The Division of Workers’ Compensation has posted the 2018 DWC Audit Unit annual report on its website. The 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 2017.

The 2018 Audit Unit annual report details the results of audits conducted in 2017 and provides the name and location of each insurer, self-insured employer, and third-party administrator audited during that time.

The DWC Audit & Enforcement Unit completed 41 profile audit reviews (PAR audits). Of the PAR audits, 40 were routinely selected and there was 1 target audit, which would have been conducted based upon failure of a prior audit. The total number of PAR audit subjects included 5 insurance companies, 11 self-administered / self-insured employers, 21 third-party administrators (TPA), and 4 insurance companies / third-party administrators combined claims adjustinglocations.

Thirty-seven audit subjects (90%) met or exceeded the PAR 2017 performance standard and therefore had no penalty citations assessed in accordance with Labor Code section 129.5(c) and CCR, Title 8, Section 10107.1(c)(4). These audit subjects were, however, ordered to pay all unpaid compensation.

Four audit subjects (10%) failed to meet or exceed the PAR standard and their audits expanded into a full compliance audit of indemnity claims (FCA stage 1). One of these audit subjects (25% of those failing to meet or exceed the PAR standard) met or exceeded the FCA 2017 performance standard and therefore had penalty citations assessed for unpaid and late payment of indemnity in accordance pursuant to Labor Code section 129.5(c)(2) and CCR, Title 8, Sections 10107.1(d).

The remaining three of the four audit subjects (75% of those failing to meet or exceed the PAR standard) failed to meet or exceed the FCA 2017 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 Labor Code section 129.5(c) and CCR, Title 8, Section 10107.1(d) and 10107.1(e).

The audit findings, by law, must detail the number of files audited, the number and type of violations cited, and the amount of an undisputed compensation found due and unpaid to the injured worker. The audit findings presented in this report are statistical and do not identify any individual injured worker. The Labor Code provides that contents of the claim files and the Audit Unit working papers are confidential.

The DWC Administrative Director’s 2017 Audit Ranking Report is part of this annual report. The Ranking Report provides the performance ratings for the 41 audit subjects listed in order, from the best to worst performer.

Congratulations to Zenith Insurance Company – Pleasanton for having the best score in the Ranking Report.  The ranking of the remaining 40 organizations are listed by name on the Ranking Report.

Performance of insurers, self-insured employers, and third party administrators subject to profile audit review and full compliance audit is rated in accordance with the performance standards set annually by the Administrative Director. The DWC Administrative Director’s 2018 Audit Ranking Report lists, in ascending order by performance rating, the administrators audited in calendar year 2017.