North Dakota's workers' compensation insurance premiums are the lowest in the nation. Its benefit payments (88 cents for every $100 of payroll) rank 33rd in the country. The entire state has fewer employees -- some 326,100 -- than the population of many cities. The number of total employers does not even rise above the 20,000 mark. So why is it such a hotbed of workers' compensation intrigue? In less than a year, the state's Workforce Safety and Insurance agency has endured:

? Felony charges against the CEO of its workers' compensation agency and the director of the special investigations unit for illegal use of confidential information and misspending of agency money.

? The firing of the CEO after the felony charges against him were dismissed.

? The naming of one interim CEO.

? The release of a consultant Conolly & Associates' report recommending the replacement of the interim CEO.

? The hiring of a second interim CEO.

? The public reaction of other widely discussed recommendations by Conolly, such as moving the WSI under the regulation of the state insurance department, and paying the WSI 11 board members more money.

? Digesting the fact that the Conolly report gave the HR department a grade of "D or an F" (ongoing on several blogs and news reports).

? The hiring of yet another outside auditor to examine whether the WSI board of directors is following its own rules.

? The firing of three more top officials at WSI and the elimination of two other positions.

? The release of a 141-page claims process review by Marsh Mercer Kroll

It's enough to make you appreciate the weather.

On its face, the state's workers' compensation is not exceptional. In most respects, it is similar to other states with monopolistic and exclusive systems. It is run by a government agency. It does not allow self-insurance. Only independent contractors as defined by the IRS are exempt from workers' compensation coverage. An 11-member board, drawn from nominations by a variety of select business and employee groups that are approved by the governor oversees the agency and hires its executive director/CEO.

Major cracks in the system began to appear when felony criminal charges were brought against then-CEO Sandy Blunt in April 2007. Blunt was charged with misapplication of entrusted property and conspiracy to commit disclosure of confidential information. The agency's top fraud investigator, Romi Leingang, also was charged with conspiracy. The misapplication charge stemmed from an audit that identified more than $18,000 in questionable spending on gift certificates and cards purchased from restaurants, shopping malls, and a lunch for lawmakers, among other things. The conspiracy charge involved what auditors said was improper use of digital driver's license photos from the state Transportation Department to try to track down an employee who was e-mailing agency payroll figures.

The CEO drama played out over many months, and even though the charges were dropped late last year, it still is not fully resolved. Blunt now is demanding that the state pay his legal fees -- a long shot, say legal experts. But with his removal, it appears that the WSI can now concentrate on polishing up its image with its constituents.

According to Tim Wahlin, WSI acting chief of injury services, there have been "constant complaints about improper denial of claims, and that's eroded public confidence. In an effort to address those public confidence issues, we had a couple of different audits to determine if that was the case."

The Conolly report gave high marks to the agency overall. "WSI is really doing an excellent job. It was almost puzzling to come in here and after hearing everything that we heard and see an organization that I would stack up with any organization that does this kind of work in the United States." (Neal Conolly, consultant) However, the report did not shy away from strong recommendations. Chief among them were the needed changes at the top. Conolly recommended hiring an interim CEO who was someone local but from outside the agency. The board recently settled on former Fargo Mayor Bruce Furness.

The Conolly report praised WSI's handling of injury claims, and said there was no evidence of any directive to deny certain claims. "There is clearly a focus upon bringing the injured worker to proper and maximum medical improvement, and to getting a claimant back to work as soon as practicable, with proper medical treatment," the report says.

The 141-page "WSI Claims Process Review" by Marsh also brought some well needed good press. The report called an injury-management team pilot program a "significant strength" and recommended replicating its approach to all claim units. The program combines the talents of a claim adjuster and dedicated nurse case manager with regular input from the medical director and pharmacy benefits director. According to Wahlin, "We have given these teams very substantial resources to triage claims, including putting doctors on staff. When you have medical professionals at the table with you, you get radically different input." Wahlin said that the very structure of the program limits its feasibility: "We can afford to hire only so many doctors. However, one of the things we have found is that having our nurse case managers sitting at the table talking to our claim adjusters really helps. We just listed positions for three new nurse case managers."

Marsh made a series of timed recommendations based on the perceived urgency of different issues. "Throughout the report, you will notice that there are no real glaring issues. This is not an organization whose work product is sick," Wahlin said. "Many of the recommendations are centered on legal involvement in training and clarification of legal language, and timeliness issues. We are up and moving on that. That is happening now."

Meanwhile, the new audit is on the horizon. A state law passed in 1997 requires that the WSI undergo an independent performance audit every two years. The report is expected by August.

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North Dakota - Workers&#039; Comp Hotbed?

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North Dakota - Workers' Comp Hotbed?