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August 2004

State: New York

Area of Interest: OSHA Signs Letter of Agreement with Mexico

The U.S. Department of Labor's Occupational Safety and Health Administration and the Mexican Embassy today signed a Letter of Agreement that reinforces the Department of Labor's continuing efforts to ensure safe and healthful working conditions for workers from Mexico and other Latin American countries.

The OSHA agreement outlines many areas of collaboration in communication, outreach, and training to assure Mexican workers appreciate their rights for a safe and healthful work environment. In addition, the Consulates will help Mexican workers and employers understand the role OSHA plays in worker protection, enforcement, and compliance assistance.

Source: Occupational Safety and Health Administration

State: Maine

Area of Interest: OSHA Cites Two Maine Employers Following Explosion

A Jan. 9, 2004, explosion at an Orrington, Maine, trash-to-energy plant that cost a worker his left hand could have been prevented if proper procedures for protecting workers had been followed, reports the U.S. Labor Department's Occupational Safety and Health Administration (OSHA).

OSHA has issued citations and proposed penalties for alleged violations of safety standards to PSC Industrial Outsourcing North Atlantic Inc. of Portland, an industrial cleaning and maintenance service, and ESOCO Orrington Inc., which operates the Penobscot Energy Recovery Company's trash-to-energy plant in Orrington.

ESOCO had hired PSC to remove slag from boiler tubes at the plant. In the deslagging process, a "shooter" places primed explosive charges in the boiler. After the "shooter" exits the boiler, the charges are then detonated from outside by a second worker. The accident occurred when one charge was detonated while the worker was still placing charges inside the boiler.

OSHA's inspection found that PSC did not require the shooter to leave the tank before each detonation, even though a PSC employee had been killed in a similar incident in Alma, Wisc., in Aug. 2001 and the company was aware that OSHA standards and industry practice require workers to leave the tank before detonation. As a result, OSHA has issued a willful citation to PSC, carrying the maximum fine of $70,000, for failing to remove the worker from inside the boiler prior to each detonation. A willful violation is defined by OSHA as one committed with an intentional disregard of, or plain indifference to, the requirements of the OSH Act and regulations.

PSC was also issued eleven serious citations, carrying $41,000 in fines, for allowing workers to make and store explosive components in the only path of egress and make up more primed charges than required, not protecting employees against noise during explosions, not providing barricades and a pre-blast warning signal, fall hazards, inadequate communication between employees working in and outside the boiler and confined space hazards.

ESOCO Orrington was issued four serious citations, with fines of $11,000, for not ensuring barricades, warning signs and a pre-blast signal, not inspecting self contained breathing apparatus monthly and not having a written exposure control program for bloodborne pathogens. A serious violation is defined as a condition that exists where there is a substantial possibility that death or serious physical harm can result to an employee.

Source: Occupational Safety and Health Administration

State: Ohio

Area of Interest: North Ridgeville, Ohio, Plastics Company Assessed $123,450 in Proposed Penalties for Alleged Willful and Serious Workplace Safety Violations

The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) has issued citations and proposed penalties to Plastic Components Inc. of North Ridgeville, Ohio, for a variety of alleged workplace safety violations that posed threats to workers.

The penalty and OSHA citations are based on an inspection initiated in January 2004 following a formal complaint about hazards at the custom plastic molding manufacturing and assembly plant. During that inspection, OSHA officials determined that injury trends indicated a high incidence of hand and finger lacerations.

As a result of that inspection, OSHA issued citations for 11 alleged serious violations and two alleged willful violations of federal workplace safety and health regulations. Serious violations included allegations of absent machine guarding, operation of defective forklift trucks, and failure to require and enforce the use of eye, face and hand protection, among others. Alleged willful violations addressed obstructed emergency exits, work areas, and aisles used for pedestrian and mechanical equipment traffic.

Source: Occupational Safety and Health Administration

State: New York

Area Of Interest: Superintendent Serio Rejects 29.4 Percent Workers Comp Increase

Superintendent of Insurance Gregory V. Serio today rejected the filing submitted by the New York Compensation Insurance Rating Board (CIRB) that recommended an overall increase of 29.3 percent in workers' compensation insurance rates. The Superintendent determined that the data CIRB submitted to support its request -- combined with testimony and information gathered during three public hearings -- did not warrant the increase.

In the Opinion and Decision issued by the Department today, the Superintendent questioned the need for such a large rate increase given the consistent level of profitability reported by the workers' compensation industry in recent years, which reported a return of 4.1% for 2004 and 4.5% in 2003. The Department believes that the true rate of return for the industry is as high as 8.1%.

The Department also found that CIRB's filing did not address the effects of Section 32 of the Workers' Compensation Law, which allows insurers to settle claims at significant savings. The Department's review of the filing also found that insurers writing workers' compensation are not performing adequately in fighting fraud, and the Department cannot approve the increase when companies have yet to reap the positive benefit from New York's anti-fraud measures.

Source: State of New York

State: New York

Area of Interest: Governor Pataki Announces Reduction in Auto Insurance Rates Success of Anti-Fraud Measures Reaffirms the Need for Even Tougher Measures

Governor George E. Pataki today announced a two percent decrease in auto insurance premiums for drivers receiving coverage under the New York Assigned Risk Plan, which will result in lower insurance payments for more than 337,000 New York drivers. This decrease, along with other recently announced rate decreases, are the result of the Governor's efforts to fight auto insurance fraud. In making the announcement the Governor also called on the Assembly to act on legislation that would further reduce fraud and provide more savings to New York drivers.

In 2001, under the direction of the Governor, the New York State Insurance Department submitted a sweeping legislative and regulatory package to fight fraud and lower rates. The Governor also signed an Executive Order that named the Attorney General as Special Prosecutor to coordinate investigatory and prosecutorial efforts at the State level to combat auto insurance fraud.

The package led to additional initiatives by the Insurance Department to fight fraud. The Department places fraud investigators with the offices of District Attorneys throughout the state to strengthen a partnership between federal, state and local law enforcement in the fight against fraud. Regulation 68, which reduces the time limit for filing claims, has been a major tool in the fight against fraud and in 2003 was upheld by the Appellate Court. A record 811 frauds arrests were made in 2003, a strong sign that New York's anti-fraud efforts are working.

Additional legislation would further fight fraud by giving law enforcement more tools to fight fraud and placing stiffer penalties on the offenders. The legislation, which already has passed the State Senate and has the Governor's support, includes:

• S.7434: Creates the crimes of staging a motor vehicle accident; prohibits planning and execution of an accident; and provides crime is a B felony if an uninvolved party is injured.

• S.555: Establishes the class E felony of unlawful procurement of clients, patients or customers for knowingly acting as a runner, or using, soliciting, directing, hiring or employing another person to act as a runner; a "runner" is a person, who knowingly, for profit, seeks to procure clients, patients or customers on behalf of an attorney or health care provider for the purpose of fraudulently obtaining insurance benefits or asserting a claim.

The Assigned Risk Plan consists of those policyholders who are unable to obtain insurance in the voluntary market. They generally have poor driving records, little or no prior driving experience, or a high frequency of claims. The rates and availability of automobile insurance are established by a competitive insurance industry, based on verifiable loss experience data, and monitored by the Insurance Department.

Source: State of New York

State: Florida

Area of Interest: Spring Hill Resident Charged with Workers' Comp Fraud Investigators videotaped supposedly disabled worker on construction site

A former employee with a local rehabilitation center was caught performing manual labor while collecting workers' compensation benefits for an alleged injury sustained on the job in 2003.

Investigators with the department's Division of Insurance Fraud say Jesus Fernandez, 44, of 7140 Sealawn Dr. in Spring Hill, collected thousands of dollars in fraudulent workers' compensation benefits.  According to investigators, Fernandez reported an injury to his employer after hospital beds he was transporting fell on him.  Fernandez was treated by a physician, placed on restricted duty and began receiving workers' compensation payments for injuries to his neck, back and right hip. 

In March and April 2004, the workers' compensation carrier hired investigators to conduct video surveillance that later was turned over to state investigators.  The video recorded Fernandez climbing on ladders, lifting ladders, carrying tools to rooftops and working on air conditioning units.  As a result of Fernandez's allegedly fraudulent claim, more than $18,000 in payments were made by the carrier.

Fernandez was arrested late Thursday and charged with one count of grand theft and one count of workers' compensation fraud.  He was booked into the Hernando County Jail, with bond set at $4,000.  If convicted on all charges, he faces up to 10 years in prison.

Source: State of Florida

State: Florida

Area of Interest: Workers Compensation Carriers, Self Insured Plans Fined More than $875,000 for Violations - Fines are the result of audits completed during fiscal year 2003-04

The Florida Department of Financial Services has fined 31 providers of workers' compensation coverage a total of more than $875,000 for failing to fully comply with Florida law in administering workers' compensation benefits to injured workers, according to Chief Financial Officer Tom Gallagher.  The fines are the result of audits completed during the fiscal year 2003-04.

Insurance companies and self-insured plans are judged under statutory standards related to:

• Timely payments to injured workers;
• Timely payment of bills to medical providers;
• Timely filings of notice of injury reports to the Department of Financial Services.

Florida law requires carriers to promptly pay injured workers and medical providers in 95 percent of total cases in order to avoid penalties.

Promoting a sound workers' compensation system is a top priority of CFO Gallagher.  Gallagher recently lowered annual assessments paid by carriers and self-insured plans to fund the administration of the workers' compensation system.  Revenues derived from the assessment cover expenses for the Division of Workers' Compensation, the Office of Judges of Compensation Claims, a portion of the Agency for Health Care Administration, a portion of the Department of Education, and a portion of the Bureau of Workers' Compensation Fraud.  Over the last two years, Gallagher has reduced the annual assessment from 2 percent to 0.75 percent.

Source: State of Florida

State: New Jersey

Area of Interest: Improved Auto Insurance Reforms - Continue to Generate Benefits for New Jersey Drivers - An Additional $15 Million to be Returned to More Than 200,000 Policyholders

Banking and Insurance Commissioner Holly C. Bakke today commended Liberty Mutual's decision to return nearly $15 million to more than 200,000 policyholders.

Liberty Mutual's decision brings the total amount returned to New Jersey drivers to more than $160 million. This recent trend in lowering rates to reward good drivers is proof that the revitalized market is making life better for New Jersey policyholders.

Liberty Mutual, the fourth largest auto insurer in New Jersey, is the latest carrier to announce a return based on special dividends and rate reductions.

Liberty Mutual Group is comprised of two companies that write auto insurance in New Jersey: Liberty Mutual Fire Insurance Company (LMFIC) and Liberty Insurance Corporation (LIC). The company plans to issue a special dividend totaling $9.3 million that will affect 180,000 long-term LMFIC policyholders who carry comprehensive and/or collision coverage. Liberty Mutual has submitted a filing with the Department to reduce their rates for 41,000 LIC policies totaling $5.6 million.

Earlier this month, Governor McGreevey and Commissioner Bakke joined AllstateNJ officials who also announced plans to return $15 million to more than 200,000 of its policyholders. The Governor's auto insurance reforms have also produced the following results for New Jersey drivers over this past year:

• Mercury Insurance has entered the marketplace, the first new auto insurer in seven years;
• State Farm decided to suspend its practice of dropping coverage for 4,000 New Jersey drivers per month;
• More than one million policyholders have received more than $160 million back in voluntary rate reductions and special dividends;
• 37,000 previously uninsured drivers are now contributing more than $54 million through the Governor's "Last Chance" program.

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