Insurance Journal - Following a nine-month investigation, New York authorities have charged nine individuals and one corporation on various counts of defrauding the State‘s Workers‘ Compensation Fund. The persons involved all owned or worked for the now defunct College Point Laundry in Queens, and are alleged to have filed numerous false reports and statements which under-reported the number of workers employed and claimed workers were covered when they were not. Several employees were also charged with claiming disability benefits when they were in fact working. The amounts involved added up to just under $250,000 Kenneth Ross, Executive Director of the New York State Insurance Fund, stated that this was more evidence of the close cooperation between his Department, The NYSID‘s Frauds Bureau and the Queens District Attorney‘s Office in cracking down on fraud.

Claims Magazine - Most insureds have expectations that they will be restored to pre-loss conditions for covered losses. However, the diminution in value of vehicles following an accident may not be included in coverage. According to the FC&S Bulletins, “Diminution of value is the difference in market value immediately before and after damage to property. The cost of repairs is generally accepted as the measure of damages, although loss of value may act as evidence of damage.” As the following cases demonstrate, much of the debate centers around the meaning of the phrase “repaired or replaced property with other of like kind and quality.”

National Underwriter - Insurance companies may be ignoring one of their greatest assets--the claims staff. It wasn’t always so. In the 1970s and early 1980s, when the majority of today’s experienced claims professionals began their careers in insurance, the industry offered a challenging career with a high degree of security. There was a general feeling of satisfaction, both with the company and the profession, with salary increases of 10 percent yearly not uncommon. Now, however, the industry finds its claims operations struggling with a dearth of new talent, a severe training deficit and a badly fractured career ladder. Problems for the claims units began in the early 1990s when, in response to a number of industry problems (real estate and record catastrophes, among others), companies often delayed salary increases and limited them to 2 or 3 percent.

Claims Magazine - In an effort to ensure the continued financial capacity of insurers to provide coverage for risks from terrorism, the House Finance Services Committee has approved the Terrorism Risk Protection Act, which will provide insurers with loans in the event of any large terrorist attacks next year. The proposed legislation will make loans available to the industry to cover 90 percent of terrorism costs greater than $1 billion. For attacks causing more than $20 billion in losses, the bill would impose a special assessment on insurance policyholders to help defray the costs. House Republicans said they had decided to adopt a one-year measure now and advance a longer-term plan next year.

National Underwriter - An estimated $30 billion-plus loss from terrorist attacks will give the p-c insurance industry "a record-poor" year-end combined ratio of 119.9, according to the Insurance Services Office Inc. The Jersey City-based ISO said that the projected 2001 combined ratio--the percentage of each premium dollar spent on claims and expenses--will be nearly 10 points worse than last year’s 110.1 figure. The losses from Sept. 11 alone have deteriorated the combined ratio by 6.3 points for the calendar year, according to an ISO representative, Christopher Guidette. Commercial lines writers, according to ISO extrapolations, could see a combined ratio exceeding 130 for the year. ISO noted that even before Sept. 11, the p-c industry's total first-half 2001 combined ratio was 111.2.

National Underwriter - A claims expert spotlighted a problem in the workers’ compensation system by citing the case of a Florida worker whose simple slip-and-fall claim ended up costing more than $472,000 in the wake of 57 diagnoses and treatments by 74 medical providers. "Something has gone wrong," commented Dr. Marcia Satlow, vice president and medical director for The Hartford, during a presentation last month in which she advocated closer monitoring of physicians’ results. Dr. Satlow’s remarks came during a panel discussion on claims trends during the recent annual Florida Workers' Compensation Educational Conference in Orlando. The meeting was sponsored by the Florida Workers' Compensation Institute, in partnership on a national track with The National Underwriter Company (which publishes this magazine).

National Association of Mutual Insurance Companies - Video surveillance or sub-rosa, as many insurers have described surveillance and activity checks for decades, is an investigative tool employed to verify the alleged disability of injured claimants and to document fraudulent casualty claims. Sub-rosa in New Latin literally means “under the rose.” The rose has been associated with secrecy and secret societies for centuries and, to be sure, secrecy is essential to successful surveillance. It is well established that claimants who seek to recover damages for alleged injuries must expect their claims to be investigated and by making a claim have waived their right to privacy to the extent of a reasonable investigation. [See McLain v. Boise Cascade Corporation, 533 P.2d 343 (Or — 1975)]. Quoting from the annotation, Right of Privacy-Surveillance, 13 A.L.R. 3d 1025, 1027: “Where the surveillance, shadowing, and trailing is conducted in a reasonable manne

National Underwriter - A New Jersey insurance executive is warning that mishandling of the anthrax crisis could be costly for the workers' compensation system, but some in the industry question her notion. Ilene B. Wachs, president of Horizon Casualty Services of Newark, N.J., is concerned that the current response to anthrax scares in the workplace could translate into substantially increased costs to workers' compensation systems. HCS is a wholly-owned subsidiary of Horizon Blue Cross Blue Shield of New Jersey that manages workers' compensation claims. She said her company has recently seen a rash of anthrax-related workers' compensation claims. Ms. Wachs, who has a background in public health, sees the problem as stemming from anthrax-related treatment decisions being made by non-medical personnel.

National Underwriter - Most workers’ compensation claims professionals know that a small percentage of claims accounts for the bulk of their costs. The trick is to find and manage the high-dollar claims early in their life cycle. By employing the right technology to accomplish that end, it’s now possible for beleaguered workers’ comp carriers and managed care firms to save millions. The key factor is focusing on claims soon enough to make a difference. But methods by which some companies identify these exceptional items can often be as random as a collection of "Post-it" notes stuck on a claims adjuster’s computer, or a single reviewer’s ability to pick something out among thousands of pieces of information. This can be almost impossible for adjusters who have to manage more than 150 claims at any given moment.

Property and Casualty.com - Insurers are coming up with ways to keep down pharmacy costs as prescription drugs become the fastest-growing portion of the health-care dollar, according to the article, "Insurers Looking to Cut Costs are Pushing Use of Generic Drugs," in the Sept. 10 issue of BestWeek. One example is Blue Cross Blue Shield of Michigan, which will be launching a campaign, called "Generic Drugs, the Unadvertised Brand," to boost the amount of generic drugs used by its members. "With trends nationally in the 15% to 20% range year over year, any step that lowers the cost of prescriptions goes along way to reducing the pharmacy trend," said Glen Perry, director of pharmacy services administration for Blue Cross Blue Shield of Michigan. He points out that prescription drugs represent the largest single program payout at Blue Cross.