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Complaint Policy


Rate and Reserve Complaint Policy


Unit Responsible for Program:  Actuarial Department

Policy Effective Date:  June 1, 2008

Policy Revision Date:  October 17, 2011



Complaint Assignment:  Rate and Reserve complaints are assigned to the Actuarial Department in Columbus.



Management Approvals:  The following management level sign-offs are required.

·         Director, Actuarial

·         Chief Actuarial Officer



Description / Background


Legal Background:  Legal references for this policy are found in Ohio Revised Codes (ORC) 4123.29 and 4123.34.


As the sole provider of workers’ compensation insurance in Ohio, the Ohio Bureau of Workers’ Compensation (BWC) is responsible for setting rates and collection of premium. Base rates are established for Ohio employers, based on the claims costs and payroll experienced in each NCCI manual classification. Individual employer rates are calculated based on a comparison between actual claims costs and the amount of costs expected for the employer. Actual claims costs include compensation paid to injured workers, medical paid on behalf of injured workers’, and reserves.


Reserves are set based on individual claims characteristics by a reserving methodology known as MIRA (Micro Insurance Reserving Analysis). Appropriate rate setting is essential if the proper amount of premium is to be collected to pay claims costs. There may be scenarios, however, where an employer or their Third Party Administrator (TPA) may send a protest to BWC asking that reserves or rates be reduced.


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 a rate and reserve protest filed by an employer or its authorized representative where there are extenuating circumstances associated with the reason the employer is requesting relief for rate and reserve issues.




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.



Evaluate Scenarios with Extenuating Circumstances


When researching and evaluating protests filed by an employer or its authorized representative due to a protest concerning rates or claims reserves, you will encounter situations having unusual or extenuating circumstances that resulted in the rejection condition.


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


·         Research and document facts


·         Outline a recommended solution to resolve the employer protest


·         Obtain management approval as outlined in this policy


·         Send approved recommendation to the Actuarial 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.


·         Changes to the management staff within the organization.


·         Change in personnel or CPA


·         Bookkeeper or CPA error


·         Implementation of a new computer system



Rate Adjustment Scenarios


Scenario 1:  Catastrophe Claim Adjustment


·         Description: When two or more claims occur as a result of one accident of same employer. Injuries result in death or permanent total disability (PTD), including statutory PTD.


·         Action: Special consideration may be given by Adjudication or Administrative Designee if injuries fail to meet the death/PTD requirement.



Scenario 2:  Disallowed Claim-Attorney General (AG) Settlement Adjustment


·         Description: Status of disallowed claim is changed to allow status by Claims Service Specialist (CSS) in order to process the settlement amount.   Claim costs are systematically added to the experience for current and past periods.  Law has opined that claim costs are to be removed from the experience when it is settled as a disallowed claim in court.


·         Action: Issue typically resolved prior to hearing.



Scenario 3:  Out of State Experience Modifier (EM) Adjustment


·         Description: Employers moving operation to Ohio without prior coverage may request transfer of EM as along as BWC requirements are met. Otherwise, employer would be base rated.


·         Action: Employer could take issue to hearing if outside EM is not granted by BWC.



Scenario 4:  Override (EM, Claim Cost, MIRA)


·         Description: Manually updating the EM, claim cost or reserve not supported by the system or source system data. An override is made due to an executive decision requiring an executive sign off (see Override Policy).


·         Action: Issue typically resolved prior to hearing.



Scenario 5:  Salary Continuation


·         Description: Wages paid to injured worker (IW) in lieu of temporary total (TT) benefits.  Salary Continuation plan must be built by CSS to suppress the reserve.


·         Action: Issue typically resolved prior to hearing.



Scenario 6:  Subrogation Recovery/Adjustment


·         Description: Medical and compensation benefits paid to an IW by a third party and collected by BWC.  Subrogation recovery is negotiated by the BWC Law dept.  BWC Law enters the amount recovered in the rates system which will systematically reduce the claim costs in the employer’s experience.


·         Action: Employer could take issue to hearing if subrogation was not allowed by law at the time of injury.



Scenario 7:  Zero Percent Permanent Partial (%PP) – Reserve Adjustment


·         Description: Tentative order awards IW a zero percent (0%) PP. In the rates system, the %PP indicator will be removed and reserve calculated.


·         Action: Issue typically resolved prior to hearing.



Scenario 8:  MIRA Reserve Re-prediction – Excessive


·         Description: Recalculation of reserve when any of the significant data elements (demographic, medical, indemnity) are changed or updated.


·         Action: Unless data elements are found to be incorrect, this issue should not go to hearing.  If data elements are incorrect, they will be updated and the reserve re-predicted.



Scenario 9:  Arth Brass Adjustment


·         Description: Medical losses are suppressed while claim is in appealed status. If issue goes to court, claim no longer in appealed status and medical losses are added back to employer’s experience.


·         Action: Upon explanation of Ohio Supreme Court decision and HB 100, issue typically resolved prior to hearing.



Scenario 10:  C92 Suspended Status – MIRA Adjustment


·         Description: Percent Permanent Partial (%PP) will not be awarded. The %PP indicator in the rates and payments system will be removed.


·         Action: Issue typically resolved prior to hearing.



Scenario 11:  Injured Worker Incarceration – Reserve Protest


·         Description: While incarcerated, injured workers are not entitled to Temporary Total (TT) benefits. The indemnity portion of the reserve is removed.


·         Action: These issues will be evaluated on a case by case basis.  Some issues may go hearing if result of protest is not favorable.



Scenario 12:  Self-Insured (SI) to State Fund Rate Calculation


·         Description: An SI employer returning to the State Fund is rated at the appropriate EM based on audit of the history of paid claim costs and payroll.


·         Action: Some issues may go hearing if result of protest is not favorable.



Scenario 13:  Occupational Disease (OD) Claim:  Same IW - Multiple Employer Adjustment


·         Description: OD claims of same IW with multiple employers are assessed a full reserve. The average reserve is calculated from all policies and divided by the number of policies to establish a reserve amount for each policy.


·         Action: Issue typically resolved prior to hearing.



Scenario 14:  Claim Level Adjustment (claim allowance, ICD9 Disallowance)


·         Description: An adjustment to a particular data element that results in a systematic adjustment of the reserve.


·         Action: Issue typically resolved prior to hearing.



Scenario 15:  MIRA Reserve – Excessive


·         Description: Reserve amount assessed on lost time claim based on significant data elements deem too high by employer/TPA.


·         Action: Unless data elements are found to be incorrect, this issue should not go to hearing.  If data elements are incorrect, they will be updated and the reserve re-predicted.



Scenario 16:  Scenarios Involving Fraud or Gross Negligence


·         Event: Fraudulent or illegal action, or gross negligence, of an employee or agent representing or working on behalf of the employer.  This employee or agent must have been directly involved with or overseeing the functions related to the protested issue.  Employer relief is limited to those situations in which the employer can verify through documentation that is has attempted to initiate legal action against the employee or agent.


·         Supporting documentation


·         For criminal or civil fraud or other illegal acts:  Proof that the employer has filed formal criminal charges or actively pursued legal action for civil fraud or other illegal acts.  A conviction is not required.


·         For gross negligence:  Proof that the employee has filed a civil complaint against the employee or agent for recovery in any court.  The employer is not required to prevail in the civil action.  Acceptable documentation may also include rulings from other state or federal governmental agencies attesting that the action is considered gross negligence.


BWC staff receiving employer complaints alleging fraud or gross negligence should work through their supervisor to seek advice from BWC Legal Division to determine if the documents presented by the employer are valid legal documents as specified by this scenario.



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


·         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.  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.