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OhioBWC - Basics: (Policy library) - File

Complaint Policy

 

Retrospective Rating Program Complaint Policy

 

 

Unit Responsible for Program: Employer Programs Unit

Policy Effective Date: June 1, 2008

Policy Revision Date: February 15, 2013 (Scenario 7 removed)

 

 

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

 

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

·        Employer Programs Supervisor

·        Director of Business Analysis and Employer Programs

 

 

Description / Background

 

Legal Background: Legal references for this policy are found in Ohio Revised Code (ORC) 4123.29(A)(3) and Ohio Administrative Codes (OAC) 4123-17-41 to 4123-17-54.

 

In retrospective rating, the insured agrees to assume a portion of the claim costs in return for a reduction in premium.  The difference allows the insured to realize a substantial up-front savings in premium which in-turn creates a cash-flow advantage.  The time interest value on the retained premium should also be considered.

 

The Retrospective Rating Program operates very similar to a deductible program; the greater the assumption of risk (or claims), the greater the potential retention in premium.

 

For the policy year, the insured will pay the minimum premium and assume the policy year claims for a 10-year evaluation period (in other words, the insured will be responsible for the policy year claims for ten (10) years).  However, there are two protections (or liabilities) that are assumed in Retrospective Rating:

 

·        First is a claim limit which caps the financial responsibility for each claim loss.  Choices range from $100,000 to No Limit;

 

·        Second, is a maximum premium percent which caps the minimum premium and claim costs for the policy year to either 150% or 200% of the projected premium obligation.

 

 

Eligibility Criteria

 

An employer interested in retrospective rating must have at least $25,000 of estimated premium.  In addition, employers must meet specific eligibility requirements for either Tier I or Tier II retrospective rating plan.

 

Tier II eligibility requirements are the same as Tier I unless an employer has entered into any partial payment arrangement with BWC. For Tier I, employers cannot have entered into a partial payment agreement for the payment of assessments due the state insurance fund for the past three rating years before the start date of the retrospective policy year. The Ohio Bureau of Workers’ Compensation (BWC) can waive this requirement for Tier II applicants.

 

Employers must be in an active status on the first day of the policy year. BWC may waive this requirement for new businesses moving into Ohio. Also, employers cannot have cumulative lapses in coverage in excess of 15 days within the last five rating years.

 

Employers must demonstrate financial strength and stability. Employers must submit audited financial statements using the generally accepted accounting principles (GAAP).  When reviewing the employers’ financial records, BWC shall consider, but is not limited to, the following criteria, as applicable:

 

·        The employer's trend of operating profit for a minimum of three years;

·        The employer's trend of net income for a minimum of five years;

·        The employer's consistent return on equity, of ten per cent or better;

·        Significant asset size of the employer in the state of Ohio;

·        A total liabilities/equity ratio of no greater than four to one;

·        The employer's debt structure, including current versus long term debt, recent drastic changes in debt, etc;

·        The employer's retained earnings trend;

·        Whether the employer has significant fluctuations in specific balance sheet numbers from one year to the next;

·        The employer’s bond rating

 

Employers must be current on any and all undisputed premiums, administrative costs, assessments, fines or monies otherwise due to any fund BWC administers, including amounts due for retrospective rating. In addition, employers cannot have any unpaid audit findings or other unpaid billings as of the application deadline.  Employers enrolled in the retrospective rating plan Tier II must implement our 10-Step Business Plan, within the first program year. Employers must agree to meet quarterly with a BWC representative to discuss the retrospective rating program.

 

Once an employer has been rejected from participation in the retrospective rating program for a particular policy year, the employer or Third Party Administrator (TPA) representing the employer may file a protest to BWC.  The Retrospective Rating Underwriters will evaluate the request by following the steps outlined in this policy.

 

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 retrospective rating program protest filed by an employer or its authorized representative where there are extenuating circumstances associated with the reason for the employers’ denial of retrospective rating or disagrees with aspects related to the annual evaluation.

 

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.

 

 

Evaluate Scenarios with Extenuating Circumstances

 

When researching and evaluating protests filed by an employer or its authorized representative due to being rejected from participation in the retrospective rating program, 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 the facts

 

·        Outline a recommended solution to resolve the employer protest

 

·        Obtain management approval as outlined in this policy

 

·        Send approved recommendation to the Retrospective Rating Program 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.

 

·        Failure to submit audited financial statements using Generally Accepted Accounting Principles (GAAP); (to be construed as employer submitted non-GAAP audited financials).

 

·        Confusion over Ohio workers’ compensation law and rules.

 

·        The employer was accepted and included on a group roster for the same policy year in which application for retrospective rating has been submitted;

 

·        Except for BWC error, the employer disagrees with:

 

·        MIRA claim reserve claim predictions, medical, or compensation payments used for the experience rating calculation for retrospective rating plan minimum premium percentages;

 

OR

 

·        Premium based on reserves (the value of the MIRA reserve predictions on claims evaluated as of the end of the tenth year;

 

OR

 

·        Premium based on paid losses (compensation payments, including death and PTD, and medical payments made in covered claims)

 

 

Scenarios That Qualify as Extenuating Circumstances

 

Scenario 1: Scenarios involving BWC Error

 

·        In this scenario a BWC error results in the employer not being accepted for retrospective rating or being rejected from participation in retrospective rating.

 

·        Examples falling under this scenario include but not limited to:

 

·        BWC calculates cumulative lapses >15 days within the last 5 rating years when no lapse occurred or was previously adjudicated and corrected;

 

·        Employer was denied participation due to an undisputed monies owed balance when in fact the balance was pending or currently disputed (including amounts due for retrospective rating).

 

 

Scenario 2: Scenarios Involving a Significant Unpredictable Event

 

·        This scenario is intended to include situations that are unpredictable and out of the employer’s control that prevents the employer from filing appropriate paperwork in a timely manner.  Situations falling under this scenario may include, but are not limited to:

 

·        Acts of nature such as a tornado, flood, etc.

 

·        Significant loss events such as water line break, fire, etc.

 

·        Terrorist Activities

 

·        Violence in the Workplace

 

·        There must be a direct correlation between the event and the reason the employer was rejected from retrospective rating (i.e. – was unable to file timely due to the significant unpredictable event)

 

 

Scenario 3: Scenarios Involving Serious Illness, Injury or Death of Essential Personnel

 

·        This scenario deals with a situation where essential personnel within the organization; such as the owner, Chief Operating Officer, Chief Financial Officer; has a serious illness, injury or death that prevented the employer from filing appropriate paperwork or documentation (either hard copy or electronic) in a timely manner.

 

·        A physician’s verification must accompany the request.  Such physician verification should not include specific medical reasons for the absence, but must include the dates the essential personnel missed work due to serious illness, injury, or death.

 

·        There must be a direct correlation between the absence of the essential personnel and the reason the employer was unable to complete the required activities within the required timeframes.

 

·        This extenuating circumstance may be utilized only to extend the required timeframe to meet a specific requirement.  It cannot be used to allow non-completion of the specific requirement.

 

 

Scenario 4: 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 employer 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.

 

 

Scenario 5: Scenarios Where Key Personnel / Owner Called to Active Military Duty

 

·        Situations falling under this scenario include but not limited to essential personnel within the organization such as the owner,   officer, Chief Operating Officer, Chief Financial Officer have been called to active military duty that prevents the employer from filing appropriate paperwork in a timely manner.

 

·        There falling under this scenario include but not limited to essential personnel within the organization such as the owner,   officer, Chief Operating Officer, Chief Financial Officer have been called to active military duty that prevents the employer from filing appropriate paperwork in a timely manner.

 

 

Scenario 6: Scenarios Where Same Issue is Appealed and Granted for Previous Rating Year and Request is to Applied to Next Rating Year

 

·        This scenario occurs when the employer appeals the BWC decision to reject them from retrospective rating and their appeal is granted by the Adjudication process for a specific rating year.

 

·        However, typically due to the timing of the hearing process and the issuance of the hearing Order, the employer is rejected from retrospective rating for the same reason for the next rating year.  Since it’s the same issue and the employer’s appeal was granted, the employer should be allowed into retrospective rating for the next rating year without having to submit a second appeal.

 

 

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 records to validate manual classifications and premium assigned to and paid on the policy.

 

·        Legal documentation related to employee charges and prosecution.

 

·        Documents supporting gross misrepresentation accusation and inability to identify by April 1st.

 

·        News report or insurance claim related to a natural disaster or significant event.

 

·        Death certificate or statement from treating physician.

 

·        BWC hearing order indicating appeal granted and BWC records indication the employer was rejected for the same reason for the next rating year.

 

·        Military order / call to active duty notice.

 

 

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.  (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.


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