The Maryland treasurer’s office did not properly review about $150 million worth of injury compensation claims filed by state employees during a recent three-year period,
a new report from the state’s Office of Legislative Audits shows.
“[The state treasurer’s office] did not verify that claims reported by [the Maryland Injured Workers’ Insurance Fund] were for actual payments made on behalf of state employees who suffered work-related injuries,” the audit states. “Since claims reported by IWIF serve as the basis for payments of more than $46 million per year, it is essential that [the treasurer’s office] verify the propriety of the reported claims.”
The treasurer’s office is responsible for sending payments to the Injured Workers’ Insurance Fund, which processes compensation claims filed by state employees.
Between fiscal years 2007 and 2009, payments to the IWIF exceeded $180 million, including $30 million for administrative costs, according to the treasurer’s office.
Legislative Auditor Bruce Myers told The Washington Examiner that investigators could not verify the claims.
“We don’t know if they are legitimate claims,” he said. “The treasurer just relies on what is sent over.”
Numerous local and state investigators have argued there is a deluge of fraud in the workers’ comp system and have chastised officials for not cracking down on abuse. During a recent four-year period, for example, the Maryland Workers’ Compensation Commission flagged just 0.06 percent of statewide claims for potential fraud.
State Treasurer Nancy Kopp says her office is taking steps to improve oversight but that her staff may not have the capacity to implement all the recommendations.
“The office is working with the Maryland Insurance Administration to conduct a targeted audit of IWIF,” Kopp noted in response to the report. “If the results of the audit reflect the need for detailed monitoring and oversight, as the auditors suggest, it is likely to require identifying and supplying staff and monetary resources that the office does not currently have.”
Auditors also noted that the IWIF has not been subject to competitive bidding for nearly 20 years.
Under the current arrangement, the Office of the State Treasurer sends payments to the IWIF to account for compensation claims during the upcoming year. Payments for anticipated claims are based on the actual amount of cases in the prior fiscal year.
As of last year, the state said the unfunded liability for claims was $275 million.
