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Maryland fund for injured workers has failed to collect millions it’s owed, audit says

A fund responsible for paying claims for some injured workers failed to collect nearly $15 million in payments from insurance companies and businesses, according to the Office of Legislative Audits.

Some of the accounts not sent for collection have been delinquent for decades. Those accounts represent a sizable portion of nearly $100 million of the Unemployed Insurers’ Fund’s accounts receivable.

“Delays in the pursuit of outstanding debt may decrease the likelihood of collecting funds owed,” auditors wrote.

Auditors also found that fund officials had not identified delinquent accounts and referred those businesses for license suspension.

The findings have been reported in previous audits dating back to 2009.

The fund pays out worker’s compensation to injured workers whose employers did not have required insurance.

Those awards and the operating expenses of the fund are paid through assessments against employers and insurance companies as well as settlement agreements approved by the state Worker’s Compensation Commission in cases involving permanent disability and death.

The fund is required to turn over all accounts more than 180 delinquent to the state’s Central Collections Unit.

Officials with the fund, who agreed with the findings of the audit, claimed delinquent accounts were being forwarded for collections after 90 days, according to a response provided to auditors.

The audit found $14.5 million in delinquent payments from 1,920 accounts. The amount of delinquent payments is 2.5 times the agency’s most recently reported fund balance of $6.3 million at the end of June 2020.

Auditors identified 138 delinquent accounts with individual balances of at least $20,000. Those accounts, delinquent for periods ranging between 222 days and 30 years, totaled  $11.2 million.

Eleven accounts totaling $328,000 were delinquent for more than 25 years.

In all, the fund has an accounts receivable balance of nearly $97 million. Of that, nearly $68 million is in collection.

The agency’s unfunded liability as of December 2020 was nearly $116 million. This is an increase of $99.8 million since 2015. Those obligations would have to be paid for from future assessments.

The study estimates that the fund would be insolvent by 2030 unless temporary increases to the assessment rate aren’t continued.

In addition to referring accounts to collections, the agency can also ask state and local governments to suspend business licenses and permits. Auditors have previously identified that the agency had not established “an effective process” to have those licenses suspended.

In the most recent audit, the fund responded that it had attempted to identify delinquent accounts that hold business licenses. But auditors said the fund could not document those changes nr provide a list of employers referred for suspension.

Auditors reviewed 10 accounts delinquent between 132 days and 3 years and found that in nine cases no evidence was found of any attempts to identify a license or refer it for suspension. Those nine companies owe the fund more than $480,000.

In its response, the fund said the effort to establish a process for identifying licenses and referring them for suspension “has been and remains ongoing.” The agency said it continues to work with the Office of the Attorney General to “memorialize the process.”


One comment


    The agency audited was Uninsured Employers’ Fund, not “Unemployed Insurers’ Fund” as stated in the article.
    Greg Hook