Workers Comp Reform Increases Penalties to Insurance Companies and Employers

NASHVILLE – In 2004 the Workers’ Compensation Penalty Program was created in response to the Workers’ Compensation Reform Act. Since the inception of the Penalty Program the division has collected close to $300,000 in penalties from insurance carriers and employers who are not abiding by the new laws. The most common penalty is for late payment of benefits.

For fiscal year 2004—2005, the Penalty Program received 120 referrals resulting in 50 penalties totaling approximately $63,600 in fines. For fiscal year 2005—2006 the program received 260 referrals resulting in 100 penalties totaling approximately $149,400 in fines. For the first six months of fiscal year 2006—2007, the program received 156 referrals resulting in 50 penalties totaling approximately $85,000.

“Obviously we’re seeing a great increase in the penalties and referrals each year,” said Labor and Workforce Development Commissioner James Neeley. “This shows us the Penalty Program is working. Governor Bredesen along with the new legislation allowed the department to obtain the resources to enforce the law so parties will act appropriately, claims will be managed timely, and employees will receive their benefits.”

The Workers’ Compensation Penalty Program is responsible for enforcing the workers’ compensation laws and regulations. These laws and regulations include, but are not limited to, 1) a 25% penalty for failing to pay or timely pay temporary benefits; 2) a $10,000 plus penalty for failing to comply with a Specialist’s order; 3) claim form filing penalties; 4) Benefit Review Conference penalties. The payment of a 25% penalty is made payable to the injured employee. All other fines become part of the division’s Second Injury Fund.

“Prior to the legislation there were no penalties if an insurance carrier or employer was late in paying a compensable claim,” said Workers’ Compensation Administrator Sue Ann Head.

“There were no consequences, and for an employee, that can be tough when you don’t have any income coming in. The legislation created a penalty for the late payment of benefits and the resources for us to enforce the law.”

The Penalty Program is a referral based system. Complaints are received about the behavior of an employer or carrier in terms of their management of a workers’ compensation case. The most common complaint is an injured employee not getting paid his temporary disability benefits. Call (615) 532-2403 to file a complaint.