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    0 Replies Latest reply on Apr 24, 2009 10:44 AM by cutcomp

    Why Companies Should Be Careful About My Kind of Biz

    cutcomp Wayfarer
      I thought this forum might be a good place to air one of my pet peeves--one that runs counter to the usual business lament about regulation. I want the government to regulate my line of work, but it doesn't (yet.) So I like to spread the word about why companies should be careful when considering a service like the one we provide.

      We check over Workers Comp insurance premiums for employers, looking for premium overcharges that have occurred in current and past policies, and getting those overcharges back for our clients (usually but not always on a contingent fee arrangement.)

      Now, I know that it's a genuinely valuable and valid service--I've been doing this kind of work personally for more than 25 years, and have had my own company specializing in this kind of work since 1987. I've recovered millions of dollars for clients large and small all across the U.S. And in the process, I've seen a number of competitors spring up (just do a Google search for Workers Compensation overcharges to see how many.)

      The problem is that nobody regulates this line of work. Unlike the sale of insurance, where states insist that producers meet at least certain minimum standards of training and regulate their business practices, Workers Comp premium recovery work is the wild west--and it's attracted a few black hats.

      I've been trying for years to get my home state of Illinois to license us (not successful so far, but now that Blago is gone I may be able to get some traction) and the department of insurance is in favor of it because they're also familiar with some of the problems caused by a few of my competitors.

      Mind you, it's not that my company is the only ethical practitioner of this art--I know of other good and honest consultants who do this kind of work (heck, we compare notes and collaborate on cases sometimes.) But I also know that some others out there engage in business practices that I consider improper and unethical--or downright fraudulent.

      One company, based out of New York, specialized in trying to get money back for employers by misrepresenting the nature of work done by the employer (or some of his workers.) This amounted to getting the employer involved in insurance fraud.

      Another company locks clients in a multi-year contract that cannot be cancelled (that's something that the Illinois Department of Insurance is upset about, but at the moment lacks regulatory power to intervene.)

      I've served as an expert witness in two legal cases now where other consultants have filed suit against an employer, seeking contingent fees for "savings" that, in my opinion, were not earned by the consultants because the savings were premium refunds that the employer would have received in the normal course of events without the involvement of any consultants.

      So the bottom line is that while I know that this kind of service can provide real and significant savings to businesses, I also know that there are some folks out there who are giving the entire industry a bad reputation. And at the moment, absent any regulation, all I can do is try to alert folks to the situation.

      My advice at the moment is this: check references carefully. Verify that the consultant actually has the credentials and memberships that he or she claims. For example, my company is a member of the Better Business Bureau, because I want to reassure clients that we're legit. I discovered one competitor who claimed to be a BBB member, but wasn't. When I check with the BBB office, they reacted with alarm at the news that this individual was back in business, and referred me to that state's Attorney General's office, which was tracking the activiities of this person due to past improper conduct. Never, ever misrepresent the nature of your company's work, or the work done by some of your employees (or allow a consultant to do so on your behalf) as this constitutes premium fraud. Many states have made this a felony, and are actively prosecuting business owners for this.

      A good premium recovery consultant can save your company thousands of dollars. A bad one can cost you much more than just money.