Skip Maine state header navigation

Agencies | Online Services | Help

Skip All Navigation

 

>> All Consent Agreements in Alphabetical Order

>> All Consent Agreements in Date Order

IN RE:
THE FRANK GATES SERVICE COMPANY

 

)
)
)
)
)
)

)
)
)
)
)
)

CONSENT AGREEMENT
Docket No. INS-11-229

This Consent Agreement is entered into by and among THE FRANK GATES SERVICE COMPANY (the “Company”), the Maine Superintendent of Insurance (the “Superinten­dent”), and the Office of the Maine Attorney Gen­eral (the “Attorney General”).  Its purpose is to bring to a halt, without resort to an adjudicatory proceeding, violations of 39-A M.R.S.A. § 359(2) certified to the Superintendent by the Maine Workers’ Compensation Board (the “Board”) pursuant to that provision.
I
STIPULATIONS

  • The Superintendent is the official charged with administering and enforcing Maine’s insurance laws and regulations.
  • The Company is organized and domiciled under the laws of the State of Pennsylvania, and is licensed in Maine as a third-party administrator under License Number TAF140627, first issued in June, 2007.  The Company administers claims arising under the Maine Workers’ Compensation Act of 1992, M.R.S.A. Title 39-A, as amended, and regulations of the Board issued there­under (the “WCA”).
  • In July, 2008, the Board’s Monitoring Audit & Enforcement Division (the “MAE Divi­sion”) audited the records of the Company with respect to claims filed under the WCA with dates of injury in 2007.  This audit focused on compli­ance with WCA requirements for form filing, timeli­ness of indemnity payments, and accuracy of indemnity bene­fits.
  • On May 4, 2009, the Board issued a Compliance Audit Report detail­ing its findings (the “Report”).  The Report’s findings relevant to questionable claims-handling techniques that violated 39-A M.R.S.A. § 359(2) included non-filing of forms, late and inaccurate forms filings, and untimely and inaccurate indemnity payments.
  • In July, 2009, the Board and the Company entered into six consent decrees, in lieu of administrative hearings, addressing the findings in the Report.  In one such decree (the “Consent Decree”), the Company agreed that it had “engaged in patterns of questionable claims-han­dling tech­niques in violation of Section 359(2)” of the WCA for the following reasons:
    • Failure to file or timely file forms with the Board;
    • Incorrect and/or misleading information reported on Board forms;
    • Failure to pay benefits timely; and
    • Failure to pay claims accurately.
  • On July 23, 2009, the Board certified these findings to the Superintendent as required by 39-A M.R.S.A. § 359(2).
  • Company adjusters attended Board training on January 29 – 30, 2010.  Company personnel attended a day of training with Board counsel on April 12, 2011.  The Company continues internal training, as well.
  • Notwithstanding the findings of the Report and the consent decrees entered into with the Board, the Company has not undergone a formal review for accuracy of indemnity claims paid after January 1, 2008.  By letter dated November 10, 2011, the Board advised the Company that an audit of indemnity claims with 2009 – 2011 dates of injury is about to be conducted (“2009 – 2011 Claims Audit”).

II
MAINE LAW

  • 39-A M.R.S.A. § 359(2) provides in part that:

[T]he [workers’ compensation] board … upon finding, after hearing, that an employer, insurer or 3rd-party administrator for an employer has engaged in a pattern of question­able claims-handling techniques or repeated unreasonably contested claims … shall cer­tify its findings to the Superintendent of Insurance, who shall take appropriate action so as to bring any such practices to a halt.
III
CONCLUSIONS OF LAW

  • The Company violated 39-A M.R.S.A. § 359(2) by engaging in a pattern of ques­tion­able claims-handling techniques through December 31, 2007.
  • The Superintendent is required, pursuant to the Board’s July 23, 2009 certification of its findings that the Company engaged in a pattern of ques­tion­able claims-handling techniques and/or repeated unreasonably contested claims, to take appropriate action to bring those practices to a halt. 

IV
COVENANTS

At a min­i­mum, such procedures must include plans for:

  • ensuring compliance with the benchmarks in Exhibit A;
  • hiring and retaining supervisory and front-line staff experienced in handling workers’ compensation claims in Maine;
  • training in-house claims personnel and employees of other entities handling claims for the Company on the provisions of the WCA concerning derivation of benefit levels from average weekly wages and accuracy of indemnity payments;
  • ensuring that employers cooperate in meeting the reporting requirements of the WCA;
  • ensuring that other entities handling claims for the Company comply with the requirements of the WCA;
  • maintaining claims payment standards through education and super­vision of in-house claims personnel and employees of other entities handling claims for the Company;
  • implementing adequate claim review procedures, to include monitoring the accu­racy and timeliness of WCB form filings and indemnity payments; and
  • auditing, on at least a quarterly basis, all indemnity claims to measure compliance with the bench­marks in Exhibit A.

The Company shall deliver to the Superintendent and the WCB Deputy Director, MAE Divi­sion, the results of the audits referred to in sub­paragraph (h) for four (4) suc­ces­sive calendar quarters starting with the quarter in which the Company executes this Agree­ment.  The Company shall deliver each audit report within thirty (30) days after the end of the applicable calendar quarter.  Within forty-five (45) days thereafter, the Superinten­dent may call a meeting with the Company to discuss any concerns he may have with the Company’s claims performance during the period covered by such audit report.  Fail­ure to call any such meeting shall not waive any of the Super­in­tendent’s or the Attorney General’s rights under this Agreement.  The Company shall deliver with the last audit report (the “Final Self-Audit Report”) a certification in the form attached as Exhibit B, attesting to the accuracy of all claims performance audit infor­mation required under this Agreement.  The Company shall also deliver, upon the Superintendent’s or the WCB Deputy Director’s request, any and all work papers and documents, in any format, in its possession, custody or control, related to any Self-Audit Report.

  • The Company shall, for the period starting January 1, 2008 and ending  December 31, 2008:
    • submit to the Bureau of Insurance within 30 days of the execution of this Agreement, an electronic spreadsheet listing all claims adjusted in the above time period, excluding those discharged under 39-A M.R.S.A. § 352, for the purpose of allowing the Bureau to designate a statistically valid random sample of claims for the period (the “Designated Claims”), for further review by the Company;
    • review the Designated Claims, the inca­pacity periods, and indem­nity benefits, penalties and interest originally paid thereon;
    • recalculate the benefits, penal­ties and interest to ensure their compliance with the WCA;
    • pay to the appropriate claimants any deficien­cies, with the penalties and interest provided for in the WCA, and file with the Board such related forms as the WCA requires; and
    • deliver to the Superintendent and the WCB Deputy Director, MAE Division, within three (3) months after receiving the Designated Claims as determined by the Bureau, an electronic spreadsheet report viewable in Microsoft Excel listing each claim so reviewed (the “Look-Back Report”).  The Look-Back Report shall contain the follow­ing data, safeguarded in accordance with the WCA, for each Designated Claim: 
  • the Board number, if known;
  • the claim­ant’s Social Security number (gen­eral for­mat/no dashes);
  • the claimant’s last and first name (in that order);
  • the date of injury;
  • insurer name and claim file num­ber; the incapac­ity periods;
  • the amount of indem­nity originally paid;
  • whether or not the claim was settled under 39-A M.R.S.A. § 352 (Y or N) and the date of such settlement;
  • the amount of indem­nity paid after review;
  • the amount of penal­ties paid after review;
  • the amount of inter­est paid after review;
  • the amount of overpayment upon review; and
  • the name of the person con­ducting the review. 

The Company shall deliver with the Look-Back Report a certification attesting to the accuracy of all information in the report, in the form attached as Exhibit B.  
This paragraph shall not apply to any claims that are subject to the audits described in paragraph 14, to any claims that have been discharged under 39-A M.R.S.A § 352, or to any claims that were previously presented to the Company or other entities handling claims for the Company that were previously audited by the Board and subse­quently corrected by the Company or other entity.

  • Should the Superin­tendent, in his sole discretion, determine, within twelve (12) months after receiving the (i) Final Self-Audit Report or (ii) Look-Back Report, that the Company:
  • did not meet or exceed on average the benefit payment and form filing bench­marks in Exhibit A during the self-audit review period described in paragraph 14, then the Company shall deliver a civil penalty to be determined at the sole discretion of the Superintendent but not exceeding Fifteen Thousand Dollars ($15,000) to the Superintendent, within thirty (30) days of receiv­ing the determination, and/or
  • failed to correct deficiencies in indemnity benefits as required by paragraph 15.d, (including penalties and interest provided for in the WCA), or as may be further required pursuant to paragraph 17, resulting in compliance with the WCA in less than 93 percent of the claims required to be reviewed pursuant to those paragraphs, then the Company shall deliver a civil penalty to be determined at the sole discretion of the Superintendent but not exceeding Five Thousand Dollars ($5,000) to the Superinten­dent, within thirty (30) days of receiv­ing the determination.

The Company agrees that (i) any civil penalties assessed under subsection (a) or (b) above will have resulted from its continued failure through the delivery date of either the Final Self-Adult Report or the Look-Back Report, to halt the pattern of ques­tionable claims-handl­ing tech­niques established by the Consent Decree, (ii) in declaring any civil penalty due, the Super­in­tendent may rely on the Self-Audit Reports and the Look-Back Report as conclusive evidence of the fact and extent of such failure, and (iii) the amount of this penalty will not limit fur­ther measures, penalties or remedies that the Superinten­dent or the Attorney General may impose or seek under paragraph 25 below.

  • Should the Superintendent, in his sole discretion, determine within twelve (12) months after receiving either the Look-Back Report or the Board’s report of the 2009 – 2011 Claims Audit that the Company, for any calendar year for which claims were reviewed, failed to achieve a 93% compliance rate in accurately calculating either (a) average weekly wage, (b) weekly compensation rate, (c) partial benefits, or (d) indemnity, the Company shall review all claims paid in each calendar year in which the Company was noncompliant for the specific purposes of identifying and correcting inaccurate payments to claimants.  Should the Superintendent order such an expanded review, the Company shall within twelve (12) months complete the review and submit a report to the Superintendent setting forth the process employed to conduct the review and the results of the review.  The Company shall provide, upon the Superintendent’s request, any additional documentation reasonably necessary for the Superintendent to verify that the review was properly completed.
  • The Company shall pay, as provided by law, the Superintendent’s reason­able costs and expenses of monitoring its compliance with, and enforcing the Company’s obligations under, this Agreement.

V
MISCELLANEOUS

  • The Company waives any:
    • hearing rights arising from this Agreement,
    • objection to any action that may be taken by the Superintendent pursuant to this Agreement, including but not limited to the imposition of the civil penalties speci­fied in paragraph 16 and agrees it will make no appeal from this Agreement; and
    • objection to the Board’s release to the Superintendent and the Attorney General of  “audit working papers,” as defined in section 153 of the WCA, related to any audit of the Company and, in connection with this waiver, to the use of such papers by the Superintendent and Attorney General for purposes related to the implementation and enforcement of this Agreement.
  • Nothing in this agreement prohibits the Company from requesting the Superintendent to reconsider any exercise of his discretion under this Consent Agreement.  The Company acknowledges and agrees, however, that its waiver of hearing rights in paragraph 19(a) above and its appeal rights in paragraph 19(b) includes any right to a hearing or appeal based on the Superintendent’s denial of (or failure to act upon) any such request.
  • The Company acknowledges that this Agreement is a public record within the meaning of 1 M.R.S.A. § 402 and will be available for public inspection and copying as provided for by 1 M.R.S.A. § 408, and will be reported to the Regulatory Information Retrieval Sys­tem database at the National Association of Insurance Commissioners.
  • The Company has been advised of its right to consult with counsel before executing this Agreement.
  • This Agreement does not bind any person or entity not a party to this Agreement, or limit the Superintendent’s ability to seek any available legal remedy for alleged or actual viola­tions of the WCA or the Maine Insurance Code against any Company affiliate or subsidi­ary not a party to this Agreement or against any other entity handling claims for the Company.
  • Nothing in this Agreement shall limit the ability of the Superintendent, in his sole discretion, in order to determine whether the Company has brought to a halt all violations of 39-A M.R.S.A. § 359(2) established by the Consent Decree, to investigate the:
    • accuracy of the self-audit quarterly review described in paragraph 14; or
    • accuracy of the indemnity claim review described in paragraph 15 or paragraph 17.
  • The purpose of the self-audit quarterly review described in paragraph 14 and the indem­nity claim review described in paragraphs 15 or 17 is to bring to a halt the violations established by the Consent Decree.  Therefore, in consideration of the Company’s execution of this Agreement, the Superintendent and the Attorney General shall not pursue civil penalties, disciplinary measures or other civil or administrative sanctions, other than those agreed to herein, for violations established by the Consent Decree that continue through the period of the reviews described in paragraph 14, 15, and 17.  However, the Superintendent or the Attorney General may pursue any available legal remedy, including without limitation imposition of additional civil penalties and the limitation, suspension or revocation of workers’ compensation authorities issued to the Company by the Superintendent should the Company:

a.         engage in conduct that violates 39-A M.R.S.A. § 359(2) after the period of the reviews described in paragraph 14, 15, and 17; or
b.         violate any provision of this Agreement other than as described in subsections (a) and (b) of paragraph 16; or
c.         otherwise violate Maine law.


 


Dated:                        , 2012

THE FRANK GATES SERVICE Company

 

By:______________________________________
Its:______________________________________

 

 Printed Name and Title

Subscribed and sworn to before me this _______ day of ________, 2012.

____________________________

Notary Public
____________________________
Printed name
____________________________
Date commission expires

 

Dated:                        , 2012

OFFICE OF THE MAINE ATTORNEY GENERAL

 

________________________________________
Jonathan R. Bolton
Assistant Attorney General

 

Effective
Date:                        , 2012

MAINE BUREAU OF INSURANCE

 

________________________________________
Eric A. Cioppa
Superintendent


Exhibit A

Form of Self-Audit Worksheet

 

FROI Timely Filed

Wage Statement (WCB-2) Filed Timely

Schedule of Dependents (WCB-2A) Filed Timely

MOP (WCB-3 or -4A) Filed Timely

Modification/Reduction (WCB-4, -4A or -8) Filed

Discontinuance (WCB-4, -4A or -8) Filed

NOC (WCB-9) Filed Timely

Initial WCB-11 Filed Timely

Annual WCB-11 Filed W/in 15 Days of Anniversary of Claim

Initial TTD Timely

Subsequent TTD/TPD Timely

Payment of Medical Bills Timely

Payment of Approved Agreements, Orders, Decisions

TTD/TPD Accurate

Average Weekly Wage

Weekly Benefit Rate

Partial Indemnity

Bench­mark (%)

85

 75

75 

85

90 

75

90

80

80

87

87 

80 

90 

75 

80 

 75

75 

xx/10

(#/#) xx%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Exhibit B

Form of Certification

IN RE:
THE FRANK GATES SERVICE COMPANY

)
)
)
)

)
)
)
)
)

AFFIDAVIT OF CORPORATE OFFICER

Docket No. INS-11-229

The undersigned, being duly sworn, says:

  • Terms used but not defined in this affidavit shall have the meanings given them in the Consent Agreement entered into between the above Company, the Superintendent and the Attorney General under Bureau docket number INS-11-229. 
  • I have read and understand the Consent Agreement and exhibits attached thereto.
  • I understand that the Board and Bureau may rely on the truthfulness of the information contained in and materials attached to this affidavit and that the truthfulness of this information is material to the ability of the Superintendent and the Board to evaluate the Company’s compliance with the Consent Agreement.
  • I have read the materials attached to this affidavit.  They accurately and completely summarize the information contained therein, as required by paragraph 14 of the Consent Agreement. 
  • I hold the position identified below and have obtained all necessary authority from the Company to give this affidavit on its behalf in connection with the proceedings undertaken as Bureau Docket No. INS-11-229. 

______________________________________
(name typed or printed)
______________________________________
(position typed or printed)
 ______________________________________
(company name typed or printed)

Acknowledgement
State of _______________
County of _____________

            Personally appeared before me on _____________, 2012, the above named ___________ __________________ and, being duly sworn, affirmed that this affidavit is based upon his or her personal knowledge and is true and correct.
 
                        Before me,
________________________________
Notary Public/Attorney-at-Law
[seal]                                        Printed Name: _____________________
My Commission Expires: ___________


____________________________
Date commission expires

Dated:                        , 2011

OFFICE OF THE MAINE ATTORNEY GENERAL

 

________________________________________
Jonathan R. Bolton
Assistant Attorney General

 

Effective
Date:                        , 2011

MAINE BUREAU OF INSURANCE

 

________________________________________
Eric A. Cioppa
Superintendent


Exhibit A

Form of Self-Audit Worksheet

 

FROI Timely Filed

Wage Statement (WCB-2) Filed Timely

Schedule of Dependents (WCB-2A) Filed Timely

MOP (WCB-3 or -4A) Filed Timely

Modification/Reduction (WCB-4, -4A or -8) Filed

Discontinuance (WCB-4, -4A or -8) Filed

NOC (WCB-9) Filed Timely

Initial WCB-11 Filed Timely

Annual WCB-11 Filed W/in 15 Days of Anniversary of Claim

Initial TTD Timely

Subsequent TTD/TPD Timely

Payment of Medical Bills Timely

Payment of Approved Agreements, Orders, Decisions

TTD/TPD Accurate

Average Weekly Wage

Weekly Benefit Rate

Partial Indemnity

Bench­mark (%)

85

 75

75 

85

90 

75

90

80

80

87

87 

80 

90 

75 

80 

 75

75 

xx/10

(#/#) xx%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

xx/10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Exhibit B

Form of Certification

IN RE:
TRAVELERS INSURANCE GROUP

)
)
)
)

)
)
)
)
)

AFFIDAVIT OF OFFICER

Docket No. INS-12-204

The undersigned, being duly sworn, says:

  • Terms used but not defined in this affidavit shall have the meanings given them in the Consent Agreement entered into between the above Companies, the Superintendent and the Attorney General under Bureau docket number INS-12-204. 
  • I have read and understand the Consent Agreement and exhibits attached thereto.
  • I understand that the Board and Bureau may rely on the truthfulness of the information contained in and materials attached to this affidavit and that the truthfulness of this information is material to the ability of the Superintendent and the Board to evaluate the Companies’ compliance with the Consent Agreement.
  • I have read the materials attached to this affidavit.  They accurately and completely summarize the information contained therein, as required by paragraph 14 of the Consent Agreement.
  • I hold the position identified below and have obtained all necessary authority from each of the Companies to give this affidavit on its behalf in connection with the proceedings undertaken as Bureau Docket No. INS-12-204. 

______________________________________
(name typed or printed)
______________________________________
(position typed or printed)
 ______________________________________
(company name typed or printed)

Acknowledgement
State of _______________
County of _____________

            Personally appeared before me on _____________, 2012, the above named ___________ __________________ and, being duly sworn, affirmed that this affidavit is based upon his or her personal knowledge and is true and correct.
 
                        Before me,
________________________________
Notary Public/Attorney-at-Law
[seal]                                        Printed Name: _____________________
My Commission Expires: ___________

 

 


Return to Consent Agreements

 

Last Updated: August 22, 2012