Protecting Yourself Against State Audits

This session at the 2015 California Workers’ Compensation & Risk Conference highlighted the criteria measured in profile audit reviews and how employers can ensure compliance.

Panelists included:

• Moderator: Michael W. Sullivan, General Managing Partner at Michael Sullivan & Associates LLP / Sullivan on Comp
• Drenée Miners, AVP/ Governmental Affairs at Gallagher Bassett
• Edward E. Canavan, Workers’ Compensation Practice and Compliance at Sedgwick Claims Management Services, Inc.

The Audit Unit is part of the Division of Workers Compensation (DWC) that is tasked to make sure injured workers and dependents are receiving timely benefits. The Audit Unit routinely conducts profile audit reviews (PAR) of every adjusting location at least once every five years. The audit subject is measured against standards set by the prior year’s audit results. The PAR performance rating is a composite based on the frequency and severity of violations.

In a PAR audit, five criteria are measured:

• The amount and frequency of unpaid compensation.
• Late initial payment of benefits and late notice advising salary is being continued in lieu of temporary disability (TD).
• Late initial payment of permanent disability (PD) benefits and late initial payment of death benefits.
• Late subsequent payment of indemnity benefits.
• Timeliness and content of any notice that advises the employee of the agreed medical evaluator / qualified medical evaluator process.

Employers can help to ensure that they pass an audit with the following practice tips:

• Issue all appropriate notices in a timely manner.
• Document and accurately calculate the average weekly wages.
• First payment of TD through the date of the check.
• Timely recognize a change in the worker’s disability status.
• Pay TD and PD benefits at the correct rate.
• Timely pay the self-imposed penalty when required.
• Timely submit treatment request to utilization review (UR). Although you may defer UR for threshold issues, do not deny a request for treatment without UR.
• Timely submit records to MAXIMU and authorize treatment following an independent medical review (IMR), if required.

PAR audits are really about making sure that the employer is doing the right thing for their injured workers. Employers that pay the injured worker in the appropriate amount of time, should pass audits with flying colors