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OhioBWC - Basics: (Policy library) - File

Complaint Policy

 

Experience Combine

(Includes Successors w/Estimated Bill on Predecessor’s Account).

 

 

Unit Responsible for Program:  Policy Processing Department

Policy Effective Date:  June 1, 2008

Policy Revision Date:  October 17, 2011

 

 

Complaint Assignment:  Experience Combine complaints are assigned to the Policy Processing Unit in Columbus

 

 

Management Approval:  The following management level sign-off is required.

·        Policy Processing Supervisor

 

 

Description / Background

 

Legal Background: Legal references for this policy are found in Ohio Revised Code (ORC) 4123.32(C) and Ohio Administrative Code (OAC) 4123-17-02.  OAC 4123-17-02 requires the Successor employer to notify the Ohio Bureau of Workers’ Compensation (BWC) of the succession.

 

Pursuant to this rule, BWC shall provide to the parties the necessary forms and instructions to notify BWC of the succession, Notification of Business Acquisition/Merger or Purchase/Sale (U-118).  The certification section of the form requests a signature from the Predecessor and Successor employer.  However, BWC has the right to proceed with processing a transaction to transfer the Predecessor’s experience and the liabilities when the Successor wholly succeeds another employer in the operation of a business without either party’s signature or approval.  BWC shall review the completed forms and if any questions arise, BWC may conduct a premium audit on each employer’s policy.

 

When an employer wholly or partially succeeds another employer in the operation of a business, BWC will transfer the appropriate experience of the Predecessor employer to the Successor employer for calculation of the Successor employer’s rate(s).  For all successions taking place on or after September 1, 2006, in situations where an employer wholly succeeds another employer, the Predecessor employer’s financial rights, obligations, and experience under Ohio Workers’ Compensation Law will be transferred to the Successor employer by BWC.  The Predecessor employer is responsible for reporting payroll under its policy up to the effective date of the succession and the Successor employer is responsible for reporting payroll under its new or existing policy from the date of succession forward.  However, the Successor employer is ultimately held responsible for any unpaid billing or premium obligations posted on the Predecessor employer’s policy.

 

Multiple criteria and the preponderance of the facts are used by BWC in the determination of whether or not a Successor employer “wholly succeeds” a Predecessor employer.  Criteria such as, but not limited to, the following are examined:

·        Business ownership

·        Continuity of business operations

·        Real Estate, plant and equipment, material inventories, and other real property

·        Customer profiles

·        Industrial pursuit

·        Employee Roster

 

The criteria listed above may be found through examination of records to include, but not limited to:

Purchase or sales agreements

·        Federal Tax and OBES records (to include W-2’s and 1099’s)

·        Receipts, invoices or transfer documents relating to real estate, equipment, vehicles, material inventory and other real property

·        List of customers and supporting invoices

·        Account receivable ledgers

·        Payroll records

 

 

The purpose of this procedure is to outline the specific processing steps for reviewing and processing scenarios where there are extenuating circumstances involved.  The specific scenarios listed in this procedure contain details on the conditions under which BWC will grant an employer’s request.  This procedure includes a key step in which all requests evaluated for extenuating circumstances require management approval prior to granting the employer’s request.

 

 

Steps in Process

 

The steps listed below should be followed when evaluating an experience combine protest filed by an employer or its authorized representative where there are extenuating circumstances associated with the reason the employer is contesting BWC’s assignment of premiums and/or assessments.

 

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.

 

 

Standard Procedures for Processing Experience Combine Actions

 

1.     Situations where the Successor employer wholly succeeds the Predecessor employer

 

·        The Predecessor employer’s policy will be combined into the Successor employer’s policy effective the date of the succession where the Successor employer has workers’ compensation coverage prior to the date of succession.  For employers not having workers’ compensation coverage prior to the date of succession the Predecessor employer’s policy will be combined into the Successor employer’s policy effective the date of the succession or the effective date of the Successor employer’s new policy.

 

·        For Successor employer’s not having workers’ compensation coverage prior to the date of succession, BWC will grant continuous coverage under certain circumstances which are:

·        Successor employer submits an Application for Ohio Workers’ Compensation Coverage (U-3) and appropriate minimum security deposit prior to the next payroll reporting period due date after the date of succession or 30 days from the date of succession whichever is greater.

·        Predecessor policy has active coverage on the date of succession.

 

·        The Predecessor employer’s rights and obligations under Ohio Workers’ Compensation Law are transferred to the Successor employer.

 

·        The payroll and claims experience of the Predecessor employer are transferred to the Successor employer.  When the Successor employer has existing BWC coverage, experience transfers become effective on the beginning date of the next payroll period.  When the Successor employer does not have existing BWC coverage or the date of succession is January 1 or July 1, the experience transfer takes place on the date of succession.

 

·        The Successor employer receives any and all rights and liabilities of the Predecessor employer, including but not limited to the Predecessor employer’s Premium Security Deposit (PSD).

 

·        The Successor employer is required to preserve the Predecessor employer’s payroll records for the five years preceding the date of succession.

 

·        Successions involving a bankrupt employer are forwarded to BWC Legal Department for advice.

 

·        Request for retention of its policy number by a Predecessor Employer will be denied.  Predecessor employer must complete an Application for Ohio Workers’ Compensation Coverage (U-3) and submit a minimum $10 premium security deposit to apply for coverage for its new/future business operation.

 

2.     Situations where Successor applies for coverage on or before date of Succession

 

·        Employer B, not having established coverage wholly succeeds Employer A who has established Ohio workers’ compensation coverage.  Application for Ohio Workers’ Compensation Coverage (U-3) and Notification of Business Acquisition/Merger or Purchase/Sale (U118) forms returned to BWC indicate Employer B wholly succeeded Employer A on 10/04/06.  Employer B applied for coverage and paid the minimum premium security deposit on 10/04/06.

 

BWC Action:  Preponderance of the facts shows that Employer B wholly succeeded Employer A.  Successor Employer B’s coverage is effective 10/04/2006.

 

·        Predecessor Employer A’s existing policy is combined into Successor Employer B’s policy effective 10/04/06.

 

·        All workers’ compensation rights and obligations of Predecessor Employer A are transferred to Successor Employer B.  Successor Employer B will receive all future invoice/statements associated with Predecessor A’s policy.

 

·        Experience of Predecessor Employer A is transferred to Successor Employer B effective 10/04/06.

 

·        Correspondence sent to Predecessor Employer A and Successor Employer B advising of actions taken by BWC.

 

·        Successor Employer B reports payroll and pays premium under its new workers’ compensation policy.  Employer A is responsible for reporting payroll for the period 7/01/06 – 10/03/06.  Employer B becomes responsible for paying the premium for the 7/01/06 – 10/03/06 period if the premium is not paid by Employer A.  Employer B is responsible for reporting and paying the premium for the 10/04/06 – 12/31/06 period and subsequent periods.

 

 

3.     Situations where Successor applies for coverage after Date of Succession

 

·        Employer B, not having established coverage wholly succeeds Employer A who has established Ohio workers’ compensation coverage.  Application for Ohio Workers’ Compensation Coverage (U-3) and Notification of Business Acquisition/Merger or Purchase/Sale (U118) forms returned to BWC indicate Employer B wholly succeeded Employer A on 10/04/07.  Employer B applied for coverage and paid the minimum premium security deposit on 12/01/07, prior to the due date of the next reporting period after the effective date of the succession.

 

BWC Action: Preponderance of the facts shows that Employer B wholly succeeded Employer A.

 

·        Successor Employer B’s coverage is effective 10/04/07

 

·        Predecessor Employer A’s existing policy is combined into Successor Employer B’s policy effective 10/04/07.

 

·        All workers’ compensation rights and obligations of Predecessor Employer A are transferred to Successor Employer B.  Successor Employer B will receive all future invoice/statements associated with Predecessor A’s policy.

 

·        Experience of Predecessor Employer A is transferred to Successor Employer B effective 10/04/07

 

·        Correspondence sent to Predecessor Employer A and Successor Employer B advising of actions taken by BWC.

 

·        Successor Employer B reports payroll and pays premium under its new workers’ compensation policy.  Employer A is responsible for reporting payroll for the period 7/01/07 – 10/03/07.  Employer B becomes responsible for paying premium for the 7/01/07 – 10/03/07 period if the premium is not paid by Employer A. Employer B is responsible for paying the premium for the 10/04/07 – 12/31/07 period and subsequent periods.

 

 

4.     Situations where business transaction effective first day of a six month rating period

 

·        Employer B, having established coverage wholly succeeds Employer A, who has established Ohio workers’ compensation coverage.  Notification of Business Acquisition/Merger or Purchase/Sale (U-118) form returned to BWC indicates Employer B wholly succeeded Employer A on 1/01/07 (effective first day of a six month rating period).

 

BWC Action: Preponderance of the facts shows that Employer B wholly succeeds Employer A.

 

·        Predecessor Employer A’s existing policy is combined into Successor Employer B’s existing policy effective 1/1/07.

 

·        All workers’ compensation rights and obligations of Predecessor Employer A are transferred to Successor Employer B.  Successor Employer B will receive all future invoice/statements associated with Predecessor A’s policy.

 

·        Experience of Predecessor Employer A is transferred to Successor Employer B effective 1/01/07 (1st day of a six month rating period).

 

·        Correspondence sent to Predecessor Employer A and Successor Employer B advising of actions taken by BWC.

 

·        Successor Employer B reports payroll and pays premium under its existing workers’ compensation policy.  Employer B is responsible for reporting payroll and paying the premium for the 1/01/07 – 6/30/07 period and subsequent periods.

 

 

5.     Situations where business transaction effective during a six month rating period

 

·        Employer B, having established coverage wholly succeeds Employer A who has established Ohio workers’ compensation coverage.  Notification of Business Acquisition/Merger or Purchase/Sale (U-118) form returned to BWC indicates Employer B wholly succeeded Employer A on 10/01/06 (effective during a six month rating period).

 

BWC Action: Preponderance of the facts shows that Employer B wholly succeeds Employer A.

 

·        Predecessor Employer A’s existing policy is combined into Successor Employer B’s existing policy effective 10/1/06.

 

·        All workers’ compensation rights and obligations of Predecessor Employer A are transferred to Successor Employer B.  Successor Employer B will receive all future invoice/statements associated with Predecessor A’s policy.

 

·        Experience of Predecessor Employer A is transferred to Successor Employer B effective 1/01/07 (1st day of a six month rating period).

 

·        Correspondence sent to Predecessor Employer A and Successor Employer B advising of actions taken by BWC.

 

·        Successor Employer B reports payroll and pays premium under its existing workers’ compensation policy.  Employer A is responsible for reporting payroll for the period 7/01/06 – 09/30/06.  Employer B becomes responsible for paying the premium for the 7/01/06 – 09/30/06 period if the premium is not paid by Employer A.  Employer B is responsible for reporting and paying the premium for the 10/01/06 – 12/31/06 period and subsequent periods.

 

 

6.     Situations where Successor applies for coverage near the due date but within 30 days of the Succession

 

·        Employer B not having established coverage wholly succeeds Employer A who has established Ohio workers’ compensation coverage.  Application for Ohio Workers’ Compensation Coverage (U-3) and Notification of Business Notification of Business Acquisition/Merger or Purchase/Sale (U-118) form returned to BWC indicates Employer B wholly succeeded Employer A on 08/20/07.  Employer B applied for coverage and paid the minimum premium security deposit on 09/05/07, after the due date of the next reporting period but within 30 days following the effective date of the succession. 

 

BWC Action: Preponderance of the facts shows that Employer B wholly succeeded Employer A.

 

·        Successor Employer B’s coverage is effective 08/20/07.

 

·        Predecessor Employer A’s existing policy is combined into Successor Employer B’s policy effective 08/20/07.

 

·        All workers’ compensation rights and obligations of Predecessor Employer A are transferred to Successor Employer B.  Successor Employer B will receive all future invoice/statements associated with Predecessor A’s policy.

 

·        Experience of Predecessor Employer A is transferred to Successor Employer B effective 08/20/07.

 

·        Correspondence sent to Predecessor Employer A and Successor Employer B advising of actions taken by BWC.

 

·        Successor Employer B reports payroll and pays premium under its new workers’ compensation policy.  Employer A is responsible for reporting payroll for the period 7/01/07 – 08/19/07.  Employer B becomes responsible for paying premium for the 07/01/07 – 08/19/07 period if the premium is not paid by Employer A.  Employer B is responsible for reporting and paying the premium for the 08/20/07 – 12/31/07 period and subsequent periods.

 

 

7.     Situations where Successor applies for coverage after the due date but more than 30 days past the date of the Succession

 

·        Employer B, not having established coverage wholly succeeds Employer A who has established Ohio workers’ compensation coverage.  Application for Ohio Workers’ Compensation Coverage (U-3) and Notification of Business Acquisition/Merger or Purchase/Sale (U-118) form returned to BWC indicates Employer B wholly succeeded Employer A on 08/20/07. Employer B applied for coverage and paid the minimum premium security deposit on 10/10/07 after the due date of the next reporting period more than 30 days following the effective date of succession.

 

BWC Action: Preponderance of the facts shows that Employer B wholly succeeded Employer A.

 

·        Successor Employer B’s coverage is effective 10/10/07.

 

·        Predecessor Employer A’s existing policy is cancelled effective 08/20/2007 and combined into Successor Employer B’s policy effective 10/10/07.

 

·        All workers’ compensation rights and obligations of Predecessor Employer A are transferred to Successor Employer B.  Successor Employer B will receive all future invoice/statements associated with Predecessor A’s policy.

 

·        Experience of Predecessor Employer A is transferred to Successor Employer B effective 10/10/07.

 

·        Correspondence sent to Predecessor Employer A and Successor Employer B advising of actions taken by BWC.

 

·        Successor Employer B reports payroll and pays premium under its new workers’ compensation policy.  Employer A is responsible for reporting payroll for the period 7/01/07 – 08/19/07.  Employer B becomes responsible for paying premium for the 07/01/07 – 08/19/07 period if the premium is not paid by Employer A.  Employer B is responsible for reporting and paying the premium for the 10/10/07 – 12/31/07 period and subsequent periods.  The period 8/20/07 – 10/09/07 is a prior to coverage period in which Employer B is responsible for any non-compliance claims that may occur, in addition to the premium due for this prior to coverage period.

 

 

8.     Situations where Partial Transfer is required

 

·        Employer B not having established Ohio workers’ compensation coverage takes over a portion of the operations of Employer A who has established Ohio workers’ compensation coverage.  Application for Ohio Workers’ Compensation Coverage (U-3) and Notification of Business Acquisition/Merger or Purchase/Sale (U-118) forms returned to BWC indicate Employer B took over a portion of the operations of Employer A on 4/1/06.  Employer B applied for coverage and paid the minimum premium security deposit on 4/01/06.

 

BWC Action: Preponderance of the facts shows that Employer B took over a portion of the operations of Employer A on 4/1/06.

 

·        Successor Employer B’s coverage is effective 4/01/07.

 

·        Predecessor Employer A retains its existing BWC policy number.

 

·        Partial Transfer Audit assignment generated to determine what portion of the payroll and claims transfer to Successor Employer B for rate making purposes.

 

·        Partial transfer adjustment complete upon submission of audit findings.

 

·        Successor Employer B reports payroll and pays premium under its new workers’ compensation policy.  Employer A is responsible for reporting payroll and paying premium for the 1/01/06 – 3/31/06 period.  Successor Employer B is responsible for reporting and paying the premium for the 4/1/06 – 6/30/06 period for the portion of Employer A’s business operation Employer B took over on 4/1/06.

 

·        Correspondence sent to Predecessor Employer A and Successor Employer B advising of actions taken by BWC.

 

 

9.     Situations of multiple Succession

 

·        Employer A having established Ohio workers’ compensation coverage was combined into Employer B having established Ohio workers’ compensation coverage effective 6/10/98.  Employer B sells entire business operation to Employer C not having established coverage. Application for Ohio Workers’ Compensation Coverage (U-3) and Notification of Business Acquisition or Purchase/Sale (U-118) forms returned to BWC indicate 100% of business operation purchased by Employer C on 03/08/07.  Employer C applied for coverage and paid the minimum premium security deposit on 2/15/06.

 

BWC Action: Preponderance of the facts shows that Employer C wholly succeeds Employer B.

 

·        Successor Employer C’s coverage is effective 02/15/06.

 

·        Predecessor Employer B’s existing policy is combined into Successor Employer C’s new policy effective 03/08/07.

 

·        All workers’ compensation related rights and obligations of Predecessor Employers A and B are transferred to Successor Employer C.  Successor Employer C will receive all future invoice/statements associated with Predecessor A and B’s policy.

 

·        Experience of Predecessor Employer B is transferred to Successor Employer C effective 7/01/07. (1st day of a six-month rating period).

 

·        Correspondence sent to Employers B and C advising of actions taken by BWC.

 

·        Successor Employer C reports payroll and pays premium under its new workers’ compensation policy. (Employer B is responsible for reporting payroll for the period 1/01/07 – 03/07/07.  Employer C becomes responsible for paying the premium for the 1/01/07 – 03/07/07.

 

 

Determine if combine really has a negative impact

 

·        Employer files protest because they receive letters (see attachments 1 & 2).  If the former has reported & paid up to the effective date of the combine & there is no negative experience issue or future debit rate adjustments on former policy, the protest may be considered resolved.

 

 

Evaluate scenarios with extenuating circumstances

 

When researching and evaluating an experience combine protest filed by an employer or its authorized representative, you will encounter situations having unusual or extenuating circumstances that resulted in the protest.

 

If one of the scenarios listed below is identified, the steps outlined in this policy should be followed.

 

·        Document the facts

 

·        Outline a recommended solution to resolve the protest

 

·        Obtain management approval as outlined in this policy

 

·        Send approved recommendation to the Policy Processing Unit for processing

 

 

Scenarios that do not qualify as extenuating circumstances: The following are examples of scenarios that should NOT be categorized as being an extenuating circumstance.

 

·        Successions accomplished under a lease agreement

 

·        Successions accomplished under a “lease-purchase” agreement

 

·        Successions accomplished through a “management contract” agreement

 

·        Successions accomplished through a “purchase agreement”

 

 

Scenarios That Qualify as Extenuating Circumstances

 

Scenario 1:  Scenarios involving a bankrupt employer:  This scenario is intended to include all experience combine situations involving a bankrupt employer.

 

·        Document the facts

 

·        Forward to BWC Legal Department for advice

 

·        Proceed based on advice from BWC Legal Department

 

·        Outline a recommended solution to resolve the protest

 

 

Scenario 2:  Scenarios involving administrative error:  This scenario is intended to cover all instances where BWC has made material errors in transfer.

 

·        Document the facts

 

·        Outline a recommended solution to resolve the protest

 

 

Scenario 3:  Employer acquires equipment through auction to use is his existing business and has acquired nothing else from the former employer:  This is an acceptable circumstance.

 

 

Scenario 4:  Involuntary transfer through an intermediary bank:  This scenario is intended to cover instances where the successor acquires its interest in the predecessor’s business by means of an involuntary transfer through an intermediary bank.

 

·        Both conditions must be present.

 

·        First, the transfer from the predecessor must be involuntary.

 

·        Second, the acquisition by the ultimate transferee/successor must be through an intermediary bank.

 

·        In addition, for successions that occur on or after July 5, 2010, NONE of the following criteria can exist.

 

·        The successor expressly or impliedly agreed to assume such obligations.

 

·        The succession transaction amounts to a de facto consolidation or merger.

 

·        The successor is merely a continuation of the predecessor.

 

·        The succession transaction was entered into for the purpose of escaping obligations under the workers’ compensation law.

 

·        The transfer was through an entity other than an intermediary bank.

 

·        If one or more of the above five criteria is met, BWC will transfer the predecessor’s experience, rights and obligations.

 

 

Obtain supporting documentation

 

·        When a recommendation is being made to approve an employer’s appeal, 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

 

·        Application for Ohio Workers’ Compensation Coverage (U-3)

 

·        Notification of Business Acquisition/Merger or Purchase/Sale (U118)

 

·        Copy of purchase, lease, or management agreement

 

 

Document Facts

 

·        Complete the Complaint Tracker.  Documentation must include:

 

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

 

·        Clearly state your recommendation and rationale for same.

 

·        File name(s) of documents in UDS

 

 

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.

 

 

Steps to Undo Combine

Via UW510S undo combine change undo flag from N to Y & save.

Via UW105S change status on former employer to CANFI 1 day after cancel request if no longer operating.

If PSD transferred from former policy to successor policy proceed as follows:

Via UW315S post PSD debit on successor policy for amount of PSD transferred from former policy.

Via UW315S post PSD credit on former policy for amount of PSD transferred to successor policy. If former policy should remain active re-bill PSD via UW310S.


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