A Further Analysis of the Wyoming Workers Compensation System

One of the areas that Wyoming will need to examine is how Workers Comp claims are handled - specifically if claims that should be accepted are instead denied. This is one of the lingering questions about the North Dakota Workers Compensation system. Is there a trend to over-deny claims as the adjusters in North Dakota and Wyoming know that the Workers Comp system is one-sided?

A high-quality full claims audit from an outside source would enable Wyoming to find out if they are being fair to their injured employees. The word "independent" is crucial. The audit would have to be superior to the one in North Dakota.

From the Casper Star Tribune:

• A recent assessment of workers comp's finances by Pacific Actuarial Consulting suggested that about $642 million is required to cover benefits and liabilities based on historic and current income and payouts. It also suggested a more conservative view may call for $848.7 million, which would cover a major catastrophic scenario.
• As of Jan. 31, workers comp's cash balance was $925,296,141, according to outgoing director Gary Child. So whether the surplus is in the neighborhood of $77 million or $283 million, advocates from both the employee and employer viewpoints say they want a more detailed analysis of the finances.

I do not ever, and will never accept an analysis from anyone in an insurance position that uses the word or words "worst-case scenario". Therefore, the analysis by Pacific Actuarial Consulting that 848.7 is needed for a catastrophe is not valid. However, I have not reviewed their findings. The $642 million seems high, but is probably more in line with actual needs of the Wyoming Workers' Compensation System. Producing a LDF (Loss Development Factor) should be sufficient for the projected needs.

One of the great things about the Wyoming Workers Compensation system is that attorneys, legislators, administrators, and others are asking questions.

Next Up - The Difference Between Premium and Reserve Audits - they are very different.

Our main website is www.cutcompcosts.com

The Answers to the Final Five Questions on the Last Blog with One More Question added:

6. We could not file a dispute with the North Dakota government or WSI as the dispute had to be filed BEFORE the end of the bidding. We would have filed a dispute for the small number of files that the provider examined in their review vs. cost, but the number of files reviewed were not published until AFTER the audit was completed.

7. A recent North Carolina public bid for a file review of 350 files had a range of $27,000 to $65,000. So with 475 files, that would be 475/350 * 65,000 = $88,214 maximum.

8. Yes, we are familiar with the audit provider. The are one of the larger companies that bid on quite a number of projects.

9. We know no one at the WSI or within the North Dakota state government.

10. Yes, we do realize that we were posted on some of the politically-based websites in North Dakota. We made no effort to contact anyone with the North Dakota press. We have heard from a few news outlets and have been interviewed on the blog postings.

11. This is another question that we just added - Did I review the report from the provider on WSI's website? What was my opinion of the report?

The report was well done from a structure standpoint. However, the numbers are not there to draw any conclusions. One area that that was remarkable was that the provider's team could have performed an audit on 475 files from 1/28/08 through 2/1/08. That is five workdays or 37.5 hours. The norm is one file per hour on the average. Lost-time files may take longer than one hour to review, but medical-benefit-only files brings the average back to within an hour. That would be 12.67 files per hour. The review team would have needed to consist of 13 auditors at a minimum to accomplish this task that quickly.

Our main website is at www.cutcompcosts.com