Washington Dept. of Labor Fines Contractor over Workers’ Comp Violations

March 4, 2005

The Washington Department of Labor and Industries has put Skanska USA Building Inc. on notice that it will lose its certificate to self-insure if it doesn’t improve the way it manages workers’ compensation insurance claims.

In addition to the “corrective action,” L&I issued the largest fine ever levied against a self-insured employer, assessing Skanska USA $136,264 in penalties for its mismanagement of workers’ comp claims over the past six years. That is in addition to the $124,811 an L&I audit found the company underpaid injured workers who did file claims.

Skanska has begun taking steps to correct deficiencies in its handling of claims, but has exercised its legal rights by protesting the audit findings. L&I has asked the company for records that support its contention that some of the audit findings are wrong.

Skanska AB is headquartered in Sweden. Three years ago it purchased Baugh Construction Co. An L&I audit of the firm found that under both ownerships, the company failed to provide forms to file workers’ comp claims to at least 468 workers who were injured on the job. The violations date back to 1999. Workers told L&I investigators that company officials threatened to fire them, or not hire them back on other jobs, if they filed a workplace injury claim.

Washington state law allows companies that meet established financial and safety criteria to manage their own workers’ comp claims.

“Employees at companies that self-insure deserve and are entitled to the same level of benefits and protections as workers covered by the State Fund,” said Robert Malooly, head of L&I’s Insurance Services Division, which runs Washington’s workers’ comp system. “It’s our job to make sure that happens, and that employers live up to their responsibilities under the law.”

In addition to the fine and back payments, Labor and Industries will closely monitor Skanska’s management of its workers’ comp claims to ensure the company has corrected its practices and is in compliance with the law. Malooly said the agency will take steps to revoke the company’s self-insurance status if it doesn’t manage claims properly.

About 385 companies in Washington are self-insured. They employ about a third of the state’s workforce. While self-insured companies don’t pay premiums, they do pay L&I a fee to oversee the administration of their system. L&I audits self-insured companies to make sure they are managing workplace injury and illness claims properly.

Labor and Industries manages a State Fund that provides workers’ compensation insurance coverage for about 1.9 million workers and 160,000 employers. In addition to providing benefits to injured workers, the system protects employers from the tort liability lawsuits that could result from workplace injuries.

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