Workers' compensation penalties -- nonspecific denial of liability

Penalty: Nonspecific denial of liability

Statute violated -- Minnesota Statutes 176.84 Subd. 1

Applicable rule -- Minnesota Rules Part 5220.2570

Assessment statutes -- Minnesota Statutes 176.84, Subd. 2

Penalty payable to -- Assigned Risk Safety Account (ARSA)

Assessed against -- insurance company or self-insured employer

Determination

Minnesota Statutes 176.84 states, "... denials of liability shall be sufficiently specific to convey clearly, without further inquiry, the basis upon which the party issuing the notice or statement is acting."

Minnesota Rules Part 5220.2570 goes further to say a denial of liability, whether it be a primary or partial denial, must include "... a specific reason for the denial which must be in language easily readable and understandable to a person of average intelligence and education and a clear statement of the facts forming the basis for the denial. A denial which states only that the injury did not arise out of and in the course and scope of employment or that the injury was denied for lack of a medical report, for example, is not specific within the meaning of this item."

Calculation

The penalty for filing a nonspecific denial of liability is a set amount of $500 for each violation. This penalty may be assessed in addition to penalties for late or frivolous denials of liability.

How to avoid a penalty

The easiest way to avoid this penalty is to become familiar with the statute and rules. Do not use language that the rules define as being nonspecific. Do not deny a claim without conducting an investigation. Remind health care providers that authorizations to release medical information are not necessary for work-related injuries.

In addition, before the department may assess a penalty for a nonspecific denial, Minnesota Statutes 176.84 requires the department notify the insurer that the reason for the denial was not sufficiently specific to meet the standard of the statute and rules. The statute also allows the insurer an opportunity to amend the denial to meet the requirements. An insurer that takes this opportunity to correct the language of the denial in a timely manner can avoid having this penalty assessed.