Source: https://www.scribd.com/document/1720566/Department-of-Labor-fines05
Timestamp: 2018-06-25 14:21:16
Document Index: 91352867

Matched Legal Cases: ['§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', 'art 5220', '§ 176', '§ 176', '§ 176', 'arts 5218', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', '§ 176', 'art 5220', '§ 176', '§ 176', '§ 176']

Department of Labor: fines05 | Self Insurance | Workers' Compensation
Department of Labor: fines05
2005 Collection and Assessment of Fines and Penalties
Minnesota Workers’ Compensation System
Workers’ Compensation Division Minnesota Department of Labor and Industry 443 Lafayette Road N St Paul MN 55155 January 2006 The total estimated cost of publishing this report is $500. Additional copies of this report are available by calling Compliance Services at (651) 284-5030 or toll-free at 1-800-342-5354. Information in this report can be obtained in alternative formats by calling the department at 1-800-342-5354 or (651) 297-4198/TTY.
Collection and Assessment of Fines and Penalties
Introduction ...........................................................................................................................1 Assessment and collection procedures ..................................................................................2 General appendix table information ......................................................................................3 Penalty descriptions Late filing of the First Report of Injury ....................................................................3 Late first payment of benefits ...................................................................................4 Late denial of claims .................................................................................................4 Prohibited practices ...................................................................................................4 Rehabilitation provider discipline .............................................................................5 Managed care organization discipline ......................................................................6 Health care provider discipline .................................................................................6 Failure to insure ........................................................................................................7 Late filing of Special Compensation Fund and loggers’ assessments ......................7 Other penalties ..........................................................................................................8 Conclusion ............................................................................................................................8 Appendix table
As part of its 1992 workers’ compensation reform legislation, the Minnesota Legislature directed the commissioner of the Department of Labor and Industry to submit an annual report about the assessment and collection of fines and penalties under workers’ compensation law (Minnesota Statutes § 176.222). Fines and penalties are found throughout the workers’ compensation statutes. Employers may be penalized for failing to obtain workers’ compensation insurance, failing to post a required poster, falsifying insurance information, and for late filing of injury reports with their insurance companies. Insurance companies and self-insured employers may be penalized for a variety of reasons, including failure to commence benefit payments to an injured employee or to deny liability for a claimed injury in a timely manner, failure to pay benefits when ordered to do so by the commissioner or a compensation judge, failure to file required reports with the department, and denying benefits without notice or reason. Insurance companies, self-insured employers, and third-party administrators may be penalized for violations of the prohibited practices section of the statute. These violations include failing to respond within 30 days to the department’s written request for information about a claim and failing to pay pursuant to an order within 45 days. Vocational rehabilitation providers are subject to sanctions, including penalties, for failure to follow the rehabilitation rules such as the professional conduct standards. Certified managed care plans and health care providers are subject to sanctions, including penalties, for failure to provide services as required by statute, rule, or in accordance with the managed care plan as certified. Any party to a claim may be penalized for failing to release requested existing medical data in a timely fashion. Under the workers’ compensation law, penalties are paid to one of two recipients, depending on the nature of the violation. Most penalties are paid to the Assigned Risk Safety Account that was created in 1992 by the Minnesota Legislature. This account finances some safety programs in the department, including matching grants or loans awarded to employers to improve the safety of their workplaces. Some penalties are paid directly to injured employees when their monetary benefit payments have been unreasonably delayed by the insurer. The department’s Financial Services unit collects all workers’ compensation penalties that are payable to the Assigned Risk Safety Account. The Benefit Management and Resolution unit monitors the payment of penalties to injured employees. This report presents fine and penalty information in its appendix for fiscal years 2002 through 2005. Each fiscal year begins July 1, ends the following June 30, and is named for the year in which the 12-month period ends. For example, the fiscal year beginning July 1, 2004 and ending June 30, 2005, is “FY 2005."
This report primarily focuses on penalties issued and collections made during FY 2005. Although warnings are also technically defined as penalties, only penalty assessments that involve monetary fines are included in the appendix.
When a potential penalty situation is identified by the department’s internal monitoring system or by an external customer, department staff members carefully review the facts and determine whether a penalty should be assessed. If so, a penalty notice is sent to the violator describing the infraction and the dollar amount of the penalty. A stipulated consent agreement containing the same information is used to assess most penalties against managed care organizations, rehabilitation providers, and medical providers. All penalty information is entered into the department’s database. When the penalty is assessed for an employer’s failure to obtain workers’ compensation insurance, the employer may challenge the penalty by filing a written objection with the department within 10 days. Objections to all other penalty notices must be filed within 30 days of the assessment. If a timely objection to a penalty notice is received by the department, the penalty recipient and the department may attempt to settle the penalty. If these attempts are unsuccessful, a settlement conference and/or hearing is conducted at the Office of Administrative Hearings (OAH) to determine whether the penalty was appropriate. If a stipulated consent agreement cannot resolve a penalty issue involving a managed care organization, rehabilitation provider, or medical provider, the commissioner may initiate a contested case hearing at OAH. An administrative law judge then issues a recommendation regarding the appropriateness of a penalty, which is considered by the Rehabilitation Review Panel (Minnesota Statutes § 176.102) or the Medical Services Review Board (Minnesota Statutes § 176.103). The panel or the board then makes the final decision whether to assess the penalty. Appeals from OAH, the Rehabilitation Review Panel, and the Medical Services Review Board are heard by the Minnesota Workers’ Compensation Court of Appeals and may be appealed to the Minnesota Supreme Court. A penalty becomes final when it is assessed and no objection or appeal is filed. If an objection or appeal has been filed by its deadline, the penalty becomes final when it is settled or when an order is issued by a judge and it is not appealed. When a penalty is final, it must be paid within 30 days. The department initiates collection procedures when parties have not paid their penalties by this deadline. If necessary, the department uses the Minnesota Department of Revenue Collections Division to obtain payment of the penalty. The department may take a penalty case to District Court as long as the action is filed within two years of the date the penalty becomes final. 2
General appendix table information
The penalties contained within Minnesota Statutes § 176 are listed on the left of the appendix table at the end of this report. The table is divided into columns describing the total number and dollar amount of penalties assessed and collected during each fiscal year for each penalty type. Assessments in a fiscal year do not correspond to collections during the same fiscal year for various reasons: • If a penalty is challenged, any subsequent settlement or withdrawal of the penalty will reduce the number and/or amount of penalties to be collected. Litigation and/or collection procedures can delay the collection of a penalty for one or more years after the assessment. The department does not collect penalty payments made to injured employees. Although these penalty numbers and dollar amounts are included in the “Assessed” column, they are not included in the “Collected” column.
Late filing of the First Report of Injury (Minnesota Statutes § 176.231) Description: The First Report of Injury is a document completed by the employer when they receive notice that a workplace injury or illness has occurred. The employer has 10 days to file this report with its workers’ compensation insurance company on all claimed work-related injuries resulting in disability which extends beyond three calendar-days (lost-time claims). The insurance company has an additional four days beyond this 10-day period. Together the employer and its insurance company have a total of 14 days, to file the First Report of Injury with the department. Self-insured employers have 14 days to file the First Report of Injury with the department. All new lost-time claims are monitored to determine whether the First Report of Injury has been filed in a timely manner. Penalties are assessed for late filings with the insurance company or with the department. If an objection is filed on a penalty, the department may settle the penalty or refer the matter to OAH for a settlement conference or a hearing before a compensation judge. Penalty payment: These penalties are payable to the Assigned Risk Safety Account. Appendix table: The number of penalties for late filing of the First Report of Injury in FY 2005 increased 25 percent from the previous fiscal year. This increase was primarily due to an improved method of reviewing cases by the department and some reporting difficulties with several companies caused by technological and/or structural changes within the companies. The improved method revealed some data quality issues on forms being filed with the department, which led to the rescinding of a higher than normal percent of these violations. 3
Late first payment of benefits (Minnesota Statutes § 176.221 and 176.225) Description: Every insurance company or self-insured employer that accepts liability for a losttime claim and the resulting disability must begin payment of monetary benefits to the injured employee within 14 days of the date the employer receives notice of the loss of time or wages. Timely issuance of the first payment or explanation of the reason for nonpayment is important to the smooth handling of a claim. Each new lost-time claim is monitored to determine whether the first payment has been timely. Penalties are assessed for late first payments of claims. The insurance company or self-insured employer may object to any penalty assessed for this violation. Settlement and litigation procedures are identical to those for late filing of the First Report of Injury. Penalty payment: The penalty under Minnesota Statutes § 176.221 is payable to the Assigned Risk Safety Account. The penalty under Minnesota Statutes § 176.225 is payable to the injured employee. Appendix table: The number of penalties for late first payment of benefits decreased slightly in FY 2005 from the previous fiscal year. Late denial of claims (Minnesota Statutes § 176.221) Description: If an insurance company or self-insured employer denies primary liability for a lost-time claim or accepts liability for the injury but denies liability for the disability, it must notify both the injured employee and the department of its denial within 14 days after the employer receives notice of the loss of time or wages. It is important that the insurer give this information to injured employees quickly. A timely denial gives the injured employee the opportunity to dispute the insurer’s liability decision more quickly. Each new lost-time claim is monitored to determine whether the denial has been filed on time. Penalties are assessed for late denials of claims. The insurance company or self-insured employer may object to any penalty assessed for this violation. Settlement and litigation procedures are consistent with those already described in this report. Penalty payment: These penalties are payable to the Assigned Risk Safety Account. Appendix table: The number of penalties for late denials of claims increased slightly in FY 2005 from the previous fiscal year. Prohibited practices (Minnesota Statutes § 176.194) Description: Minnesota Statutes § 176.194 describes nine types of conduct by insurance companies, self-insured employers, and third-party administrators that are prohibited under workers’ compensation law. These include:
failing to reply within 30 days to written requests from the claimant for information about a claim; failing to either deny the claim or commence benefits within 45 days after a written request to do so; failing to pay or deny medical bills within 45 days of receipt of all information requested of the medical provider; failing to investigate a claim before denying liability; failing to pay weekly benefits in a timely manner; failing to respond within 30 days to the department’s written request for information about a claim; failing to pay pursuant to an order within 45 days; advising the injured employee not to obtain an attorney; and altering information on a document to be filed with the department without the notice and consent of any person who previously signed the document and would be adversely affected by the alteration.
The department monitors the written requests it makes to insurance companies, self-insured employers, and third-party administrators, and assesses penalties when a party fails to respond. Penalties are also assessed as a result of complaints made by parties to a claim alleging violations of the prohibited practice statute by insurance companies, self-insured employers, and third-party administrators. Depending on the type of prohibited conduct, monetary penalties may either be assessed immediately or after five violations of that type of conduct have occurred within the previous 12 months. As with the preceding penalties, a prohibitive practices penalty may be settled or litigated before an administrative law judge after an objection is received. Penalty payment: Monetary penalties are payable to the Assigned Risk Safety Account. Appendix table: In FY 2005 these penalties decreased 38 percent from the previous fiscal year. This decrease was primarily due to the reduction in violations with one insurer that no longer actively writes policies in Minnesota. The number of penalties collected appears abnormally low because a larger percentage than normal of these penalties were being litigated and were not resolved until after the end of the fiscal year. Rehabilitation provider discipline (Minnesota Statutes § 176.102) Description: Minnesota Statutes § 176.102 and Minnesota Rules Part 5220 provide minimum standards of performance and professional conduct for rehabilitation providers. These standards require each provider to follow the process specified in the statute and rules for the provision of vocational rehabilitation consultation and services. Each provider must also follow certain standards of conduct, objectivity, and professional competence, and must not confuse the role of a provider with that of an insurer. The department certifies rehabilitation providers and also monitors their performance. Members of the general public may file complaints with the department when they believe a rehabilitation provider has violated any of the performance or professional conduct standards. The department investigates the complaints and may initiate a variety of disciplinary actions against the provider, 5
including monetary penalties. Subsequent negotiations with the provider may result in a settlement of the penalty. If a settlement does not occur, the department may bring the issue before an administrative law judge for a hearing. However, unlike other penalty processes, the judge’s findings of fact and conclusions of law are submitted to the Rehabilitation Review Panel (Minnesota Statutes § 176.102), which imposes the penalty. The panel’s decision may be appealed to the Workers’ Compensation Court of Appeals. Penalty payment: Monetary penalties are payable to the Assigned Risk Safety Account. Appendix table: Department monitoring of rehabilitation providers has resulted in penalties during each of the four fiscal years listed in the appendix. Managed care organization discipline (Minnesota Statutes § 176.1351) Description: Under Minnesota Statutes § 176.1351, the department certifies managed care plans. Minnesota Rules Parts 5218.0800 and 5218.0900 require the department to monitor the performance of these plans and investigate complaints. The department may refuse to certify, suspend, or revoke certification of a managed care plan for failure to provide required medical services and for failure to provide those services in accordance with the terms of the certified plan. In lieu of suspension or revocation of certification, administrative penalties may be assessed. The commissioner may enter into a stipulated consent agreement with the managed care plan for corrective or preventive action or the amount of the penalty to be paid. If there is no stipulated agreement and the managed care plan objects to the penalty assessment, it may be brought before a compensation judge for a hearing. Penalty payment: Monetary penalties are payable to the Assigned Risk Safety Account. Appendix table: There were no penalties assessed against certified managed care organizations in FY 2005. Health care provider discipline (Minnesota Statutes § 176.103) Description: Under Minnesota Statutes § 176.103, sanctions may be imposed against health care providers by the Medical Services Review Board for violating a workers’ compensation statute or rule. Any member of the general public may initiate a complaint against a health care provider if he or she believes a violation has occurred. If the department’s investigation determines that a complaint is substantiated, the commissioner may enter into a stipulated consent agreement with the health care provider for corrective or preventive action, including a monetary penalty. If a settlement does not occur, the department brings the issue before an administrative law judge for a hearing. The judge’s findings of fact and conclusions of law are submitted to the board, which imposes the penalty. The board’s decision may be appealed to the Workers’ Compensation Court of Appeals. 6
Penalty payment: Monetary penalties are payable to the Assigned Risk Safety Account. Appendix table: There were no penalties assessed against health care providers under this statute in FY 2005. Failure to insure (Minnesota Statutes § 176.181) Description: Under the provisions of Minnesota Statutes § 176.181, all employers that are covered by Minnesota workers’ compensation laws must obtain insurance through an insurance company or become self-insured. When an employer is suspected of operating without workers’ compensation insurance, the department conducts an investigation and assesses a penalty when the employer is found to be in violation of this law. The department uses a penalty matrix to determine the severity of each violation and the amount of the penalty. As with other penalties, a dispute may result in a settlement of the penalty or a hearing before an administrative law judge. Employers that fail to respond to a department’s penalty assessment may be taken to District Court for judgment and collection. Penalty payment: These penalties are payable to the Assigned Risk Safety Account. Appendix table: The department monitors and investigates employers suspected of being uninsured. Cases are generated from tips provided by the public, information from First Report of Injury forms, and a comparison of employers’ unemployment insurance records against their workers’ compensation insurance records. The number of penalties assessed decreased by 36 percent in FY 2005 from the previous fiscal year. The level of penalties collected in this area is a result of factors identified after penalties have been levied, including adjustments in payroll levels or class codes and the return of uncollected penalties by the Minnesota Department of Revenue due to the bankruptcy, lack of assets, or the inability to locate the subject uninsured employer. Late filing of Special Compensation Fund and loggers’ assessments (Minnesota Statutes § 176.129 and 176.130) Description: The Special Compensation Fund, which is administered by the department, is funded primarily by semi-annual assessments against insurance companies and self-insured employers based on the amount of indemnity benefits paid. Minnesota Statutes § 176.129 and Minnesota Rules Part 5220.2840 dictate filing and payment timelines and provide for the issuance of penalties when the timelines are not met. A second workers’ compensation statute, Minnesota Statutes § 176.130, imposes an annual assessment on Minnesota wood mills. This assessment is used to pay rebates to qualified employers in the logging industry and to fund a logger safety education program. Penalties provided under Minnesota Statutes § 176.130 may be imposed against wood mills for failure to pay their assessments by the statutory deadline.
These two penalties are combined in the appendix table under “Late Filing of Special Fund Assessment.” Settlement and litigation procedures are consistent with those used for other department penalties. Penalty payment: Both of these penalties are payable to the Assigned Risk Safety Account. Appendix table: The number of penalties in FY 2005 for late filing of special compensation fund assessments and logger assessments decreased by 36 percent from the previous fiscal year. This was primarily due to the simplification and the change in frequency in the filing of the assessment reports. Other penalties (Minnesota Statutes § 176.221, 176.225, 176.138, 176.231, 176.238, and 176.84) Description: Situations resulting in these penalties most often include late payment of medical, rehabilitation, or monetary benefits, failure to file required reports, frivolous or nonspecific denials of claims, and the improper payment or discontinuance of benefits. Most penalties are assessed against insurers, but penalties for failure to file required reports are also assessed against employers and health care providers. These penalties occur either as a result of complaints from members of the general public or as a result of departmental monitoring of files. As with other penalties, these may be settled or litigated after the penalty is assessed. Penalty Payment: These penalties are payable to the Assigned Risk Safety Account and/or the injured employee. Appendix Table: The number of these types of penalties returned to the FY 2003 level.
The overall quantity of penalties assessed from FY 2002 through FY 2005 has declined however the dollar amount has remained fairly consistent. The overall quantity and dollar amount of penalties collected from FY 2002 through FY 2005 has declined.
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