A third-party administrator for self-insured workers' compensation groups is under investigation by the New York State Attorney General's Office and faces possible license suspension for failing to pay injured workers awards and submitting false information, it was disclosed today.
Under regulatory fire is Poughkeepsie, N.Y.-based Compensation Risk Managers, a subsidiary of CRM Holdings, Ltd. in Bermuda. The parent firm said CRM has been hit with a subpoena from the AG's office and is cooperating with authorities.
The New York State Workers' Compensation Board in a letter to CRM dated Tuesday said it will hold a hearing to revoke the firm's license on May 20 at WCB's Albany office based on eight charges lodged by an investigatory panel.
WCB's letter accused the TPA of:
o Repeated failure to make timely payments of awards and installments of compensation to injured workers, for which the firm was penalized up to 20 percent of the amounts involved and $300 for each late payment.
o Failure to file proper forms.
o Repeated dilatory conduct.
o Failure to list its client Health Quest when it renewed its TPA license.
o Failure to provide timely information to Health Quest.
o Routinely failing to set adequate reserves in connection with claims it administered for self-insured trusts.
o Failure to cooperate with the WCB auditor PricewaterhouseCoopers.
o Submitting false information to clients and the board in connection with 2005 financial statements issued by HITNY, a self-funded workers' compensation trust CRM offered to New York health care facilities.
According to the board's letter, CRM was so late in filing reports for Health Quest that the client was at risk of having its self-insured status terminated by the WCB.
Without revealing the charges against it, CRM's parent announced the revocation move by WCB today and noted it is entitled make its case with evidence at the hearing.
"While CRM believes the charges are substantially without merit, there can be no assurances that CRM will ultimately prevail in administrative action or any further litigation that may be commenced. The company cannot estimate what impact, if any, the New York Workers' Compensation Board's administrative action may have on its financial position, operating results or cash flows," a statement from the firm said.
CRM said the attorney general's subpoena requested documents related to the TPA's administration of the Healthcare Industry Trust of New York.
The firm noted that the attorney general has not initiated any proceedings against CRM and said it believes the subpoena "relates to the concurrent investigation being conducted by the WCB."
CRM Holdings, Ltd.'s main business activities include underwriting primary workers' comp policies, underwriting workers' comp reinsurance and excess insurance policies, and providing fee-based management and other services to self-insured entities.
The company provides primary workers' compensation insurance to employers in California, Arizona, Florida, Nevada, New Jersey, New York and other states. It also reinsures some of the primary business underwritten and provides excess workers' comp coverage for self-insured organizations. CRM is also a provider of fee-based management services to self-insured groups in California.
A spokesperson for the WCB, Brian Keegan, said a three-commissioner panel will hold the revocation hearing and then make a recommendation for action to the full board.
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