Amended Self-Insurance Regs

 

In February, the Dept. of Industrial Relations adopted amendments to self-insurance regulations (Title 8 CCR §§ 15201, 15300, 15400, 15400.2, 15402.4, 15403, 15450, 15450.1, 15452, 15454, and 15463), and these new regs took effect March 11. The regs, which affect both public and private self-insurers, define terms, establish requirements for estimating future liabilities of workers’ comp claims for self insured employers, indicate claim file contents for self insured employers’ workers’ comp claims, establish requirements for the transfer of claims records from one administrator to another, and address audit site locations. In addition, these sections address the issuance of Certificates to Administer to TPAs, establish annual license fees for TPAs, and establish application fees for the testing of technical knowledge and certification of competence of individual administrators.

The following is a list of the regs that were amended along with bullets summarizing the new changes:

Section 15201 defines commonly used terms related to self insurance. The new amendments:

• expand the definition of "Adjusting Location" to address telecommuter claims adjuster locations.
• specify that each year’s claims log must list claims by the year reported, that claim logs of private self insurers done by calendar year and logs of public self insurers done by fiscal year.

Section 15300 requires a list of open indemnity claims with each Self Insurer’s Annual Report, requires indemnity and medical-only claims reflect realistic estimates of future liabilities due or potentially due, prohibits reduction of estimates for 3rd party recoveries or aggregate excess insurance, addresses procedures for claiming credit for specific excess insurance, and requires that estimates of future liability and paid costs be made available when claims are audited. The new amendments:

• clarify that estimates of future liability reflect liabilities reasonably expected rather than potentially due.
• specify required components for both indemnity and medical reserves.
• prescribe how to reserve in case of conflicting information.
• specify that medical reserves must be established for the duration of treatment and the life of the claim based on the worker’s life expectancy in claims with lifetime awards for benefits.
• specify principles that must be considered when reducing estimates based on utilization review or expected reductions in costs.

Section 15400 indicates required contents of claim files for injuries reported before 1990 and for injuries on or after 1/1/90, requires that estimates of future liability be reasonable and be adjusted upon receipt of certain items. It also recommends (vs. requires) use of a reserve calculation worksheet. The new amendments:

• delete the requirement for a reasonable estimate to be adjusted following certain events as requirements for the basis and timing of establishing reserves are covered in Section 15300.
• indicate that, for injuries reported on or after 1/1/06, claim files shall be in chronological order or subdivided into sections based on the nature of the documents; that electronic portions of files shall be easily retrievable; and that itemized written documentation showing the basis for calculating estimated future liability shall be in each file.

Section 15400.2 requires all claim files be kept and maintained for at least 5 years from the date of injury, or the date benefits were last provided, whichever is later, and indicates that claims may be closed 2 years after benefits are last provided. The new amendments:

• clarify that claims may not be closed if there is a reasonable expectation that future benefits will be payable

Section 15402.4 requires that in the event claims are transferred from one administrator to another, all open claims will be provided immediately to the new administrator, and all closed claims and all computerized claims data shall be transferred within 30 days unless otherwise provided by agreement. The new amendments:

• require the prior administrator to provide the new administrator hard copies of computerized claim contents at its own expense if it is not providing the computerized claim contents.

Section 15403 allows the Manager of Self Insurance Plans to order an audit at such reasonable times as is deemed necessary and claim files must be made readily available. The new amendments:

• require the claims administrator to make claims available for audit at a California office location of the administrator or the self insured employer in the event of an audit of claims that are administered at a telecommuting adjuster’s home.

Section 15450 requires that each claims administrator possess a Certificate to Administer, and provides certain exceptions. The new amendment:

• makes grammatical changes and deletes references to minimum, maximum, and median periods of time to issue the Certificates to Administer.

Section 15450.1 prohibits self administration of workers’ comp claims by private self-insured employers for the first three years of self insurance. The new amendment:

• makes grammatical changes and removes redundancies.

Section 15452 requires that self-insured workers’ comp claims be administered in California unless good cause for administering the claims out of state is shown; establishes a process for testing technical knowledge of workers’ comp so that individual adjusters may demonstrate competence, provides for an application form in the index of the regulations, and establishes a fee of $100 to take the Self Insurance Administration examination. The new amendments:

• specify that the desire to consolidate claims or the demonstration of competence of an out of state adjuster do not show good cause for out of state administration.
• delete the application form from the regulations.
• increase the fee for taking the exam to $150.

Section 15454 indicates time frames for renewing TPA Certificates to Administer and sets annual license fees for each TPA, and extra charges for additional adjusting locations. The new amendments:

• increase the annual license fees from $650 to $1,000 per year for each TPA.
• increase the additional charge from $100 to $200 for each additional adjusting location.

amended regs are online at http://sip.dir.ca.gov/Regs-ClaimsHandlingAndTPALicensingAndExamFees.doc