DWC Issues 2015 Audit Standards

State law (Labor Code §§129 and 129.5) requires DWC profile audit reviews (PARs) of all workers’ compensation adjusting locations at least once every five years. Each year the Division calculates overall claim operation performance ratings based on composite scores for such measures as payment of accrued and undisputed indemnity; late first payment of temporary disability and first notice of salary continuation; late first payment of permanent disability and death benefits; late subsequent indemnity payments; and provision of notices with qualified medical evaluator and agreed medical evaluator. The Division then uses the ratings from the last three years to set standards for upcoming audits.

DWC has just announced that the 2015 ratings, based on 2011-13 audit results, will be lower than they were in 2014. The 2015 PAR standard will be 1.53446; the full compliance audit standard will be 1.68525. What do these numbers mean to you?   

Audited adjusting locations receiving a PAR rating of 1.53446 or lower must pay any unpaid compensation, but no penalties; while those with a PAR performance rating of 1.53447 or higher face a full compliance audit (FCA) and an additional sample of indemnity claims will be audited. 

Full Compliance Audit subjects w/an FCA performance rating of 1.68525 or less must pay any unpaid compensation + penalties for all violations involving unpaid & late paid compensation. If an FCA subject’s FCA performance rating is 1.68526 or higher, an additional sample of denied claims and the expanded sample of indemnity claims will be audited. Penalties will be assessed for all violations per 8CCR §10111.2.

Additional details on the performance standards that the Division will use in 2015 profile audit reviews and full compliance audits are now posted on the DWC Audit Unit Web site under “Annual Audit Performance Standard.”

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