Topic: Workers Compensation
Nearly 100 years ago, Pennsylvania passed the Workers’ Compensation Act to provide payment to workers who are injured on the job. The Act ensures that injured workers receive compensation for their medical expenses and lost wages. It also provides death benefits to families of a worker who suffers a fatal accident on the job. The State of Pennsylvania requires all businesses to carry Workers’ Compensation insurance.
To help small businesses comply with the law, Pennsylvania established the State Workers’ Insurance Fund (SWIF). At eight percent of the total Workers’ Compensation market, SWIF is the largest provider of Workers’ Compensation insurance in the state. Recently, the Pennsylvania House Labor and Industry Committee heard a presentation from SWIF administrators about problems the fund has recovering premiums from some employers.
Some employers take advantage of the system
As long as an application for insurance is in order, SWIF is obligated to write the policy, regardless of the risk involved. Some companies have realized this and taken advantage of the system. A company may owe premiums, but if the company files for a new employee insurance number (EIN) and uses a new name to submit another application for insurance, then SWIF must write them a new insurance policy. Despite the company being in default on a previous policy, SWIF must provide them a new one.
SWIF conducts audits of employers to verify that they are paying the correct premium amount. A company’s premium is based on payroll estimates. Some employers deliberately underestimate their payroll to get a lower premium. If this comes out in an audit, then the company owes back payments to SWIF. Too often, instead of paying, the company just files a new SWIF application as described above and there is no way to collect the money owed.
This issue was being addressed before the legislature for the first time. SWIF administrators are looking for a way to hold companies who avoid their debts accountable. The House Labor and Industry Committee agreed that the matter needs to be investigated. SWIF also reported that since 2015, it has increased its debt collection efforts resulting in $2.3 million in recovered revenue. Currently it has no power to demand higher premiums from policyholders with bad debt. This leaves the companies exploiting the loophole with no incentive to change their behavior.
The interim director of SWIF described the situation as the agency being the insurer of last resort with an obligation to provide Workers’ Compensation insurance to companies that default on their payments as long as they apply with a new EIN number. While he declined to specify to the Pennsylvania legislature what needs to be changed, he said that the fund “needs more teeth in requiring insurers to address the debt they have with the state.”
Philadelphia Workers’ Compensation Lawyers at E.S. Borjeson & Associates Protect the Rights of Injured Workers
An experienced Philadelphia Workers’ Compensation lawyer is crucial to recovering the compensation you are owed for a work injury. At E.S. Borjeson & Associates, our attorneys understand the complex Pennsylvania Workers’ Compensation system and which rules apply to your specific case. We will work tirelessly on your behalf to obtain the benefits you are entitled to and make sure your employer complies with the law. Call 215-274-0181 today or contact us online. We are located in Center City Philadelphia, serving clients throughout Bucks County, Chester County, Montgomery County, Delaware County and Berks County.