California Regulations 10107

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§ 10107 Notice of Audit; Claim File Selection; Production of Claim Files; Auditing Procedure.

(a) Once a subject has been selected for an audit, the Audit Unit shall serve a Notice of Audit on.the claims administrator. The Notice shall inform the administrator of its selection for audit, and shall include a request to provide the Audit Unit with a claim log or logs. The audit subject shall provide two copies of the specified claim log(s) within fourteen days of the date of the receipt of the Notice. The Audit Unit may select any or all claim files for audit.

.(b) The Audit Unit shall send the audit subject a Notice of Audit Commencement.identifying the files to be audited, except that no notice need be given to audit claim.files which are the subject of inquiries or complaints. The audit shall commence no.less than fourteen days from the date the Notice was sent, unless the audit subject.agrees to earlier commencement.

.(c) The Audit Unit shall randomly select separate samples of indemnity, denied, and.medical-only files from two years' of the audit subject's claim logs, except that if the earliest.of the last two completed years has already been the subject of an audit, claims will be.randomly selected from only the last completed year. .(1) The total number of indemnity files randomly selected for audit will be determined based.on the following table: .TABLES IN PDF FORMAT - CLICK HERE .(2) In conducting the audit, the Audit Unit shall calculate the frequency of files with percentages of the files with exposure for violations after the following number of.randomly selected indemnity files are audited: .TABLES IN PDF FORMAT CLICK HERE

If any of the following criteria are met after auditing the sample size as set forth in this.subsection (c)(2), the Audit Unit will proceed to audit the remaining number of randomly.selected indemnity files selected for audit pursuant to subsection (c)(1): .(i) The number of randomly selected audited files with violations involving the failure to pay.indemnity exceeds 20% of those files in which indemnity is accrued and payable and the.average amount of unpaid indemnity exceeds $200.00 per file in which indemnity is accrued.and payable; .(ii) The numbers of randomly selected files with violations involving the late first payments of.temporary disability indemnity, permanent disability indemnity, vocational rehabilitation.maintenance allowance, late subsequent indemnity payments, and late payments of death.benefits, as mitigated for frequency under Section 10111.1(e)(3)(i) through (v), exceeds 30%.of the files in which those indemnity payments have been made; .(iii) The number of randomly selected audited files with violations involving the failure to issue.benefit notices, as assessed under Section 10111.1(a)(7)(ii) of these regulations, exceeds 30%.of those files in which there is a requirement to issue those notices..The determination of whether or not to audit the number of files selected pursuant to.subsection (c)(1) of this section shall not be the subject of appeal, and no preliminary report.of findings will be issued to the audit subject before the determination is made.

.(d) The total numbers of denied files and medical-only files randomly selected for audit will be.determined based on the following table: .TABLES IN PDF FORMAT CLICK HERE >

(e) In addition to randomly selected indemnity, denied, and medical-only files, the Audit Unit.may also select for audit any or all files for which the Division of Workers' Compensation has.received complaints within the past three years.

.(f) The audit subject shall pay all expenses of an audit of an adjusting location outside the.State of California, including per diem, travel expense, and compensated overtime of audit.personnel.

.(g) The audit subject shall make each of the claim files selected for audit available at the at the time of audit commencement. If claim files are maintained in an electronic or other.non-paper storage medium, the claims administrator shall, upon request, provide to the Audit.Unit direct computer access to electronic claim files and/or legible printed paper copies of the.claim files, including all records of compensation payments.

.(h) The Audit Unit shall have discretion to audit files in addition to those identified with the.Notice of Audit Commencement. The audit subject shall make each of the additional files.selected for audit available at the audit site within 14 days of receipt of written notice.identifying the additional files.

.(i) The audit subject shall provide the auditor(s) an adequate, safe, and healthful work space.during the audit, which allows the auditors a reasonable degree of privacy. If this work not provided, the Audit Unit may require the audit subject to deliver the files to the nearest.Audit Unit office for completion of the audit.

.(j) The Audit Unit may obtain and retain copies of documentation or information from claim.files to support the assessment of penalties.

.(k) The audit subject shall have the opportunity to discuss preliminary findings and provide.additional information at a post-audit conference.

.(l) The Audit Unit may at any time request additional information or documentation in complete its audit. Such information may include documentation that, as specified by.Labor Code Sections 3751(a) and 3752, compensation has not been reduced or affected by.any insurance, contribution, or other benefit due to or received by or from the employee. The.audit subject shall provide any requested documentation or other information within thirty.days from the Audit Unit's request, unless the Audit Unit extends the time for good cause.

.(m) The Audit Unit shall issue a report of audit findings which may include, but is not, the following: one or more requests for additional documentation or compliance, Notices of.Intention to Issue Notice of Compensation Due, Preliminary Notices of Penalty Assessments,.Notices of Compensation Due, or Notices of Penalty Assessments. If any additional requested.documentation is not provided within thirty days of receipt of the report, additional audit.penalties may be assessed under Section 10111.1(d)(2) of these Regulations.