According to a federal lawsuit filed in October, Liberty Mutual Insurance may be playing its workers’ comp cards a little too close to the chest.

The lawsuit, Valley Container Co. v. Liberty Mutual Inc., alleges that by withholding key information, Liberty Mutual kept workers’ comp premiums artificially — and illegally — inflated for employers across the nation. As of this writing, the suit has only one employer plaintiff. However, the suit aspires to class-action status as other policyholders are invited to add their voices to the chorus.

More disturbingly, the suit claims that the National Council on Compensation Insurance (NCCI), while not a defendant, played a key (and passive) role in the scheme. The lesson? Employers (and providers) must protect themselves from claims administrators who see the befuddling complexity of workers’ comp as an opportunity for abuse.

What Employers Don’t Know...Can Hurt Them

The suit includes multiple charges, including crimes under the RICO (Racketeer Influenced and Corrupt Organizations) Act typically associated with organized crime syndicates. According to the only plaintiff (for now) and their attorneys, Liberty Mutual saved significant amounts of money via subrogation and other methods — savings the insurer should have passed on in the form of lower premiums for employers.

In addition, the suit maintains that Liberty Mutual owed refunds to employers, based on experience modifications and other cost savings that the NCCI reported to Liberty Mutual. But Liberty Mutual never remitted those refunds, supposedly relying on NCCI to forego any enforcement or oversight responsibilities.

The suit further alleges that Liberty Mutual — a major NCCI member — availed itself of NCCI’s “lack of oversight and diligence,” and that “[t]his lack of oversight is by design and is a function of the fact that NCCI is a creation and tool of Liberty Mutual and the other insurers that control NCCI’s decision-making.”

The plaintiff is Valley Container Co., a Connecticut-based packaging company. Valley alleges, among other things, that Liberty Mutual was almost fully reimbursed for an injured Valley employee’s claim — but never reported it. This caused Valley’s premiums to rise inappropriately, despite the fact that the Valley employee’s claim ultimately cost Liberty Mutual almost nothing.

A Symptom of the Workers’ Comp System

Workcompcentral reports that Valley Container’s woes are nothing new in workers’ comp, and that this lawsuit stands as an example of a problem that employers have complained about for decades.

As workers’ comp billing experts and provider advocates, these allegations only underscore something we at DaisyBill stress to our clients on a daily basis: Protect yourself, because employers and providers cannot trust that claims administrators will play by the rules. Neither can we rely on those entrusted to enforce the rules, at least not consistently.

Know the regulations, know exactly what you’re owed, and hold claims administrators accountable.

Don’t let anyone take advantage of your office. Use a reliable, accurate, efficient software to ensure that claims administrators play by the rules, and remit correct reimbursement on time, every time. Schedule a free demonstration of our Billing Software today.

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