Insurance

by Richard Ollis

Worker's compensation fraud adds to employers' costs every year. Statistics indicate that more than 15 percent of worker's compensation premiums are attributed to some type of fraud. The penalty in Missouri for committing fraud just got stiffer.

In July of this year, the governor signed House Bill 1237. This bill, involving worker's compensation, makes a second offense under worker's compensation law a Class D felony.

Not that first offenders get off easy. A first offense is a Class A misdemeanor subject to a $10,000 fine, or double the amount of the fraud, whichever is greater.

Any employer failing to insure their liability can be fined an amount equal to twice the annual premium the employer would have paid, or $25,000, whichever is greater. Fraud is being monitored and cracked down on in the state of Missouri. Here's what is being done:

?Missouri now has a fraud investigation unit. This unit, established in 1993, investigates worker's compensation fraud and will do so following a simple phone call reporting it. Although the fraud unit prefers to have as much information on the case as possible, you can report incidents anonymously.

You can contact them at the Department of Labor and Industrial Relations, Division of Workers Compensation, Fraud and Noncompliance Unit, PO Box 1009, Jefferson City, Mo. 65102-1009. The fraud hotline number is 800-592-6003. There is also a local office where legal advisers will answer questions and provide input 3322 S. Campbell, Ste. C 888-4100.

?Many insurance companies have fraud investigation units that will investigate possible fraudulent claims. These carriers are responding to and becoming active partners for employers who suspect fraud.

?Now a thriving industry of private investigating services is available in the marketplace. Many are using surveillance and other means to stamp out fraud.

Fraud laws apply to employers, employees, doctors, attorneys and the insurance industry. Other new changes in work comp due to HB 1237 include:

?Many companies applying for city business licenses were formerly required to furnish proof of worker's compensation insurance to obtain the license. Now, only the construction industry, specifically contractors, are required to verify coverage or exemption prior to obtaining a city or county business license.

Another provision of existing worker's compensation law requires contractors with one or more employees to carry coverage. Non-contracting employers with five or more employees must carry coverage. If you are an employer that is not required by law to carry worker's compensation, you are still responsible for your workers' injuries.

?The statute adds limited liability partnerships and companies, in addition to employers, thus requiring these entities to comply with worker's compensation laws and provisions.

?The three-day period for which compensation will not be paid unless a disability lasts longer than 14 days, has been changed from the first three "regularly scheduled" work days to the first three days "during which the employer is open for the purpose of operating its business or enterprise."

?One thing that many employers have been taking advantage of is paying claims of less than $500 with no lost time from work so that these claims do not affect the experience modification.

Now, employers are no longer required to fill out the "Acknowledgment of Rights" form for accidents involving less than $500 in medical costs. Remember to file a report of injury regardless of whether you are paying the claim yourself.

?HB 1237 also increases the number of administrative law judges to 25, effective Jan. 1, 1999, and sets forth procedures for annual review of administrative law judges, associate administrative law judges and legal advisers.

?Family members of partners or sole proprietors are now automatically covered under the state's worker's compensation law unless they are specifically excluded in the worker's compensation policy.

?The "Kids Chance Scholarship Program" was also established for children of workers injured or killed in work-related accidents or by occupational disease. The program will be funded by $50,000 per year from insurance premium tax collections under the worker's compensation law.

Other revisions to Missouri's worker's compensation law by HB 1237 can be found on the Missouri House Home Page at www.house.state.mo.us.

Worker's compensation is continually changing. You have to know the new rules if you want to play by them effectively.

(Richard Ollis is a commercial insurance specialist with Ollis & Company Insurors. He was recently appointed to represent the Midwest Region on the National Young Agents Committee.)

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