As always, The Illinois General Assembly, Rules Committee, is currently reviewing new legislation amending the Illinois Insurance Code. However, the pending amendment to add Section 462c may have a significant impact on employers in regards to their workers' compensation insurance policy.
Currently, Sections 462 and 462b pertain to the information to be furnished to insureds, regarding hearings and appeals of insureds, while the latter, indicates that insurance companies shall apply correct classifications, payrolls and other factors of a rating system to compute premiums.
Section 462c, if enacted, raises the ante for employers to make sure their payroll records are reasonably accessible to their workers' compensation insurance carriers. Section 462c may also give a bit more leverage to the insurance carrier to ensure that their insured is keeping accurate payroll records that are readily accessible to the carrier for a verification audit. Obviously, the term "reasonable" will be up for debate.
However, Section 462c would allow the insurer to hold the employer liable for a total premium for the policy equal to 3 times the insurer's then-current estimate of the annual premium on the expiration of the policy for non-compliance. This should certainly get employers' attention. However, the insurer will still need to comply with certain rules and procedures to notify the employers of their duty to allow access to the records.
Section 462c is currently in front of the Rules Committee, and proposed as follows:
Sec. 462c. Workers' Compensation; audits.
- If an employer fails to provide the insurer or its authorized representative with which it has its workers' compensation insurance policy with reasonable access to payroll records for a payroll verification audit when requested by the insurer under the terms of the employer's workers' compensation insurance policy, the employer shall be liable to pay to the insurer a total premium for the policy equal to 3 times the insurer's then-current estimate of the annual premium on the expiration of the policy. This section shall only apply if the insurer complies with the conditions set forth in subsection(c).
- The insurer shall have and follow regular and reasonable rules and procedures to notify employers of their duty to provide for access to records, and to contact employers to make appointments during regular business hours for that purpose.
- Upon the employer's failure to provide access after the insurer's third request during at least a 90-day period, the insurer may notify the employer through its mailing of a certified, return-receipt, document of the increased premium and the total amount of the costs incurred by the insurer for its attempts to perform an audit as described under subsection (a). Upon the expiration of 30 days after the delivery of the notice, collection by the insurer of the amount of the premium and costs described under subsection (a), less all premiums previously paid by the employer for the policy, shall be fully enforceable and executable.
- If the employer provides for access to its records after having received notice described in subsection (c), and if the insurer then succeeds in performing the audit to its satisfaction, the insurer shall revise the total premium and costs payable for the policy by the employer to reflect the results of its audit.
Should Section 462c be enacted, it will undoubtedly have an impact on attorneys practicing in the workers' compensation field. Section 462c would presumably allow easier access to accurate payroll records for the determination of TTD and PPD payments.
So, a note to all employers: Keep your eyes open for this amendment, because if it passes you better be sure to allow access to your payroll records. NOTE: Section 462c is pending in the Rules Committee and is not current law.
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Matthew J. Daley is an associate in our Chicago office. Prior to joining our firm, Matthew served as an Assistant State's Attorney for the Cook County State's Attorneys Office.
Our workers' compensation attorneys represent businesses and employers throughout Illinois in the Industrial Commission. Our philosophy is to quickly evaluate claims, proactively resolve cases when appropriate and strongly defend other claims when trial is the only option. We represent a wide variety of respondents. Our clients include major businesses, governmental entities, hospitals, and small businesses. Querrey & Harrow has long been recognized as a leader in civil litigation in Illinois. Our talented workers' compensation attorneys allow us to service all areas of possible exposure to our valuable business partners.
