Florida Regulations 69O-190.073: Premium Audit
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(1) All self-insurers funds shall determine the normal premium due from each member in each policy year based on actual audited payroll. Audits shall consist of physical, onsite audits or mail self-audits. The requirements set forth in this rule shall apply to the fund and its present or former members. Funds shall be responsible for the compliance with this rule of contracted audit personnel or firms.
(2) Physical, onsite audits shall be required for all members who meet one of the following conditions:
(a) New members (new businesses or members who had coverage with another fund or carrier when they joined the current fund) who are eligible for experience rating at policy inception.
(b) New members in the construction industry. Any employer with classification codes subject to the Florida Contractors Classification Premium Adjustment program shall be deemed to be in the construction industry.
(c) All renewal members (members who were in the same fund for the new and prior policy period) who are eligible for experience rating at policy renewal.
(d) Any member may be audited at the discretion of the fund.
(3) Mail self-audits will be allowed for all new and renewal accounts not required to have a physical, onsite audit. However, any member shall have the right to request a physical, onsite audit when such a request is made on reasonable grounds.
(4) Each member shall be notified in writing by the fund of the audit requirements and penalties set forth in these rules. Such notice in plain language shall be mailed to the member at least 45 days prior to the end of each policy year.
(5) Each member shall be notified by the fund, either in person, by telephone or in writing prior to date that the physical audit is to be made.
(6) The following procedures shall govern the scheduling of physical, onsite audits:
(a) The fund shall make at least two separate good faith attempts to schedule a physical, onsite audit at a date and time mutually agreeable to the member and the fund.
(b) The fund shall keep a written record of the time and date of each attempt.
(c) After two attempts, if the fund is unable to establish, with the member, a mutually agreeable date for an audit, then the fund shall give the member notice by certified mail of the date of the fund’s choice on which an audit is to be performed. The fund may, at this time, issue a notice of termination to the member. This procedure is also applicable if the member cancels, with sufficient notice, two different appointments for a mutually agreed upon audit.
(d) Such notice shall include, in plain language, the statutory penalties for the member’s failure to give the fund access to the member’s records and for the member’s failure to allow the fund to complete its audit.
(7) All funds shall complete audits (both physical or mail) on 90% of its premium within 5 months after the end of the policy year.
(8) If a new member meets one or more of the following criteria then a preliminary, onsite audit should be performed within 6 months of the beginning of the policy year:
(a) Payroll contained on the UCT-6 forms or the monthly application updates is inconsistent with the member’s estimated annual premium.
(b) Information contained on the monthly application updates (OIR Form BSI-3A) is inconsistent with the member’s estimated annual premium.
(c) Construction risks with estimated annual premium in excess of $10,000.
(d) Any trucking or employee leasing business.
(e) Any business with over $50,000 in estimated annual premium.
(9) A physical onsite audit shall be performed on all members who terminate during their first year of membership. Such audit shall be scheduled within 30 days after the termination date and completed within 60 days after the termination date. Procedures applicable to year ending physical audits shall also apply to audits of terminated members.
(10) The following procedures and standards shall apply to all physical, onsite audits performed by the fund:
(a) The audit shall include a review of the member’s records and such review shall be sufficient to determine the actual premium owed to the fund and shall include an inspection of the member’s premises sufficient to determine the correctness of classification assignments, if such inspection has not previously been performed.
(b) If all of a member’s records are not maintained at one location, then an audit shall be performed at each location containing records.
(c) If a member’s estimated annual premium is in excess of $100,000, then an inspection of the member’s premises at all locations shall be part of the audit. Locations which were inspected during the expiring policy period by the fund’s safety personnel or which were the subject of a classification inspection during the same period need not be visited again during the audit.
(11) The following records are to be audited onsite, as applicable to the individual member:
(a) Payroll records;
(b) Ledgers or journals;
(c) UCT-6 reports;
(d) Checking accounts;
(e) Certificates of insurance for subcontractors;
(f) Form 1099’s;
(g) Claims history; and,
(h) Any other pertinent records.
(12) All audit reports, both physical and mail, shall include a summary of the correct audited payroll by classification, payrolls and classifications previously reported by the member, the calculation of the difference in payroll and a determination of the under or over payment of premium. The fund shall retain the audit report for at least 2 years and the audit workpapers for at least one year.
(13) When a fund schedules a mutually agreed upon audit, the member shall provide the name and title of the person who will represent the member at the time of the audit. If the agreed upon audit is more than 7 working days from the date the appointment was made, the fund shall confirm the appointment in writing and include the name of person designated to represent the member at the audit. The confirmation should include a statement that the member is to notify the fund by telephone immediately if the appointment cannot be kept.
(14) The fund shall make at least two good faith attempts to obtain the return of a mail audit before any penalties may be applied.
(15) If the fund attempts to complete a mutually agreed upon audit and cannot complete the audit because the member failed to give the fund access to the necessary records, the fund shall select a new date and time at least 2 weeks in advance. The fund shall send a notice to the member by certified mail advising the member of the audit and of the penalties for failure to allow the fund to complete the scheduled audit. Denial of access of records by the member’s agent or representative shall be considered the same as a denial by the member.
(16) If a member disputes the findings of a physical audit or the fund’s premium determination based on a mail audit, the following procedures shall apply:
(a) The member shall have 30 days from the date the audit results were mailed to file a written response to the fund. The response shall contain the specific facts in dispute as well as any documents which are pertinent to the dispute.
(b) Upon receipt of a timely notice of the dispute, the fund shall investigate the matter and render a written decision. A written decision shall be rendered on at least 75% of disputed audits within 30 days after the response was mailed by the member.
(c) If the fund does not agree with the member’s position, the fund may schedule another audit in the same manner as the original audit.
(d) Any reaudit scheduled shall be used to determine the member’s premium and the fund is not obligated to perform any further audit unless there is substantial evidence that both the original audit and the reaudit were incorrectly performed.
(e) The dispute shall be resolved in accordance with the dispute resolution procedure adopted by the fund pursuant to Fl. Admin. Code R. 69O-190.064
(f) Failure of the member or the fund to comply with the timeframes contained in paragraphs (a) and (b), without reasonable cause shall result in the matter being resolved in favor of the other party.
(17) Any overpayment of premium shall be refunded to the member within 60 days after the completion of any undisputed audit. Refunds of overpayment of premium shall be refunded within 30 days after the resolution of any dispute. The fund shall have the right to apply any overpayment of premium to any unpaid premium.
(18) A member may be fined $500 by a fund for failure to allow access to essential records during the course of a physical audit subject to the following conditions:
(a) The member has failed to allow the completion of a prior physical audit, when such audit was scheduled on a date and time mutually agreeable to the fund and the member; or
(b) The member has canceled two previous appointments for a physical audit; and,
(c) The fund has notified the member by certified mail of the date and time of the next scheduled audit and such notice shall include the penalties for failure to complete the next audit; and,
(d) The fund incurred time and travel expenses in attempting to complete the next audit.
(19) If the fund cannot complete an audit because the employer failed to maintain essential records then the member shall be subject to a $500 fine in the same manner and under the same conditions as if the member denied the fund access to his records.
(20) The $500 fine imposed by the fund shall become a part of the premium owed the fund and shall be collected in the same manner and at the same time as other premium. The $500 fine may be deducted from any premium overpayment owed to the member.
(21) If the failure to complete a physical audit or to return a mail audit results in the fund’s inability to determine an accurate final premium, the fund may arbitrarily determine payroll and charge up to a maximum of three times the most recent estimated annual premium in accordance with Florida Statutes § 440.381(8)
(22) If the member intentionally understates payroll or misrepresents employee duties on the Application for membership or on the monthly updates and this results in an underpayment of premium, the member shall pay 12 percent simple interest to the fund on the amount of underpaid premium. The fund shall not be eligible to collect interest on the underpayment if the understatement of payroll or misrepresentation of employee duties could have been determined from a review of the monthly updates or UCT-6 forms.
(23) If the fund determines that a member has deliberately filed an Application for Membership or monthly updates containing false, misleading or incomplete information for the purpose of avoiding or reducing the amount of premium owed, then the fund shall notify the office and the Bureau of Worker’ Compensation Insurance Fraud of the name of the member as well as all supporting documents.
Rulemaking Authority 440.591, 440.51(6)(b), 440.381(3) FS. Law Implemented 440.51(6)(b), 440.381 FS. History-New 6-12-91, Amended 12-19-93, Formerly 38F-5.073, 4-190.073.
Terms Used In Florida Regulations 69O-190.073
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Fraud: Intentional deception resulting in injury to another.
(a) New members (new businesses or members who had coverage with another fund or carrier when they joined the current fund) who are eligible for experience rating at policy inception.
(b) New members in the construction industry. Any employer with classification codes subject to the Florida Contractors Classification Premium Adjustment program shall be deemed to be in the construction industry.
(c) All renewal members (members who were in the same fund for the new and prior policy period) who are eligible for experience rating at policy renewal.
(d) Any member may be audited at the discretion of the fund.
(3) Mail self-audits will be allowed for all new and renewal accounts not required to have a physical, onsite audit. However, any member shall have the right to request a physical, onsite audit when such a request is made on reasonable grounds.
(4) Each member shall be notified in writing by the fund of the audit requirements and penalties set forth in these rules. Such notice in plain language shall be mailed to the member at least 45 days prior to the end of each policy year.
(5) Each member shall be notified by the fund, either in person, by telephone or in writing prior to date that the physical audit is to be made.
(6) The following procedures shall govern the scheduling of physical, onsite audits:
(a) The fund shall make at least two separate good faith attempts to schedule a physical, onsite audit at a date and time mutually agreeable to the member and the fund.
(b) The fund shall keep a written record of the time and date of each attempt.
(c) After two attempts, if the fund is unable to establish, with the member, a mutually agreeable date for an audit, then the fund shall give the member notice by certified mail of the date of the fund’s choice on which an audit is to be performed. The fund may, at this time, issue a notice of termination to the member. This procedure is also applicable if the member cancels, with sufficient notice, two different appointments for a mutually agreed upon audit.
(d) Such notice shall include, in plain language, the statutory penalties for the member’s failure to give the fund access to the member’s records and for the member’s failure to allow the fund to complete its audit.
(7) All funds shall complete audits (both physical or mail) on 90% of its premium within 5 months after the end of the policy year.
(8) If a new member meets one or more of the following criteria then a preliminary, onsite audit should be performed within 6 months of the beginning of the policy year:
(a) Payroll contained on the UCT-6 forms or the monthly application updates is inconsistent with the member’s estimated annual premium.
(b) Information contained on the monthly application updates (OIR Form BSI-3A) is inconsistent with the member’s estimated annual premium.
(c) Construction risks with estimated annual premium in excess of $10,000.
(d) Any trucking or employee leasing business.
(e) Any business with over $50,000 in estimated annual premium.
(9) A physical onsite audit shall be performed on all members who terminate during their first year of membership. Such audit shall be scheduled within 30 days after the termination date and completed within 60 days after the termination date. Procedures applicable to year ending physical audits shall also apply to audits of terminated members.
(10) The following procedures and standards shall apply to all physical, onsite audits performed by the fund:
(a) The audit shall include a review of the member’s records and such review shall be sufficient to determine the actual premium owed to the fund and shall include an inspection of the member’s premises sufficient to determine the correctness of classification assignments, if such inspection has not previously been performed.
(b) If all of a member’s records are not maintained at one location, then an audit shall be performed at each location containing records.
(c) If a member’s estimated annual premium is in excess of $100,000, then an inspection of the member’s premises at all locations shall be part of the audit. Locations which were inspected during the expiring policy period by the fund’s safety personnel or which were the subject of a classification inspection during the same period need not be visited again during the audit.
(11) The following records are to be audited onsite, as applicable to the individual member:
(a) Payroll records;
(b) Ledgers or journals;
(c) UCT-6 reports;
(d) Checking accounts;
(e) Certificates of insurance for subcontractors;
(f) Form 1099’s;
(g) Claims history; and,
(h) Any other pertinent records.
(12) All audit reports, both physical and mail, shall include a summary of the correct audited payroll by classification, payrolls and classifications previously reported by the member, the calculation of the difference in payroll and a determination of the under or over payment of premium. The fund shall retain the audit report for at least 2 years and the audit workpapers for at least one year.
(13) When a fund schedules a mutually agreed upon audit, the member shall provide the name and title of the person who will represent the member at the time of the audit. If the agreed upon audit is more than 7 working days from the date the appointment was made, the fund shall confirm the appointment in writing and include the name of person designated to represent the member at the audit. The confirmation should include a statement that the member is to notify the fund by telephone immediately if the appointment cannot be kept.
(14) The fund shall make at least two good faith attempts to obtain the return of a mail audit before any penalties may be applied.
(15) If the fund attempts to complete a mutually agreed upon audit and cannot complete the audit because the member failed to give the fund access to the necessary records, the fund shall select a new date and time at least 2 weeks in advance. The fund shall send a notice to the member by certified mail advising the member of the audit and of the penalties for failure to allow the fund to complete the scheduled audit. Denial of access of records by the member’s agent or representative shall be considered the same as a denial by the member.
(16) If a member disputes the findings of a physical audit or the fund’s premium determination based on a mail audit, the following procedures shall apply:
(a) The member shall have 30 days from the date the audit results were mailed to file a written response to the fund. The response shall contain the specific facts in dispute as well as any documents which are pertinent to the dispute.
(b) Upon receipt of a timely notice of the dispute, the fund shall investigate the matter and render a written decision. A written decision shall be rendered on at least 75% of disputed audits within 30 days after the response was mailed by the member.
(c) If the fund does not agree with the member’s position, the fund may schedule another audit in the same manner as the original audit.
(d) Any reaudit scheduled shall be used to determine the member’s premium and the fund is not obligated to perform any further audit unless there is substantial evidence that both the original audit and the reaudit were incorrectly performed.
(e) The dispute shall be resolved in accordance with the dispute resolution procedure adopted by the fund pursuant to Fl. Admin. Code R. 69O-190.064
(f) Failure of the member or the fund to comply with the timeframes contained in paragraphs (a) and (b), without reasonable cause shall result in the matter being resolved in favor of the other party.
(17) Any overpayment of premium shall be refunded to the member within 60 days after the completion of any undisputed audit. Refunds of overpayment of premium shall be refunded within 30 days after the resolution of any dispute. The fund shall have the right to apply any overpayment of premium to any unpaid premium.
(18) A member may be fined $500 by a fund for failure to allow access to essential records during the course of a physical audit subject to the following conditions:
(a) The member has failed to allow the completion of a prior physical audit, when such audit was scheduled on a date and time mutually agreeable to the fund and the member; or
(b) The member has canceled two previous appointments for a physical audit; and,
(c) The fund has notified the member by certified mail of the date and time of the next scheduled audit and such notice shall include the penalties for failure to complete the next audit; and,
(d) The fund incurred time and travel expenses in attempting to complete the next audit.
(19) If the fund cannot complete an audit because the employer failed to maintain essential records then the member shall be subject to a $500 fine in the same manner and under the same conditions as if the member denied the fund access to his records.
(20) The $500 fine imposed by the fund shall become a part of the premium owed the fund and shall be collected in the same manner and at the same time as other premium. The $500 fine may be deducted from any premium overpayment owed to the member.
(21) If the failure to complete a physical audit or to return a mail audit results in the fund’s inability to determine an accurate final premium, the fund may arbitrarily determine payroll and charge up to a maximum of three times the most recent estimated annual premium in accordance with Florida Statutes § 440.381(8)
(22) If the member intentionally understates payroll or misrepresents employee duties on the Application for membership or on the monthly updates and this results in an underpayment of premium, the member shall pay 12 percent simple interest to the fund on the amount of underpaid premium. The fund shall not be eligible to collect interest on the underpayment if the understatement of payroll or misrepresentation of employee duties could have been determined from a review of the monthly updates or UCT-6 forms.
(23) If the fund determines that a member has deliberately filed an Application for Membership or monthly updates containing false, misleading or incomplete information for the purpose of avoiding or reducing the amount of premium owed, then the fund shall notify the office and the Bureau of Worker’ Compensation Insurance Fraud of the name of the member as well as all supporting documents.
Rulemaking Authority 440.591, 440.51(6)(b), 440.381(3) FS. Law Implemented 440.51(6)(b), 440.381 FS. History-New 6-12-91, Amended 12-19-93, Formerly 38F-5.073, 4-190.073.