The ABC11 I-team is reporting on a problem that many of our clients have become all-to-aware of: many worker’s comp claimants across the state have not received their weekly disability checks due to CorVel being replaced as the administrator for many North Carolina state employees’ workers compensation claims. Sedgwick took over the handling of claims effective July 1, 2015 for claimants who were injured while working for the N.C. Department of Public Instruction. But Sedgwick is telling attorneys and claimants that it has not received the files from CorVel that would allow them to begin issuing payments to claimants. The result is that thousands of people on worker’s comp have not received any payment over the last month, through no fault of their own.
North Carolina’s Worker’s Compensation Act is notoriously weak in terms of punishing insurance carriers for mailing payments late. Carriers typically can place a check in the mail as late as 24 days after it became due, and avoid any type of penalty. Even when a penalty applies, it is a parsley 10% penalty, which is hardly a stern enough penalty to worry more insurers.
The NC WC Act follows a mailbox rule, meaning it is not necessary for a claimant to receive a disability check within 24 days. Rather the Act just requires mailing of the check. The also allows carriers to avoid the imposition of any penalty if they can show the late payment was due to events out of their control. Therefore the most comment defense is the equivalent of the old “the check is in the mail” defense, where an adjuster claims the payment was mailed within the timeframe, but simply became lost in the mail. Sedgwick will surely use this defense if any claimants in the ongoing late check dispute try to convince the Industrial Commission to impose any late penalty, claiming that the late checks were due to the failure of CorVel to turn over their files, making it an event out of Sedgwick’s control. It will be interesting to see whether the North Carolina Industrial Commission buys such an argument.
There is no question that North Carolina needs to strengthen the Worker’s Compensation Act with regards to late payments. Other states allow much shorter time periods, higher penalties, and imposition of attorneys fees. This is in stark contrast to the North Carolina rule that gives carriers 24 days to even place a check in the mail before they can be considered late. Technically, Sedgwick could mail out checks 23 days after they become due and avoid imposition of any punishment. Unless North Carolina toughens its’ laws regarding this issue, carriers have little incentive to ensure payments go out properly.