Volume 4, Issue 7
BUSTED: Victories for Truth, Justice, and Lower Insurance Premiums

Eat, Drink and Be Merry
by a DMA Investigator, Los Angeles

Those inclined to commit insurance fraud can be skilled and persuasive actors. Many take great care to stay in character as their claim proceeds. But there is something about the holidays that distracts even the most dedicated of conmen and con-women. Maybe it is something in the eggnog. Perhaps the spirit of the season just overcomes the caution that dominates a fraudster’s life in other months.

This case came to us from defense counsel and had a high exposure (close to $400,000). Our subject was supposedly completely disabled in her right hand. Our first attempt at surveillance, in the fall of the year, found her playing her part, using her left hand. But the file had enough red flags that we scheduled additional surveillance in December.

We picked her up on the way to the mall. Maybe it was the sale at the Gap that caused the forgetfulness. At once we had her on film using her right hand to carry her purse, open the doors at the mall and, after having successfully made several purchases, holding and dialing a cell phone.

This was a great start, but we needed more to eliminate the “one of my good days” attack on hard film evidence.

Some days later we picked her up late in the day and followed her to a restaurant. We filmed her use of her right hand opening and closing a car door, opening the door to the restaurant. As I got set to wait for her to come out, I noticed that this restaurant had seating near an expanse of large windows providing a lovely view for those outside as darkness fell and the lighting inside came up. I thought it would be too much to ask for that she should choose a window seat, but I had to check it out. Sure enough, there she was with her companion in full view and amazingly enough there was a parking space across the street. 59 minutes later I had the entire meal on film, all of it eaten right-handed (including some fancy twirling of the pasta onto her fork and some vigorous cutting of some unknown substance).

It is a wish common to the holidays that one and all get what they deserve. This applies not only to iPhones, designer bags and video games for the good boys and girls. It also applies to those with $400,000 bogus claims - potentially ill-gotten gains that will drive our premiums and blood pressure higher if paid. When such a claimant has to settle for less than 5% of demand, hardly enough after attorney fees to cover the credit card bills run up while starring in our surveillance videos, holiday justice has been served. The lump of coal in her stocking is beyond our powers, but we are contemplating asking permission to send a copy of our video to Santa so that the case might be wrapped up in full.

THE LEGAL ARENA
FLASH REPORT
Bureau Recommends 5.2 Percent Hike At Rate Hearing

The Workers' Compensation Insurance Rating Bureau of California yesterday made its case to the Department of Insurance for a 5.2 percent pure premium rate increase. The Bureau's revised filing is one percentage point more than its original submission in September, an increase necessitated by Governor Schwarzenegger's endorsement of AB 338. If Insurance Commission Steve Poizner approves the filing for advisory rates on Jan. 1, 2008, it'll be the first increase since July 2003 and perhaps a portent of things to come. Poizner was unable to attend the rate hearing due to the Insurance Department's in working with policyholders and insurers dealing with the raging Southern California fires. That left Chris Citko, CDI senior staff counsel, running the meeting.

The Bureau's original filing proposed a 4.2 percent increase contingent upon the governor not signing AB 338. The new law, which affects workers injured on or after Jan. 1, 2008, increases the window during which injured workers may use their temporary disability benefits from two years from the date of the first benefit payment to five years from date of injury. Schwarzenegger signed the bill into law earlier this month. According to Dave Bellusci, chief actuary for the Bureau, this change will eliminate about one third of the TD savings realized from SB 899.

Despite the signing of AB 338, the greatest factor in the Bureau's proposed increase was the affects of loss adjustment expenses – that is the costs associated with adjusting claims. Loss adjustment expenses have not decreased commensurate with the decline in losses from accident years 2003 through 2006. This factor accounts for 3.5 percentage points of the proposed increase. As for reasons that the LAE are not declining, Bellusci points to new medical utilization review procedures, legal challenges to regulations and legislation, and challenges to the Permanent Disability Rating Schedule that are likely increasing the cost of administering claims.

"To the extent that there will be reduced litigation, we haven't seen it yet. Maybe when the smoke clears from the reforms, we'll see a decline in loss adjustment expenses," Bellusci said at yesterday's hearing.

Bellusci also informed the Department that the data submitted by AIG and Virginia Surety Insurance Company are included in the rate filing. AIG and Virginia Surety's data were excluded from the July rate filing because of data inaccuracies and anomalies respectively, but they have since remedied the deficiencies. However, the data of Arch Insurance Company were excluded because of data anomalies. Arch has less than one percent of the market share in California.

Next year's rate is now in the hands of Poizner, who must either accept the filing or reject and order a different rate change in either direction. Insurers, however, are not required to use the pure premium rate and may price policies as they see fit.

Source: Worker's Comp Executive
Copyright © 2007 Providence Publications, LLC - All Rights Reserved.

WORKERS' COMP NEWS
California State Fund Holds Line On 2008 Rates
by Walter Olson, overlawyered.com

California's State Compensation Insurance Fund has announced the filing of its Jan. 1, 2008, rating plan, making no change in the average collectible rate level. SCIF held the line on rates despite the Workers' Compensation Insurance Rating Bureau's filed recommendation for a 5.2 percent average rate increase effective January 1.

State Fund's rating plan adopted the Workers Compensation Insurance Bureau's recommended changes in individual class loss costs. Individual employers will therefore see differences in their pricing due to changes in their classification loss costs, experience modifications, and other changes in rating plan features. Overall, however State Fund's average collectible rate level will be unchanged.

Small employers (premiums between $1,000 and $59,999) with superior safety records will continue to receive a 10 percent workplace safety credit. "Small businesses are crucial to the California economy. State Fund is pleased to be able to reward these employers for maintaining safe workplaces," said State Fund President Janet Frank.

"Employers are enjoying the benefit of a healthy, competitive workers' compensation market that is directly attributable to passage of the Governor's reform legislation in 2004, SB 899, and earlier 2003 reform legislation, AB 227 and SB 228," she continued. "State Fund's rate filing reflects our role as a carrier of choice for many employers, as well as the safety net for any employer needing workers' compensation insurance in California."
State Fund's rate level remains 55 percent below pre-reform 2003 rate levels. The new rates will apply to new and renewal workers' compensation policies with an effective date on or after Jan. 1, 2008.
For more information, visit www.scif.com.

Source: SCIF


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