Maryland’s Workers’ Compensation Commission failed to identify employers in the state who were not properly insured.
The finding is one of three in a new report released by the Office of Legislative Audits. Two findings — a failure to maintain complete records on cases and a failure to verify that millions of dollars in collections from employers and insurance companies were deposited — had been identified in previous audits.
The 10-member commission is charged with receiving reports about workplace accidents. It also settles claims, holds hearings, and refers injured workers to rehabilitation services. The panel is also responsible for assessing fines against employers who fail to provide required worker’s compensation insurance.
Under state law, a company with one or more employees must carry worker’s compensation insurance or receive approval to self-insure.
Violations carry a penalty of up to $10,000. The fine goes to the state’s Uninsured Employers’ Fund. The commission can also order the business to obtain insurance and hold hearings for those who fail to do so.
In fiscal year 2022, more than 22,000 claims were filed with the commission. Of those more than 16,000 received awards for permanent disability or death, totaling nearly $374 million.
But auditors said the commission’s reliance on reports by the National Council on Compensation Insurance to determine compliance may not go far enough.
Auditors compared those reports against state Department of Labor unemployment insurance records for companies that joined the system between July 1, 2017 and December 31, 2020. The review identified more than 1,600 businesses that appeared not to carry worker’s compensation insurance.
A test of 20 of those businesses found that 19 “did not have active Maryland workers’ compensation coverage,” according to the audit.
The commission “was not aware of the lack of insurance for 18 of the 19 employers until we brought the matter to its attention.”
In a written response, Commission Chair Maureen Quinn agreed with the finding. She said the commission would work to modernize its compliance program and include more comparisons to state unemployment insurance data.
Quinn said the commission would review the 1,650 employers identified by auditors “to determine if coverage existed; contact those employers that did not have coverage to determine if coverage was required” and to assess fines if coverage was required.
Auditors also found that the commission’s tracking of cases was incomplete. The report looked at seven days between November 2021 and September 2022 — a total of 647 cases slated for hearings.
Of those, 139 were not listed in the commission’s tracking records.
Another 493 had no documentation of the outcome of the case.
The commission’s deficiencies in tracking cases was identified in a 2019 audit, according to the report.
In her response, Quinn agreed with the finding but noted that “the hardcopy files also show the actions taken on each employer compliance case.”
She said the commission would work to improve the completeness and accuracy of the it’s spreadsheet tracking.
In a third finding, auditors said the commission “did not have procedures to independently verify” that all payments received from employers and insurance companies were deposited since the commission employee responsible “had access to the collections and maintained the related accounts receivable records.”
A similar finding was part of a 2019 audit.
Again, Quinn agreed with the finding in the auditors’ July 2023 report. She said that the commission addressed the same issue identified in the 2019 audit, assigning one employee to handle deposits and another to handle accounts receivable recordkeeping.
“This segregation of duties was in place until June 2021 when the individual performing the accounts receivable recordkeeping departed the agency. Because of the short staffing and other logistical challenges brought on by the COVID-19 pandemic, the agency was not able to maintain this segregation of duties until another employee was hired and trained. As of April 27, 2023, the agency once again has the appropriate segregation of duties in place.”
However, the audit notes that “access to the safe and related collections had not been restricted during the current audit period.”
In fiscal year 2022, the commission reported deposits of $33.7 million.
The report said the commission “advised [auditors] that staffing vacancies within the fiscal department prevented the recommendations from being implemented as intended.”
Quinn joined the commission after then-governor Parris N. Glendening (D) appointed her in 2002. She moved from acting chair to chair after Gov. Wes Moore (D) appointed her in March.
This article was originally published on MarylandMatters.org and is republished with permission.