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HOUSE DOCKET, NO. 3081        FILED ON: 1/14/2009

HOUSE  .   .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1846


The Commonwealth of Massachusetts



Michael J. Rodrigues


To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
              Court assembled:

              The undersigned legislators and/or citizens respectfully petition for the passage of the accompanying bill:

An Act to provide incentives for productive workers compensation audits.






Michael J. Rodrigues

8th Bristol

Thomas M. McGee

Third Essex and Middlesex

Michael F. Kane

5th Hampden

SEE HOUSE, NO. 5027 OF 2007-2008.]

The Commonwealth of Massachusetts


In the Year Two Thousand and Nine



An Act to provide incentives for productive workers compensation audits.


              Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

              Chapter 152 of the General Laws as appearing in the 2006 Official Edition is hereby amended by inserting after section 25U the following section:  Section 25V.

(1)(a) Any employer who knowingly submits an application for workers’ compensation coverage that contains false misleading or incomplete information provided for the purpose of avoiding or reducing the insurance premium shall be punished by imprisonment in the state prison for not more than 5 years or by imprisonment in jail for not less than 6 months nor more than 2½ years or by a fine of not less than $1000 nor more than $10000 or both. (b) All applications for workers’ compensation coverage shall contain a statement printed on the application that the filing of an application containing false misleading or incomplete information provided for the purpose of avoiding or reducing the insurance premium shall be punishable pursuant to this section. Any application for workers compensation coverage filed by an employer shall contain a sworn statement by the employer attesting to the accuracy of the information submitted and a sworn statement by the insurance agent attesting that the insurance agent explained to the employer or officer the classification codes that are used for premium calculations.

(2) The division of insurance shall the minimum requirements for payroll verification audits and employee classifications. Minimum requirements for payroll verification audits shall ensure that the appropriate premium is charged for workers’ compensation coverage and that audits performed by carriers and employers are adequate to ensure all sources of payment to employees subcontractors and independent contractors are reviewed and the accuracy of employee classification verified. Employers in all classes other than the construction class shall be audited biennially. Employers in the construction class generating more than the premium required to be experience rated shall be audited annually. The annual audits required for construction classes shall consist of physical onsite audits. At the completion of an audit the employer or officer of the corporation and the auditor must print and sign their names on an audit document and attach proof of identification to the audit document.

(3) Each employer shall annually submit a copy of any quarterly contribution reports required by the division of unemployment assistance pursuant to section 45 of c hapter 151A at the end of each year to the carrier, and submit an annual self-audit supported by quarterly contribution reports. The reports shall include a sworn statement by an officer or principal of the employer attesting to the accuracy of the information contained in the report.

(4)(a) Employers shall make available all records necessary for the payroll verification audit and permit the auditor to make a physical inspection of the employer’s operation. If an employer fails to provide reasonable access to all records necessary for a payroll verification audit the employer shall pay a penalty to the carrier or self-insurer of three times the most recent estimated annual premium. (b) If an employer understates or conceals payroll knowingly misrepresents or knowingly conceals employee duties so as to avoid proper classification for premium calculations or misrepresents or conceals information pertinent to the computation and application of an experience rating modification factor said knowing misrepresentation or knowing concealment shall be considered a violation of chapter 93A.

(5) If an employee suffering a compensable injury was not reported as earning wages on the last quarterly contribution report filed with the division of unemployment assistance before the accident the employer shall indemnify the carrier for all workers’ compensation benefits paid to or on behalf of the employee unless the employer establishes that the employee was hired after the filing of the quarterly report in which case the employer and employee shall attest to the fact that the employee was employed by the employer at the time of the injury. Failure of the employer to indemnify the insurer within 21 days after demand by the insurer shall be grounds for the insurer to immediately cancel coverage. The insurer shall be entitled to reasonable attorney’s fee if it recovers any portion of the benefits paid in the action.

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