactory compliance. A compliance level of 90% or
higher in each category is considered satisfactory compliance. No fine will be
imposed for deficiencies in any category in which satisfactory compliance is
determined in the compliance audit. For the categories listed in subparagraphs
8 through 10 in paragraph (B) of this Rule 4-1, the auditor will comment upon
the insurer's adjusting practices but fines will not be imposed for
deficiencies found on compliance audits in those categories.
(D) After reviewing the insurer's procedures
and examining the claims selected for audit and other information requested,
the auditor will provide the insurer with preliminary audit findings, including
compliance levels. Thereafter:
(1) The insurer
will have thirty (30) calendar days within which to agree in writing with the
preliminary audit findings. If the insurer does not agree with the preliminary
audit findings it shall, within the same 30 calendar days, state with
particularity and in writing to the auditor its reasons for all disagreements
and provide in writing all relevant legal authority, and/or other relevant
proof upon which it relies in support of its position(s) concerning its
disagreements with the preliminary findings.
An extension of time not to exceed 30 additional days may be submitted in writing to the auditor prior to the expiration of the 30 calendar days afforded to the insurer to agree with the preliminary findings. Failure to timely submit a written disagreement will be considered waiver of the right to do so.
(2) A representative
of the division and the insurer shall have twenty (20) calendar days after
submission of the written disagreement with the preliminary audit findings
within which to resolve those disagreements and to agree to the preliminary
audit findings.
(3) If the
representative of the division and the insurer are unable to agree on the
preliminary findings within the 20-day period afforded in paragraph (D)(2) of
this Rule 4-1, the preliminary audit findings along with the insurer's written
disagreements will be referred to the Director for final determination
regarding the audit findings. The final determination of the relevance and/or
weight given to any authority or proof submitted in connection with the
insurer's disagreements regarding audit findings is reserved to the
Director.
(4) When a determination
regarding audit findings has been made by the Director, a Final Audit Report
and/or order will be issued.
(5)
When the insurer has agreed to the preliminary audit findings without
disagreement, or when the insurer fails to timely provide a written
disagreement or when the Director has made a determination regarding audit
findings as provided in paragraph (D) of this Rule 4-1, the Final Audit Report
will issue. The Final Audit Report will contain a summary of the final audit
findings, comments on the insurer's adjusting practices, and a determination of
the insurer's compliance levels. Fines will be ordered as determined by the
Director in accordance with Rule 4-2.
(6) Insurers may be required to correct
deficiencies in all claims covered by the audit period if the compliance level
for any identified category is below 90%. Insurers may also be required to
undergo training if indicated by audit results or for such other reasons as may
be determined by the Director.
4-2 fines for claims audits
(A) An insurer's first claims audit conducted
after January 1, 2006 measures and establishes the insurer's levels of
compliance with applicable statutes and rules in identified categories. A
compliance level below 90% in any compliance category is considered
unsatisfactory. A compliance level below 90% in a compliance category listed in
subparagraphs 1 through 7 in paragraph (B) of Rule 4-1, on consecutive
compliance audits is considered repeated non-compliance. Repeated
non-compliance in any category set out in Rule 4-1(B)(1) through (7) shall
result in the insurer being ordered to pay a fine.
(B) In order for an insurer's unsatisfactory
performance to result in fines for failure to meet the 90% compliance standard
in any category set out in Rule 4-1(B)(1) through (7), its compliance level in
that category must be below 90% on at least two consecutive audits.
(C) Each category for which a fine may be
imposed has a fine schedule. The amount of any fine will be determined in
accordance with the findings in the Final Audit Report and in accordance with
this Rule 4-2. Fines for repeated violations in any category set out in Rule
4-1(B)(1) through (7) are based on the compliance level for that category and
as set out in this Rule 4-2.
(D)
The dollar amount of a fine is arrived at by first locating the insurer's
compliance level on the appropriate schedule found in paragraph (E) of this
Rule 4-2. The number of identified deficiencies in the relevant category is
multiplied by the "per deficiency" dollar amount for the appropriately numbered
finable occurrence indicated in the schedule to arrive at a fine amount for
that category.
(E) The fine
schedule for each consecutive finable compliance category is as follows:
(1) For the categories listed in Rule 4-1(B)
subparagraphs 1,5,7:
|
(a) |
80-89% |
$60 |
|
(b) |
70-79% |
$90 |
|
(c) |
60-69% |
$120 |
|
(d) |
<60% |
$150 |
(2)
For the categories listed in Rule 4-1(B) subparagraphs 2,3,4,6:
|
(a) |
80-89% |
$100 |
|
(b) |
70-79% |
$200 |
|
(c) |
60-69% |
$400 |
|
(d) |
<60% |
$600 |
4-3 POLICY COMPLIANCE AUDIT
(A) Every insurer shall submit to compliance
audits of its policy reporting. Policy information to be reviewed will consist
of all new, renewal and cancellation policy data information that has already
been reported to the Division. The purpose of compliance audits is to examine
whether insurance coverage is reported in accordance with the Workers'
Compensation Act and the Workers' Compensation Rules of Procedure.
(1) Identifying and underlying coverage
information examined as part of a compliance audit is accessible only to the
insurer under review and shall not otherwise be open to any person except upon
order of the Director. If the Director issues an order for a specific policy
the order will be sent to all parties.
(2) Division personnel shall give advance
written notice of the compliance audit to the insurer setting forth the period
to be audited. Unless the Division determines that circumstances warrant
otherwise, the insurer will be given at least 15 calendar days
notice.
(3) The insurer shall make
any requested information related to the compliance audit available to the
auditor at the time and place designated by the auditor.
(4) Failure to make information requested by
the auditor available to the auditor for audit shall be considered willful
refusal to comply with Division efforts.
(B) A compliance level will be determined for
each category examined during the policy compliance audit. A compliance level
is the ratio of deficiencies found within a category in relation to the total
number of applicable audit inquiries reviewed in that category. A deficiency is
a failure to comply with statute or rule. The categories to be examined during
the compliance audit may include but are not limited to the following:
(1) Reporting of new or renewal
policies
(2) Reporting of policy
cancellations
(C) Fines
will be imposed for the repeated failure to demonstrate satisfactory
compliance. A compliance level of 95% or higher in each category is considered
satisfactory compliance. No fine will be imposed for deficiencies in any
category in which satisfactory compliance is determined in the compliance
audit.
(D) After examining the
relevant policy data for audit and other information requested, the auditor
will provide the insurer with preliminary audit findings, including compliance
levels. Thereafter:
(1) The insurer will have
thirty (30) calendar days within which to agree in writing with the preliminary
audit findings. If the insurer does not agree with the preliminary audit
findings it shall, within the same 30 calendar days, state with particularity
and in writing to the auditor its reasons for all disagreements and provide in
writing all relevant legal authority, and/or other relevant proof upon which it
relies in support of its position(s) concerning its disagreements with the
preliminary findings.
An extension of time not to exceed 30 additional days may be submitted in writing to the auditor prior to the expiration of the 30 calendar days afforded to the insurer to agree with the preliminary findings. Failure to timely submit a written disagreement will be considered waiver of the right to do so.
(2) A representative
of the Division and the insurer shall have twenty (20) calendar days after
submission of the written disagreement with the preliminary audit findings
within which to resolve those disagreements and to agree to the preliminary
audit findings.
(3) If the
representative of the Division and the insurer are unable to agree on the
preliminary findings within the 20-day period afforded in paragraph (D)(2) of
this Rule 4-3, the preliminary audit findings along with the insurer's written
disagreements will be referred to the Director for final determination
regarding the audit findings. The final determination of the relevance and/or
weight given to any authority or proof submitted in connection with the
insurer's disagreements regarding audit findings is reserved to the
Director.
(4) When a determination
regarding audit findings has been made by the Director, a Final Audit Report
and/or order will be issued.
(5)
When the insurer has agreed to the preliminary audit findings without
disagreement, or when the insurer fails to timely provide a written
disagreement, or when the Director has made a determination regarding audit
findings as provided in paragraph (D) of this Rule 4-3, the Final Audit Report
will issue. The Final Audit Report will contain a summary of the final audit
findings, comments on the insurer's policy reporting practices, and a
determination of the insurer's compliance levels. Fines will be ordered as
determined by the Director in accordance with Rule 4-4.
(6) Insurers may be required to correct
deficiencies in all policy information covered by the audit period if the
compliance level for any identified category is below 95%. Insurers may also be
required to undergo training if indicated by audit results or for such other
reasons as may be determined by the Director.
4-4 FINES FOR POLICY AUDITS
For the categories listed in Rule 4-3(B) subparagraphs (1) and (2):
Fines per consecutive Audit Deficiency per Compliance Category
|
Compliance Level |
Fine |
|
90-94% |
$60 |
|
85-89% |
$90 |
|
80-84% |
$120 |
|
<80% |
$150 |
Notes
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