Businesses Looking for Legal Recourse on Rate Error

Tuesday, November 27, 2018 | 0

Pennsylvania employers, stung by a rate-filing error that's expected to cost them more than $200 million this year, may have few options when seeking legal remedies, attorneys said this week.

It's possible that businesses could file a lawsuit against insurance carriers, but any recovery may be limited by the wording of the policy. It's also possible that they could sue the Pennsylvania Compensation Rating Bureau, which filed for an erroneous loss-cost increase last year that led to higher rates, according to lawyers who spoke with a Pennsylvania business news publication.

“I think the fight will come down to whether the Pennsylvania Compensation Ratings Bureau is an arm of Pennsylvania state government,” said Micah Saul, a Harrisburg attorney who specializes in labor and employment law. 

Government agencies carry sovereign immunity, which, in most cases, protects them from lawsuits by businesses.

As reported by WorkCompCentral, the rating bureau announced this month that it had discovered the 2017 loss-reporting error by a major insurance carrier, and acted quickly to recommended a 10.02% decrease, starting Jan. 1. The carrier that overstated its losses has not been named.

The bureau has also filed a second request for a 5.24% decrease based on projected savings from passager of House Bill 1840, which restored the use of impairment rating guides for work-related injuries. The two filings combined will result in a 14.74% decrease in collectible loss costs, according to a notice posted Monday in the Pennsylvania Bulletin, the state's official notice register. A public comment period runs through Dec. 9.

If approved by the state Insurance Department in December, the two filings will reduce workers' compensation rates next year, but business groups have said that many policies have already renewed, and they want some relief for higher premiums paid since April of this year, when the error-based increase took effect.

If approved, both rate decreases will take effect Jan. 1.