Civil penalty cap increase – 2019 Legislative Concept

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Civil penalty cap increase – 2019 Legislative Concept

Some insurers and self-insured employers have had declining performance relating to claim processing, proof of coverage reporting, and responsiveness to division inquiries. One of the division’s primary tools to motivate improved behavior is to issue civil penalties for violation of laws, rules, and orders of the director. The current civil penalty is limited to $2,000 per violation and is capped at $10,000 per three-month period (approximately $40,000 per year). The cap was set in 1975.

In recent years, the division has used other ways to improve behavior, such as focused audits, providing education, and requiring poor performers to institute a work plan to improve behavior. Though these efforts have provided small improvements in some areas, the performance of some insurers and self-insured employers in important areas such as benefit payments have not improved and in some cases even worsened. There are chronic poor performers in each of the last several audit cycles, despite the issuance of penalties, which may indicate some are absorbing the penalties as a cost of doing business instead of doing business correctly.

This concept makes three changes to the current civil penalty cap in ORS 656.745:

  • Separates the civil penalties into three areas with separate caps for each: 1) employer or insurer inducement not to file or failure to report claims; 2) insurers, self-insured employers, and service companies who fail to pay assessments or comply with the law; and 3) employers and managed care organizations who fail to pay assessments or comply with the law.
  • Converts all three penalty caps to a calendar year basis, instead of a three-month rolling period.
  • Increases the penalty cap and the per violation amounts for insurers, self-insured employers, and service companies (only for claim processing violations based on audits) to a level reflecting approximate inflation since 1975.
Three-Month Period Calendar Year Per-Violation
Current penalty (all areas) $10,000 n/a $2,000
Concept – employer or insurer inducement not to file n/a $40,000 $2,000
Concept – employers and MCOs violate laws n/a $40,000 $2,000
Concept – insurer/self- insured employer/service company violate laws n/a $180,000 $9,000
By | 2018-05-15T08:29:41+00:00 May 15th, 2018|Legislative|0 Comments

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