Not a week goes by that we’re not asked this question! So, let’s put a common workers comp audit question to rest right now…not all audits are wrong! The correct answer to this question can only be determined after research into specific details surrounding any individual case has been completed. So, it’s not that simple. Sure many audits contain errors, but making the decision to file an audit dispute should be based on facts discovered after a thorough audit review and not just an assumption an error exists. Let’s look as some pros and cons of filing an audit dispute.
When an audit dispute is properly filed you may find these pros:
- An audit dispute is a method or process, in place, that’s designed to correct errors or mistakes that occur during the audit process.
- Allows an employer to communicate the need for a correction to their insurance company when an error leads to incorrect additional premium being applied to an employers policy.
- May ultimately lead to a reduction of premium.
- Allows an employer to present more accurate information to the insurance carrier.
- May lead to more accurate statistical information used in the calculation of experience modification rates or other loss sensitive rating calculations.
- May lead to more accurate classification code descriptions for a business operation.
When an audit dispute is incorrectly filed you may find these cons:
- Changes you request may lead to increased cost and higher premiums.
- A negative effect on your experience modification rate or other loss sensitive rating factors.
- An employer is still responsible to pay the undisputed portion of an audits additional premium.
Most audit disputes seem to revolve around disagreements between an employer and insurance carrier in regards the proper classification codes. We’ve worked many cases where an employer has contacted us, after doing some research on their own, with the idea that the codes being used on their policy are wrong or that the auditor shifted payroll for certain employees into a higher rated code. All valid reasons for filing a dispute, if the facts support the information provided. Of course there are other valid reasons to dispute an audit…but we’ve found that most employers are very aware of classification codes and their effect on the cost of their policy. Can you blame an employer for wanting to use a lower rate code? Probably not, but proper code assignment can be tricky and while the focus may be on codes, don’t forget all the other sources for audit errors. There’s quite a few!
Unfortunately, we are called in on many of these cases only after an employer or insurance agent tries to work with the auditor and insurance company on their own only find they are faced with more problems than when they started.
Here’s a bold statement: Workers Compensation Audit Disputes Should Only Be Filed After A Complete Audit Review Has Been Conducted!
I’m sure you’ll find my collegues in the world of workers compensation premium and audit consulting will support this statement. Even when obvious errors are found on an audit, the decision to proceed with a dispute needs to be researched and the way to do that is to conduct an audit review.
- Not all audits are incorrect;
- Not all audits are correct;
- Some corrections may lead to higher costs and not benefit an employer;
- Incorrect codes and payroll assignment lead to many disputes being filed;
- Do not file an audit dispute as a method to delay paying the premium;
- Do not file an audit dispute without conducting an audit review;
- When a properly researched audit dispute is filed it can lead to lower workers compensation costs;
- When an improper audit dispute is filed it can lead to higher workers compensation costs;
- Do not file an audit dispute on an assumption the correction will work out in favor of an employer-learn the facts first;
- Be cautious when making a decision to file an audit dispute!
Should I dispute my audit? I’m not sure…but I am sure it’s always a good idea to have an audit review conducted before filing a dispute!
Hope this helps you out! Thanks!