1. Winning The Gold… Audit Unit Updates
COSIPA
Presented by Cora Lee
Southern California Supervisor
DWC-Audit Unit
3/11/10 and 3/25/10

2. 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

3. Winning the Gold…
LC §129.5 Administrative and Civil Penalties, Schedule of Violations
Administrative penalties cited
Undisputed indemnity, due and unpaid
Violations of 8CCR §§
Civil penalty may be assessed for action knowingly committed as a general business practice

4. 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

5. Winning the Gold… 2010 Performance Standards
Exhibit 1A (PAR): or greater fails
Exhibit 1B (FCA-1): or greater fails
Exhibit 1C (FCA-2): or greater fails

6. 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§ (c)(3)(B)]
Factor #3 - Late first or resumed payment of PD, VRMA, DB [8CCR§ (c)(3)(C)]
Factor #4 - Late subsequent (scheduled) indemnity payments [8CCR§ (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)]

7. 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§ (c)(3)(E)
Faulty Benefit Notices
There 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

8. Winning the Gold… Performance Factors
Failure to pay indemnity is Factor #1 for PAR audit subject’s performance rating [8CCR§ (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

9. 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.

10. 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 issued or
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 by
the 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

11. 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.

12. 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

13. 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

14. 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§ (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

15. Winning the Gold… New Audit regulations
New (b)(27) The penalty for failure to comply with the SJDB notice requirements of 8CCR§
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

16. 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§ (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

17. 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

18. Winning the Gold…
Obtain a wage statement and adjust benefits accordingly
Issue benefits through the date of the check
Proper calculation of benefits
Verification of periods and amounts owed

19. Winning the Gold… 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

20. 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)

21. 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 (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, (a)(12); prospective request the fine is $ , (a)(13); and for a retrospective it is $ (a)(14).
Adjuster authorization: a verbal authorization must be followed with a fax or letter to meet the written notification requirement, (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.

22. Winning the Gold… Utilization Review
Content: A notice to Modify, Delay or Deny, must include all elements (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, (b)(4)(B)
Document calls giving verbal authorization, (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)).

23. 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.

24. Winning the Gold… DWC ~ Audit Unit
320 West Fourth Street, 9th Floor; Los Angeles, CA 90013
Tel: (213) Fax: (213)
(213) (Cora’s direct line)
1515 Clay Street, Suite 1800; Oakland, CA 94612
Tel: (510) Fax: (510)
160 Promenade Circle, Suite #340; Sacramento, CA 95834
Tel: (916) Fax: (916)