California Workers' Compensation Rates Going Up in 2014

Despite the fact that recent legislation in California limited access to the Worker's Compensation system even further, and imposed medical treatment review procedures without the availability of an adversary system, worker's Compensation rates are increasing in 2014.

Insurance Commissioner Dave Jones today adopted an advisory average pure premium rate of 2.70 dollars per 100 dollars of employer payroll for workers compensation rates effective January 1, 2014.

The adopted amount is lower than that proposed by the Workers' Compensation Insurance Rating
Bureau of California's (WCIRB). The WCIRB's proposed advisory average rate was $2.75 per $100 of payroll.

The WCIRB's proposed advisory average pure premium rate is 8.7% ($2.75 per $100 of payroll) above the industry's average filed rates as of July 1, 2013 and the adopted pure premium rate ($2.70 per $100 of payroll) is 6.7% above the industry's average filed rates as of July 1, 2013.

Commissioner Jones, the WCIRB and the public members' actuary all agree that the overall impact of SB 863 (2012) continues to result in savings for the workers' compensation system.

The California Department of Insurance continues to observe that medical and indemnity losses are outpacing wage growth and consequently, the average advisory pure premium will increase in 2014.
Media Note:

• The commissioner's pure premium decision is advisory only. Pursuant to California law, the commissioner does not set or have authority over workers' compensation insurance rates. The commissioner's advisory pure premium rate is not predictive of what an individual insurance company may charge its policyholders because the review of pure premium rates is just one component of insurance pricing. 
• Workers' Compensation Insurance Rating Bureau of California

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California employer sentenced for insurance fraud

Employer fraud is rampant. As costs to do business increase the underground economy continues to expand. Today's post was shared by votersinjuredatwork and comes from www.dailynews.com

A West Hills man was sentenced Thursday to 29 days in county jail and three years’ probation after pleading guilty to one count of insurance fraud for failing to report employee income in order to pay lower premiums on his air-conditioning company’s workers’ compensation policy. Officials with the California Department of Insurance said Douglas Lambert, 48, did not report or under-reported employee income to Clarendon National Insurance Co. from 2006 to 2009 for Lambert Air Conditioning, a company he owned and operated in Visalia, near Fresno in Northern California. “Fraud is a multimillion-dollar enterprise, which costs consumers over $210 million annually,” said Insurance Commissioner Dave Jones in a statement. “Lambert cheated both Clarendon National and the State of California out of over $110,000, and by doing so passed the cost of his fraud onto consumers across the state,” Lambert was living and working in Tulare County at the time the initial complaint was filed with the Department of Insurance and was prosecuted in Northern California. Authorities said he filed at least one workers’ compensation claim for an employee’s injury during the time frame of the investigation even though he was not paying insurance on the employee’s wages. He was ordered to pay $110,381 in restitution and will serve his sentence in Los Angeles County jail. While he was living up north, a spokesman for the department said he...

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Corporate Workers Compensation Fraud: California Targets Underground Economy

Sweep targets contractors operating in California's underground economy

Insurance Commissioner Dave Jones today announced that a statewide joint task force in the fight against California's underground economy has netted contractors allegedly operating illegally, resulting in 104 enforcement actions.

"Operation Underground took aim at the "off the books" activity of unscrupulous contractors allegedly operating illegally or without proper coverage for their workers," said Commissioner Jones. "In doing so, they not only failed to protect their employees, but they create unfair competition in California."

"Participants in the state's underground economy are harmful to everyone," said CSLB Registrar Steve Sands. "Anyone who neglects their responsibility to comply with state contracting, insurance, and payroll requirements drives up premiums. At the same time, legitimate licensed contractors are being underbid and struggle because of these illegal business practices."

Detectives from the California Department of Insurance (CDI), the Contractors State License Board (CSLB), Employment Development Department (EDD), and County District Attorneys' offices partnered for a series of sweeps at suspected illegal construction sites on June 20 and 21, 2012. Supplied with information in part from the State Compensation Insurance Fund (State Fund), sweeps were conducted in 11 counties, where enforcement actions were issued for violations including failure to carry workers' compensation insurance, under-reporting the number of workers to obtain cheaper insurance premiums and to pay less payroll withholding tax, and cash payment to hide unregulated practices. Uninsured, untaxed, unlicensed, and unregulated activity is referred to as the underground economy.

Sweeps took place in cities within Alameda, Butte, El Dorado, Kern, Los Angeles, Monterey, Orange, Riverside, San Bernardino, Santa Clara, and Yolo Counties. These actions resulted in 104 enforcement actions against contractors that failed to obtain the appropriate workers' compensation insurance coverage for workers, obtain the required contractor's license, or comply with payroll tax withholding requirements. Some received stop orders for the workers' compensation violations, which means they are not allowed to use employee labor until they obtained a policy for their workers and submit proof of that coverage to CSLB.

Highlights of the two-day operation, by county, are as follows:

• Investigators issued two citations for workers' comp violations and stop orders in Pleasanton. One of them also faces contracting without a license charges. In Dublin, one was cited for workers' comp violations and received a stop order (Alameda County).
• Investigators in Chico opened one insurance investigation; and two contracting citations are pending in Paradise (Butte County).
• Six citations were issued for workers' comp violations, and three investigations and audits were opened in South Lake Tahoe (El Dorado County).
• In Bakersfield, two insurance investigations and two EDD investigations were opened (Kern County).
• One contractor caught in Inglewood and another in Santa Clarita will face tax audits (Los Angeles County).
• One insurance investigation was opened in Salinas and four insurance investigations were opened in Monterey County; three were cited for workers' comp violations in Pebble Beach; one was cited in Carmel for contracting without a license and illegal advertising; and two were cited for workers' comp violations and received stop orders (Monterey County).
• Two contractors caught in Riverside face EDD audits, along with one in Temecula (Riverside County). One contractor caught in Ontario received a citation for workers' comp violations and faces an EDD audit; one caught in Chino Hills faces an EDD audit; one contractor at a Fontana jobsite received a citation for aiding and abetting a non-licensee who was cited for contracting without a license and failure to carry workers' comp; and one EDD audit was opened in Upland (San Bernardino County).
• Sixteen EDD audits were opened and one person was cited for workers' comp violations in San Jose; and one EDD audit was opened in Campbell (Santa Clara County).
• In Woodland, investigators issued six stop orders for workers' comp violations and opened six investigations for insurance and tax fraud (Yolo County).

"This enforcement activity is a result of the partnership under the Joint Enforcement Strike Force which is made up of various state agencies including CDI, CSLB and EDD to aggressively combat the underground economy," said Jones. "Legitimate businesses that play by the rules are often forced to close their doors because illegal businesses are cheating the system."

Commissioner Jones offers the following tips for consumers when hiring a contractor:
Call the Contractors State License Board at 800-321-2752 or visit their Web site at www.cslb.ca.gov to check a contractor's license number or get further information on home and property repairs.

1. Deal only with licensed contractors. Ask to see the contractor's "pocket license," together with other identification. If the person claims to be representing a contractor, but can't show you a contractor's license or home improvement salesperson registration card, call the contractor and find out if the person is authorized to act on the contractor's behalf.
2. Do not do business with a contractor who does not carry the appropriate insurance coverage. If the contractor is not insured, you may be liable for accidents that occur on your property. Ask the contractor if he/she carries general liability and workers' compensation insurance. Request a certificate of insurance (COI) from the contractor that shows the name of the insurance company, policy number and policy limits the contractor carries. Contact the insurance company directly to verify information on the COI.
3. Don't rush into signing a contract. Collect business cards, interview several contractors, and request multiple bids for comparison. Make sure to read the fine print on all estimates and contracts.
4. Obtain estimates from at least three contractors before deciding which to hire.
5. Beware of building contractors that encourage you to spend a lot of money on temporary repairs.
6. Hire local, licensed contractors when possible, as it is easier to deal with a local contractor if problems develop. However, since it may not always be possible to deal with local contractor, be particularly careful to thoroughly check references for out-of-town contractors.
7. Get everything the contractor discusses in writing. Also, if changes or modifications occur in the contract terms, they should be acknowledged by all parties in writing.
8. Never sign a contract with blanks that have not been filled in. Unscrupulous contractors may fill in the blanks later with unacceptable terms.
9. Never pay a contractor for the entire project in advance or before the work is completed. California law requires that the amount of the down payment for any one improvement project, other than for construction of a swimming pool, may not exceed $1,000 or 10% of the contract price, excluding finance charges, whichever is less.
10. Be especially suspicious of door-to-door sales people who make unrealistically low estimates, refuse to leave a contract overnight, or try to sell their services by playing on your emotions.
11. Federal law requires a three-day "cooling off" period for unsolicited door-to-door sales of more than $25.

Consumers with questions or concerns regarding insurance, or who feel they have been a victim of insurance fraud, are urged to contact the California Department of Insurance at 800-927-HELP (4357) or online at www.insurance.ca.gov.

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