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Maine.gov > PFR Home > Insurance Regulation > Bureau Reports > Foreign Company Examination Reports > NGM Insurance Company
Market Conduct Examination
NGM INSURANCE COMPANY
|WCB-1, First Report of Injury||39-A M.R.S.A. § 303|
|WCB-2, Wage Statement||39-A M.R.S.A. § 303|
|WCB-2A, Schedule of Dependent(s) And Filing Status||39-A M.R.S.A. § 303|
|WCB-3, Memorandum of Payment (MOP)||39-A M.R.S.A. § 205(7)|
|WCB-4, Discontinuance or Modification of
|WCB Rules & Regs, Ch 8 § 1|
|WCB-8, (21 Day) Certificate of Discontinuance or
Reduction of Compensation
|39-A M.R.S.A. § 205 (9)|
|WCB-9, Notice of Controversy (NOC)||WCB Rules & Regs, Ch 8 § 2|
|WCB-11, Statement of Compensation Paid||WCB Rules & Regs, Ch 8 § 1|
Standard G-4 establishes a general framework for the timely correspondence of claim documentation. Failure to file any WCB forms within established time frames is a violation of 39-A M.R.S.A. § 360(1)(A) or (B).
(3) Standard G-5
Claim files are adequately documented.
Test Step 3: Determine if quality of the claim documentation (e.g. wage statements, schedule of dependents and filing status) is sufficient to support or justify the ultimate claim determination and whether state requirements were satisfied.
Standard G-5 establishes a general framework for the adequacy of claim file documentation to correctly calculate claim payments in accordance with 39-A M.R.S.A. § 212, § 213 and § 215.
This section outlines the application of the tests to the claims selected. The results of testing those open indemnity claims during the examination period are delineated in the following tables:
TEST 1: Verify that initial and subsequent indemnity payments were made in accordance with 39-A M.R.S.A. § 205(2).
|Paid Timely||Not Paid
|Initial Payment||3||0||5||100 %||42 %|
|Subsequent Payments||144||20||2||87.8 %||71 %|
TEST 2: Verify the timely filing of the following forms with the WCB in accordance with Title 39-A, WCB Rules & Regulations or MAE Protocols:
|Test||WCB-1||3||1 (B)||0||4||75 %||10 %|
|Test||WCB-2||3||0||0||5||100 %||0 %|
|Test||WCB-2A||2||1 (B)||0||5||66.7 %||0 %|
|Test||WCB-3||3||0||0||5||100 %||0 %|
|Test||WCB-4||3||0||0||5||100 %||60 %|
|Test||WCB-11 First||3||0||0||5||100 %||NA|
|Test||WCB-11 Annual/Final||1||3||0||4||25 %||NA|
(A) - For comparative purposes, these compliant percentages are taken from the WCB Audit dated August 10, 2005 conducted on 2002 data.
(B) - The late form filing was due to the employer not notifying the Company in a timely manner.
TEST 3: Verify that the average weekly wages (“AWW”) were calculated accurately and the subsequent indemnity payments were calculated accurately for both total and partial incapacity.
|AWW||2||4||2||33.3 %||67 %|
|Partial & Total Indemnity Payments||1||5||2||16.7 %||56 %|
Numbers in this table represent number of claims rather than each specific calculation or payments. “Not Paid Accurately” represents five claim files where one or more payments were not made accurately.
SUMMARY EXAMINATION REPORT
Timely Initial and Subsequent Payments (Test 1)
The results of this examination indicate that the Company is in compliance with 39-A M.R.S.A. § 205(2) in regards to the timeliness of initial and subsequent payments. As the Company was deemed to be in compliance with the timeliness of payments it appears that the “pattern of questionable claims-handling techniques” regarding timeliness of payments no longer exists.
Timely Filing of Forms (Test 2)
The WCB applies two benchmarks of compliance during their audits. The benchmark for timely initial indemnity payments is 80% and for timely filing of WCB-3 forms the benchmark is 75% compliance. The Company met the WCB’s initial payment benchmark of 80% for initial payment timeliness and 75% for the timely filing of WCB-3’s during the examination with a score of 100% for both requirements. It should be noted that the Company still has unacceptably low level of compliance for filing the WCB-11 annual forms. (See comments and recommendations #1.)
Payment Accuracy (Test 3)
Test 3 was designed to verify accurate calculation of the AWW and to determine if indemnity payments were calculated accurately for both total and partial incapacity. The compliance percentage results of the examination in this category were lower than those of the WCB Audit. The compliance level of 33% for calculating the AWW and 17% for accuracy of the indemnity payments continues to be unacceptably low. The issues that led to incorrect payments were:
The results of this examination determined that the rate of accuracy remains unacceptably low and it appears that the “pattern of questionable claims handling techniques” in regards to the accuracy of payments still exists. (See comments and recommendations #2)
1) Comment: Test 2 was designed to determine compliance with Title 39-A’s form filing requirements. As shown in the Test 1 table, due to the small volume of claims tested even a few errors can have a material impact on compliance percentages. We note that the one error documented for form filing of the WCB-1 and WCB-2A was based on the same claim file where the employer failed to notify the Company in a timely manner. The WCB-3 filing benchmark of 75% was reached with 100 % compliance and the WCB-11 First Report filing also reached 100% compliance. However, the WCB-11 Annual/Final filing is still at an unacceptable compliance level of 25%.
Recommendation: We recommend that the Company develop protocols and procedures to ensure that employers notify the Company in a timely manner of lost time occurrences so required forms may be filed within allowed time limits. Specifically, the Company should continue to train and monitor its adjusting staff to ensure an adequate understanding of Maine requirements for timely filing of WCB forms, especially the WCB-11 Annual/Final filings.
2) Comment: Test 3 was designed to verify accurate calculation of the AWW and to determine if indemnity payments were calculated accurately for both total and partial incapacity. The compliance percentage during the examination was 33% for calculation of the AWW and 17% in regards to the accurate calculation of indemnity payments. The incorrect payments were the results of various actions, including:
Recommendation: We recommend that the Company implement policies and procedures to ensure that claims adjusters are aware of WCB payment requirements and that managers monitor the adjusters’ performance regularly to ensure compliance with Maine law.
This examination reviewed all workers’ compensation indemnity claims for Maine employees or claimants involved in losses in Maine that were open during the period of October 1, 2005 through September 30, 2006 with dates of injury occurring on or after January 1, 1993.
As noted previously, due to the limited number of open claims during the examination period, BOI staff did not select a sample, but tested the entire book of eight claims. Under these circumstances, any error has a substantial impact on compliance percentages. Notwithstanding this impact, the results of the examination are that the Company’s AWW and indemnity benefit calculations still fall substantially below acceptable levels of compliance. The Company needs to focus special attention in this area.
The courtesy and cooperation extended by the officers and employees of the Company during the course of the Examination is hereby acknowledged. The Examination was conducted and is respectfully submitted by the undersigned.
STATE OF MAINE
COUNTY OF KENNEBEC, SS
Carolee M. Bisson, being duly sworn according to law, deposes and says that in accordance with the authority vested in her by Mila Kofman, Superintendent of Insurance, pursuant to the Insurance Laws of the State of Maine, she has made an examination on the condition and affairs of the
NGM Insurance Company
As described in the scope of examination section of the report, subscribed to by her, is true to the best of her knowledge and belief.
Carolee M. Bisson, AIE, AIRC
Sr. Market Conduct Examiner
Subscribed and sworn to before me
This ___ day of ________ , 2009
My commission expires:
Last Updated: September 12, 2013
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