Running a business requires a constant balance between keeping your ducks in a row and not suffocating them with an singular focus on clerical accuracy. Stress and worry can limit creativity and innovation, but unless you’re aware of the job’s minutia, it’s easy for tiny items like paperwork, permits, and insurance plans to fall through the cracks. Business Credentialing Service ensures your peace of mind by keeping these ducks in a row, and letting business owners focus on the more important issues.
Workers’ Compensation is a frequently overlooked aspect of running a business — coverage is always assumed (by both employers and employees), but what happens when there’s an unforeseen lapse in coverage? Or how will you respond when your insurance broker refuses to accept a charge that covers a workplace injury?
Failure to comply with state workers’ comp laws is a criminal offense. If the state is made aware of your situation, the DLSE (Division of Labor Standards) will issue a stop order, effectively shutting down your business until coverage is obtained. Actual penalty costs vary from state to state, but ignoring the stop order is considered a misdemeanor no matter where your business is. The DLSE can also issue a fine of up to $10,000, imprisonment in a county jail for up to 60 days, or both. There’s even the potential of an additional $1,000 fine per employee when the stop order is issued, up to a maximum fine of $100,000.
These steep penalties exist only because workers’ compensation insurance is critical for both the employer and the employee. Workers’ comp began as a way to protect businesses, and this is still one of the primary reasons to secure insurance. These funds make it impossible for employees to double dip in injury cases. Once they accept payment from the workers’ comp fund, they aren’t allowed to file a private suite as well. If your insurance is up to date, it provides a huge buffer against bogus claims. Insurance carriers and claims adjusters have the power, resources, and personal interest needed to sniff out dishonest claims.
But it’s crucial that this protective buffer isn’t ever abused, even if the cause is mere oversight. States will penalize your business if payments aren’t released promptly. For as great as workers’ comp funds are for companies, their main purpose is to ensure that the injured party doesn’t have to jump through hoops to get their bills paid. Even when the injury and incident in question may have been quite painful, workers’ comp insurance strives to make the aftermath as painless as possible.
Perhaps the best way to show how beneficial an auditing service like BCS can be is to relay a recent California case that ended tragically with the death of a hard working family man. On December 20th, 2003, a Ralph’s Grocery employee named Charles Romano injured his shoulder and cervical spine while restocking shelves. After finally undergoing surgery for his injury in August 2005, Romano contracted methicillin-resistant staphylococcus aureus (MRSA), an infection that causes renal and pulmonary failure. If that wasn’t bad enough, Romano also became paralyzed from the shoulders down.
While Romano sought treatment for this debilitating infection, the third party insurance administrator refused to grant payment for the procedure. Instead, Romano had to opt into Medi-Cal, California’s version of Medicaid. Even when a workers’ compensation judged forced Ralph’s and the insurance company to cover this “compensable consequence,” they failed to comply. For whatever reason, the ruling was ignored, denying and delaying treatment for Mr. Romano. As a result, he unfortunately passed away on May 2, 2008, with the bills still unpaid.
Sedgwick CMS, the third party administrator, was referred to the Division of Workers’ Compensation’s Audit Unit for “unreasonably delaying or denying treatment to a patient who was dying from an infection he contracted after undergoing surgery for a compensable work injury.” This passive approach to such a critical case cost Sedgwick CMS thousands of dollars and their reputation; not to mention the inappropriate death of Mr. Romano.
The prompt and proper treatment of workers’ comp claims is a necessary first step in preventing similar tragedies. BCS realizes that an auditor’s presence wouldn’t have guaranteed Romano’s survival, but we would have been there to oversee the case and make sure the insurance channels were running as intended. While Charles Romano’s death is a depressing extreme, it’s a humbling example of how quickly insurance claims can get out of hand.
If any skeptics remain, let us outline a more realistic scenario that can still wreak havoc on your business’ bottom line. Thankfully, this scenario is also easier for BCS’ auditors to prevent.
What happens when you send an injured employee to the emergency room and realize that you don’t actually have the required workers’ compensation insurance? Coverage could have simply lapsed, or the initial processing could have been mishandled. Either way, your company’s situation just became substantially more dire.
After discovering a lapse in coverage (it’s unfortunate that the most common method of discovery is actually filing a legitimate claim), contact your insurance broker immediately. They may reinstate your coverage, but action on their part is far from guaranteed. Their decision is usually based on your overall pay history in addition to other risks that will be calculated by your underwriter. Transparency is absolutely necessary, and your insurance broker won’t make multiple accommodations to this situation.
Which means it’s in your business’ best interest to avoid this point at all costs. It’s more than preventing headaches and ensuring profits, the actual lives of your employees may be at risk. Burying your head is never a valid option, and Business Credentialing Services exists to help you understand whatever nightmare results from a lapse in coverage. Otherwise, the employees have the right to come after your and your business, as the protections offered by workers’ comp aren’t in effect. These funds have nothing to do with fault. As long as the injury was related to their job, employees are entitled to benefits if the injury was their fault, your fault, or nobody’s fault.
It isn’t often that such radical consequences result from something as simple as a clerical oversight. Delays of benefits can come from an understaffed claims office, an overworked or poorly trained adjuster, a vindictive employer, an improper incentive program, and more. It’s a lot to monitor when your mind is (and should be) focused on growing your business. This is why BCS Audit can be such an asset. Business Credentialing Services routinely examines your insurance paperwork to make sure it’s always up to date. If real life is indicative of anything, it’s that disaster will strike at the most inopportune moment. With BCS Audit, there won’t be any inopportune moments.