senate Bill S5376A

Amended

Provides incentives for productive workers' compensation audits

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 16 / May / 2013
    • REFERRED TO LABOR
  • 13 / Jun / 2013
    • AMEND AND RECOMMIT TO LABOR
  • 13 / Jun / 2013
    • PRINT NUMBER 5376A
  • 20 / Jun / 2013
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 20 / Jun / 2013
    • ORDERED TO THIRD READING CAL.1562
  • 20 / Jun / 2013
    • PASSED SENATE
  • 20 / Jun / 2013
    • DELIVERED TO ASSEMBLY
  • 21 / Jun / 2013
    • REFERRED TO LABOR
  • 08 / Jan / 2014
    • DIED IN ASSEMBLY
  • 08 / Jan / 2014
    • RETURNED TO SENATE
  • 08 / Jan / 2014
    • REFERRED TO LABOR
  • 28 / Apr / 2014
    • 1ST REPORT CAL.385
  • 29 / Apr / 2014
    • 2ND REPORT CAL.
  • 30 / Apr / 2014
    • ADVANCED TO THIRD READING
  • 16 / Jun / 2014
    • AMENDED ON THIRD READING 5376B
  • 20 / Jun / 2014
    • COMMITTED TO RULES

Summary

Provides incentives for productive workers' compensation audits.

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Bill Details

See Assembly Version of this Bill:
A7921A
Versions:
S5376
S5376A
S5376B
Legislative Cycle:
2013-2014
Current Committee:
Senate Rules
Law Section:
Workers' Compensation Law
Laws Affected:
Add ยง112-a, Work Comp L

Sponsor Memo

BILL NUMBER:S5376A

TITLE OF BILL: An act to amend the workers' compensation law, in
relation to providing incentives for productive workers' compensation
audits

PURPOSE: To prevent workers' compensation insurance fraud by ensuring
that all employers in the State are appropriately classified.

SUMMARY OF PROVISIONS:

Section 1 of the bill would add a new Section 112-A to the Workers'
Compensation Law.

Paragraph (a) of subdivision one of such Section would require
periodic audits, including but not limited to, payroll records
verifications and onsite physical inspections, in order to determine
each employer's unique experience-rated operations for premium
calculations. Construction class employers shall be audited annually
and all other employers not less than biennially.

Paragraph (b) of subdivision one such Section would make a knowing
misrepresentation or concealment of material information in order to
avoid proper classification for purposes of premium calculations, a
fraudulent insurance practice in violation of applicable provisions of
Workers' Compensation Law Section 114 and Penal Law Section 176.05.

Subdivision two of such Section would exempt self-insureds from the
provisions of the Section.

Subdivision three of such Section defines "construction class."

Section 2 of the bill sets forth the effective date

JUSTIFICATION: In order to combat Workers' Compensation Insurance
fraud and hold down premiums charged, especially in the construction
industry, periodic audits are necessary. Productive employer audits
are beneficial, since they (1) protect workers by ensuring adequate
workers' compensation coverage; (2) true-up premium, often leading to
return of premium or credits against future installments; and (3)
provide adequate premium for the appropriate risk classification. For
instance, a roofing contractor claiming to be a kitchen remodeler
leads to data corruption at the New York Compensation Insurance Rating
Board and ultimately in the rate-making at the Division of Insurance
of the Department of Financial Services.

Often, employers who refuse an audit are attempting to avoid paying
the appropriate Workers' Compensation premium. Experience in states
that have a periodic audit statute in place (like Florida, California,
North Carolina and South Carolina) shows that appropriate premium from
an employer who refuses an audit may be in excess of established
penalty provisions for such refusals. This bill would make clear the
penalties for refusing to submit to the standard practice of audits of
workers' compensation insurance policies, and would restate that
refusal to permit an audit of payroll records and knowing
misrepresentation or concealment of the number and type of employees
and actual work performed could constitute criminal insurance fraud.


LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: This act shall take effect immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 5376--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 16, 2013
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be  committed  to  the  Committee  on  Labor  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT to amend the workers' compensation law, in relation to providing
  incentives for productive workers' compensation audits

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The  workers' compensation law is amended by adding a new
section 112-a to read as follows:
  S 112-A. AUDITS OF EMPLOYERS. 1. (A) EMPLOYERS IN  ALL  CLASSES  OTHER
THAN  THE  CONSTRUCTION  CLASS SHALL BE AUDITED NOT LESS FREQUENTLY THAN
BIENNIALLY AND THE CHAIR OR BOARD MAY PROVIDE FOR MORE  FREQUENT  AUDITS
OF  EMPLOYERS  IN  SPECIFIED  CLASSIFICATIONS  BASED  ON FACTORS SUCH AS
AMOUNT OF PREMIUM, TYPE OF BUSINESS,  LOSS  RATIOS,  OR  OTHER  RELEVANT
FACTORS. IN NO EVENT SHALL EMPLOYERS IN THE CONSTRUCTION CLASS, GENERAT-
ING  MORE THAN THE AMOUNT OF PREMIUM REQUIRED TO BE EXPERIENCE RATED, BE
AUDITED LESS FREQUENTLY THAN ANNUALLY. THE ANNUAL  AUDITS  REQUIRED  FOR
CONSTRUCTION  CLASSES  SHALL  BE  A  PHYSICAL, ONSITE REVIEW OF ORIGINAL
PAYROLL RECORDS, EMPLOYEE RECORDS, CHECKBOOKS, CASH BOOK  (DISBURSEMENTS
AND RECEIPTS), GENERAL LEDGER, CONTRACTS, TAX RETURNS INCLUDING QUARTER-
LY  PAYROLL  FILINGS,  AND ORIGINAL CERTIFICATES OF INSURANCE. THE AUDIT
SHALL BE CONDUCTED NO MORE THAN NINETY DAYS AFTER THE  EXPIRATION  OF  A
POLICY PERIOD.  AT THE COMPLETION OF AN AUDIT, IF REQUESTED BY THE AUDI-
TOR,  THE  EMPLOYER  OR  OFFICER OF THE CORPORATION AND THE AUDITOR MUST
PRINT AND SIGN THEIR NAMES ON THE AUDIT DOCUMENT AFFIRMING THE  ACCURACY
OF  THE INFORMATION PROVIDED THEREIN. AS REQUIRED BY SECTION ONE HUNDRED
TWELVE OF THIS ARTICLE, EMPLOYERS SHALL MAKE  AVAILABLE  ALL  BOOKS  AND
RECORDS  NECESSARY  FOR  THE  PAYROLL  VERIFICATION AUDIT AND PERMIT THE
AUDITOR TO MAKE A PHYSICAL INSPECTION OF THE EMPLOYER'S OPERATION.    IF
AN  EMPLOYER  FAILS  TO  PROVIDE REASONABLE ACCESS TO ALL SUCH BOOKS AND

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11025-02-3

S. 5376--A                          2

RECORDS NECESSARY FOR A PAYROLL VERIFICATION AUDIT, INCLUDING A PHYSICAL
INSPECTION OF THE EMPLOYER'S OPERATION, THE EMPLOYER SHALL PAY AN  ADDI-
TIONAL  PREMIUM  TO THE CARRIER OF THREE TIMES THE MOST RECENT ESTIMATED
ANNUAL PREMIUM.
  (B)  IF  AN  EMPLOYER  KNOWINGLY  UNDERSTATES  OR  KNOWINGLY  CONCEALS
PAYROLL, KNOWINGLY MISREPRESENTS OR KNOWINGLY CONCEALS  EMPLOYEE  DUTIES
SO  AS TO AVOID PROPER CLASSIFICATION FOR PREMIUM CALCULATIONS, OR KNOW-
INGLY MISREPRESENTS OR KNOWINGLY CONCEALS INFORMATION PERTINENT  TO  THE
COMPUTATION AND APPLICATION OF AN EXPERIENCE RATING MODIFICATION FACTOR,
SAID KNOWING MISREPRESENTATIONS OR KNOWING CONCEALMENTS SHALL BE CONSID-
ERED  FRAUDULENT  PRACTICES  IN  VIOLATION  OF  APPLICABLE PROVISIONS OF
SECTION ONE HUNDRED FOURTEEN OF THIS  ARTICLE  AND  INSURANCE  FRAUD  IN
VIOLATION OF APPLICABLE PROVISIONS OF SECTION 176.05 OF THE PENAL LAW.
  (C)  IF DURING THE COURSE OF AN AUDIT CONDUCTED UNDER THIS SECTION, AN
INSURANCE CARRIER OBTAINS INFORMATION  INDICATING  A  VIOLATION  OF  THE
PROVISIONS  OF PARAGRAPH (B) OF THIS SUBDIVISION, THEN THE CARRIER SHALL
REPORT SUCH INFORMATION TO THE BOARD.
  2. THIS SECTION SHALL NOT  APPLY  TO  EMPLOYERS  THAT  SELF-INSURE  OR
EMPLOYERS THAT ARE MEMBERS OF A WORKERS' COMPENSATION GROUP SELF-INSURED
TRUST.
  3.  FOR  THE  PURPOSES OF THIS SECTION, "CONSTRUCTION CLASS" MEANS THE
WORK OR OCCUPATION DESCRIBED IN "GROUP 3" OF SUBDIVISION ONE OF  SECTION
THREE OF THIS CHAPTER.
  S 2. This act shall take effect immediately.

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