Liberty Mutual Workers’ Comp Complaints of Overcharging Comp Premiums Leads To Class Action Lawsuit

Liberty Mutual workers’ comp complaints lead to accusations of inflating workers’ compensation insurance premiums and it raises concerns across the industry.

Liberty Mutual Workers' Comp Complaints of Overcharging Comp Premiums Leads To Class Action Lawsuit

Business Insurance is reporting that Liberty Mutual workers’ comp complaints have led to a class action lawsuit filed against Liberty Mutual for inflating workers’ compensation insurance premiums. It has been alleged that Liberty Mutual “systematically, willfully and unlawfully” overcharged companies in at least 35 states. In one such instance, Liberty Mutual did not report a third-party recovery to the National Council on Compensation Insurance (NCCI) resulting in an inflated experience modification rating and higher insurance premium.

This article about the Liberty Mutual workers’ comp complaints that have led to a class action lawsuit is fascinating because of the legal requirement to purchase workers’ compensation insurance. Michigan law requires private employers with 3 or more employees to obtain coverage. It is also required for employers who regularly employ at least 1 person for 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks. Even households with domestic help must obtain coverage. Failure to purchase required workers’ compensation insurance is a misdemeanor that can be punished through civil fines and even imprisonment.

Liberty Mutual is one of the larger insurance carriers that we see on a regular basis. This article certainly raises eyebrows to the Liberty Mutual workers’ comp complaints along with its allegations of breach of contract, unjust enrichment, as well as violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). Other Liberty Mutual workers’ comp complaints have led to accusations of the insurance company taking advantage of its relationship with NCCI to “defraud employers and obtain and retain greater premium amounts” in states where NCCI is the designated rating and statistical organization.

Michigan also uses a data collection and reporting organization to set a pure premium rate. The Compensation Advisory Organization of Michigan (CAOM) collects data from insurers on every claim that is paid. It then analysis losses using job classifications. The rate is expressed in terms of premium dollars per hundred dollars of payroll. This is generally the starting point to set rates. However, insurance companies in Michigan are not required to use the pure premium rate and are permitted to deviate from it.

Michigan’s workers’ compensation law was amended in 2011. Thanks to these pro-business reform efforts, the pure premium rate has dropped 49 percent in the last 8 years with estimated savings of half a billion dollars.

We have long been critical that savings are being achieved at the expense of people hurt on-the-job. For example, one of our clients saw his checks slashed to just $19 per week based upon his residual wage earning capacity from a job that he was not even qualified to perform. There is also little evidence showing that savings have been passed along to small businesses who are the driving force of our economy.

Do you own a small business? Have your workers’ compensation insurance premiums really dropped 49 percent over the last 8 years? Are insurance companies just profit taking? We are interested in hearing your stories!

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (844) 201-9497 for a free consultation today.

Related information:

Who pays for a 28% reduction in premiums?

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