Workers’ Compensation - OCPS

Workers’ Compensation

Internal Audit Report June 20, 2018

Linda J. Lindsey, CPA, CGAP, Senior Director Alpa H. Vyas, CIA, CRMA, Internal Auditor

Table of Contents

Page Number

EXECUTIVE SUMMARY 1

BACKGROUND 2

OBJECTIVES, SCOPE, AND METHODOLOGY 6

FINDINGS AND RECOMMENDATIONS 7

Workers’ Compensation Internal Audit Report

Page 1 of 10

EXECUTIVE SUMMARY

Why We Did This Audit Our objectives were to determine whether the workers' compensation program is operating effectively, efficiently, in accordance with applicable laws and regulations, and with appropriate internal controls.

This audit was included in the 2017-2018 Annual Audit Plan.

What We Found Our overall conclusion is that operations of the workers' compensation program are effective and in accordance with applicable laws and regulations and with appropriate internal controls. However, Workers’ Compensation (WC) staff should ensure that efficient controls are put in place to ascertain that all required documentation is completed accurately before processing claims.

What We Recommended • All required WC forms and other

documents should be obtained, scanned, and stored in Documentum.

• Unless in an emergency situation or if the injured employee is not available, the First Report of Injury (FRI) should be signed and submitted by the injured employee to the supervisor, and the Form should be signed by the supervisor prior to scanning and submitting to USIS.

• WC Notice of Injury Tracking Log (acknowledgment log) should be scanned and maintained in a central location such as in Documentum.

• A brief WC initial procedures and WC Intranet information should be considered for inclusion in New Manager Orientation materials for awareness of WC procedures among new management employees.

This report has been discussed with management and they have prepared their response which follows.


Page 2 of 10

BACKGROUND:

Orange County Public Schools (OCPS) is self-insured for workers’ compensation (WC) insurance up to $2,000,000 for a single incident. The district has entered into an agreement with an insurer, Safety National Casualty, to provide specific excess coverage of claim amounts above the $2,000,000 limit. The district has also contracted with an insurance claims third party administrator, United Self Insured Services (USIS) Inc., to administer the workers’ compensation program including consultation, processing, management, investigation and payment of claims.

The workers’ compensation program and the performance of the third party claims administrator are overseen by the District’s Risk Management Department. The Workers’ Compensation division includes 3 staff members - a Senior Manager, a Light Duty Program Coordinator, and an Administrator. The workers’ compensation program provides medical care to employees who are injured during their work hours through a network of authorized physicians. The staff also manages a Light Duty (LD) program for benefited injured employees. The Light Duty program keeps an injured employee with work restrictions in an active status until they are released by their authorized physician to return to full duty work.

As part of its oversight, the Risk Management Department contracts with Risk Consulting Services Inc. to conduct an annual actuarial valuation of the program. This valuation includes estimating the amount of losses to be paid for both known and unknown claims as of the date of the valuation. The results of this valuation are used by district management along with reserves for current claims to determine funding for the program during the annual budget process. Risk Consulting Services Inc. also conducts an audit of the third party administrator each year. The results of this audit are used by management to determine whether the third party administrator is performing its services in a satisfactory manner. No significant issues have been raised in the most recent Risk Consulting Inc. audit report dated June 19, 2017.

Orange County Public Schools is self-insured for workers’ compensation insurance.

A third party administrator manages claims.

A consulting firm and the Florida Department of Workers’ Compensation conduct audits on a regular basis.


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The Florida Department of Workers’ Compensation (DWC) also conducted an audit of USIS from February, 2012 to January, 2017. DWC assessed penalties of $300 for failure to timely pay benefits and $2,500 for failure to timely file Notices of Action or Change. USIS paid a total of $2,800 on March 3, 2017. The DWC audit report also noted $1,438.69 of overpaid benefits and $522.12 of underpaid benefits along with additional penalties and interest of $308.69.

The charts and table below provide claim statistics by month, work location, causes of injury, paid amount, status, types, and reported of delayed days.

The highest number of claims was submitted in October.

Custodial employees accounted for the most claims.

19

30

52

54

86

0 20 40 60 80 100

ACADEMIC CENTER FOR EXCEL

MAGNOLIA SCHOOL

DRIVERS AND MONITORS

FOOD SERVICE

CUSTODIAL

Number of Injuries/Claims

Loca

tion

Chart 2 - Claims By Top Five Location From July, 2017 to March, 2018

41

104

106

113

117

118

122

137

157

0 50 100 150 200

July

March

Sept

Jan

Aug

Dec

Feb

Nov

Oct

Number of Injuries/Claims

Mon

th

Chart 1 - Distribution of Claims By Injury MonthAs Of March 30, 2018 (1,015 Total Claims)


Page 4 of 10

$51,380

$59,968

$60,040

$61,431

$68,061

$103,382

$293,909

$0 $100,000 $200,000 $300,000

WASHINGTON SHORES ELEMENTARY

FOOD SERVICE

MAINTENANCE

SUNRIDGE MIDDLE

TIMBER LAKES ELEMENTARY

DRIVERS AND MONITORS

CUSTODIAL

Total Paid $

Loca

tion

Chart 4 - Total Paid By LocationJuly, 2017 to March, 2018

263638

44515354

75212

219

0 50 100 150 200 250

STRUCK-Falling/Flying ObjectINJ - Lifting

INJ - TwistingCUT-Cut, Puncture, Scrape, NOCFALL-From Liquid/Grease Spills

INJ-Strain/Injury by, NOCFALL-On Same Level

MISC-Other Misc., NOCFALL-Fall, Slip, Trip, NOC

STRUCK-Struck/Injured, NOC

No Other Cause (NOC) Number of Injuries/Claims

Caus

es o

f Inj

ury

Chart 3 - Claims By Cause of InjuryJuly, 2017 to March, 2018

$39,965

$41,192

$42,887

$56,411

$175,430

$0 $50,000 $100,000 $150,000 $200,000

SR Administrator I

Varying Exceptionalities

Building SVCS Tech II

Physical Education

Custodian Resident

Highest Paid $

Occ

upat

ion

Chart 5 - Highest Payment to Employee By OccupationJuly, 2017 to March, 2018

The top two causes of injury were: Struck or injured and Fall, Slip, and Trip.

The highest total payment of claims was for custodians. The highest payment to an employee was to a custodian.


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Per Florida statute 440.185, an injured employee shall report to employer within 30 days after the date of injury. A few claims were reported late by employees and thus received late by USIS. Delay days is defined as a gap of days between the actual injury date and the date the claim was received by USIS. The table below shows delay days for claims during the audit period.

Out of total 1,015 claims, 9 were denied by OCPS and 16 were litigated by employees.

Out of total 1,015 claims, 929 were Medical Only and 79 were Lost Time.

A non-fatal injury that causes any loss of time from work is known as Lost Time. Medical Only means the injured worker may be released after treatment or required to a follow up visit to the healthcare provider prior to release.

Open - 360

Open and Denied - 2

Open and Legal - 15

Closed - 630

Closed and Denied - 7 Closed and Legal- 1

Chart 6 - Claims By Status From July, 2017 to March, 2018Total 1,015 claims submitted in that period

Open LT- 51

Open MO - 326

Closed MO - 603

Closed LT - 28 Closed RO - 7

Chart 7 - Total 1,015 Claims By Type From July, 2017 to March, 2018MO - Medical Only, LT - Lost Time, RO - Report Only No Medical

Provided


Page 6 of 10

Number of Delay Days Number of Claims

31 to 40 days 10 Claims




More than 200 days 2 Claims

Total 45 Claims

OBJECTIVES, SCOPE AND METHODOLOGY:

Objectives The objectives of this audit were to determine whether the workers' compensation program is operating effectively, efficiently, in accordance with applicable laws and regulations, and with appropriate internal controls. Scope The audit scope included current and closed workers’ compensation claim activities from July, 2017 to March, 2018. Methodology Our audit methodology included:

• obtaining WC data directly from USIS; • analyzing WC data in audit software; • reviewing WC policies and procedures; and, • interviews and observations with WC staff.

As of March 31, 2018 a total of 377 WC open claims were in process. During the period from July 1, 2017 through March 31, 2018, 638 WC claims were closed. Payments on these claims amounted to $1,025,432 for the open claims and $645,216 on those closed from July 1, 2017 to March 31, 2018.

Out of 377 open claims and 638 closed claims, we selected 15 claims and 5 claims, respectively, for our audit sample. Selected claims were reviewed, and verified for:

Ten claims were reported by employees more than 100 days from their injury date.

We sampled both open and closed claims for a variety of attributes.


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• required forms on Documentum; • compliance with policies and procedures; • approved health provider; • WC codes in SAP; • medical and legal invoices; • USIS reimbursements in SAP; and, • segregation of duties and security roles in system, MyOCPS -

WC Application, and Documentum.

Our audit was conducted in accordance with the International Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors and included such procedures as deemed necessary to provide reasonable assurance regarding the audit objective. Internal Auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. We are required to note any material deficiencies in accordance with Florida Statutes, School Board Policy and sound business practices. We also offer suggestions to improve controls or operational efficiency and effectiveness. FINDINGS & RECOMMENDATIONS: 1) Documentation was missing. High Risk Best Practice: Proper maintenance of documents is an important record keeping practice which assists to support past or current transactions and document compliance with required procedures. Audit Finding: During our verification of WC compliance, we noted that certain documents were not on file in Documentum. Of our sample of 20 claims we noted the following deficiencies:

Several required forms were not found on file in Documentum.


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• Six Supervisor’s Investigation Reports (SIRs) were missing The SIR is signed by the employee and the supervisor. The supervisor submits the completed form to WC staff within five working days of the reported injury. WC staff reviews, signs, and initiates the process.

• Nine Authorization for Medical Treatment Forms were missing The form is signed by the work location administrator and employee. The employee submits this form to the authorized medical provider.

• Seven Authorization of Release Information Forms were missing The form is signed by the employee. Employee submits form to USIS allowing authorization for USIS to request medical records.

• One Florida Department of Workers’ Compensation (DWC) Form was missing. The Department of Workers’ Compensation form is signed by the medical provider with employee’s work status, and the employee submits it to USIS.

Documentum is a centralized record storage system which can be used for easy access and retrieval of documents anytime, from anywhere, and by anyone who has permission to access the system. Recommendation: All required WC forms and other documents should be obtained, scanned, and maintained in Documentum. 2) There were no employee and/or supervisor signatures on 13 First Report of Injury (FRIs)/Notice of Injury (NOIs) out of our sample of 20 claims. High Risk

Best Practice: Form should be printed, completed, signed, scanned through MyOCPS application, and submitted to USIS. The complete form with signature(s) is considered as valid support document of WC claim. Signatures confirm that both employee and supervisor reviewed, understand, and acknowledge the statement. Audit Finding: Thirteen FRIs/NOIs were not completed with signatures. On the form, the injured employee explains the details of the injury and submits the form to the supervisor who reviews and approves the form. The supervisor submits the approved form to USIS

Missing documentation from a sample of 20:

• 6 Supervisor’s Investigation Reports

• 9 Authorization for Medical Treatment forms

• 7 Authorization of Release of Information forms

• 1 Florida Department of Workers’ Compensation form

Thirteen of 20 FRIs were not signed by the employee and/or the supervisor.


Page 9 of 10

through the WC Application. The FRI/NOI must be reported to DWC by USIS no later than seven days after the reported date. Recommendation: Unless in an emergency situation or if the injured employee is not available, First Report of Injury (FRI)/Notice of Injury (NOI) should be signed and submitted by employee to supervisor, and the form should be signed by supervisor prior to scanning and submitting to USIS. 3) WC Notice of Injury Tracking Log (acknowledgment) is maintained by work location and not scanned and maintained in Documentum. Low Risk

Best Practice: Central document management system can be used for easy access, security control, search, and retrieval documents anytime, from anywhere, and by anyone who has permission to access the system. Audit Finding: WC Notice of Injury Tracking Log is evidence that the injured employee received all WC information and the Employee Quick Reference Brochure, and agreed to provide all required forms. This log is needed as evidence when claim status becomes legal case. WC Notice of Injury Tracking Log is not scanned and maintained in Documentum. It is maintained by work location. Recommendation: WC Notice of Injury Tracking Log (acknowledgment log) should be scanned and maintained in central location such as in Documentum for proper documentation. Documentation in a central place assists in easy access of this acknowledgment log by WC staff and Legal staff whenever the acknowledgment log is needed. It also assists to access document if work location did not maintain properly. 4) WC initial procedures are not included in New Manager Orientation materials. Low Risk Best Practice: Training is the easiest and fastest method to increase awareness of procedures and communicate procedures among newer employees.

WC Notice of Injury Tracking Log (acknowledgment) is maintained by work location but not on Documentum.


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Audit Finding: WC initial procedures including WC Intranet information are not included in New Manager Orientation materials. Newly hired and promoted management level employees attend mandatory New Manager Orientation. Subjects that could be addressed include initial procedures such as the First Report of Injury (FRI) or Notice of Injury (NOI) form and the SIR form which are completed and submitted by the injured employee to the supervisor, and by the supervisor to the WC staff and USIS. Recommendation: A brief overview of WC initial procedures and WC Intranet information should be considered for inclusion in New Manager Orientation materials for awareness of WC procedures among new management employees. We wish to acknowledge the staff of the Workers’ Compensation for their cooperation and assistance during this audit.

WC initial procedures and WC Intranet information could be included in New Manager Orientation materials.

7/25/18

AUDIT RESPONSE MATRIX FISCAL PERIOD OR AUDIT DATE: JUNE 20, 2018________

Department / School Name Workers Compensation Administrator / Department Head Beth Curran / Carlos Yepes Cabinet Official / Area Superintendent Dale Kelly

Exception Noted (Finding / recommendation)

Management Response (Corrective Action)

Responsible Person (Name & Title)

Expected Outcome & Completion Date What is the evidence of the corrective action?

What is? What should be?

What needs to be done?

Who needs to do it? When will the action be completed? Ongoing

FINDING: 1) Documentation was

missing: High Risk Six Supervisor Investigation Reports (SIRs) were missing. Nine Authorization for Medical Treatment Forms were missing. Seven Authorization of Release Information Forms were missing. One Florida Department of Workers Compensation ( DWC) Form was missing Recommendation: All required WC forms and other documents should be obtained, scanned, and maintained in Documentum.

Claim Paperwork Tracking Spreadsheet has been developed to keep record of the forms that have been received and the forms that are still missing for each claim. If the work location does not provide the necessary forms, the Workers Compensation Office will contact the work location until the forms are completed and received by the Workers Compensation Office.

The Workers Compensation TPA assistant will be in charge of this function.

This corrective action has been implemented effective 5/29/18. This action will take place on a “continuing basis”. Florida Department of Workers Compensation (DWC). This form is completed by the authorized medical provider who will provide a copy to the injured employee, the TPA (USIS) and to the Workers Compensation Office. The employee will also provide a copy to the work location and the work location will forward to the Workers Compensation Office and to the TPA if necessary. The Workers Compensation Office will “only” request the DWC if needed, from the Medical Provider, the TPA or the Injured Employee, on the claims that qualify for the Light Duty Program, or on any other claims where information needs to be reviewed for clarification or documentation purposes.

7/25/18


2) There were no employee and/or supervisor signatures on 13 First Report of Injury (FRIs)/Notice of Injury (NOIs) out of our sample of 20 claims. High Risk

Recommendation: Unless in an emergency situation or if the injured employee is not available, First Report of Injury (FRI)/Notice of Injury (NOI) should be signed and submitted by employee to supervisor, and the form should be signed by supervisor prior to scanning and submitting to USIS.

Claim Paperwork Tracking Spreadsheet has been developed to keep record of the forms that have been received and the forms that are still missing for each claim. If the work location does not provide the necessary forms, the Workers Compensation Office will contact the work location until the forms are completed and received by the Workers Compensation Office.

The Workers Compensation TPA assistant will be in charge of this function.

This corrective action has been implemented effective 5/29/18 This action will take place on a “continuing basis”.

3) WC Notice of Injury Log (acknowledgment) is maintained by work location and not scanned and maintained in Documentum. Low Risk.

Recommendation: WC Notice of Injury Tracking Log (acknowledgment log) should be scanned and maintained in central location

The WC Notice of Injury Tracking Log (acknowledgment) will continue to be maintained at each work location. The Workers Comp Office will request the Tracking Log from the work location only if necessary for verification.

Work Location Workers’ Compensation contact.

The work location Workers’ Compensation contact will continue to maintain and provide to Workers’ Compensation upon request. This action will take place on a “continuing basis”.

7/25/18


such as in Documentum for proper documentation. Documentation in a central place assists in easy access of this acknowledgment log by WC staff and Legal staff whenever the acknowledgment log is needed. It also assists to access document if work location did not maintain properly. 4) WC initial procedures are not included in New Manager Orientation materials. Low Risk Recommendation: A brief overview of WC initial procedures and WC Intranet information should be considered for inclusion in New Manager Orientation materials for awareness of WC procedures among new management employees.

This item of concerned was discussed between the two (2) departments and was determined the New Manager Orientation is not a training platform for Workers’ Compensation procedures. We recommend the managers meet with their work location contact to go over the Workers’ Compensation procedures or attend one of the Workers’ Compensation procedure trainings.

The Workers’ Compensation Office does provide training throughout the year and encourages all to attend.

It has always been a practice of the Workers’ Compensation staff to provide Workers’ Compensation procedural training available to all Workers’ Compensation contacts and to whomever would like to attend. In addition, the Workers’ Compensation Office is invited to participate in several training events organized by other departments throughout the district. The information provided at these trainings include, but is not limited to “Workers’ Compensation procedural training”, “Back to Basics”, “Ergonomics” and Accident Prevention”. We also provide “one on one” trainings as well. This action will take place on a “continuing basis”.

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