For those who have worked in workers’ compensation understand that on legitimate claims, insurance companies do not want to pay the injured worker. The Pioneer Press has reported that a recent audit by the Minnesota Legislative Auditor has found that insurers are mishandling a growing number of claims, including paying injured workers less than they deserve.

The full report from the Minnesota Legislative Auditor can be found here.

The report from the legislative auditor released Wednesday said mistakes are resulting in about $3 million a year in underpaid benefits, and there’s other evidence that insurers are trying to avoid legitimate payouts.

For injuries in 2006, about a quarter of claims denied within 14 days of the injury had been paid as of July 2008.

The report lays part of the blame on what it describes as a lack of oversight resources at the state Department of Labor and Industry.

The $3 million in underpaid claims represents less than 1 percent of overall benefits paid, but auditors recommended that the Department of Labor and Industry improve oversight.

They also recommended that department officials keep an eye on cases in which a claim initially was denied but was eventually paid. Officials could then more closely examine any insurer who might improperly deny a claim.

The auditor recommended that lawmakers hire an ombudsman for workers’ comp to help injured workers who might be overwhelmed by the process.

The audit also faults the state labor department for shortcomings in the enforcement of laws mandating that employers provide workers’ compensation coverage.

State law says the department must seek reimbursement plus a penalty from an uninsured employer when an injured worker’s benefits are paid out of a special state fund. But auditors found that between 1998 and 2007, the department’s reimbursement database shows billing records for fewer than half of the cases in which the state paid for benefits.

In a written response to the audit, Commissioner Steve Sviggum said his department is working on reforms to the system through an advisory council. Sviggum also said the department is interested in using an ombudsman for workers’ compensation.

The WCCA will meet on Monday, March 2, 2009 to discuss proposals for the legislature.

(Audit Detail workers’ comp problems | Pioneer Press)