By Mannix Porterfield
REGISTER-HERALD REPORTER
CHARLESTON
February 02, 2008 11:05 pm
—
Critics in the Legislature portray the office of Insurance Commissioner Jane Cline as an agency bent on denying injured West Virginia workers just compensation for their job-related wounds.
Two of them, Delegates Mel Kessler and Rick Moye, both D-Raleigh, want to make the job an elected office rather than one where the commissioner is appointed by the governor.
Cline disputes both points — and several others — in an erstwhile quiet legislative session that, at times, has sharpened its focus on her office in handling the “old fund” she inherited when the Legislature privatized the ailing workers’ compensation system.
In a lengthy interview with The Register-Herald, she disputed the Raleigh lawmakers’ contention that insurance rates are lower in states where the insurance commissioner runs for office.
Data kept for 2004, the last year for which she had figures, show that Louisiana and Oklahoma ranked second and third in homeowner rates, at $1,362 and $1,064. Commissioners are elected in both states.
After that, Mississippi was fifth, followed by Delaware, California and Kansas. The national average was $729. West Virginia, with its governor-picked commissioner, was 16th from the bottom with an average rate of $616.
The pattern was about the same in auto rates. Louisiana was fifth-highest, at $1,076, with Delaware three rungs away at $1,028. West Virginia was 15th-highest with an average premium cost of $857.
“I think you are responsible to the people because the governor has been elected to be their leader and look out for their best interests and make decisions about looking for the opportunity to improve the general climate in the state for the entire constituency,” Cline said.
Cline feels her detractors simply aren’t attuned to the entire picture of how the office functions in handling workers’ compensation claims she inherited when BrickStreet came on line.
And it’s understandable that some people complain.
“You’re going to hear from the people who don’t like the answer they’re getting far more than you hear from the person who is satisfied with the answer,” she said.
Cline acknowledged that Cambridge, a contractor hired at the outset to deal with the old-fund claims, fumbled the ball on “numerous occasions,” and said her office called to point out the errors.
“This is not about the bottom line,” she said.
“This is about making sure that somebody deserving of benefits is getting the appropriate treatment. We’re not about a bottom line here. We’re about making sure people are being taken care of properly.”
When mistakes were detected, Cline said, her office pointed them out.
“We want to make sure every claim deserving of a benefit gets the appropriate treatment up front,” she said, emphasizing the word “deserving.”
“The sooner you get the treatment, the better the opportunity for an improved outcome for that individual. We always want to make sure if they’re entitled to wage replacement benefits that they’re getting that without having to jump through a lot of hoops.”
Before sweeping changes came in the Legislature in both 1995 and 2003, she said, claimants generally got what they desired. And that led to a $3 billion debt, she said.
“If you looked at the benefit structure, it was a very rich benefit as compared to what you saw in other states,” she added.
Even more changes came in the 2005 session, and all combined, the reforms made it tougher to stake a claim, she said, while assuring that deserving claimants get what they are entitled to collect.
Cline disagreed on yet another point Kessler made — that the governor was unaware of the $3.5 million BrickStreet had to reimburse her office to manage the old fund.
Kessler’s contention that the elimination of third-party bad faith lawsuits did nothing to lower insurance rates likewise was countered by Cline, noting that State Farm imposed an across-the-board reduction of 10 percent in auto rates. The state’s largest insurer cut its vehicle premiums some $34 million, she said.
Cline pointed to West Virginia’s premium taxes, one of the higher ones in America, at more than 5.5 percent, while most states are in the 2 percent range. A large part of that tax winds up in general revenue, but some is dedicated to satisfying municipal fire and police pensions. Some is headed to the teachers’ pensions.
Another factor is the staggering figure that one in every 63 highway accidents involves a collision with a deer — the highest rate in the country, she said.
“The fact of the matter is, what you pay in rates is really based on what the company is paying out in claims,” she said.
Cline strongly disputed Kessler’s assertion that his telephone calls to her office are routinely taped.
“That is not correct,” the commissioner said.
Records of all calls to the office are stored in a database, and that includes ones involving complaints, whether it’s a company or an individual, she said.
Through the past year, for the record, the office received 781 complaints on workers’ compensation, and 541 entailed the old fund, while 163 involved BrickStreet, four were from the uninsured and 77 were self-insured.
“So we have this information and we can use that to work to improve the complaints process,” the commissioner said. “And we can understand what the complaints are.”
Some $2 billion in red ink lingers in the old fund, but the system is benefiting from a $250 million special revenue stream the Legislature devised. Last year, Cline’s office paid some $300 million in benefits.
By 2014 or 2015, her office should all but be out of workers’ compensation.
“All the claims will not be run off by then, but by that time, we will have a better idea of about what the claims are and most likely work to do a risk portfolio transfer where we sell that risk off to an insurance company that specializes in run-off type business,” she said.
“That’s what Texas did several years ago. Other states have gone through that process. We are in the process of getting a better handle on what claims we actually have.”
Even with a sizable downturn in the debt, a significant number of claims are still being paid.
BrickStreet’s desire to function as an insurance company rather than as a third-party administrator led to the contract to Cambridge. From there, the business was dished off to three other firms.
“You can imagine transitioning 46,000 claims files to three third-party administrators,” Cline said. “That’s a pretty massive undertaking, but we’ve been able to do that.”
Sedgewick wound up with the lion’s share of some 39,000 claims, while American Mining and Wells Fargo are handling about 4,000 apiece, including those for occupational disease.
“The real benefit with having these three third-party administrators is we have twice as many claims adjusters working on these claims,” Cline said.
At Sedgewick, for instance, all 7,500 phone calls it got in December were handled by a live operator inside a minute, and 95 percent of the concerns were taken care of on the first call, she said. There were a mere 17 complaints out of the entire 7,500.
A recurring old claim could keep her office in the compensation work, as well as a new black lung claim, she pointed out.
“That’s not clearly identifiable today, but as the individual ages, the exposure is already there, and that will occur,” she said.
One claim for an unspecified problem actually harks back to 1929.
“Some of these claims will still be in existence far beyond 2014 or 2016, but that’s when we believe we’ll be in position to say, ‘company, this is what you have, what will you do,’ and just get the state out of the workers’ comp insurance business.”
Kessler also complained the office is quick to appeal in an effort to deny the injured rightful compensation, but Cline suggested this step is never taken lightly.
“Clearly, something that is obviously no question it’s an incident that occurred on the job, we wouldn’t be appealing that,” she said.
“But in the advent that the employer really believes they weren’t responsible, then there is the obligation to defend the employer. Because the old workers’ compensation didn’t do that very well, employers often got involved in the system.”
Mary Jane Pickens, general counsel and director of the office’s legal division, pointed out that in 3,300 appeals before the state Supreme Court, only 774 came from the former workers’ comp director or insurance commissioner.
“So the vast majority — 2,338 — are where the claimant has appealed, and the employer is about 221,” Pickens said.
“We would only appeal if we believe the facts were so strong that the claimant was not right.”
Moreover, Cline said, fraud is prevalent, and a special unit strives to take care of it — be it the chicanery of an employer, a provider or a claimant.
“At the end of the day, our interest is making sure there is available and affordable insurance market in West Virginia,” she said.
“And that consumers are treated fairly, and now, with workers’ comp, that the claimants and the employers are treated fairly. That’s our mission. That’s our purpose.”
— E-mail:
mannix@register-herald.com
Copyright © 1999-2008 cnhi, inc.