TPA’s Rapid-Fire Work Comp Claim Denials Cost Vermont Insurer $100K

A workers’ compensation insurer must pay $100,000 under an agreement with Vermont state regulators because its claims administrator gave short shrift to claims for post-traumatic stress disorder and other occupational diseases.

Acadia Insurance Co. on April 18 reached an agreement with the Vermont Department of Financial Regulation to pay an $85,000 administrative penalty and contribute $15,000 to the Victim Restitution Special Fund because of the unfair claim settlement practices of its third-party administrator, W.R. Berkley Corp.

The department said Acadia’s TPA, known as BerkleyNet, refused to pay claims before conducting a reasonable investigation or did not engage in a good faith attempt at settlement from 2015 to 2019. In one instance, according to state regulators, BerkleyNet mailed a request to a first responder for information necessary to process the workers’ compensation claim and denied the claim on the very same day.

“It is critical for our first responders to receive necessary and deserved mental health care and this settlement will help ensure these illegal claims practices do not occur again as a result of the corrective actions the company is required to undertake,” stated DFR Commissioner Michael S. Pieciak.

He said the $15,000 contribution to the victim restitution fund will be used to support educational efforts for first responders.

The Vermont labor department has recognized since 1996 that mental disorders can be compensable under the state’s workers’ compensation statute and the state’s courts have upheld that interpretation. In 2017, the state legislature passed a law that creates a presumption that any PTSD suffered by police officers, rescue or ambulance workers and firefighters is compensable, unless a preponderance of evidence shows that the disorder was caused by risk factors not related to work.

Insurers are required to reasonably investigate claims, the Department of Financial Services, But according to the consent order signed by Acadia, Berkley Net on six occasions denied claims before four days had passed after asking the claimant to submit a consent form to release medical information.

Four of those denied claims were for PTSD. One was for chest pain and another was for an unspecified mental disorder. All of the claims were handled by the same adjuster.

In two instances, the adjuster mailed a medical release form to the claimant on a Thursday and then sent a denial notice on the following Monday. Twice, the adjuster mailed the release form on a Wednesday and denied the claim on the following Friday. Once, the adjuster mailed the release form on a Friday and denied the claim on the same day.

The consent order says BerkleyNet “engaged in a pattern of claims adjustment and settlement practices that deterred a potentially vulnerable population of claimants from pursuing claims, which at a minimum, constitutes the failure to conduct reasonable investigations” in violation of state law.

Acadia takes in 9.85% of the workers’ compensation premiums paid in Vermont, according to DFS records.