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December 2003

State: California

Area of Interest: Insurance Commissioner John Garamendi Adopts a 14.9% Decrease in Worker’s Comensation Pure Premium Rates, Rolling Back Rates to July 2002 Level - The ruling represents ongoing savings of $5.5 billion from the broken workers’ compensation system offering hope of relief to employers from skyrocketing premiums

Insurance Commissioner John Garamendi, responding to the worker’s compensation crisis dampening California’s economy, announced he has significantly lowered the advisory pure premium rate by 14.9%, effectively returning it to the July 2002 level.

Garamendi’s ruling, based upon recommendations from experts, as well as the evidence of the significant savings that can result from the reform legislation signed in September, said California’s employers must have relief from rising rates, and his advisory ruling is a big step in that direction.

Although insurers use his advisory rate as a benchmark, the Commissioner does not have the power to set the rates charged to employers. However, the reform legislation includes a provision that requires insurers to file rates that reflect the savings that the Commissioner determines are due to the reforms.

Source: State of California

State: Texas

Area of Interest: TDI Adopts Rules on Credit Scoring Disclosure, appeals process to provide consumer protections

AUSTIN - The Texas Department of Insurance (TDI) today adopted initial rules regarding the use of credit scoring by insurers in Texas. These rules, along with the statutory provisions in Senate Bill 14, are among the strongest in the country regulating the use of credit scoring.

Under the new rules, companies using credit information must provide a disclosure statement to the consumer once an insurance application is received. The disclosure notifies potential policyholders if credit scoring will be used in rate setting and describes the consumer's rights and protections.

SB 14 made provisions for the use of credit scoring by the insurance industry but mandated that the Texas Insurance Commissioner regulate its use. Texas insurers using credit scoring filed their credit scoring models with TDI in September. By law, those models are open to the public. TDI has already released these models under open records requests to the media and consumer groups.

Source: State of Texas

Area of Interest: Sixteen People, Including Four New York City Police Officers, Charged with Bribery, Grand Larceny, and other Offenses in Scams to Defraud Automobile Insurance Providers

Superintendent of Insurance Gregory V. Serio today joined Bronx District Attorney Robert T. Johnson and New York City Police Commissioner Raymond W. Kelly to announce that sixteen people, including four current and one former New York City Police Officers, have been charged with grand larceny and other offenses in the theft of nearly a quarter of a million dollars from seven insurance companies. Of the total amount paid by the insurance companies, over $185,000 was for claims submitted by medical facilities where "victims" of "alleged automobile collisions" were examined and treated.

It is alleged that the defendants caused insurance companies to pay claims over $229,700 for medical treatment, bodily injury and property damage based on accident reports of automobile collisions that never happened, and medical procedures that never occurred. The defendants have also been charged in connection with claims involving an additional $130,633 in billing that the insurance companies did not pay.

Source: State of New York

State: Florida

Area of Interest: Gallagher Advises Construction Industry: Apply for New Workers’ Compensation Exemption by November 30. Letters sent to affected businesses regarding deadline and recent legislative changes

Florida’s Chief Financial Officer Tom Gallagher today urged current workers’ compensation exemption-holders in the construction industry to take the necessary steps to file for a new exemption by November 30. All current construction exemptions will expire on January 1, 2004.

The Florida Department of Financial Services has sent additional notifications to affected businesses regarding the January 1, 2004, deadline and recent legislative changes to the original reforms passed in May. Under the new legislation, passed during a recent special session, individuals now have the option of becoming a member of a limited liability company and qualifying for an exemption by having at least a 10 percent ownership in the company. Exemptions are limited to three officers. Individuals are no longer required to incorporate to maintain their exemption.

Businesses choosing to incorporate may exempt no more than three corporate officers who hold at least a 10 percent share in the company. The business must also be registered with the Department of State’s Division of Corporations.

Source: State of Florida

Area of Interest: Crushing Accident and Other Hazards Lead to $153,500 in Fines for Wyman Gordon's North Grafton, Mass., Plant

A North Grafton, Mass., forge manufacturer's failure to protect workers against crushing, machine guarding, electrical and other hazards has resulted in $153,500 in fines from the U.S. Labor Department's Occupational Safety and Health Administration.

Wyman Gordon Company has been cited for a total of 25 alleged willful, repeat and serious violations of the Occupational Safety and Health Act following an inspection prompted by a May 5 accident in which the operator of a large metal-cutting bandsaw had both feet crushed by a 9,000 pound metal billet that tipped over as he was attempting to move it into the saw.

OSHA's inspection found that the saw's feed conveyor had been broken for more than a year, forcing workers to feed billets into it in an unsafe manner, and that the company had ignored workers' calls to fix it. As a result, OSHA issued a willful citation to Wyman Gordon for failing to maintain the equipment in safe operating condition and proposed a fine of $70,000, the largest allowed under law. OSHA defines a willful violation as one committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act and regulations.

Source: Occupational Safety and Health Administration

State: New York

Area of Interest: OSHA-NYC Medical Examiner Alliance Aims to Benefit Immigrant Workers, Reduce Fatalities

The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) offices that service the five boroughs of New York City have formed an alliance with the New York City Office of the Chief Medical Examiner (OCME) to foster a culture of fatality prevention while sharing best practices and technical knowledge. OSHA Health and Safety alliances are part of Labor Secretary Elaine L. Chao's ongoing efforts to improve the health and safety of workers through cooperative partnerships

New York City's large immigrant population every year suffers a disproportionate number of occupational fatalities, a number of which go unreported despite the legal requirement for employers to report workplace deaths to OSHA. Meanwhile, the Medical Examiner is involved in investigating and ruling on the cause of all unattended deaths.

Source: Occupational Safety and Health Administration

State: Ohio

Area of Interest: Richard Jamieson Sentenced to 20 Years in Federal Prison for Viatical Fraud Insurance Department Closely Involved with Federal Agencies in Nationwide Viatical Investigation

Ohio Department of Insurance Director Ann Womer Benjamin announced that John Richard Jamieson, former operator of Toledo-based Liberte Capital Group, was sentenced today in U.S. District Court in Toledo to 20 years in federal prison on 159 counts for his involvement in a viatical settlement and investments scheme that defrauded life insurance companies and nearly 3,000 investors nationwide of more than $105 million. Jamieson was also ordered to pay $92 million in restitution.

Through its investigation, the Department was able to identify 33 individuals each of whom had fraudulently obtained five or more life insurance policies by not disclosing accurate health information. All of them had either HIV or AIDS and collectively obtained more than 200 policies. Liberte Capital Group then purchased these policies and sold them to unsuspecting investors. Because of this investigation, 83 insurance companies were able to rescind most of the fraudulent policies, saving the companies more than $25 million.

Source: State of Ohio

State: Washington

Area of Interest: L&I issues statement on repeal of ergonomics rule

The November 4 vote on Initiative 841 resolves the debate about the ergonomics rule. Voters have said they don't believe a mandatory rule is appropriate.

The initiative heightened awareness of ergonomics and generated a broader discussion of this important safety issue. Both sides of the debate have said that use of proper ergonomic techniques belongs in the workplace and benefits employers as well as workers. We look forward to working collaboratively with labor and business to reduce these costly injuries.

Source: State of Washington

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