Washington state: Computer error resulted in overpayment in workers' compensation rebates

Officials in Washington state recently announced that a computer coding error resulted in the overpayment of workers' compensation rebates to businesses since 1994.

Officials from the Department of Labor and Industries said the agency has corrected the duplicated line of computer coding, which will result in lower refunds for many participants in the state's Retrospective Rating Program. The program rewards good workplace safety practices by issuing refunds if a participant has lower than expected workers' comp costs. If costs are higher, it may be assessed additional premiums.

According to the department, the error goes back to at least 1994 and was discovered by the agency's actuaries as they prepared data for a legislative request to review the Retrospective Rating Program. Officials said it amounts to less than one-half cent per hour worked and wasn't large enough to be detected by the normal audit process. In a system that collects $1.6 billion in premiums annually, this error could be in the range of $10 million to $15 million per year.

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Judy Schurke, director of the department, said the agency is working with the state auditor's office, internal auditors, the attorney general's office, and an independent actuary to do further analysis. She said the error does not affect the solvency of Washington state's workers' comp State Fund, which is made up of insurance premiums paid by employers and employees.

"Once the department identified this problem, it immediately contacted our office for assistance," said Brian Sonntag, state auditor. "We're pleased that L&I also asked us to engage an independent actuarial firm to review its data and suggest recommendations."

It is unclear whether the state will attempt to get back some of the money that was overpaid during this period.

March 9, 2009

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