Compliance Managers of Workers'compensation Claims Administrators Avoid the Radar of the Dwc Audit and Enforcement Unit: Here Is Why

• Publication year: 2024
• Citation: Vol. 37 No. 1
• Author: MONSERRAT MORITA, ESQ.

Compliance Managers of Workers' Compensation Claims Administrators Avoid the Radar of the DWC Audit and Enforcement Unit: Here Is Why

MONSERRAT MORITA, ESQ.

PASADENA, CALIFORNIA

Disclaimer: The opinions expressed in this article are the opinions of the author and are not the opinions of the State of California Department of Industrial Relations, the Division of Workers' Compensation, or any other entity or individual.

THE HISTORY OF THE AUDIT UNIT

Although the Workers' Compensation system has been codified in California for well over a century since 1911, the Division of Workers' Compensation, Audit Unit and Enforcement Unit (Audit Unit) is a relatively new development. Implemented by law in 1989, the Audit Unit was created with the intent to enforce Labor Code sections 129 and 129.5. At the core ofLabor Code section 129 is the Audit Unit's obligation to "...make certain that injured workers, and their dependents in the event of their death, receive promptly and accurately the full measure of compensation to which they are entitled..." (Lab. Code § 129(a).)

The Audit Unit also ensures industry adherence to the pertinent provisions of the California Code of Regulations, Title 8.

The Audit Unit fulfills the mandates of the Labor Code by ensuring that every insurance carrier, third party administrator, and self-insured employer, who administers workers' compensation cases for California injured workers, provide timely and accurate benefits. The monetary benefits include temporary disability, wage loss, permanent disability, and Salary Continuation. Other benefits include medical care, durable medical equipment, and mileage reimbursement, among others.

The Audit Unit consists of one manager, three supervisors, seven senior auditors, 20 auditors, and two audit technicians for the northern and southern regions of California and Claims Administrators operating in other states. The number of audits completed varies, depending on the complexity of each audit. The Audit Unit keeps a master list of all administrators that handle cases for California. There are currently 341 identified administrators subject to routine audits.

ROUTINE AUDITS CAN END AT THE SNAPSHOT OR GO THE DISTANCE AND LAST A YEAR

The Audit Unit conducts routine investigations of indemnity files where the administrator authorized salary continuation or paid temporary disability, permanent disability, or death benefits. There are three stages to a routine audit and the administrator's performance determines the progression of the stages. The first two phases are the Profile Audit Review, or PAR, and the Full Compliance Audit stage 1, or FCA-1.

THE SNAPSHOT

A PAR is a snapshot of claims handling practices. Files are identified for audit using an automatic random selection program that selects files from logs provided by administrators. In PAR, the Audit Unit reviews a maximum of 59 indemnity files to determine if the administrator complied with five key areas. The five key areas are: payment of accrued and undisputed indemnity; the late first payment of temporary...