Pursuant to Labor Code section 129(e), the Administrative Director of the Division of Workers’ Compensation submitted its twenty-seventh annual workers’ compensation report summarizing the results of 2017 audits conducted by the DWC Audit and Enforcement Unit.
The Audit Unit annual report provides information on how claims administrators audited by the DWC performed and includes the Administrative Director’s ranking report for audits conducted in calendar year 2016.
The DWC Audit & Enforcement Unit completed 47 profile audit reviews (PARs), which were all routinely selected; there were 0 target audits, which would have been conducted based upon the failure of a prior audit. The PAR subjects consisted of 7 insurance companies, 14 self-administered/self-insured employers, 22 third-party administrators (TPA), and 4 insurance companies/third-party administrators’ combined claims-adjusting locations.
The performance of any insurer, self-insurer, or third-party administrator is rated for action in specific areas of benefit provision. Of foremost importance is the payment of all indemnities owed to an injured worker for an industrial injury. The timeliness of all initial and subsequent indemnity payments and compliance with the regulations of the Administrative Director for the provision of notice for a qualified or agreed medical evaluation are also measurable performance factors.
– Forty-three audit subjects (91%) met or exceeded the PAR 2016 performance standard and therefore had no penalty citations assessed in accordance with LC section 129.5(c) and CCR, Title 8, section 10107.1(c)(4). However, these audit subjects were ordered to pay all unpaid compensation.
– Four audit subjects (9%) failed to meet or exceed the PAR standard, and their audits were expanded to a full compliance audit of indemnity claims (FCA stage
1) Two of these audit subjects (50% of those that failed to meet or exceed the PAR standard) met or exceeded the FCA 2016 performance standard and therefore had penalty citations assessed for unpaid and late payment of indemnities in accordance with LC section 129.5(c)(2) and CCR, Title 8, sections 10107.1(d).
2) The remaining two of the four audit subjects (50% of those that failed to meet or exceed the PAR standard) failed to meet or exceed the FCA 2016 performance standard and their audits expanded into full compliance audit of indemnity claims (FCA stage 2) and added a sample of denied claims to be audited. These audit subjects were assessed administrative penalties for all penalty citations in accordance with LC section 129.5(c) and CCR, Title 8, Section 10107.1(d) and 10107.1(e).
The audit regulations are currently being amended to address the statutory changes brought about by the adoption of Senate Bill (SB) 863. As of January 1, 2013, the amended Labor Code section 4650(b)(2) came into effect and now provides that, under specific circumstances set by statute, permanent disability (PD) indemnity will not be payable to an injured employee until it is awarded by the Workers’ Compensation Appeals Board.