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December 21, 2015

Aggressive CIRB Audits Can Result in Dramatic Increases to Workers' Compensation Premiums

Health care providers that were members of failed self-insured workers’ compensation trusts have coped with increased workers’ compensation premiums in the private market.  Recently, aggressive reclassification of health care workers by the New York Compensation Insurance Rating Board (CIRB) has compounded the budgetary strains upon providers securing workers’ compensation insurance for their employees.

CIRB determines, revises or modifies the classification applicable to individual risk. It creates job codes for classification of employees based on the employees’ job duties and responsibilities. For example, CIRB provides a classification code for “social case workers-traveling” and this code, in conjunction with the employers’ loss experience dictates the amount of the employers’ workers’ compensation premiums.  The aim is to ensure that the workers’ compensation premiums for employees with the same duties and responsibilities, but different employers do not have a wide variance in the amount of premiums their employers must pay.

CIRB has the power to conduct on-site audits of employers to ensure that employees are properly classified and that risk premiums are appropriately correlated to the employees’ risk of injury.  Subsequent to an audit, CIRB may issue a directive to the employer’s insurance carrier requiring a classification code change for certain employees. The classification code change may result in a higher risk premium for re-classified employees and substantial additional premiums for the employers.

Many health care providers have employees that do not fit squarely in the classification code categories created by CIRB.  Providers offering health care services that are unique or unfamiliar to CIRB may create difficulties for CIRB auditors trying to apply a proper classification code. CIRB auditors have re-classified and upcoded employees into classification codes that carry increased workers’ compensation premiums without a clear understanding of the employees’ job duties and responsibilities.  For example, CIRB has a long history of auditing employers who provide temporary housing in combination with mental health counseling, substance abuse counseling and on-site health services that include treatment by doctors and nurses. CIRB has less familiarity with employers who offer temporary housing and refers clients to mental health counseling, substance abuse counseling and off-site health services, but has grouped employees of both the former and latter employer in the same classification groups.  The result is increased premiums for employers that are incongruous with the employees’ risk of an on the job injury.

The improper re-classification of employees can result in steep increases in workers’ compensation premiums, and these increases are often applied retroactively.  Employers subject to a CIRB audit should communicate their employees’ job duties and responsibilities clearly to ensure that proper classification codes are applied.  Consider consulting an attorney to successfully navigate the process of contesting a re-classification and ensure that workers’ compensation premiums do not increase because of CIRB’s failure to understand your employees’ job duties and responsibilities.

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