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									               COMPLIANCE AUDIT REPORT

                                    STATE OF MAINE
                              WORKERS’ COMPENSATION BOARD




                                           CNA
                                    Limited-Scope Audit
                                        August 22, 2006




                           Office of Monitoring, Audit & Enforcement




Paul R. Dionne                                       Steven P. Minkowsky
Executive Director/Chair                             Deputy Director of Benefits Administration
                                                                  CONTENTS



SUMMARY ................................................................................................................................................ 1


PENALTIES ............................................................................................................................................... 2

    Penalties Payable to Injured Employees and the Workers' Compensation Board ............................ 2
     39-A M.R.S.A. Section 324(2) ......................................................................................................... 2

    Penalties Payable to the Workers’ Compensation Board ................................................................. 6
     39-A M.R.S.A. Section 359(2) ......................................................................................................... 6
     39-A M.R.S.A. Section 360(2) ......................................................................................................... 6
                                            SUMMARY

CNA is an insurance group which administers most of its own claims and also acts as a third party
administrator (TPA) for other insurers and self-insureds.

CNA headquarters is located at 333 South Wabush Avenue, Chicago, Illinois.

This limited-scope audit was prompted by six (6) Complaint for Audit forms received by the Audit
Division of the Maine Workers’ Compensation Board (MWCB). The complaints alleged that CNA had
violated Section 324(1) of the Act (Title 39-A M.R.S.A.), and an investigation of those complaints
confirmed the allegations.

        The Audit Division of the MWCB examined thirty-one (31) claim files for the period under
           examination (dates of injury between 01/01/02 and 07/25/05) to determine compliance with
           Title 39-A M.R.S.A., Section 324(1).

The original sample was drawn from the MWCB’s records of CNA claims. Those records revealed
thirty-three (33) separate instances where benefits were due pursuant to a Mediation agreement, a Board
decree (This population includes Consent Decrees that were Board-approved.) or a Lump Sum
Settlement (LSS).

This audit identified thirteen (13) of the thirty-three (33) instances referenced above that were paid
timely. Twelve (12) of those thirteen (13) instances were settled by LSS. One (1) instance was a Board
decree that reduced benefits to the claimant.

This audit identified one or more violations of Section 324(1) arising from twenty (20) of the thirty-three
(33) instances referenced above. Details of those violations are provided on the following pages of this
report.




                                                                                                         1
 Penalties Payable to Injured Employees and the Workers' Compensation Board

39-A M.R.S.A. Section 324(2)

“Except as otherwise provided by Section 205, if an employer or insurance carrier fails to pay
compensation as provided in this section, the board shall assess against the employer or insurance carrier
a forfeiture of up to $200 for each day of noncompliance.”

Violations subject to Section 324(2) were found on the following claims:

CLAIM                                 PENALTY JUSTIFICATION

Dalot, Richard vs. A V                Indemnity was issued (08/09/04) nineteen (19) days after the date the
CONSTRUCTION INC                      parties signed the corresponding Mediation Agreement (07/21/04).
Date of Injury: 05/01/02
CNA' File # 29821951                  Payment of interest due on indemnity was issued (08/09/04) nineteen
WCB File # 2013175                    (19) days after the date the parties signed the corresponding Mediation
                                      Agreement (07/21/04).

Denyier, Scott vs. ALLIED             One or more medical payments were issued (07/10/06) six hundred
DEVICES CORP                          seventy-eight (678) days after the corresponding Consent Decree was
Date of Injury: 09/19/02              mailed (08/31/04).
CNA' File # 29823688
WCB File # 2014612                    CNA has not yet produced proof of payment for interest due on
                                      indemnity, from 11/16/02 through 08/09/03 and 01/15/04 through
                                      05/10/04 to 08/14/04, as agreed upon by the corresponding Consent
                                      Decree (mailed 08/31/04).**

Denyier, Scott vs. ALLIED             Payment for advance of employee mileage was issued (03/11/04)
DEV`ICES CORP                         thirty-one (31) days after the date the parties signed the corresponding
Date of Injury: 09/19/02              Mediation Agreement (02/09/04).
CNA' File # 29823688
WCB File # 2014612

Donovan, Michael vs.                  A LSS, in the amount of $8,000.00, was issued (07/07/04) twenty-six
GIBRALTAR                             (26) days after it was approved (06/11/04).*
CONSTRUCTIONS CO INC.
Date of Injury: 03/10/03
CNA' File # 29827113
WCB File # 3002794

Dow, Brent vs. J. H. HUBER            Indemnity was issued (10/23/03) fifteen (15) days after the
CORP                                  corresponding Board decree was mailed (10/08/03).*
Date of Injury: 05/05/02
CNA' File # IC025041                  Payment of interest due on indemnity was issued (07/07/04) two
WCB File # 2007943                    hundred seventy-three (273) days after the corresponding Board decree
                                      was mailed (10/08/03).*

                                                                                                         2
Dunlop, Tina vs. FRANK        One medical payment was issued (12/17/03) thirty-six (36) days after
COOPER INC.                   CNA received the bill (11/11/03) that was agreed upon by the
Date of Injury: 03/02/03      corresponding Mediation Agreement (11/04/03).
CNA' File # 29827860
WCB File # 3004751            CNA has not yet produced proof of payment for "all of Dr. Herzog's
                              and Stedmen's medical bills that relate to the 3/2/03 injury … to date"
                              that were agreed upon by the corresponding Mediation Agreement
                              (11/04/03).

                              CNA has not yet produced proof of payment for interest due on
                              indemnity from 05/02/03 to 11/10/03 that was agreed upon by the
                              corresponding Mediation Agreement (11/04/03).**

Geary, Michael vs. EASTERN    Payment of interest due on indemnity was issued (12/15/03) nineteen
ELECTRICAL CORP               (19) days after the corresponding Board decree was mailed (11/26/03).
Date of Injury:12/04/02
CNA' File # 29825187          CNA has not yet produced proof of payment for "partial incapacity
WCB File # 2015858            benefits from 01/20/03 through 02/03/03" as awarded by the
                              corresponding Board decree (mailed 11/26/03).**

Knight, Lucas vs. ADDUS       One medical payment was issued (10/04/05) twenty-seven (27) days
HEALTHCARE                    after CNA received the bill (09/07/05) that was agreed upon by the
Date of Injury: 02/14/03      approved settlement (12/07/04).*
CNA' File # IC809404
WCB File # 3002171

Legere, Daniel vs. SKILSTAF   Indemnity was issued (07/12/04) fifty-two (52) days after the
INC                           corresponding Board decree was mailed (05/21/04). CNA paid
Date of Injury: 06/18/02      (08/27/04) a penalty to the claimant in the amount of $2,250.00.
CNA' File # 1C807504
WCB File # 2013426            Payment of interest due on indemnity was issued (08/24/04) ninety-five
                              (95) days after the corresponding Board decree was mailed (05/21/04).

Nadeau, Louise vs. ECHO       One medical payment was issued (02/21/06) two hundred sixty-five
CONSULTING SERVICES INC.      (265) days after the parties signed the corresponding Mediation
Date of Injury: 07/06/04      Agreement (06/01/05).
CNA' File # 29838474
WCB File # 4015342




                                                                                                 3
Ricci, Benedict vs. HUDSON    Indemnity was issued (10/02/03) sixteen (16) days after the
NEWS COMPANY                  corresponding Board decree was mailed (09/16/03).
Date of Injury: 04/03/02
CNA' File # IC024629          Payment of interest due on indemnity was issued (10/02/03) sixteen
WCB File # 2013219            (16) days after the corresponding Board decree was mailed (09/16/03).

Richards, Cheryl vs. HUDSON   One medical payment was issued (05/17/05) fifty-six (56) days after
NEWS                          the approved settlement (03/22/05).*
Date of Injury: 04/08/03
CNA' File # 1C025890
WCB File # 3018306

Root, Richard vs. GRANGER     Indemnity was issued (09/15/03) twenty-eight (28) days after the date
NORTHERN INC.                 the parties signed the corresponding Mediation Agreement (08/18/03).
Date of Injury: 03/20/02
CNA' File # 29818986          CNA has not yet produced proof of payment for interest due on
WCB File # 2003000            indemnity from 07/15/02 to 09/15/03 as agreed upon by the
                              corresponding Mediation Agreement (08/18/03). CNA has stated
                              interest was issued (09/15/03) twenty-eight (28) days after the date the
                              parties signed the corresponding Mediation Agreement (08/18/03).

Scott, Dianna vs. SEATON      Indemnity was issued (06/20/05) fourteen (14) days after the date the
CORP.                         parties signed the corresponding Consent Decree (06/06/05).*
Date of Injury: 03/18/04
CNA' File # 1C812218          CNA has not yet produced proof of payment for interest due on
WCB File # 4010903            indemnity from 10/29/04 to 06/20/05 as agreed upon by the
                              corresponding Consent Decree (06/06/05).* **

Singh, Tony vs. AMTECH        A LSS, in the amount of $20,000.00, was issued (08/02/04) twelve (12)
LIGHTING SERVICES             days after it was approved (07/21/04).*
Date of Injury: 02/28/03
CNA' File # 1D804638
WCB File # 3004395

Smaligo, Andrea vs. TJX       One medical payment was issued (11/12/04) seventy-nine (79) days
COMPANIES, INC.               after CNA received the bill (8/25/04) that was agreed upon by the
Date of Injury: 11/11/03      approved settlement (08/18/04).*
CNA' File # 1C811128
WCB File # 3015040            CNA has not yet produced proof of payment for outstanding related
                              medical treatment bills as agreed upon by the approved settlement
                              (08/18/04).* **




                                                                                                 4
Thurlow, Thomas vs. HUDSON         Indemnity was initially issued (03/17/04) thirty-seven (37) days after
RPM DIST                           the corresponding decree was mailed (02/09/04). However, retroactive
Date of Injury: 02/20/02           benefits due were paid (04/08/04) fifty-nine (59) days after the
CNA' File # IC024725               corresponding Board decree was mailed (02/09/04).
WCB File # 2005620
                                   CNA has not yet produced proof of payment on interest on indemnity
                                   from 03/08/03 to 03/17/04 awarded by the corresponding Board decree
                                   (02/09/04).**

Underwood, Jane vs. TJ MAXX        One or more medical payments were issued (12/02/05) four hundred
Date of Injury: 06/20/02           sixty-three (463) days after the corresponding second amended Board
CNA' File # IC807084               decree was mailed (08/26/04).
WCB File # 2007762
                                   CNA has not yet produced proof of payment for "medical payment
                                   subject to fee schedule up to and including 2/28/03" as awarded by the
                                   corresponding second amended Board decree (mailed 08/26/04).**

Vandenburgh, George vs.            One medical payment was issued (01/11/05) three hundred eighty-nine
MARSHALLS                          (389) days after the corresponding Board decree was mailed
Date of Injury: 07/17/02           (12/19/03).
CNA' File # 1C87464
WCB File # 2008668                 CNA has not yet produced proof of payment for medical bills related to
                                   the 07/17/02 injury of right knee as awarded by the corresponding
                                   Board decree (mailed 12/19/03).**

Washburn, Patricia vs. TJ MAXX     One medical payment was issued (06/07/05) ninety-one (91) days after
Date of Injury: 03/14/03           the approved settlement (03/08/05).*
CNA' File # IC811801
WCB File # 3002857                 CNA has not yet produced proof of payment for "payment of up to
                                   $20,000 in medical expenses" as agreed upon by the approved
                                   settlement (03/08/05).* **


*These claims have been settled by Lump Sum, and the corresponding employees have thereby waived
their rights to any penalties arising from the violations cited.
** Penalty amount accruing until paid.




                                                                                                    5
   Penalties payable to the Workers’ Compensation Board

 39-A M.R.S.A. Section 359(2)

 “In addition to any other penalty assessment permitted under this Act, the board may assess civil
 penalties not to exceed $10,000 upon finding, after hearing, that an employer, insurer or 3rd-party
 administrator for an employer has engaged in a pattern of questionable claims-handling techniques or
 repeated unreasonably contested claims. The board shall certify its findings to the Superintendent of
 Insurance, who shall take appropriate action so as to bring any such practices to a halt. This certification
 by the board is exempt from the provisions of the Maine Administrative Procedure Act.”

         The Deputy Director of Benefits Administration has the authority to and may refer CNA to
            the Abuse Investigation Unit to pursue penalties under Section 359(2) for the following
            reasons (including, but not limited to):

                 Failure to pay benefits pursuant to Mediation agreements, Board decrees, Consent
                  Decrees or Lump Sum Settlements
                 Failure to pay benefits pursuant to Mediation agreements, Board decrees, Consent
                  Decrees or Lump Sum Settlements timely

         Penalty exposure: $10,000.00



39-A M.R.S.A. Section 360(2)

 “The board may assess, after hearing, a civil penalty in an amount not to exceed $1,000 for an individual
 and $10,000 for a corporation, partnership or other legal entity for any willful violation of this Act, fraud
 or intentional misrepresentation. The board may also require that person to repay any compensation
 received through a violation of this Act, fraud or intentional misrepresentation or to pay any
 compensation withheld through a violation of this Act, fraud or misrepresentation, with interest at the
 rate of 10% per year.”

         The Deputy Director of Benefits Administration has the authority to and may refer CNA to
            the Abuse Investigation Unit to pursue penalties under Section 360(2) for the following
            reason (including, but not limited to):

                 Repetitive failure to comply with Title 39-A M.R.S.A., Section 324(1).

         Penalty exposure: $10,000.00




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