North Carolina Employers Face Jail Time Over Uncovered Workers’ Claims

By | April 23, 2012

North Carolina officials are requiring insurers to expedite the payment of workers’ compensation patients medical and wage-loss benefits or risk being sentenced to jail.

The North Carolina Industrial Commission has ordered more than a dozen employers to attend a May 22 hearing in an attempt to resolve claims that have been dragged though the legal system for decades. Employers who refuse to pay or settle part of a claim will face contempt charges and be ordered to jail.

“In the interest of better serving the employees and employers of North Carolina and enforcing the provisions of the workers’ compensation law, the North Carolina Industrial Commission is reviewing its contempt procedures,” said Pamela Young, chair of the commission that is charged with enforcing the state’s workers’ compensation law.

The commission’s action came within weeks of a study conducted by the Raleigh, N.C-based News and Observers that found that tens of thousands of employers may be operating without coverage.

At issue are the commission’s lack of resources to monitor the many worksites around the state, a lack of communication among state agencies, and an apparent reluctance to penalize employers.

The commission contracts with the North Carolina Rate Bureau to collect the data over the number of employers in the state with workers’ compensation coverage. The bureau reported that insurers provide coverage to 140,000 business with another 117 companies self-insured. That leaves many business without coverage.

By law, employers are required to inform the bureau on of the commission’s behalf, when they purchase, renew or cancel coverage.

For all practicable purposes, however, the information is a one-way street. Commission officials acknowledge using the database to find the insurer responsible for covering a claim, but do not monitor cancellations. As a result, they only find out an employer is without coverage when an injured worker files a claim.

Also, when it comes to pursuing employers without coverage, it has little leverage to enforce the law. The law states that employers found not in compliance with the law can be fined $100 per day and the cost of any benefits and medical expenses the injured worker should have collected.

The Industrial Commission’s Fraud Unit reported that since January 2011, it has only pursued 225 cases where employers where found not to have proper coverage. The unit reported collecting $30,500 in fines, which equals around $135 per case.

That is why North Carolina has decided to approach having proper workers’ compensation not just a civil matter, but a criminal one as well.

“In response to the issues raised, we now have some concrete plans,” said Young.

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