S.C. Workers’ Comp Case Could be Reopened

June 29, 2006

A judge in Columbia, S.C. deciding whether to approve a nearly 33 percent increase in a workers’ compensation rates may be asked to reopen a case after opponents of the increase learned the Insurance Department didn’t disclose overcharges based on faulty data.

Data from the National Council on Compensation Insurance is at the heart of a request for a 33 percent increase. The data is the biggest part of a workers’ comp rate-setting formula. The case is being decided by Judge Marvin Kittrell, an administrative law judge who wrapped up hearings on the request in April.

Kittrell is expected to issue a ruling within the next few weeks.

On Friday, the state Department of Consumer Affairs and the South Carolina Small Business Chamber of Commerce asked the court to order the Insurance Department and NCCI to provide the information for review after learning South Carolina employers were overcharged for several years because NCCI calculations used to set premiums were in error.

NCCI’s calculations are use by 36 states, all of which were affected.
Apart from seeking that information, the groups told Kittrell they may ask to reopen proceedings.

“We want them to produce the information of the data problems experienced in other states, because we want to know how it affects South Carolina,” said Frank Knapp, president of the Small Business Chamber. “Let’s look at the data.”

But an executive with NCCI said last week the “motion is without foundation.” Peter Burton of NCCI said last week the company has been truthful and honest throughout the process.
Insurance Department spokeswoman Ann Roberson said she would not comment about a pending legal matter.

In June 2005, the state Insurance Department learned of the problems from New Hampshire’s Insurance Department, which had ordered refunds. Vermont and Missouri also ordered refunds.

The South Carolina Insurance Department investigated, too. But, instead of ordering refunds, it said rate adjustments would be made in the future to compensate for overpayments.

In July, NCCI recommended a 32.9 percent increase in loss costs, the amount workers’ comp insurers pay for disability and medical care. Insurance companies use NCCI’s loss-cost calculation as they set their rates.

Consumer Affairs asked the Insurance Department about the faulty NCCI data as it prepared to fight the rate request. The agency said the Insurance Department didn’t provide information about NCCI’s miscalculations, even though officials knew at least a month earlier that problems existed.

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