senate Bill S5376B

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

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:S5376B

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 benefi-
cial, 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 Finan-
cial 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 Caro-
lina 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 January 1, 2015.

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

                                 5376--B
    Cal. No. 385

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 16, 2013
                               ___________

Introduced  by  Sens.  SEWARD, AVELLA -- read twice and ordered printed,
  and when printed to be committed to the Committee on Labor --  commit-
  tee  discharged, bill amended, ordered reprinted as amended and recom-
  mitted to said committee -- recommitted to the Committee on  Labor  in
  accordance  with Senate Rule 6, sec. 8 -- reported favorably from said
  committee, ordered to first and second  report,  ordered  to  a  third
  reading,  amended  and  ordered  reprinted, retaining its place in the
  order of third reading

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 MAY  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 OF
ALL EMPLOYERS SHALL BE CONDUCTED NO MORE THAN ONE  HUNDRED  TWENTY  DAYS
AFTER THE EXPIRATION OF A POLICY PERIOD.  AT THE COMPLETION OF AN AUDIT,
IF  REQUESTED BY THE AUDITOR, THE EMPLOYER OR OFFICER OF THE CORPORATION
MUST PRINT AND SIGN THEIR NAMES ON  THE  AUDIT  DOCUMENT  AFFIRMING  THE
ACCURACY OF THE INFORMATION PROVIDED THEREIN. AS REQUIRED BY SECTION ONE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11025-08-4

S. 5376--B                          2

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
RECORDS NECESSARY FOR A PAYROLL VERIFICATION AUDIT, INCLUDING A PHYSICAL
INSPECTION OF  THE  EMPLOYER'S  OPERATION,  THE  EMPLOYER  SHALL  PAY  A
SURCHARGE  TO  THE CARRIER OF TWO TIMES THE MOST RECENT ESTIMATED ANNUAL
PREMIUM.
  (B) EMPLOYERS THAT FAIL TO PROVIDE REASONABLE ACCESS  TO  THE  CARRIER
FOR THE PURPOSE OF CONDUCTING AN AUDIT SHALL BE REPORTED TO THE NEW YORK
COMPENSATION INSURANCE RATING BOARD.
  (C)  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.
  (D)  IF DURING THE COURSE OF AN AUDIT CONDUCTED UNDER THIS SECTION, AN
INSURANCE CARRIER OBTAINS INFORMATION  INDICATING  A  VIOLATION  OF  THE
PROVISIONS  OF PARAGRAPH (C) 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 January 1, 2015.

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