Workers' compensation penalties -- prohibited practices

Penalty:  Prohibited practices

Statute violated -- Minnesota Statutes 176.194 Subd. 3

Assessment statutes -- Minnesota Statutes 176.194 Subd. 4

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

Assessed against -- insurance company, self-insured employer, third-party administrator or adjuster

Special note

Prohibited-practice penalties may be assessed in addition to any other penalties provided by the workers' compensation laws. They may be assessed against insurance companies, self-insured employers, third-party administrators that act on behalf of an insurer, adjusters, the Minnesota Insurance Guaranty Association or any other entity.

Determination

A penalty may be assessed when the department finds that any of nine specific types of prohibited conduct have occurred in the handling of claims.

Types of prohibited conduct
1.	Failing to reply, within 30 calendar-days after receipt, to all written communication about a claim from a claimant that requests a response.
2.	Failing, within 45 calendar-days after receipt of a written request, to commence benefits or to advise the claimant of the acceptance or denial of the claims by the insurer.
3.	Failing to pay or deny medical bills within 45 days after the receipt of all information requested from medical providers.
4.	Filing a denial of liability for workers' compensation benefits without conducting an investigation.
5.	Failing to regularly pay weekly benefits in a timely manner, as prescribed by the rules adopted by the commissioner, after weekly benefits have begun. Failure to regularly pay weekly benefits means failure to pay an employee on more than three occasions in any 12-month period, within three business-days of when payment was due.
6.	Failing to respond to the department within 30 calendar-days after receipt of a written inquiry from the department about a claim.
7.	Failing to pay pursuant to an order from the department, compensation judge, court of appeals or the supreme court, within 45 days from the filing of the order, unless the order is under appeal.
8.	Advising a claimant not to obtain the services of an attorney or representing that payment will be delayed if an attorney is retained by the claimant.
9.	Altering information on a document to be filed with the department without the notice and consent of any person who previously signed the document and who would be adversely affected by the alteration.

The prohibited conduct most commonly penalized for by the department is failing to respond to the department within 30 days after receipt of a written inquiry from the department about a claim. This violation typically occurs after the department sends a written request for information about a claim. The law requires a response to the request within 30 days. If the department does not receive a response by then, a penalty may be assessed or a courtesy second request may be sent to the attention of the claims manager.

Calculation

The penalty amount is based on the number of penalties assessed against the party for violations during the previous 12-month period prior to the current violation. The chart below shows the current penalty amounts for each violation.

Items 1 through 6 and 9		Items 7 and 8
Violation number	Penalty amount	Violation number	Penalty amount
1 through 5	warning	1 through 5	$3,000 each
6 through 10	$3,000 each	6 through 30	$6,000 each
11 through 30	$6.000 each

If a party has 31 or more violations during a 12-month period, a penalty of $6,000 is assessed for each violation. In addition, the department may refer the party to the Minnesota Department of Commerce for license review.