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California Division of Workers’ Compensation 2006 Audit Unit Training Presented by Cora Lee

California Division of Workers’ Compensation 2006 Audit Unit Training Presented by Cora Lee. Association Insurance Professionals October 10 th , 2006. California Division of Workers’ Compensation 2006 Audit Program Description (Hand-Out # 1). Changes to the Audit Program beginning 2003

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California Division of Workers’ Compensation 2006 Audit Unit Training Presented by Cora Lee

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  1. California Division of Workers’ Compensation 2006 Audit Unit TrainingPresented by Cora Lee Association Insurance Professionals October 10th, 2006

  2. California Division of Workers’ Compensation 2006 Audit Program Description(Hand-Out # 1) • Changes to the Audit Program beginning 2003 • Selection of PAR Audit Subjects • Targeted Audit Subject Selection • Notices of Audit and Audit Commencement • Selection of Claims for Audit and Performance Standards • Audit Procedures • Preliminary Report and Post-Audit Conference • Final Audit Report, Payment of Penalties and Compensation Due, and Appeal of Penalties and/or Compensation Due • What to Expect - Some Things You Should Know • How to Help the Audit Run Smoothly

  3. DWC - AUDIT UNIT CLAIMS HANDLING ISSUES(Hand-Out # 2) • Impact of Assembly Bills 749 & 227 on the Audit Unit • Claim File Contents • Calculation of Average Weekly Wage / Indemnity Rate(s)(LC§4653) • First Payment of Temporary Disability Indemnity - LC§4650(a) • Subsequent Payment of Temporary (and/or Permanent) Disability Indemnity – LC§4650(c) • Payment of Permanent Disability Indemnity – LC4650(b) • Self-Imposed Increase (SII) – LC§4650(d) • Audit Violations / General Rules – 8CCR§10108 • Right and Duty to Investigate • Unsupported Denials

  4. Profile Audit Review Performance Rating of Randomly Selected Claims Exhibit 1A (Hand-Out # 3)

  5. Full Compliance Audit Performance Rating of Randomly Selected Claims Exhibit 1B (Hand-Out # 3)

  6. Full Compliance Audit Performance Rating of Randomly Selected Claims Exhibit 1C (Hand-Out # 3)

  7. Title 8, California Code of Regulations (Hand-Out # 4) Title 8, California Code of Regulations Subchapter 1.5 Injuries On or After January 1, 1990 Article 1 Audits, General Definitions §10100. Definitions - Prior to January 1, 1994. §10100.1. Definitions - On or after January 1, 1994. §10100.2. Definitions - On or after January 1, 2003. Article 2 Claims Administration and Record Keeping §10101. Claim File - Contents. §10101.1. Claim File - Contents. ( January 1, 1994) §10102. Retention of Claim Files. §10103. Claim Log - Contents and Maintenance. §10103.1. Claim Log - Contents and Maintenance. ( January 1, 1994) §10103.2. Claim Log - Contents and Maintenance. ( January 1, 2003) §10104. Annual Report of Inventory. Article 3 Auditing §10105. Auditing, Discretion of the Administrative Director. §10106. Random and Non-Random Audit Subject Selection; Complaint / Information Investigation. 10106.1. Routine and Targeted Audit Subject Selection; Complaint Tracking; Apeal of Targeted Audit Selection ( January 1, 2003) §10106.5. Civil Penalty Investigation. §10107. Notice of Audit; Claim File Selection; Production of Claim Files; Auditing Procedure. §10107.1. Notice of Audit; Claim File Selection; Production of Claim Files; Auditing Procedure ( January 1, 2003) §10108. Audit Violations - General Rules. §10109. Duty to conduct Investigation; Duty of Good Faith.

  8. Title 8, California Code of Regulations (Hand-Out # 4) Title 8, California Code of Regulations Subchapter 1.5 Injuries On or After January 1, 1990 (Continued) Article 4 Notices of Compensation Due §10110. Notice of Intention to Issue a Notice of Compensation Due;Notice of Compensation Due; Review by Workers' Comp Appeals Board. Article 5 Administrative Penalties §10111. Schedule of Administrative Penalties for Injuries on or after January 1, 1990, but before January 1, 1994. §10111.1 Schedule of Administrative Penalties for Injuries on or after January 1, 1994:

  9. (a) Penalties Up To $100 (a) penalties up to $100 (1) late or unpaid SII* (2) late 1st PD* (3) response to request reimbursement for self-procured medical tx payment of travel expense • w/ notice of C/A scheduled exam •w/in 14 days of AD or WCAB scheduled exam •w/in 60 days of IW request (5) documentation for indemnity rate (6) late scheduled indemnity payments* (7) compliance for unspecified regs [i] provision of DWC-1 [ii] missing benefit notice [iii] late benefit notice* [iv] inaccurate benefit notice [v] file contents [vi] all other regs... (8) medical-legal expense (9) unpaid medical treatment expense (10) late paid medical tx expense (11) VR expense (12) late 1st TD* (13) failure to pay all indemnity due/balance paid later* (14) late 1st VRMA or DB* NOTE: *AP subject to exacerbation under 8CCR§10108(c) if action over 30 days late BOLD sections subject of the PAR and Full Compliance –1 audit; part of Full compliance –2 Audit

  10. (b) Penalties Up To $500 (b) penalties up to $500 (1) maintenance / provision of claim log (2) 90-day VR advice (post 1993 DOI) w/ FEHA & ADA (3) Notice of Potential Eligibility for VR (4) enclosure of medical report w/ VR denial notice (5) VR denial notice (6) PD advice; notice of QME/AME procedures (7) notice of denial of death benefit (8) notice of denial of all liability (9) materially misleading notice of denial of all liability (10) non-payment of uncontested AP on Notice of Penalty Assessments (11) timeliness and accuracy of Annual Report of Inventory BOLD sections subject of the PAR and Full Compliance –1 audit; part of Full compliance –2 Audit

  11. (c) Penalties Up To $1,000 (c) penalties up to $1,000 (1) payment of Notice of Compensation Due (2) termination, interruption, deferral of VR (3) unpaid TD, VR, SC (4) unpaid PD (5) unpaid DB (6) failure to investigate (8CCR§10109)  BOLD sections subject of the PAR and Full Compliance –1 audit; part of Full compliance –2 Audit

  12. (d) Penalties Up To $5,000 (d) penalties up to $5,000 (1) unsupported denial of all liability (2) compliance w/ request or order of AD or Audit Unit (3) failure to provide DWC-1 upon request (4) compliance w/ award or order of the WCAB or Rehab Unit (5) failure to produce legible file copy backdating or fraudulent alteration of documents BOLD sections subject of the PAR and Full Compliance –1 audit; part of Full compliance –2 Audit

  13. (e) Modification of Penalties (e) modification of penalties (1) for gravity (2) good faith (3) frequency (4) history (5) no penalties based on overall performance (6) extraordinary circumstances  BOLD sections subject of the PAR and Full Compliance –1 audit; part of Full compliance –2 Audit

  14. §10111.2 Full compliance Audit Penalty Schedules; Target Audit Penalty Schedule. ( January 1, 2003) (a) penalties up to $5,000 (1)unpaid SII (2)unpaid VRMA, TD, SC (3)unpaid PD (4)unpaid DB (5)late 1st TD* (6)late 1st PD* (7)late 1st VRMA, DB* (8)underpaid indemnity, paid late* (9)failure to pay indemnity according to schedule (10)100% increase of AP’s for (a)(1) – (a)(9) if part of WCAB or RU order or award (11)failure/late paid NOCD (12)failure/late-paid administrative penalties NOTE: * AP subject to exacerbation under 8CCR§10108(c) if action > 30 days late

  15. §10111.2 Full compliance Audit Penalty Schedules; Target Audit Penalty Schedule. ( January 1, 2003) (b) penalties up to $5,000 (1)failure to investigate (2)unsupported denial of liability (3)failure to produce legible file (4)provision of backdated / altered / fraudulent document(s) (5)response to reimbursement request for self-procured med tx (6)payment of travel expense w/ notice of C/A scheduled exam w/in 14 days of notice of AD or WCAB scheduled exam w/in 60 days of IW request (7)documentation for indemnity rate (8)compliance w/ specified regs [i] provision of DWC-1 [ii] missing benefit notice [iii] late benefit notice* [iv] inaccurate benefit notice [v] file contents [vi] all other regs...

  16. §10111.2 Full compliance Audit Penalty Schedules; Target Audit Penalty Schedule. ( January 1, 2003) (b) cont’d (9)late/unpaid medical-legal exp (10)unpaid medical treatment exp (11)late paid medical treatment exp (12)VR expense (13)claim log maintenance / provision (14)90-day VR advice (w/ FEHA & ADA) (15)Notice of Potential Eligibilty – VR (16)provision of med report for determination of VR eligibility (17)VR denial notice (18)PD / AME /QME advice (19)notice of denial of DB (20)notice of denial of all liability (21)materially misleading notice of denial of all liability (22)VR termination, deferral or interruption (23)compliance w/ request or order of AD or Audit Unit (24)failure to comply w/ award or order of the WCAB or RU (25)failure to provide DWC-1 on request (26)timeliness and accuracy of Annual Report of Inventory

  17. §10111.2 Full compliance Audit Penalty Schedules; Target Audit Penalty Schedule. ( January 1, 2003) (c) mitigation of penalty amounts (1)for gravity (2)for good faith (3)for frequency (4)for history (5)for PAR audit pursuant to LC§129.5(c)(1) and (c)(2) (6)for FCA audit pursuant to LC§129.5(e) (7)based on the # of indemnity claims reported for audit location in last audited year (claims w/ DOI on or after 1/1/2003) (8)penalties may be assessed in all levels of target audits for specific practices  Bolded sections subject of the PAR and Full Compliance –1 audit; part of Full compliance –2 Audit

  18. §10112.2. Liability for Penalty Assessments. ( January 1, 2003)

  19. Article 6 Civil Penalty §10113. Order to Show Cause Re: Assessment of Civil Penalty and Notice of Hearing. §10113.1. Order to Show Cause Re: Assessment of Civil Penalty and Notice of Hearing. ( January 1, 2003) §10113.2. Amended Complaint or Supplemental Order to Show Cause Before Submission of Case §10113.3. Administrative Director’s Designation of Hearing Officer. §10113.4. Written Statement and Supporting Evidence.§10113.5. Prehearing Conference; Subject Matter; Prehearing Order. §10113.6. Subpoenas. §10114. Hearing and Determination. §10114.1. Evidence; Examination of Witnesses. §10114.2. Affidavits. §10114.3 Oaths. §10114.4 Determination. Article 7Appeals §10115. Appeal of Notice of Compensation Due. §10115.1. Appeal of Notice of Penalty Assessment - Filing and Contents. §10115.2. Appeal of Notice of Penalty Assessment; Conference Process and Delegation of Authority; Notice of Findings, Service.

  20. Article 7 Appeals §10115. Appeal of Notice of Compensation Due. §10115.1. Appeal of Notice of Penalty Assessment - Filing and Contents. §10115.2. Appeal of Notice of Penalty Assessment; Conference Process and Delegation of Authority; Notice of Findings, Service.

  21. Newsline No. 51-06 September 22, 2006 Return to work program regulations approved The return to work program regulations, Title 8, California Code of Regulations, sections 10001 and 10003, have been approved by the Office of Administrative Law (OAL). The regulations provide for (1) an incentive to employers with 50 or more employees who provide injured employees with an offer or return to regular, modified or alternative work, by way of a permanent partial disability reduction of 15 percent, and (2) a disincentive, by way of a permanent partial disability benefit increase, for employers who fail to provide an injured employee with a return to work offer. The final approved regulations were filed with the secretary of state on Sep. 21, 2006 and become effective Oct. 21, 2006. Approved sections 10001, 10002, and 10003, as filed with the secretary of state, can be found on the DWC Web site at http://www.dir.ca.gov/dwc/DWCPropRegs/ReturnToWork_regulations/ReturnToWork_regulations.htm. Sections 10001 - 10005, 10133.53, and 10133.55, which became effective Aug. 18, 2006, can be found at the same location.

  22. Thank you for your attention! Contact Information: Cora Lee Supervising Workers Compensation Compliance Officer Direct Line: (213) 576-7428         Main Line: (213) 620-2312           Fax: (213) 620-6133 Email: clee@dir.ca.gov

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