The NOC on Wal-Mart Maine’s second-largest employer is under review for contesting an unreasonable number of workers’ comp claims BY CHRISTIE TOTH

When Steven Minkowsky gets excited about MOPs and NOCs, one almost expects him to add that he will not have them in a box, he will not have them with a fox. But Steven Minkowsky is the Deputy Director of the Maine Workers’ Compensation Board’s Office of Monitoring, Audit, and Enforcement, and behind his Seussian acronyms lies a real anxiety for workers injured on the job at the state’s second-largest employer, Wal-Mart.

"We’re very concerned about Wal-Mart’s numbers," says Minkowsky.

Claims Management, Inc. is the company owned and operated by Wal-Mart, through which the company self-administers its own workers’ compensation insurance at Wal-Mart and Sam’s Club stores in Maine and many other states. The Maine Workers’ Compensation Board has placed CMI under review for contesting an unreasonable number of claims.

Workers’ compensation protects workers who sustain injuries on the job. Compensation covers medical bills, pays a portion of lost wages if the injury forces the worker to take time off, and may include payments in perpetuity if the damage permanently reduces the worker’s earning power. Workers’ compensation is a no-fault system; the worker is compensated regardless of the accident’s cause, and the employer, in turn, is not subject to lawsuits or allegations of pain and suffering.

In the early 1990s, workers’ compensation in the state of Maine "really melted," according to Minkowsky. The Maine Workers’ Compensation Act of 1992 was designed to restructure the compensation system and create greater governmental oversight. As part of the reporting requirement amended to the Act in 1997, the Workers’ Compensation Board began tracking compliance quarterly in 1999, and reporting Memoranda of Payment (MOPs) and Notices of Controversy (NOCs) in January of 2004.

MOPs and NOCs track the insurers’ response in the first 14 days after a worker has submitted a compensation claim. MOPs are filed with the Workers’ Compensation Board by the insurer when payment on a claim has been made. NOCs are what the insurer submits when it is contesting the worker’s claim.

Through its quarterly reports, the Workers’ Compensation Board (WCB) is both monitoring the timeliness of the insurer’s response and comparing the numbers of MOPs versus NOCs that each insurer files.

According to John Rohde, the WCB’s General Counsel, Wal-Mart’s NOCs are "off the charts."

In the first quarter of 2004, Claims Management, Inc. (CMI) filed four MOPs, and 77 NOCs. During the second quarter, CMI again filed four MOPs, but this time it filed 87 NOCs. The third quarter’s numbers were similar, with seven MOPs and 64 NOCs. This means that Wal-Mart is contesting almost 94 percent of the compensation claims filed by workers in its Maine stores and warehouse facilities.

By comparison, Hannaford Brothers, the state’s largest employer, averaged 26 MOPs and fewer than five NOCs per quarter. Over the three reported quarters, Hannaford contested only 17 percent of its workers’ claims.

The Wal-Mart Corporation declined to comment on the reasons for its high rates of claim controversy, despite repeated phone calls and the submission of questions via email, as requested by two of the company’s public relations representatives.

Why does Wal-Mart’s number of NOCs matter to you? "Every unreasonably contested claim costs society," says Minkowsky. Injured workers who do not receive timely payment can end up mired in medical debt, and are often forced to turn to public assistance for healthcare, unemployment benefits, and other needs that they and their families cannot meet while the breadwinner remains uncompensated. Wal-Mart sales clerks, who on average make less than $14,000 a year, and fewer than half of whom can afford the company’s least expensive health insurance plan, are particularly vulnerable to the financial hardships of contested claims.

"One of the goals of the monitoring program is to avoid cost shifting," says Minkowsky. "Every contested case must be reviewed by the Board. Unreasonable claims controversy shifts costs onto the workers, the Workers’ Compensation Board, and ultimately the taxpayers."

Wal-Mart has been challenged by states for unreasonable claims controversy before. In 2000, after auditing the Bentonville, Arkansas company’s record of payment on claims in Washington, that state’s Department of Labor and Industries decertified Wal-Mart for self-administration until 2010. Wal-Mart will have to reapply to administer its own insurance in Washington after the rehabilitation period, with no guarantee that its certification will be reinstated.

Maine is the only state in the nation that tracks MOPs and NOCs on a quarterly basis; the Wal-Mart Corporation declined to comment on whether its rate of claims controversy in Maine was representative of its record in other states where it self-insures through CMI.

Although allowing a company to self-insure and self-administer workers’ compensation may seem to present a conflict of interest, Minkowsky insists that it usually works well. "In Maine, we have many large self-insured companies. Bath Iron Works, for instance, self-insures and self-administers. Typically, these companies are in a good position to know the realities on the ground in their workplaces."

BIW averaged 12 MOPs and 24 NOCs in the first three quarters of 2004.

"A few of the self-insured companies are in the 50/50 category, which is the point at which we begin to look into things," says Minkowsky, "but Wal-Mart is clearly in an area that has caught our attention."

"Most of the other self-insured companies use a third-party administrator," elaborates Rohde. "Wal-Mart really stood out compared to the others."