VENTURA COUNTY SCHOOLS SELF-FUNDING AUTHORITY WORKERS COMPENSATION CLAIM AUDIT NOVEMBER 2010

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1 VENTURA COUNTY SCHOOLS SELF-FUNDING AUTHORITY WORKERS COMPENSATION CLAIM AUDIT NOVEMBER 2010 NICHOLAS L. CALI, Claim Consultant/Auditor P. O. Box 2158 Sonoma, California Phone/Fax: 707/ Mobile: 707/

2 I. CONCLUSIONS Ventura County Schools Self-Funding Authority s (VCSSFA) workers compensation claim administration program is performing above claim industry standards and CAJPA Claim Administration Accreditation Criteria as well as the VCSSFA Reporting Requirements. It is apparent that York Insurance Services has successfully completed transition to a paperless workers compensation claim administration environment. The computerized claim administration reporting vehicle Claims Connect provides all necessary documentation, including necessary forms as well as reporting by the examiners and all parties involved. Mr. McCathan has successfully completed a staffing change at one examiner position, which has been very positive and has improved the unit s performance significantly. File reviews reflect a keen sense of urgency regarding claimant contact, medical management, compensability investigation, and the delivery of benefits in a timely and accurate fashion. Permanent disability issues and future medical issues are being addressed proactively and disposed of wherever possible. Reserving philosophy and practice continue to be sound. Excess reporting is in compliance with the excess carrier s reporting criteria. The reporting timeliness issue identified in the previous workers compensation claim audit involving one specific school district has since been resolved, and there is no indication of any significant reporting timeliness problem following this audit. Workers compensation claim administration by York Insurance Services for the VCSSFA continues to be above industry standards and has improved over previous audit findings. Nicholas L. Cali, Claim Consultant/Auditor 1

3 II. RECOMMMENDATIONS There are no recommendations as a result of these audit findings. Nicholas L. Cali, Claim Consultant/Auditor 2

4 III. FINDINGS A. STAFFING VCSSFA s workers compensation claim program continues to be administered by York Insurance Services in their Oxnard, California office under the direction of Executive Director Thomas F. Osborne. The York Insurance Services unit is dedicated to VCSSFA claims. The unit manager is Winston McCathan, a thoroughly professional workers compensation claim handler and administrator. There are six claim examiners, all considered to be senior level examiners by way of experience and professionalism. The examiner staffing includes: Dorothy Davis, Sylvia Pulido, Lee Cribben, Anna Flores, Claudia McKay, and Connie Cavallo. Rose Miranda handles the Medical Only claims. Ms. Cavallo is the new examiner; a review and audit of her claim handling during this audit indicates that she is very experienced and demonstrates a keen sense of urgency and professionalism in the handling of her caseload. The examiners diaries are current, and reporting in the Note Pad feature of the computerized system Claims Connect is comprehensive and timely. All necessary workers compensation claim form documentation is clearly recorded in the system as well as Mr. McCathan s involvement as supervisor/manager via supervisory reviews and approval of the Claim Management Reviews (CMR). Staffing for the Authority s workers compensation claim administration program is proper and caseloads are very reasonable, ranging in the area of B. REPORTING Reporting timeliness by the school district members has improved from 7.8 days to 4.0 days. Keep in mind that this audit involved the most recent claims reporting for the past months. Significant in this finding is the fact that the Ventura Unified School District went from 10.0 days to 3.9 days on average. The 4.0 days average for the Authority is excellent reporting timeliness. The members should be commended and encouraged to continue their emphasis to improve this area. Below is a listing of the average reporting timeliness for several of the member school districts: Fillmore School District 4.0 days Hueneme School District 4.0 days Moorpark Unified School District 6.0 days Nicholas L. Cali, Claim Consultant/Auditor 3

5 Oak Park School District 4.0 days Ocean View School District 3.5 days Ojai School District 4.0 days (1 claim) Oxnard School District 3.2 days Oxnard Unified High School District 6.5 days Pleasant Valley School District 4.5 days Rio School District 4.8 days Ventura County Office of Education 3.0 days Ventura Superintendent s Office 1.0 day Ventura Unified School District 3.9 days The Claims Management Review (CMR) continues to be required of Mr. McCathan every 90 days if the total incurred is over $25,000. Each claim file reviewed, and others spot-checked that were not included in the audit, indicate that the CMR is contained in the file with Mr. McCathan s approval documented. I found no exceptions to this requirement. C. CLAIMANT CONTACT Claimant contact was made or attempted in virtually 100% of the claim reviewed regardless if the injured worker was losing time at the time of the report. This is an important feature that relates to medical case management and the establishment of communications and rapport, thus helping to deter legal representation. Delay and denial notices are being sent timely and decisions dates were met in 100% of those cases reviewed. D. DIARY SYSTEM The York Insurance Services diary system continues to be 60 days for all Indemnity claims unless otherwise established by the examiner based upon the individual needs of each claim. The diary system was found to be current, and examiner reporting was timely and comprehensive. E. INVESTIGATION York Insurance Services examiners are responsible for all necessary investigation, a majority of which is performed cost-effectively via telephone and/or with the member school districts, medical providers, or others involved in the claim. Field investigation, when necessary, is assigned to Frye Claim Consultation and Administration, Inc. and RJN Investigations, Inc. Investigative reporting by the vendors reviewed in this audit were found to be timely and comprehensive. Invoicing is proper with itemized services performed, time, and hourly rates. A spot-check of the Frye Claim Consultation and Administration, Inc. s invoices Nicholas L. Cali, Claim Consultant/Auditor 4

6 reveals they are no longer charging for travel time, and their hourly rate has been reduced to $69. York Insurance Services examiners report all workers compensation claims to the Index Bureau. F. TEMPORARY DISABILITY I found only one claim involving temporary disability in which the initial notice was late. York Insurance Services paid a small penalty and there were no other negative findings in this regard. This is good compliance in this area of performance. Computations of the temporary total disability rates are made timely and accurately. Wage statements were contained in 100% of the claims reviewed during this audit. G. PERMANENT DISABILITY The York Insurance Services examiners are very proactive in regard to the administration of permanent disability benefits. They recognize the potential for permanent disability and advances are made in a timely manner. I did see one case in which the PD advance was one day late, thus creating a small penalty for York. This is not indicative of a negative trend in this area of performance. There is an aggressive approach toward the settlement and disposition of permanent disability issues by way of Stipulation and Award or Compromise and Release. York contracts with Crowe Paradis to compute Medicare Set-Aside allowances in those cases where they are required. The Note Pads are documented with the Medicare Set- Aside requirement automatically for each claim. H. LITIGATION The Authority maintains a panel of approved defense counsel from which the York Insurance Services examiners make assignments when litigation is at issue. Those firms include: Joan Bird Graves, Robeson, Bourassa Pearlman, Borkas, and Wax Floyd, Skeren, and Kelly Dorey and Horelly. A review of some litigated claims handled by these firms during this audit reveal an aggressive approach that is generated by examiners proactive medical case management and litigation strategy. It is apparent that the examiners are driving the claim disposition in litigated claims. Nicholas L. Cali, Claim Consultant/Auditor 5

7 The examiners activities from the claims inception throughout the life of the claims supports the fact that litigation prevention is a major goal, and the low litigation ratio reflects their success. Litigation control and management continues to be a positive area of performance in VCSSFA s claim administration program. In reviewing defense counsel invoices, I found them to properly itemized as to services performed, time, and hourly rates. The hourly rate appears to be capped at $165, which is reasonable for this geographic jurisdiction. I. MEDICAL CONTROL AND PAYMENTS As indicated above, the York Insurance Services examiners are skilled in medical case management. The utilization review program is aggressive, and nurse case management is also effectively employed. Medical bills are reviewed and approved by Wellcomp. Medical bill payment timeliness was spot-checked and revealed that York pays bills well within 30 days of receipt. The savings that result from the bill review process are evident. The York Insurance Services examiners are ensuring that the Medical Provider Network (MPN) is utilized for treatment of injured workers. The claims are well documented with their involvement in identifying non-approved treating physicians and getting the injured worker back on track with appropriate medical treatment. The physicians in the MPN are reporting timely and their reports clearly identify permanent and stationary information upon which to base permanent disability rating decision. J. SUBROGATION Some of the claims reviewed during this audit involve the potential for subrogation. The examiners are keenly aware of the need to recognize third party liability and the potential for subrogation. The investigations are documented and collection is pursued aggressively. K. REHABILITATION York Insurance Services examiners identify the rehabilitation benefit criteria in each claim, reserve for its potential, and provide the necessary administration of this benefit. This is documented on every CMR. L. RESERVES Reserving philosophy and practice by the York Insurance Services examiners are sound. They are establishing and maintaining an ultimate probable cost reserve for Indemnity, Medical, expense, and rehab costs based upon the information available in each claim. The deficiency found in the previous audit involving a single examiner no longer exists as that examiner has been replaced. Nicholas L. Cali, Claim Consultant/Auditor 6

8 I did review a group of 23 Future Medical claims during this audit. I found that in 100% of those claims, the reserving practices were proper. There were no dangling reserves other than necessary medical or expense reserves. Medical Only claims reviewed are being processed properly. Reserve rationale is documented on the CMR form in each claim, which is produced every 90 days. In addition, Mr. McCathan comments on reserves during his supervisory reviews documented in the Note Pads. M. EXCESS NOTIFICATION The Authority s excess coverage is effective July 1, Coverage is provided by Castle Point National Insurance with a $500,000 Self Insured Retention per occurrence. Reporting requirements have remained unchanged with 50% of the SIR or $100,000 in incurred expenses being a trigger to report. Status reporting is required quarterly. I attempted to select as many claims as possible that qualified for excess notification. There were several claims reviewed during this audit that qualified for excess notification based upon incurred amounts or nature/extent of injuries/benefits involved. All of those claims have been reported, and status reporting is current and documented in the Note Pads or other areas of the Claims Connect system. In those cases where the Authority s SIR has been pierced, reimbursement activities are active and documented. Nicholas L. Cali, Claim Consultant/Auditor 7