Benefit Penalties: Updated Info from DIR

 I received a letter from Charles Verre, Chief Administrative Officer of the Workers' Compensation Section of the Division of Industrial Relations responding to my request for more information about the number of benefit penalties against insurers and third-party administrators by DIR.  (DIR investigates complaints by injured workers that insurers and/or their third-party administrators are violating Nevada's workers' compensation laws.  If a violation is found, DIR may also assess a benefit penalty that is payable to the injured worker.)  I previously wrote in a blog post that after DIR gave me statistics, Mr. Verre told me during the DIR conference that DIR didn't have good statistics to give me because they had an old computer system and DIR couldn't properly track this information.

Mr. Verre wrote to me on January 23, 2014, that for fiscal year 2013 (7/1/2012 through 6/30/2013), they issued 13 benefit penalties against insurers and third-party administrators, and that $20,625 was paid in benefit penalties to injured workers during that time period.  Mr. Verre also stated that DIR does not collect benefit penalties on behalf of the injured worker.  He didn't tell me the amount that was assessed against insurers and administrators.   

--Written by Virginia Hunt, Hunt Law Office

A New and Better Regulatory Agency For Nevada Work Comp Claims?

      The Nevada Justice Association, comprised of plaintiffs' attorneys, has a small off-shoot group of workers' compensation attorneys who represent injured workers.  I joined this group, started by Billie-Marie Morrison of Craig Kenny & Associates this past year, and I'm glad I did.  The attorneys who attend freely share their practice tips, and they are very dedicated to improving the Nevada workers' compensation system for injured employees.

      Most of this group attended the educational conference  by the Division of Industrial Relations, Workers' Compensation Section  a few months ago.  During open question and answer sessions with the DIR  department heads, we called  DIR on the carpet for not complying with the law that requires that DIR keep accurate statistics about DIR complaints filed, fines imposed, and benefit penalties paid by TPA's and insurers.  We  also expressed our disappointment in the DIR complaint process as a remedy for negligent and incompetent claims handling.  

      At the DIR conference, the DIR Administrator, Donald Jayne, his chief attorney, Don Smith, and Southern District Manager, Chuck Verre, promised to meet with us claimants' attorneys to discuss our concerns in greater detail.  Just prior to our meeting last Thursday, it was announced that Donald Jayne had left the DIR.  However, Chuck Verre and Don Smith, along with Susan Sayegh,   Southern District Manager, fulfilled their promise to us and attended our meeting. 

      I still didn't get a satisfactory answer as to DIR's failure to keep accurate statistics.  Mr. Verre again  blamed it on their antiquated computer system.  He couldn't explain why the person in charge of statistics at DIR had been supplying me with statistical information the past two years, and he wouldn't comment further on whether I had been given correct numbers or not.   I still had the impression that this was information DIR did not want to disclose to us.  However, they did listen to our main complaint that DIR was ducking its responsibility  to investigate insurer violations when it tells us that it can't investigate if we have also requested a hearing before a Department of Administration hearings officer.   

      Perhaps the most encouraging bit of information I learned during this meeting was that 80% of the DIR investigators are new.  If the new chief administrator who replaces Don Jayne has a pro-active approach to investigating the complaints of injured workers who believe that they have been the victim of insurers and TPA's violating the law, then perhaps the DIR system will work as envisioned with these new investigators.

     Mr. Verre asked me whether I had an agenda in wanting the statistical information on fines and benefit penalties, implying that I was gunning for a new law at the next legislative session to allow bad faith lawsuits again.  I replied that when the law was passed in 1995 that prohibited bad faith lawsuits and replaced them with the DIR system of administrative fines, I was co-counsel on a bad faith case that was scheduled for trial.  Nineteen depositions had already  been taken  when the Nevada Supreme Court held that the case had to be dismissed after passage of the new law providing for administrative fines and penalties as the exclusive remedy for bad faith.  Madera v. SIIS, 114 Nev. 253, 956 P.2d 117 (1998).  

     I told Mr. Verre that bad faith lawsuits are expensive and take years to reach trial.  I wasn't sure that simply allowing bad faith actions was the solution for improper claims handling, although suing an insurer for actual and punitive damages certainly commands an insurer's attention better than a $250 fine and a $5000 benefit penalty.    I told him that what I was hoping for, much sooner than when the legislature meets again in 2015, was a different approach by DIR to enforcing the laws we already have on the books.  We shall see. 

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DIR Conference on Nevada Work Comp

On August 15-16, the Division of Industrial Relations (DIR) held its annual educational conference for anyone interested in the Nevada workers' compensation system.  I was unable to attend many of the break-out sessions, but was present for the panel discussions with the key DIR employees responsible for insurer compliance with the law. 

Previously, i wrote in a blog post that DIR had provided me with statistics on the number of complaints that result in actual violations of the law by insurers, the number of fines assessed, and the number of cases in which a benefit penalty is awarded to an injured worker.  It is generally the feeling among attorneys who represent injured workers that the DIR was not doing an adequate job in ensuring that insurers comply with the law.  I had asked for statistics on complaints to determine whether this perception had a legitimate basis.

The first time I asked questions regarding the  DIR's research department's recent email to me with last year's statistics, I was told to return the next day to ask the questions.  I did, and I wasn't at all satisfied with the answers.  Don Smith, Esq., Senior Division Counsel, and Chuck Verre, Chief Administrative Officer for DIR told me that they didn't think the statistics I had been given by Ruth were accurate.  However, they couldn't give me actual numbers themselves because they said they had a bad computer system.   They both thought that the number of benefit penalties that had been awarded was greater than 8 for the last fiscal year.

Several of us trouble-maker attorneys reminded DIR that they are obligated to keep statistical information pursuant to statute and to make the information public.  I think Donald Jayne, Administrator for DIR was sincere in his promise to us that DIR would get better computer programs so that accurate statistical information is available.  While the answers DIR gave us about their investigation process were lame, I think the conference did hammer home the point that DIR needs to do a better job for injured workers.  

--Written by Virginia Hunt, Hunt Law Office

Nevada Workers' Comp: Who or What is DIR?

I'm grateful that my social media consultant knows only what she's read in my blog posts about the Nevada workers' compensation system, because she reminds me that my intended readers, like her, may  know little about the system.   After reading my last blog post about DIR complaints, she saw that I didn't  give the full name of the Nevada state agency.  Sorry about that.  Here is more information about DIR, which is the Division of Industrial Relations, a sub-agency of the Nevada Department of Business and Industry. 

Below is a brief description and web site link to the four main Nevada state agencies responsible for our present workers' compensation system in Nevada:

1. Department of Business and Industry- a large state agency that has within it the

   Division of Industrial Relations, Workers' Compensation Section  (DIR) 

  • Regulates insurers, self-insured employers, medical providers, and third-party administrators,
  • Proposes and holds hearings on regulations (NAC 616),
  • investigates  complaints that an insurer or TPA has violated the law, and may impose fines and penalties for violations of the law,
  • Funds and oversees the Nevada Attorney for Injured Workers, the state attorneys who provide free legal representation to injured workers at the appeals officer level of hearings.
  •  Controls the list of rating doctors who do impairment evaluations on injured workers' for possible awards for permanent impairments due to  work injuries or occupational illnesses,
  • Verifies that a particular employer has workers' comp coverage so that doctors, clinics, and hospitals can file claim forms of injured workers,
  • Investigates cases where the employer doesn't have a workers' comp policy so that the injured worker can have the claim paid from the Uninsured Employers' Claim Fund,
  • Provides educational seminars to the public, training for claims adjusters and vocational rehabilitation counselors, and brochures to medical providers, employers, and injured workers
  • Posts the current statutes (laws) and regulations and approved claim forms on its web site, www.dirweb.state.nv.us./wcs

2. Department of Insurance 

  • Reviews insurance rates and licenses self-insured employers, third-party administrators,
  • A list of all licensed work comp insurers and TPA's in Nevada are at www.doi.state.nv.us.

3. Department of Administration

  • Operates the Hearings and Appeals Divisions which decide contested injured workers' appeals of adverse determinations by insurers or their TPA's 

4.  Office of the Attorney General

  • Has a fraud unit that investigates possible workers' compensation fraud by injured workers, employers, or medical providers, and brings criminal charges.

5. Office of the Governor

  • Consumer Affairs has an ombudsman that can look into complaints by injured workers, but the ombudsman has no authority to order benefits or medical care.

Names of the supervisory employees and department heads of the above agencies are on the various agencies' web sites

 

    

    

 

 

 

 

 

 

 

--Written by Virginia Hunt, Hunt Law Office

DIR Statistics Disappointing for Injured Workers

 Last year when I contacted the Research and Analysis Supervisor of the Workers' Compensation Section of the Industrial Insurance Regulation Section of the DIR, I was told that only 31 benefit penalties were issued in 2011.  I just received statistical information for Fiscal Year 2013 (July 1, 2012 to July 1, 2013), and over this past year,  only 8 benefit penalties were issued.  Investigations were requested 963 times in the past fiscal year for the entire state of Nevada. 

I was told that of the 779 DIR investigations that were completed in the last fiscal year, DIR found only 184 violations of the law by an insurer or TAP (third-party administrator).  70 complaints resulted in administration fines assessed, and only 8 resulted in a benefit penalty in some amount awarded to an injured worker  I've asked some follow-up questions to determine how much money was actually collected in fines, and how much was actually paid to injured workers on assessed benefit penalties.  I know from my discussions with other claimants' attorneys that most of those 8 benefit penalty cases are still in the appeals process, with the insurer and/or TAP fighting the penalty.  

Filing a DIR complaint to allege that the industrial insurer is violating Nevada law governing work injuries is the only remedy available to an injured worker in Nevada.   See NRS 616D.030.  An injured worker cannot sue his employer or they employer's insurer for bad faith or negligence in paying benefits or delaying medical care.  The Nevada legislature thought that injured workers would be adequately compensated by DIR awarding them  benefit penalties,  and that insurers would follow the law if they were subject to administrative fines.  However, if only 70 fines were assessed in the 184 cases where insurers or TPA's  violated the law,  and only 8 benefit penalties were imposed, the current DIR complaint system does not provide any real incentive for insurers and their TPA's to administer workers' compensation claims correctly. 

 --Written by Virginia Hunt, Hunt Law Office

DIR Complaints Are Insufficient Remedy

 In 1995, the Nevada legislature passed a law, NRS 616D.030,  that injured workers could no longer sue workers' compensation insurers or the third-party administrators who handle comp claims .Injured workers had been filing  lawsuits for money damages against  insurer's or TPA's for their  "bad faith" or negligence in denying or delaying medical care and compensation benefits, The large employers and their insurers were successful in convincing state legislators to  do away with  these lawsuits entirely.  The lawmakers replaced the injured workers' right to sue with a law that  only allows injured workers to file complaints with the DIR.

The Division of Industrial Relations is the state agency responsible for ensuring insurers, self-insured employers, and TPA's compliance with the laws and regulations governing work accidents and occupational diseases.   If an injured worker thinks that the adjuster handling her claim is not following the law in handling her claim, she may file a written complaint with the DIR.  The complaint does not have to be on any particular form, but this form can be used.

DIR is supposed to investigate any complaints for violations of the law.  If DIR finds a violation, it may then hit the insurer or TPA with an administrative fine and a benefit penalty to punish the insurer or TPA.  Administrative fines can range from $3,000 to $15,000 depending on whether this is a first, second or subsequent violation.    In addition, the DIR may also order the insurer or TPA to pay a sum of money, called a benefit penalty  (up to $50,000),  to an injured worker.  The benefit penalty amount depends on how much harm was caused to the injury worker by the adjuster's violation of the compensation laws. 

Attorneys who represent injured workers generally believe that this system of fines and penalties does not adequately compensate injured workers who are harmed by an adjuster's failure to handle claims according to the law.  Attorneys would prefer to bring a lawsuit against the insurer or TPA to recover money damages awarded by a jury.  Attorneys argue that the administrative fines and benefit penalties don't sufficiently deter insurers and TPA's from trying to shirk their duties under the law to pay legitimate claims on time and to provide appropriate medical care. 

DIR's Research and Analyst Supervisor kindly provided me statistical information regarding DIR Complaints.  She said that DIR receives about 1,400 complaints every year, including all written complaints, phone calls, and emails from injured workers.  Many informal complaints are quickly resolved with a single phone call by a DIR investigator.  

As I have filed many formal, written DIR complaints on behalf of my clients over the years, I was curious as to how many formal complaints were filed every year, and in how many cases were violations found.  I was told that DIR cannot determine from its current computer program how many formal complaints last year resulted in violations.  DIR could only tell me that in calendar year 2011, there were 31 benefit penalties issued . That tells me that injured workers are awarded money through the DIR complaint process for harm caused by insurers or TPA's in only  2% of the cases  involving alleged  DIR complaints of some sort.  

Unfortunately, the Nevada legislature said that filing a DIR complaint is the injured worker's exclusive remedy for harm by adjusters handling cases.  Is it a sufficient remedy if an injured worker goes without necessary medical care and suffers additional injury?   Is it a sufficient remedy if an injured worker loses her home because the adjuster can't manage to send compensation checks on time, and  to the right address, over and over again? I don't think so.  I think that a lawsuit is more apt to get the attention of the industrial insurer.  

While filing a  DIR complaint is not likely to result in an administrative fine or benefit penalty, it still helps to file a complaint.  Adjusters dislike having to respond to an investigator's request for information. Additionally,insurers and TPA's can have their licenses suspended or revoked if DIR finds repeated violations. 

--Written by

Workplace Safety In Nevada

Congratulations to Alexandra Berzon, a journalist with the Las Vegas Sun, for recently winning the Pulitzer Prize for Public Service for her investigative reporting last year of the 9 construction workers who died at CityCenter in a 16-month time period. Ms. Berzon continues to report on the reforms, or rather the lack of significant reforms to ensure workplace safety, during the current legislative session in Carson City.  Ms. Berson also reports on efforts by attorneys and injured workers’ advocates to make other necessary changes in the law to the workers’ compensation system in Nevada.

   Ms. Berzon contacted me about six months ago for information about my clients’ experiences in filing complaints with the Division of Industrial Relations for violations of the law by third-party administrators.   She impressed me as being extremely thorough in her search for accurate facts about whether the current system of requesting fines and penalties from the Division of Industrial Relations adequately protects and compensates injured workers with legitimate complaints.  I was happy to also offer her my opinion that it is woefully inadequate.  Thank you to Ms. Berzon for her excellent work in letting the public know what really happens to injured workers in Nevada.