Thought you could just walk away from that workers compensation audit? Good luck trying! Well not really…after all it is your responsibility to make sure the audit gets completed. But what happens if it goes uncompleted and the insurance company marks your account as uncooperative?
Not all, but many states have some kind of penalty built into either their state statute or the workers comp rules that are followed in their individual state that dictates to the insurance company what they can do when an employer or policyholder fails to cooperate with having the workers compensation audit completed. Think about it. If there were no penalties, what would the incentive be for an employer/policyholder to make sure the audit is completed? Let’s talk about a few states.
Georgia – WC 01 04 02 – An NCCI state, Georgia has adopted special wording that applies to workers compensation policyholders who do not cooperate in completing a physical or who fails to return a voluntary audit. The insurance carrier may apply up to three times (3) the estimated payroll in determining the final premium. There are certain conditions that must be met, but all are reasonable and deal with the number of attempts the insurance carrier must try before applying the non-cooperation penalty. Let’s think about this for a minute. So a policyholder buys a workers comp policy and his estimated annual premium is $3,000. The insurance company tries but the policyholder doesn’t allow the audit to be completed. The insurance company calculates the final premium at $9,000 and then proceeds to collect it!
North Carolina – Failure of the policyholder to allow the audit to be completed and to cooperate may result in the insurance company calculating the final premium using up to three times the estimated payroll! That means the insurance company is allowed to charge you up to three (3) times the estimated premium! Again, there are certain conditions that the insurance company must follow to be able to apply this penalty.
Colorado – WC 05 04 04 – In Colorado the insurance company will add the WC 05 04 04 Colorado Non-Cooperation with Premium Audit Surcharge Endorsement to the policy. This policy endorsement changes Part Five (5) Premium Condition G. Audit, to allow the insurance company to levy a surcharge of up to three times the estimated annual premium. Look for this endorsement on your Colorado workers compensation policy!
South Carolina – Like their neighbor to the north, South Carolina is allowed to charge up to three times the estimated payroll in calculating the final premium because of a non-cooperative policyholder.
Missouri – Recent (2013) changes in Missouri law allow an insurance company to levy an Audit Noncompliance Charge equal to the estimated annual premium to the policyholder. So for non-compliant employers in Missouri they get to pay two times.
Ok, I’ll admit it. This may not be the most exciting issue in workers compensation today but it is the kind of thing that most employers or policyholders are not made aware of when they secure workers compensation coverage! When it comes to living up to the conditions that are agreed to when a workers comp policy is purchased or secured the audit process remains confusing to many employers, insurance agents and insurance company personnel.
If you have a problem with a workers compensation audit, don’t understand why an audit is being conducted or faced with a large additional premium bill from a recently completed audit be sure to check with an Independent Workers Compensation Consultant for help!
Hope this helps you out! Thanks!
