Unit Responsible: Underwriting and
Policy Effective Date: June 1, 2008
Policy Revision Date: October 17,
Complaint Assignment: Audit complaints
are assigned to the Audit Unit in Columbus.
Management Approval: The following
management level sign-offs are required:
of Underwriting & Premium Audit if granting and financial impact is
Legal Background: Legal
references for this policy are found in Ohio Administrative Code (OAC) 4123-17-17.
Premium audits help ensure Ohio provides
employers with a fair business climate for workers’ compensation.
year BWC randomly selects employers to audit. Also, employers who may have over
reported their payroll or who believe they are incorrectly classified can
request an audit.
audit verifies that employers are properly classified according to their
business operations and ensures they report payroll accurately and pay the
correct premium amount.
BWC selects an employer or an employer requests an audit, BWC will contact the
employer to schedule it. BWC can conduct the audit at the employers’ place of
operation, an accountant’s office, or a local BWC service office.
BWC auditor reviews employer records for the last four semi-annual reporting
periods to confirm that the employer accurately reported all wages to the
proper classification and calculated all premiums correctly.
BWC performs audits to ensure all
employers pay their fair share of workers compensation premiums. If BWC
determines that premiums have been overpaid the employer’s account will be
credited and a refund will be issued for the overpayment.
The purpose of this procedure is to
outline the specific processing steps for reviewing and processing scenarios
that involve extenuating circumstances. The specific scenarios listed in
this procedure contain details on the conditions under which BWC will grant the
employer’s request that would otherwise be denied absent extenuating
circumstances. This procedure includes a key step in which all requests
evaluated for extenuating circumstances require management approval prior to
granting the request.
The steps listed below should be
followed when evaluating a protest or appeal of a completed audit.
Employer notifies BWC within two years of completion of the audit that they do
not agree with the completed audit.
is general in nature and cannot address all potential situations.
finding that a good cause exists to grant a request for relief must provide
adequate documentation to support such finding.
Findings of good
cause must be brought to the attention of the immediate supervisor for review
Transaction Update Processing
The complaint process empowers field staff
to make decisions on issues and complaints brought by employers. A
component of the process is for field staff to recognize when it is appropriate
to update a transaction status in WCIS from Open (OP) to Appeal (AP).
Field staff should only utilize the appeal status update to ensure an open
transaction is not certified to the Attorney General in error.
consulting with the Audit Supervisor, the Premium Auditor determines that there
are extenuating circumstances as outlined in the steps below.
Audit Review Protest Steps: Following are
the steps involved when handling an employer’s audit protest.
files Letter of Protest or a protest letter is forwarded from Adjudication to
the Audit Unit.
This letter should
outline the specific reasons for the audit protest.
Auditor reviews the protest and makes a determination based on the following
the employer’s issue is with the classification assigned to the risk, the
Premium Auditor will:
the appropriate classification was assigned using the NCCI Scopes Manual and/or
through discussion with the classification department.
the employer’s appeal has merit, the audit should be revised and no hearing
necessary. The employer should be contacted.
the employer’s issue is with the retroactive assignment of a higher rate
classification, the Premium Auditor will:
the Application for Coverage and see what operations, duties were listed when
they opened their policy.
for a previous audit.
whether the operations changed/were not disclosed or whether BWC made an error
in the classification assignment.
BWC made the error, the classification should be assigned prospectively and the
audit should be revised with no hearing necessary. The employer should be
of mistakes are:
Bureau originally misclassified the employer’s operations when the employer
gave an accurate description of their operations on the U3.
BWC had previously given the employer clear instructions on how to report and
then the current audit changed those instructions. Under both examples,
there should not have been a substantial change in the employer’s operations.
the protest involves picking up Form 1099 – Miscellaneous Income wages, the
Premium Auditor will:
the reasons for deeming these workers “employees” is well documented in the
audit and that the auditor has shown that direction and control resides with
Independent Contractor Questionnaire should be used as a tool to help determine
independent contractor issues. Documentation should be given to show
which factors in the questionnaire demonstrated the workers were employees and
not independent contractors.
cases of claims being filed, but no payroll reported for that IW:
the employer has certified the claim, we pick up the wages.
the employer rejects the claim on the grounds of no employer-employee
relationship and the IC rules that the injured worker is an employee, we are
bound by this order to pick up wages on this IW. However, the auditor
would still make an independent determination of whether other contractors are
the employer does not appeal a claim allowance for a 1099 recipient and the
claim subsequently becomes allowed, the auditor picks up wages.
the employer rejects a claim and this is upheld by the IC, the auditor is bound
by this order but still makes an employer-employee determination on the other
the protest involves wage segregation or dispute over a classification assigned
to a specific employee(s), the Premium Auditor will review the employer’s
on this information, the audit may be wholly or partially revised.
the protest involves a rule (EX: picking up ordinary income for officer of an S
Auditor will make sure the audit is applying the rule appropriately.
in doubt about what is a reasonable wage, the auditor should use the
Occupational Wage and Employment Statistics for Ohio Web site.
the protest involves a policy or procedure (EX: not refunding the premiums paid
by a sole proprietor who hasn’t elected coverage).
Premium Auditor will make sure that the policy has been applied correctly and
the protest is only asking for relief from the financial burden of the audit.
to the employer that the audit followed applicable rules and procedures.
to policy on “Premium Relief Protests.”
the Complaint Tracker.
the protest involves elective coverage.
a partner, sole proprietor, or ICORP officer has reported wages but not elected
coverage, there was intent for coverage and premiums are not refunded. In
these cases, wages are picked up according to min/max requirements.
Obtain Supporting Documentation
a recommendation is being made to approve an employer’s request, supporting
documentation must be provided to validate the accuracy of the information
submitted by the employer.
of appropriate supporting documentation are as follows:
records to validate error.
or other insurance records to validate manual classifications and premium paid
on policy, both in-state and out-of-state.
previous BWC hearing order(s).
issued incarceration orders.
data elements used for reserve prediction.
the Complaint Tracker. Documents must include:
information (i.e., background and other related
state your recommendation and rationale for same.
name(s) of documents in UDS,
Review for Outstanding Balances
the decision is to grant, it will be contingent on any outstanding balances or
actual payrolls (for the previous 2 years) being reported and paid within 30
days. The employer is to be informed they have 30 days to comply, but
give them 60 days before taking action. They may apply for a partial payment
plan for the balance and, if on a partial payment plan, then the contingency
would be to grant once the partial payment plan is completed. If not met
within that time, the decision will be vacated.
the complaint is not granted, the employer will need to be told if they ask for
a hearing that historically these issues have been denied and more likely their
issue would also be denied.
Obtain Approval For Your
the assigned BWC staff member has evaluated the complaint and made a
determination, the staff member will forward their recommendation for
management approval using the complaint tracking system. The system
will automatically forward the complaint to the next level for review and
approval. (refer to approval sign-off at beginning of this policy)
each level of approval, the reviewer will indicate approval or denial using the
complaint tracking system. The final reviewer will notify the initially
assigned BWC staff member and the appropriate BWC unit of their action.
Management approval in the complaint tracking system
does not mean the employer’s request is granted. Management approval
means management is agreeing with the BWC staff member’s recommendation to
either grant or deny the employer’s request.
upon whether the complaint is returned to the service
office or to a central processing unit, the responsible individual/unit will:
the employer a written response explaining the
results of the employer’s request.
WCIS notepad entry to document the result of the
out the Complaint Tracker entry.
all documentation in the UDS Employer Electronic File