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November 2006

Area of Interest: U.S. Labor Department's OSHA Fines Connecticut Manufacturer $315,000 for Widespread Hazards

Wiremold Co., a manufacturer of electronic products, faces $315,000 in fines from the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) for workplace hazards at its West Hartford, Conn., plant. The company was cited for 40 alleged violations of safety and health standards following OSHA inspections begun April 12 in response to employee complaints.

OSHA's inspection also found that reportable instances of hearing loss among employees exposed to high noise levels were not recorded on the plant's OSHA logs, as required. The failure to record these cases, plus the work on live parts, resulted in the issuance of two willful citations carrying $140,000 in proposed fines.

OSHA proposed $117,000 in fines for 15 repeat citations for hazards found in these inspections that were similar to those cited in earlier OSHA inspections. They included material stored in an exit stairwell; improper storing and handling of flammable liquids and combustible items; numerous instances of unguarded or inadequately guarded machinery; an uncovered electrical junction box and other electrical hazards; an uninspected crane; an unguarded welding machine, and an inadequate system for collecting aluminum dust generated during buffing operations.

The company has 15 business days from receipt of its citations to request and participate in an informal conference with the OSHA area director or to contest the citations before the independent Occupational Safety and Health Review Commission.

Source: Occupational Safety and Health Administration

State: Florida

Area of Interest: McCarty Orders Increased Drop on Rates Filed for Workers’ Compensation

Florida Insurance Commissioner Kevin McCarty today disapproved the recent rate filing submitted by the National Council on Compensation Insurance (NCCI). NCCI’s filing called for a statewide average rate decrease in workers’ compensation insurance rates of 13.3 percent, which was primarily due to a significant drop in claims frequency and a reduction in the cost of claims.

The overall average rate decrease of 15.7 percent would produce a savings of over $400 million for Florida employers, and would constitute the fourth consecutive drop since Gov. Bush and the Legislature passed sweeping reforms to the state’s workers’ compensation system in 2003. The cumulative overall statewide average rate decrease for the period would total over 40 percent.

Workers’ compensation rate changes in Florida following the reforms were:

Source: State of Florida

State: California

Area of Interest: Northridge Company CEO and Wife Arrested for Alleged Workers’ Comp Fraud; Accused of Bilking State Compensation Insurance Fund of More Than $7 Million

A felony complaint was issued by the Los Angeles County District Attorney’s Office charging 3 individuals with charges ranging from fraud to conspiracy.  Bail for each of the defendants has been set at $6.5 million dollars.

The business obtained a workers’ compensation policy from State Compensation Insurance Fund (SCIF) on September 1, 2001. SCIF conducts routine audits of policy holders as part of its normal procedures.  The audits revealed that the payroll reported to SCIF was significantly lower than that reported to the Employment Development Department (EDD).  As a result, SCIF referred the case to the CDI Fraud Division.

During the course of the investigation, it was learned that the individuals were responsible for preparing the alleged fraudulent monthly payroll reports provided to SCIF. The monthly payroll reports were reviewed and approved by the President.  The investigation conducted by the CDI, Fraud Division determined that from September 1, 2001 to April 16, 2005, the business. underreported payroll of $26,937,575 to SCIF. This underreported payroll resulted in a premium loss of $7,565,009.  SCIF also assisted in the investigation.

Source: State of California

State: California

Area of Interest: Insurance Commissioner John Garamendi Announces Arrests of Four Suspects in Alleged $39 Million Workers' Compensation Premium Fraud Case

Investigation exposed what is likely the largest amount of fraud committed against an insurance company in California; one suspect still at large

Insurance Commissioner John Garamendi today announced the arrests of four suspects who allegedly committed more than $39,280,000 worth of workers’ compensation premium fraud against three insurance companies.

Each of the four suspects has been charged with one count of conspiracy to commit workers’ compensation insurance fraud and one count of conspiracy to commit denial of workers’ compensation insurance benefits. If convicted, they could face up to 10 years in prison

The suspects were all owners or employees who are alleged to have fraudulently underreported and/or misclassified employees to several insurance companies. The suspects’ companies were neither licensed insurers nor were they bonded and able to act as a third party administrator.

Source: State of California

State:Florida

Area of Interest: Office of Insurance Regulation Disapproves Insurer Rate Increases

The Florida Office of Insurance Regulation has issued Notices of Intent to disapprove recent rate filings from Cincinnati Insurance Companies and Home Pointe Insurance Company.

Cincinnati Insurance Companies and Home Pointe Insurance Company requested statewide average rate increases of 78.9 percent and 92.4 percent for their respective homeowner’s programs. The Cincinnati filing impacts 12,967 policyholders with a planned effective date of March 1, 2007 for new and renewal business. Home Pointe’s filing impacts 21,899 policyholders with a planned effective date of October 5, 2006 for new and renewal business. Upon receipt of a Notice of Intent to Disapprove, a company may request an administrative hearing, arbitration or modify its current filing.

In addition, the Office has approved Home Pointe’s dwelling fire rate filing request at 29.8% affecting 5,178 policyholders statewide.

Source: State of Florida

Area of Interest: OSHA Issues Hexavalent Chromium Guidance for Small Businesses

The Occupational Safety and Health Administration (OSHA) today issued safety and health guidance to help small businesses comply with the Agency's new hexavalent chromium(Cr(VI)) requirements for general industry, construction and shipyards.

The guide describes the steps that employers are required to take to protect employees from hazards associated with exposure to Cr(VI). It is divided into sections that address the major provisions of the standards, and follows the same organization as the corresponding paragraph of the standards. However, the guide provides more detail than the standards to help employers better understand the requirements.

Permissible Exposure Limits (PEL), exposure determination, regulated areas, methods of compliance, respiratory protection, protective work clothing and equipment, hygiene areas and practices, housekeeping, and medical surveillance, are the major topics included in the guide.

Hexavalent chromium compounds are widely used in the chemical industry as ingredients and catalysts in pigments, metal plating and chemical synthesis. Cr(VI) can also be produced when welding on stainless steel or Cr(VI)-painted surfaces. The major health effects associated with exposure to Cr(VI) include lung cancer, nasal septum ulcerations and perforations, skin ulcerations, and allergic and irritant contact dermatitis.

Source: Occupational Safety and Health Administration

State: California

Area of Interest Bay Area Man Sentenced in Bogus Insurance Company Scheme

Charged with grand theft and operating an unauthorized insurance company targeting high-risk consumers in Alameda County

Insurance Commissioner John Garamendi today announced a Santa Clara man who operated an unlicensed automobile insurance company will serve five years formal probation and pay restitution to his victims.

In a 14 count felony complaint, the individual was charged with two felony counts of grand theft of personal property and 12 felony counts of transacting insurance without authorization.

The investigation revealed that between approximately September 28, 2004 and January 31, 2005, the individual operated an unlicensed automobile insurance company by the name of Flat Rate Insurance Company (FRI). FRI appealed to high risk California insurance consumers by advertising very low automobile insurance rates on the Internet. Some policyholders had automobile accidents and presented claims for their damages. However, the suspect failed to pay all of the claims submitted and left some consumers without transportation and/or with liability exposures.

As part of his plea agreement, the individual paid more than $27,000 in restitution and agreed to pay more should additional victims come forward. While the potential for huge losses existed at the outset, the CDI Investigation Division was successful in closing down FRI quickly, minimizing losses by California insurance consumers.

Source: State of California

State: Ohio

Area of Interest: Ohio Enters into $7 Million Settlement with Insurance Firm

Resolves Antitrust Allegations by Petro, Insurance Department in Sale of Commerical Insurance

A settlement has been reached with Zurich American Insurance Company, resolving allegations that the company conspired with other insurers and insurance broker Marsh & McLennan to eliminate competition, mislead customers and inflate premiums paid for commercial casualty insurance policies in Ohio, all violations of Ohio’s antitrust and insurance laws.

As a part of the settlement, Zurich, without admitting these allegations, has agreed to pay $5 million in civil penalties and $2 million to reimburse the State for attorneys’ fees and investigative costs. The company also agreed to adopt comprehensive business reforms and cooperate with the state’s continuing investigation of the conspiracy. In connection with the resolution of other investigations and a class action lawsuit now awaiting approval, Zurich would pay nearly 79,000 of its business and government policyholders in Ohio their proportionate share from nationwide settlement funds exceeding $209 million.

The settlement agreement prohibits Zurich from providing false quotes and from entering into so-called “pay-to-play“ arrangements under which insurers compensate brokers for being included on a list of companies from which the brokers solicit bids or quotes. In addition, Zurich must institute business reforms that result in disclosure of information to consumers about the compensation it pays to insurance producers, including brokers. Zurich must also designate a compliance officer and create a compliance program to make sure it adheres to the terms of the agreement.

Source: State of Ohio.

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