Skip Navigation Links.
Online Support available
Monday through Friday
7:30 a.m. - 5:30 p.m.
Click here to get help!
OhioBWC - Basics: (Policy library) - File

Complaint Policy

 

Audit Protest

 

Unit Responsible: Underwriting and Premium Audit

Policy Effective Date: June 1, 2008

Policy Revision Date: October 17, 2011

 

 

Complaint Assignment: Audit complaints are assigned to the Audit Unit in Columbus.

 

 

Management Approval: The following management level sign-offs are required:

·        Audit Supervisor

·        Director of Underwriting & Premium Audit if granting and financial impact is >$50,000

 

 

Description / Background

 

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.

 

·        Each 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.

 

·        An audit verifies that employers are properly classified according to their business operations and ensures they report payroll accurately and pay the correct premium amount.

 

·        If 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.

 

·        A 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.

 

 

Steps in Process

 

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.

 

Note:

 

This procedure is general in nature and cannot address all potential situations.

 

Employees 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 and approval.

 

 

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.

 

 

After 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.

 

·        Employer 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.

 

·        Premium Auditor reviews the protest and makes a determination based on the following scenarios:

 

·        If the employer’s issue is with the classification assigned to the risk, the Premium Auditor will:

 

·        Verify that the appropriate classification was assigned using the NCCI Scopes Manual and/or through discussion with the classification department.

·        If the employer’s appeal has merit, the audit should be revised and no hearing necessary. The employer should be contacted.

 

·        If the employer’s issue is with the retroactive assignment of a higher rate classification, the Premium Auditor will:

 

·        Pull the Application for Coverage and see what operations, duties were listed when they opened their policy.

 

·        Look for a previous audit.

 

·        Determine whether the operations changed/were not disclosed or whether BWC made an error in the classification assignment.

 

·        If BWC made the error, the classification should be assigned prospectively and the audit should be revised with no hearing necessary. The employer should be contacted.

 

·        Examples of mistakes are:

 

·        The Bureau originally misclassified the employer’s operations when the employer gave an accurate description of their operations on the U3.

 

·        The 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.

 

·        If the protest involves picking up Form 1099 – Miscellaneous Income wages, the Premium Auditor will:

 

·        Ascertain that 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 the risk.

 

·        The 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.

 

·        In cases of claims being filed, but no payroll reported for that IW:

 

·        If the employer has certified the claim, we pick up the wages.

 

·        If 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 employees.

 

·        If the employer does not appeal a claim allowance for a 1099 recipient and the claim subsequently becomes allowed, the auditor picks up wages.

 

·        If 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 contractors.

 

·        If the protest involves wage segregation or dispute over a classification assigned to a specific employee(s), the Premium Auditor will review the employer’s position.

 

·        Based on this information, the audit may be wholly or partially revised.

 

·        If the protest involves a rule (EX: picking up ordinary income for officer of an S Corp).

 

·        The Premium Auditor will make sure the audit is applying the rule appropriately.

 

·        When in doubt about what is a reasonable wage, the auditor should use the Occupational Wage and Employment Statistics for Ohio Web site.

(Linked: Here)

 

·        If the protest involves a policy or procedure (EX: not refunding the premiums paid by a sole proprietor who hasn’t elected coverage).

 

·        The Premium Auditor will make sure that the policy has been applied correctly and consistently.

 

·        If the protest is only asking for relief from the financial burden of the audit.

 

·        Communicate to the employer that the audit followed applicable rules and procedures.

 

·        Refer to policy on “Premium Relief Protests.”

 

·        Update the Complaint Tracker.

 

·        If the protest involves elective coverage.

 

·        If 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.

 

 

Follow-up Actions

 

Obtain Supporting Documentation

 

·        When 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.

 

·        Examples of appropriate supporting documentation are as follows:

 

·        BWC records to validate error.

 

·        BWC or other insurance records to validate manual classifications and premium paid on policy, both in-state and out-of-state.

 

·        Any previous BWC hearing order(s).

 

·        Court issued incarceration orders.

 

·        Claim data elements used for reserve prediction.

 

 

Document Facts

 

·        Complete the Complaint Tracker.  Documents must include:

 

·        Summary information (i.e., background and other related facts).

 

·        Clearly state your recommendation and rationale for same.

 

·        File name(s) of documents in UDS,

 

 

Review for Outstanding Balances

 

·        If 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.

 

·        If 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 Recommendations

 

·        Once 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)

 

·        At 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.

 

·        Note: 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.

 

 

Process Protest

 

·        Depending upon whether the complaint is returned to the service office or to a central processing unit, the responsible individual/unit will:

 

·        Send the employer a written response explaining the results of the employer’s request.

 

·        Create WCIS notepad entry to document the result of the employer’s request.

 

·        Close out the Complaint Tracker entry.

 

·        Save all documentation in the UDS Employer Electronic File Room.

 

 


Resources