Errors in workers comp victims payments for six years with 25 per cent underpaid by icare
A review of payments to 3000 workers compensation claimants from the state-government owned insurer icare has revealed half contained errors, with a quarter of recipients underpaid over a six-year period.
There are concerns the true figure may be higher and cost the agency millions.
In the latest controversy surrounding icare, a review conducted last year and revealed by the regulator last week identified errors in around half of the 3000 reviewed claims from 2012-18.
One quarter “were potentially underpaid, at least initially, and a similar proportion were potentially overpaid”
A statement from the State Insurance Regulatory Authority (SIRA) said in those instances where the weekly payments to claimants were incorrect, premium calculations for medium to large businesses may also be incorrect.
icare has identified underpayments and overpayments over six years in a review of 3000 workers compensation claimants.
SIRA ordered icare “to take swift action to fully quantify the scale of this issue”, and is requiring icare to repay any underpaid workers.
Icare was ordered to produce a review and remediation plan by Friday, detailing when the full extent of issues will be known, a proposed approach and timeframe for repaying any workers who have been underpaid, and all employers who subsequently paid a higher premium than appropriate.
It demanded a risk assessment audit for other NSW government workers compensation funds and the government property insurance scheme managed by icare, known as the Treasury Managed Fund.
The NSW workers compensation scheme lost almost $1 billion in the last financial year largely because of the introduction of a new outsourced claims management model, according to an independent report.
Daniel Mookhey, NSW Labor Opposition Minister for Finance and Small Business, said given the regulator’s review only looked at 3000 claimants, the true extent of payment problems may be much higher.
“Tens of thousands of sick and injured workers may have been underpaid because the Treasurer’s own agency got its sums wrong,” Mr Mookhey said, adding it put the concerns on the level of the Woolworths underpayment saga.
“No one can say yet how much money sick and injured workers were underpaid, but the bill is likely to run into millions of dollars.”
In response, icare issued a statement, saying the implementation of a new IT platform last year identified “discrepancies”.
“The quality assurance sample identified a number of potential instances where initial pre-injury average weekly earnings calculation inconsistencies by scheme agent case managers may have resulted in potential over and underpayment errors made to workers’ first weekly benefit payment.
“After verification of the sample last week, icare notified SIRA of the potential inconsistencies and raised the need for a wider review across the entire NSW workers compensation system.”
Icare said it will not recover overpayments but will remediate any underpayments. The majority of issues date from before 2016, icare said.
In response to questions about the impact on the state’s finances, a spokeswoman for Treasurer Dominic Perrottet issued a statement, saying the issue predated icare.
“Icare are working through the extent of the potential discrepancies and the Treasurer expects them to devise a plan to address them as quickly as possible.
“Icare has already indicated they will not seek repayment of overpaid funds.”
Last year, SIRA ordered an independent review of the nominal insurer managed by icare. It insures more than 284,000 employers and their 3.4 million employees and holds more than $32 billion in assets.
Icare’s net loss in FY2019 was $874.3 million, almost double the forecast, with blame sheeted home to the new claims model introduced in 2018.
The issue is expected to be examined by a parliamentary committee on Monday.