RECOMMENDATIONS OF SUB-COMMITTEE

GARDNER LAW OFFICE
JEFFERSON PLACE
350 NORTH NINTH STREET -- SUITE 102
P.O. BOX 2528
BOISE, ID 83701

As you know, a sub-committee, and two committees under that sub-committee, have met on the issue of the out-of-state adjusting. Overall, the recommendations have been as follows:

If you or any other members of the Advisory Committee have questions, please do not hesitate to contact me.

IN-STATE ADJUSTING INTERPRETIVE GUIDELINES

INTRODUCTION

It has been brought to the attention of the Industrial Commission that a number of insurance companies, and self-insureds, are conducting operations in such a manner that the in-state requirements of Industrial Commission regulations are being violated. To this end, the Industrial Commission has taken the advice of the Industrial Commission’s Advisory Committee, staff, and independent investigation, and is issuing the following guidelines with reference to in-state requirements. The guidelines articulate the regulations which are being violated and the practices which are prohibited. The following list is not exclusive but illustrates matters of significance and importance at the present time.

MANDATES AND PROHIBITIVE PRACTICES

1. Claims decision making must be made within the state of Idaho. Therefore, the following practices are deemed not to be in compliance with the in-state adjusting requirements:

1. Medical claims management, including but not limited to, pre-certification and treatment authorization, as well as adjusting decisions, must be conducted by an Idaho licensed in-state adjuster, or by an in-house in-state adjuster, and cannot be made by case management nurses, within or without the state, or by an out-of-state adjuster. However, nothing in this interpretive memorandum would prohibit consultation by adjusters or attorneys with health care consultants. “Fronting” by having a figure-head adjuster in the state will not be deemed compliance with the in-state adjusting requirements.

2. Claims investigation, including but not limited to, interviews and correspondence with the Claimant, physicians, vocational rehabilitation personnel, and Industrial Commission staff, must be conducted by an Idaho licensed in-state adjuster, or by an in-house in-state adjuster. All correspondence pertaining to the claims (other than interoffice memos), Explanation of Benefits, and completion of all Industrial Commission required forms and communications, must be distributed through the in-state adjusting office. Any directives to the Claimant, health care providers, Industrial Commission, or others, must specify that any replies or communications are to be directed to the in-state adjusting office.

3. 1-800 numbers that reach out-of-state locations are prohibited relative to any aspect of the handling of claim, including but not limited to, medical care issues, benefit payment issues (medical and income benefits), and investigation issues.

2. Waiver for out-of-state checks. The waiver for issuance of checks out-of-state as included in the Industrial Commission regulations does not permit out-of-state adjusting or claims handling. The waiver pertains to check issuance only. Although the checks may be printed and signed out-of-state, the in-state adjuster must comply with the following:

Because of the widespread violation of the above requirements, and urgency of the situation, the Industrial Commission and the Department of Insurance are prepared to move forward with sanctions for failure to comply with all in-state adjusting requirements. Any insurance carrier or self-insured not complying with the requirements must come into compliance within 45 days of the above date. Any insurance company or self-insured found to be in violation of the requirements of proper in-state adjusting will then be subject to sanctions which could be imposed by both the Department of Insurance and the Idaho Industrial Commission. Sanctions could include show cause proceedings that could result in cessation of the right to continue to write workers’ compensation insurance in the state of Idaho and penalties and fines by the Department of Insurance for violation of the in-state adjuster licensing requirements.

Attached is a checklist of items compiled by the Industrial Commission staff for conducting of audits relative to the in-state adjusting requirements.