State: California

Area of Interest: Los Angeles Man Convicted of Felony Insurance Fraud in Worker's Compensation Case

LOS ANGELES -- Richard Montellano Argomaniz, a former Los Angeles County Sheriff's Department (LASD) civilian employee, plead no contest yesterday to one count of felony insurance fraud for allegedly filing a false workers' compensation claim.

Argomaniz was arrested following an investigation by the California Department of Insurance Fraud Division that revealed he allegedly committed insurance fraud when he falsely claimed he was disabled from injuries he sustained to his back and right arm in a work-related accident in 1999.

The Los Angeles County Department of Human Resources engaged the services of a private investigation company to investigate Argomaniz' claim. Surveillance video showed Argomaniz working for STOVACT Inc. during the same periods he received benefits from his workers' compensation claim.

In a deposition, Argomaniz testified that he was currently a STOVACT employee, but insisted he did not begin working until after he resigned his position with the county and ceased receiving workers' compensation benefits.

Argomaniz received Temporary Total Disability (TTD) and Industrial Accident earnings and salary continuation benefits in excess of $9,000 from Los Angeles County and the LASD while he was unable to work.

Following his arrest and conviction for felony insurance fraud, Argomaniz was sentenced to 100 hours of community service and ordered to pay restitution of $2,880 to Los Angeles County. Argomaniz' felony conviction will be reduced to a misdemeanor upon payment of restitution.

Source: State of California

State: Minnesota

Area of Interest: Minnesota workers' compensation costs level-off

Workers' compensation costs leveled-off in 2000, following a five-year decline, according to a newly released report from the Minnesota Department of Labor and Industry (DLI).

The Workers' Compensation System Report estimates the total cost per $100 of payroll remained $1.37 for both 1999 and 2000. This is down 45 percent from the 1989 through 1994 average of $2.51 and the lowest since costs were first estimated in 1984. A combination of employer and insurer efforts and law changes in 1992 and 1995 produced major workers' compensation cost reductions through most of the 1990s. These cost reductions are now having a more limited effect.

The purpose of the annual report is to inform policy discussions. It presents statistics about the state workers' compensation system through 2000, and focuses on claims and costs, vocational rehabilitation, disputes and dispute resolution. Other findings include:

• There were 8.2 paid claims per 100 full-time workers in 1999, and 1.7 claims with cash benefits per 100 full-time workers in 1999 and 2000. Most claims had medical benefits only. Claim rates fell during most of the 1990s.
• The average number of weeks of cash benefits per claimant increased by about 14 percent from 1998 through 2000.
• Driven primarily by the increase in benefit duration, average cash benefits per claim increased 7 percent from 1998 through 2000.
• Approximately 17 percent of claimants with cash benefits, injured in 2000 -- about 5,300 individuals, received vocational rehabilitation services, an increase from 15 percent for 1997.
• The percentage of claims with disputes, after peaking in 1991, declined rapidly in the early 1990s, and changed relatively little during 1995 through 2000.
• The percentage of cash-benefit claims with claimant attorney fees decreased from 17 percent in 1991, to 12 percent in 2000.
• For 2000, total attorney fees were roughly 16 percent of cash benefits and 6 percent of total workers' compensation cost.

Source: State of Minnesota

State: New York

Area of Interest: Department Revamps New York State's Assigned Risk Plan and Slashes Requested Rate Hike

Superintendent of Insurance Gregory V. Serio today announced a series of significant changes to the New York Automobile Insurance Plan, (the Plan), New York's assigned risk insurer of last resort, and challenged New York's insurance community to reduce the Plan's population to 200,000 policies or less -- levels where enrollment stood just 2 years ago.

Included in the new directives for the Plan are the implementation of a full anti-fraud unit within 60 days, 100% automation of the application process to reduce fraud, expansion of the voting membership on the Governing Committee by adding 12 new members-- including a consumer representative-- and a requirement of bi-annual public meetings of the Plan--one to be held upstate and one downstate.

"In May of last year, the Department laid out plans for a wide-reaching auto insurance reform package and we have made good on our promises," said Serio. "The Attorney General was named Special Prosecutor by Governor Pataki and we have already seen tangible results from that initiative. We have fought an over two-year battle for amendments to Regulation 68, and remain committed to seeing the fraud--fighting regulation through until the end. And we introduced sweeping legislative changes and remain optimistic that 2002 will be the year that the legislature institutes real meaningful reform for New York State's drivers."

"No-fault insurance fraud costs New York's drivers $1 billion annually," said Serio. "My new directives will go a long way to fight fraud, increase Plan accountability, lower costs to all drivers, and once again de-populate the Plan."

The Plan, which had over 1.5 million New York policies in 1995, was reduced by almost 90% to just 175,000 policies in 2000.

The Plan will be directed to institute a full fraud-fighting unit within its offices in the next two months that will be consistent with the special investigations units currently operating in all of New York's auto insurance companies. The Plan will also be instructed to add 12 new members including 5 company representatives, 6 new producers representatives, and a consumer representative to its Governing Committee. There are currently 15 members, composed of 8 insurers and 7 producers. Additionally, in order to better inform and educate the public at large, the Plan will be directed to hold two public meetings annually, one in Albany and one in New York City.

"I challenge the Plan's Governing Committee and the insurance community to take advantage of the single best way to control the insurance industry's costs—de-populate the Plan," said Serio. "In 2000, there were about 175,000 policies in the Plan. Today, the Plan has in excess of 350,000 policies. I call on the Committee and Insurers to immediately reverse this trend and to reduce the number of policies to 200,000."

Additionally, the Department will be directing the Plan to modify its procedures to provide enhanced documentation on voluntary market declinations of coverage in order to decrease the number of insureds who are placed in the Plan. The Plan offers auto insurance to those who cannot find coverage in the voluntary market.

The Department also slashed the rate hike requested by the Automobile Insurance Plan by 75%--approving a statewide increase of 19.5% for the Plan.

"No-fault insurance fraud is currently the number one cost driver in auto insurance in New York State," said Serio. "The Department has seen reports of no-fault fraud skyrocket from approximately 5,000 reports in 1996 to over 15,000 in 2001. The creation of a fraud unit within the Plan together with the efforts of the Insurance Department, Attorney General, and local DA's will help to suppress these criminal acts and punish those who commit fraud. However, it is only by implementation of Regulation 68 and meaningful action from the Legislature that we will bring long-term stability to the marketplace, preserve the affordability and availability of auto insurance in New York, and put a stop to this theft from the pockets of New York's drivers."

Source: State of New York

State: Texas

Area of Interest: Health Plan Ordered Shut Down

For the fourth time in one year, Commissioner Jose Montemayor today issued a cease-and-desist order to stop an unauthorized entity from selling health insurance policies to Texas consumers.

Montemayor's order is directed toward Ajax Health Benefit Plan (AHBP), Ajax Enterprises, Inc. (AEI) and Justin Michael Sciarra, owner and president of both companies located in Audubon, New Jersey. Along with the cease-and-desist order, Montemayor ordered the companies and Sciarra to each pay $1 million in administrative penalties within thirty days.

"Once again we have uncovered a health care plan that has left some Texas residents with unpaid claims and losses," said Montemayor. "The people who offer fraudulent health care plans are going to find out the hard way that ripping off Texans can prove costly." While unlicensed and unauthorized to sell insurance in Texas, AHBP, AEI and Sciarra began selling healthcare coverage in September 2000, and they claimed to be a healthcare plan established and operated in accordance with the Employee Retirement Income Security Act of 1974 or ERISA. Approximately 250 Texas residents were enrolled in the plans that terminated Jan. 31, 2001.

Enrollees in the AHBP plan were required to become "employees" of AEI, a purported staff leasing company. However, the enrollees neither worked for AEI, nor were they paid wages by AEI.

A notice of hearing was sent by certified mail to AHBP, AEI and Sciarra informing them of their right to defend the allegations against them. No response was received.

The Texas Department of Insurance (TDI) is considering disciplinary action against licensed insurance agents in Texas who sold or accepted commissions from the sale of these plans. Just last week, Montemayor issued a bulletin to agents warning them of the consequences of marketing or selling unauthorized insurance. Agents and consumers can verify if an insurance entity is licensed by calling TDI's Consumer Protection Help Line at 1-800-252-3439 or checking the agency's Web site at www.tdi.state.tx.us/.

Source: State of Texas

State: Washington

State to Delay Penalties and Citations for Ergonomics Standard

A blue ribbon panel was convened in the state of Washington to evaluate the State's Ergonomics Rule. While the panel believes the criteria the governor established have been met, we offer the following recommendations to facilitate effective and fair implementation of the ergonomics rule.

Recommendation 1. As WISHA proceeds to the subsequent stages in the implementation of the ergonomics rule, the demonstration project approach should continue to be used to assist the agency in further promoting understanding of the rule. The agency should develop a specific plan for the next phase of demonstration projects, which should be run in as many industries as is reasonable, with emphasis on industries where significant hazard reductions can be anticipated. The panel strongly encourages all employers and employees to participate in these demonstration projects when offered the opportunity.

Recommendation 2. Further development of educational programs should continue and, in particular, should include additional training on alternative hazard analysis tools. Special attention should be given to the educational and training needs of small businesses.

Recommendation 3. The Department should explore innovative programs to further promote their consultation services to employers. Adequate resources should be provided to these and other outreach programs.

Recommendation 4. As an additional aid to consistency, during the first two years of enforcement of the ergonomics regulation, the Department should clear all citations, prior to issuance, through its office of the Ergonomics Program Director.

Recommendation 5. The Department should, on a regular basis, report on the progress of current and future demonstration projects, educational programs, consultation programs and enforcement activities to the WISHA Advisory Committee.

Source: State of Washington

Area of Interest: Ergonomics Standards being developed in Minnesota and Alaska

The Minnesota standard is very concise. If the law is passed, it will require MN-OSHA to develop a "standard regulating workplace ergonomic hazards … to prevent work-related musculoskeletal disorders." The law would require that the standard address:

1. awkward postures;
2. force;
3. repetitive motion
4. repeated impacts
5. heavy, frequent, or awkward lifting; and
6. vibration

The focus of the standard will be to prevent injuries before they occur.

The Ergonomics standard in Alaska will be much broader and will encompass IAQ, and workplace violence. Alaska OSHA is currently holding public meetings prior to beginning the rulemaking process.

Source: Ergoweb.com

Area of Interest: OSHA Encourages Defibrillator Use

OSHA is encouraging employers to consider making Automated External Defibrillators, or AEDs, available in their workplaces to help save the lives of workers who experience cardiac arrest while on the job. To support this effort, the agency issued a pocket card and technical information bulletin on the use of AEDs.

"AEDs are easy to use and can make the critical difference in reviving individuals who suffer a cardiac crisis," says OSHA Administrator John L. Henshaw. "Administered within 3 minutes, the electric shock or defibrillation restores the normal rhythm to the victim's heart and can increase survival rates from less than 5 percent to nearly 75 percent." Immediate defibrillation, he says, can revive more than 90 percent of victims.

Source: Occupational Safety and Health Administration

Area of Interest: On the Job Injuries Declining

The overall on-the-job injury and illness rate dropped 3 percent in 2000, continuing a downward trend that has lowered the incidence rate from 8.1 per 100 equivalent full-time workers in 1995 to 6.1 in 2000. That was the finding of the Bureau of Labor Statistics' latest Survey of Occupational Injuries and Illnesses, announced in December.

The 2000 rate is a record low since BLS started reporting annual figures in the 1970s. About the same number of cases, 5.7 million, were reported in 2000 as in 1999, when the injury and illness rate was 6.3 cases per 100 full-time workers. Meanwhile, employees worked 2 percent more hours in 2000 than the previous year.

Elaine L. Chao, Secretary of Labor, called the announcement "good news" for both workers and those who employ them. "These data show that our nation's workplaces continue to become safer and more healthful each year," she says. "We must keep improving upon this positive trend in workplace injury and illness rates through proper enforcement of health and safety standards, as well as OSHA's model compliance assistance program."

Injuries and illnesses that resulted in lost workdays accounted for 2.8 million cases, compared with 2.7 million in 1999. The lost-workday rate in 2000 was 3 cases per 100 workers, the same rate as in 1999.

The rate for workers on restricted work activity while they recuperate stabilized at 1.2 per 100 workers in 2000, the same rate as in 1998 and 1999. Manufacturing workers experienced the highest injury and illness rate, at 9 cases per 100 workers in 2000. Other rates for large industrial sectors were 7.1 per 100 for agriculture, forestry, and fishing; 4.7 per 100 for mining; 8.3 per 100 for construction; 6.9 per 100 for transportation; 13.9 per 100 for nursing and personal-care facilities; and 5.9 per 100 for wholesale and retail trade.

Source: Occupational Safety and Health Administration