Washington Working Harder to Combat Insurance Fraud

In advance of a rate announcement expected in September, Washington’s Department of Labor and Industries said it is working to “transform itself” by strengthening fraud fighting efforts, helping distressed employers and driving down costs internally through efficiencies. The agency recently has faced criticism for its rate and monopolistic status.

Among the tools L&I is using deter fraud, is a new blog to attract attention to the problem and encourage more people to report fradulent activities. The agency also has implemented a program that will allow L&I to audit Internal Revenue Service data and other outside system with employer-submitted information to see if employers are reporting more employees than they are reporting to L&I to reduce their workers’ compensation costs.

“People who commit fraud against L&I’s workers’ compensation system cost taxpayers money and put those who do the right thing at a competitive disadvantage,” said Washington Gov. Chris Gregoire, touting L&I’s fraud fighting efforts.

Additionally, L&I Director Judy Schurke said her agency is going after $7.6 million in penalties for people who are collecting unwarranted claims payments. Through its compliance program, L&I identified 56 percent more in questionable billings this year, she explained. While not all of those were incidences of fraud, she said for every dollar investigated in L&I’s fraud prevention program, there is an $8 return to the Workers’ Compensation Trust Fund.

As another step in its transformation, L&I is working to help more small businesses that have been hurt by the economic downturn. In February, the insurer discovered about 13,000 businesses were behind in their workers’ comp insurance premiums, and 60 percent of those had never made late payments before, Schurke said. Consequently, L&I piloted an Employer Assistance Program to help employers with a good payment history to get on a payment plan and lower premiums so that they can survive the recession, she said. The nine-month pilot now will be a permanent program.

Finally, L&I, which also had to deal with the economic downturn, said it is adapting more lean manufacturing principles into its operations, to eliminate bottlenecks and inefficiencies that don’t add to service. It plans to implement 40 lean projects that should save $2.5 million in costs, Schurke said.

“These are good business practices that we will have to [create] a new and more efficient way to do business,” Gregoire said.

L&I is the sole workers’ compensation insurer in the state, covering 168,000 employers. The agency is processing about 120,000 new claims and 30,000 workers in the system at any one time, according to Schurke.

A new initiative to eliminate the monopoly and allow private insurers to offer workers’ compensation insurance coverage has qualified for the November general election.