More claims in question than thought
By Patrick Springer pspringer@forumcomm.com
Metro/State - 04/11/2008 A state auditor is digging to determine whether North Dakota injured workers’ claims were inappropriately denied in numbers far higher than suggested in the main body of a recent consultant’s report. Despite the consultant’s assurances that only a “handful” of questionable claim denials turned up in the review, auditors are troubled

that an appendix to the report determined 14 percent of denied claims – one in seven – were inappropriate. Consultants for Marsh USA examined 84 denied claims and concluded that 12 were not appropriately denied, in a review presented March 5 to

Workforce Safety and Insurance, the North Dakota workers’ compensation agency. “I promise you we would never call 12 out of 84 a handful or isolated,” said Gordy Smith, a state audit manager who is overseeing a performance evaluation of the agency. “Maybe that might be one of the differences between consultants and auditors.” A Marsh executive said the

firm “stands by the contents of its report” and is cooperating with state auditors “as appropriate.” If the 14 percent inappropriate denial rate accurately reflects the thousands of claims handled during the review period – from 2005 to 2007 – that could mean hundreds of workers’ claims were improperly denied, Smith said.

Marsh USA was one of two outside consulting firms called in to evaluate the agency after the former internal audit manager at workers’ comp – a whistleblower who later was fired – warned of possible widespread inappropriate denials of injured workers’ claims. The claims review, which examined a sampling of 475 claims handled from 2005 to 2007, found no evidence of systemic inappropriate denials, Marsh executive Anthony Walker said last month in presenting the findings.

But the consultants reported finding “isolated” questionable denials involving claims lacking proper documentation or disagreements over legal interpretations used to justify denial of certain claims. “We saw some claims in there that were questionable based on our interpretation of your statutes,” Marsh USA executive Anthony Walker told WSI board members March 5. “But these were isolated incidents. It isn’t like we saw quite a few claims. We saw a handful.”

Asked to explain the apparent contradiction between a “handful” of questionable denials and a 14 percent inappropriate denial rate, Walker declined an interview request from The Forum. Instead, he emailed a statement: “Marsh stands by the contents of its report, which should be carefully read in its entirety. Marsh can confirm that it has been contacted by an auditor in the state manager’s office. Marsh has already provided numerous working papers in response to his request and will continue to cooperate with the state auditor as appropriate.”

Smith said Thursday that he hasn’t yet received all of Marsh’s working papers to enable him to complete a statistical analysis that will project the inappropriate denial rate to the thousands of claims handled during the review period. “I’m just trying to help all the decision makers,” Smith

said. Legislators and other state officials would want to know if the sampling of claims suggests a high rate of inappropriate denials, he added. Marsh shouldn’t have buried such an important and fundamental finding in an appendix table at the back of a thick report, where it would be easily overlooked, Smith said. Bruce Furness, interim CEO of WSI, pledged the agency’s complete cooperation in all audits. He said he believes state laws entitle auditors to all consultants’ working papers for reviews, and officials should resolve the contradiction.

Both Furness and Smith said the current performance evaluation of the agency, scheduled for completion in late summer or early fall, will address the claims process and should shed further light on the fairness of claims. Readers can reach Forum reporter Patrick Springer at (701) 241-5522