STATE OF OREGON DEPARTMENT OF CONSUMER AND BUSINESS SERVICES

Transcription

1 STATE OF OREGON DEPARTMENT OF CONSUMER AND BUSINESS SERVICES In the Matter of ) STIPULATION AIU Insurance Company, ) and FINAL ORDER American Home Assurance Company, ) AIG Casualty Company, ) Commerce and Industry Insurance Company, ) Granite State Insurance Company, ) Illinois National Insurance Company, ) National Union Fire Insurance Company of Pittsburgh PA ) New Hampshire Insurance Company, and ) The Insurance Company of the State of Pennsylvania. ) Case No. INS STIPULATION The Director of the Oregon Department of Consumer and Business Services (director) commenced this administrative proceeding, pursuant to Oregon Revised Statutes (ORS) and , to take enforcement action against AIU Insurance Company, American Home Assurance Company, AIG Casualty Company, Commerce and Industry Insurance Company, Granite State Insurance Company, Illinois National Insurance Company, National Union Fire Insurance Company of Pittsburgh PA, New Hampshire Insurance Company, and The Insurance Company of the State of Pennsylvania (collectively referred to as AIG). AIG desires to conclude this proceeding without a hearing by entering into this stipulation pursuant to ORS (5). AIG waives all rights relative to an administrative hearing and judicial review thereof. AIG stipulates that the director finds the following facts and makes the following conclusions. AIG neither admits nor denies the facts and conclusions. AIG agrees to take the following corrective actions, agrees to pay the unsuspended portion of the civil penalty, and acknowledges that the suspended portion of the civil penalty may be reinstated on certain conditions. AIG consents to the director issuing a final order incorporating this stipulation. Page 1 of 10 Stipulation and Final Order, AIG, Case No. INS

2 AIG stipulates that the stipulation and final order resolves only the matters set forth herein. The person or persons signing this stipulation represent and warrant that they have the authority to enter into this stipulation and obligate each specified insurer to comply with its terms. The purpose of this stipulation is to achieve compliance by AIG with the insurance and workers compensation laws and regulations of Oregon. Facts 1. AIG provides workers compensation insurance to a significant number of employers in Oregon. Since 1985, AIG has failed to comply with certain Oregon insurance and workers compensation laws. 2. AIG failed to collect, maintain, or provide sufficient and accurate information regarding Oregon premiums and claims experience that must be reported to the National Council on Compensation Insurance, Inc. (NCCI) for use by the director in developing workers compensation rates for Oregon. 3. AIG transmitted erroneous information concerning its 2005 Oregon data call submissions used for Oregon rates effective January 1, The errors were of sufficient magnitude to make the information unusable for Oregon ratemaking. 4. AIG failed to report information on large risk rating plan (LRRP) policies for the period 1985 through 2005, or failed to provide data of sufficient quality for ratemaking purposes. As the third largest writer of workers compensation insurance in Oregon, the AIG information becomes an integral part of the overall information used to develop workers compensation rates in Oregon. 5. AIG filed inaccurate information regarding earned workers compensation premiums in its annual financial documents from 1987 to These financial documents were used in both Oregon ratemaking and to determine AIG s correct Oregon Workers Compensation Insurance Plan (OWCIP) assessments. 6. AIG failed to pay its correct OWCIP assessments which caused other insurers to pay excess OWCIP assessments. Page 2 of 10 Stipulation and Final Order, AIG, Case No. INS

3 7. From 1985 to 2005, AIG issued an unknown number of LRRP policies on a form or forms that AIG did not file with the director for approval prior to use. AIG continued to issue these unapproved policy forms with knowledge that the director would not approve such forms after NCCI withdrew a similar form filed with the director in Using these forms gave AIG an unfair advantage with respect to other workers compensation insurers in Oregon and provided their policyholders with an unfair market advantage over other Oregon employers. 8. From 1987 through 2005, AIG: a. Failed to pay the correct Oregon workers compensation premium assessments; b. Failed to timely file workers compensation guaranty contracts and cancellations of guaranty contracts; c. Failed to timely and accurately process workers compensation claims and pay benefits to injured workers; and d. Processed workers compensation insurance claims at more than eight locations in Oregon. 9. AIG s failure to comply with Oregon laws has had the following harmful effects in Oregon: a. AIG caused NCCI to provide ratemaking information to the director that was incomplete or in error and incorrectly calculate the OWCIP assessments, and caused the director to incorrectly calculate the workers compensation rates. b. AIG directly caused all other insurers who are authorized to provide workers compensation insurance in Oregon and their insured employers to pay more than they should have for their OWCIP assessments. c. AIG s delay in filing timely guaranty contracts delayed the processing of claims and the payment of benefits to injured workers and caused the director to conduct unnecessary investigations of noncomplying employers, which resulted in inconvenience and increased costs to Oregon employers. d. AIG s failure to provide injured workers fair, adequate, and reasonable income benefits and sure, prompt, and complete medical benefits which created the Page 3 of 10 Stipulation and Final Order, AIG, Case No. INS

4 potential for significant harm and hardship on those injured workers and their families. e. Lastly, AIG created confusion for employers and workers as a result of maintaining processing locations in excess of the number allowed by Oregon law, failing to file service agreements for all locations processing claims, and failing to provide notice when claims were moved from one service location to another. Conclusions AIG violated the following Oregon laws: Oregon Revised Statutes (ORS) or, in the alternative, ORS by failing to collect or maintain required information; failing to provide, and/or providing incorrect or insufficient information to the NCCI about its Oregon premium and claims experience that are used in connection with Oregon s rates, rating plans, and rating systems. ORS and Oregon Administrative Rules (OAR) (1) by failing to comply with the OWCIP by failing to pay its equitable apportionment of residual market assessments. ORS (1) and by issuing LRRP policies on a form or forms and at rates that AIG did not file with the director for approval prior to use. ORS (1) by failing to pay the correct Oregon workers compensation premium assessments. ORS and by failing to file workers compensation guaranty contracts and cancellations of guaranty contracts. Multiple claims processing statutes, including ORS , , , and , and related administrative rules by failing to timely and accurately process workers compensation claims and pay benefits to injured workers. ORS (4)(b) by processing workers compensation insurance claims at more than eight locations in Oregon. Page 4 of 10 Stipulation and Final Order, AIG, Case No. INS

5 Action Corrective Actions 1. Within thirty (30) days from the date of the final order, AIG shall reduce to eight or fewer, the number of locations each insurer of AIG uses to process Oregon workers compensation claims. No later than 9/1/07, AIG shall submit to the director copies of the appropriate service agreements between each insurer and their service company indicating where the claims are being processed. 2. AIG shall not issue or renew any workers compensation policy written on a policy form not approved by the director unless otherwise permitted by law. 3. AIG shall comply with ORS and AIG shall comply with all of the standards and requirements contained in Exhibit A and shall use Exhibit B to report such compliance, both of which are hereby incorporated into this stipulation. AIG shall reimburse the director for the director s expenses connected with all audits referred to therein. Expenses include staff time, travel expenses (lodging, meals, parking, private or state car mileage charges), document copying, computer time, and other reasonable charges of like nature. 5. Regarding whether AIG owes any additional workers compensation premium assessment for the period from 1996 to 2005: a. Within sixty (60) days from the date of the final order, AIG shall provide to the director the following information: (1) In electronic spreadsheet form, the insurer, insured, policy number, policy effective date, and earned premium relative to the Oregon workers' compensation earned premium for each year from 1996 to 2005, including any reconciliations between the total earned premium and the total earned premium that was reported to the director in the each insurer s quarterly Premium Assessment Report and Oregon Exhibit of Premiums and Losses (Statutory Page 14). (2) In electronic.pdf form, a copy of each specified insurer s workers' compensation quarterly Premium Assessment Report and the Statutory Page 14 for each year from 1996 to Page 5 of 10 Stipulation and Final Order, AIG, Case No. INS

6 b. After the director receives the information, the director shall determine whether AIG owes additional assessment based on the information and notify AIG in writing of the determination. If the director determines that AIG owes additional assessment, the notice shall include the amounts of assessment and interest, and an explanation of how the amounts were calculated. c. If the director determines that AIG owes additional assessment, then within ten (10) days from the date AIG receives the notice, AIG shall pay the additional assessment and interest. If AIG disputes the amount of the additional assessment, AIG and the director shall confer but the director s decision shall be final, subject to the hearing rights provided pursuant to ORS chapter 183. Assessment of Civil Penalty Pursuant to ORS and (2)(a), AIG is assessed a civil penalty in the amount of $5 million for violations stipulated to above. $1 million of the civil penalty is payable within 45 days from the date of the final order. The remaining $4 million is suspended, and will either be withdrawn or reinstated upon the following conditions: 1. By September 30, 2008, the director shall issue an order withdrawing the suspended portion of the penalty, if the director, in the director s sole discretion, determines that AIG timely complied with all of the corrective actions required by this stipulation and timely paid the $1 million portion of the civil penalty. 2. If AIG fails to comply with all of the corrective actions required by stipulation or fails to timely pay the $1 million portion of the civil penalty, then any or all of the suspended portion of the civil penalty shall become payable, at the sole discretion of the director, within 30 days after AIG receives notice and an opportunity for a hearing as specified in ORS chapter 183. The only issue at any such hearing is whether AIG failed to comply with the terms of this document. AIG waives any right to contest the amount of civil penalty after a determination is made that AIG is not in compliance with the terms of this stipulation. All payments of the workers compensation premium assessment and civil penalty shall be paid in the form of a check made payable to the Department of Page 6 of 10 Stipulation and Final Order, AIG, Case No. INS

7 Consumer and Business Services, and sent to the Workers Compensation Division, 350 Winter Street NE, Room 27, Salem, OR Nothing in this stipulation: 1. Prevents the director from assessing penalties on individual claims pursuant to ORS (11), or assessing penalties under ORS (2), for violations of ORS chapter 656 or OAR chapter 436 occurring on or after January 1, 2006; 2. Releases AIG from the responsibility for any unpaid assessments or taxes; 3. Prevents the director from receiving money from any past or present multistate regulatory settlement involving AIG, except to the extent that such regulatory settlement is based on the specific facts and violations of law set forth in this stipulation. Any money due Oregon concerning OWCIP assessments for the period from 1987 to 2005, plus interest, is excluded from this stipulation. Page 7 of 10 Stipulation and Final Order, AIG, Case No. INS

8 Dated June 28, 2007 /s/ Paolo Grassi [Signature of Representative] Paolo Grassi [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] AIU Insurance Company Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] American Home Assurance Company Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] AIG Casualty Company Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] Commerce and Industry Insurance Company Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] Granite State Insurance Company Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] Illinois National Insurance Company Page 8 of 10 Stipulation and Final Order, AIG, Case No. INS

9 Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] National Union Fire Insurance Company of Pittsburgh PA Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] New Hampshire Insurance Company Dated June 28, 2007 /s/ Kenneth V. Harkins [Signature of Representative] Kenneth V. Harkins [Printed Name of Representative] Vice President, General Counsel [Printed Title of Representative] The Insurance Company of the State of Pennsylvania Page 9 of 10 Stipulation and Final Order, AIG, Case No. INS

10 FINAL ORDER The director incorporates herein the above stipulation, adopts it as the director s final decision in this proceeding pursuant to ORS (5), and orders that the action stated therein be taken. Dated July 5, 2007 /s/ Cory Streisinger Cory Streisinger Director Department of Consumer and Business Services Attachments Exhibit A Standards for Compliance Exhibit B Oregon Compliance Report Card Page 10 of 10 Stipulation and Final Order, AIG, Case No. INS

11 EXHIBIT A STANDARDS FOR COMPLIANCE 1. PROOF OF COVERAGE REPORTING REQUIREMENTS AIG must achieve and maintain a performance standard of 90 percent or better timeliness in filing guaranty contracts and 80 percent timeliness in filing guaranty contract terminations. In order to ensure AIG s progress in achieving these timeliness standards, AIG must meet the following quarterly performance levels and timelines: A. Guaranty contracts filed timely - within 30 days of coverage effective date. ORS Required performance levels and timelines: 80% timely July 1, 2007 through September 30, % timely October 1, 2007 through December 31, % timely January 1, 2008 through March 31, 2008 B. Guaranty contract terminations filed timely within 10 days of policy end date. ORS ; OAR Required performance levels and timelines: 50% timely July 1, 2007 through September 30, % timely October 1, 2007 through December 31, % timely January 1, 2008 through June 30, 2008 Notes to performance standards relating to guaranty contracts: A. DCBS will not consider guaranty filings late in situations that are beyond the insurer s control, such as when the insurer first learns about the Oregon exposure at mid-term policy or at audit, provided AIG notifies DCBS of the reason for the late filing. B. Each insurance company within the AIG Group is independently responsible for complying with the Oregon coverage laws and reporting requirements. Reporting statistics should be reported by insurer and in the aggregate for AIG. C. Oregon s timeliness standards are based on statute and measured from the effective date of coverage, for guaranty contract filings, 30 days from the effective date of coverage. For guaranty contract terminations, the director s notice must be within 10 days after the effective termination date. The effective termination date is based on the insurer s mailing of the termination notice to the employer. 2. CLAIMS PROCESSING REQUIREMENTS Claims Performance Group 1 AIG must achieve and maintain a performance standard in the claims processing categories in the group listed below of 90 percent or better in the delivery of benefits and processing of Page 1 of 5 Stipulation and Final Order Exhibit A, AIG, Case No. INS

12 workers compensation claims. A performance level of 90 percent is required; however, to enable AIG to make changes necessary to succeed in meeting this standard, AIG must meet the following quarterly performance levels and timelines for claims processing categories in Claims Performance Group 1: 80% timely August 1, 2007 through September 30, % timely October 1, 2007 through December 31, % timely January 1, 2008 through March 31, % timely April 1, 2008 through June 30, 2008 A. Timely first payment of temporary disability within 14 days of employer s date of knowledge, or authorization of disability if authorization is more than 14 days after the employer s date of knowledge ORS ; OAR B. Timely claim acceptance/denial within 60 days of employer s date of knowledge ORS ; OAR C. Timely closure of claims within 14 days of activity qualifying for closure ORS ; OAR D. Accurate closure of claims - ORS Temporary disability authorized correctly OAR ; Medically stationary or qualifying date correct OAR ; Authority to issue closure OAR ; Permanent disability rating correct OAR ; ; Sufficient information to rate permanent disability OAR ; ; E. Accurate payment of all temporary and permanent disability, and fatal benefits 1. Temporary total disability calculated correctly; paid correctly as authorized ORS ; OAR Temporary partial disability calculated correctly; paid correctly as authorized ORS ; OAR Permanent partial disability calculated correctly; paid correctly as authorized ORS ; OAR ; OAR Permanent total disability calculated correctly; paid correctly as authorized ORS ; OAR Fatal benefit payments calculated correctly; paid correctly as authorized ORS Claims Performance Group 2 Beginning August 1, 2007, AIG must achieve and maintain a performance standard of 90 percent or better in the claims processing categories in Claims Performance Group 2. Claims Performance Group 2 includes: Page 2 of 5 Stipulation and Final Order Exhibit A, AIG, Case No. INS

13 E. Timely payment of subsequent temporary disability, permanent disability, and fatal benefits 1. Subsequent temporary disability payments at 14-day intervals, no more than 7 days in arrears ORS ; OAR Permanent partial disability payments 30 days from final order, then at monthly intervals OAR Permanent total disability payments 30 days from order, then at monthly intervals OAR Fatal benefit payments 30 days from order, then at monthly intervals OAR F. Timely determination of vocational eligibility within 35 days of qualifying activity or request ORS ; ORS G. Timely and accurate reimbursements to workers 1. Timely reimbursement of related services costs within 30 days of receipt of request 2. Accurate reimbursement of related services costs appropriate and accurate OAR ; Bulletin 112 H. Timely payment of medical bills within 45 days of receipt of billing or 14 days of acceptance, whichever is later. OAR I. Appropriate processing of nondisabling claims 1. Timely claim acceptance/denial within 60 days of employer s date of knowledge 2. Appropriate notices to workers ORS ; OAR J. Accurate reporting to Director 1. First temporary disability payment reports OAR Claim acceptance/denial reports OAR Form 1503 (Notice of Closure) reports OAR ; Bulletin Retroactive Reserve Fund requests OAR K. Timely response to injured workers, their representatives, and the Director 1. Timely delivery of requested records (discovery) to workers/attorneys within 14 days of receipt of request OAR Timely response to worker request for claim reclassification within 14 days of receipt of request ORS ; OAR Page 3 of 5 Stipulation and Final Order Exhibit A, AIG, Case No. INS

14 3. Timely response to worker request for claim closure within 10 days of receipt of request ORS ; OAR Timely response to worker request for vocational assistance within 35 days of receipt of request ORS ; OAR Timely response to Director inquiry within timeframe specified in Director s inquiry letter ORS Timely response to Director order within timeframe specified in Director s order ORS Beginning with the calendar quarter ending September 30, 2007, AIG shall report its quarterly performance, by insurance company, in Claims Performance Groups 1 and 2, no later than the 30 th day following the end of the calendar quarter. AIG s initial report will need to reflect claims processing performance for August and September Subsequent reports will include calendar quarters ending December 31, 2007, March 31, 2008, and June 30, Performance for claims processing categories (A) and (B) is self-reported on claims and will be measured quarterly through the Director s Quarterly Claims Processing Performance audit. A representative of AIG must present the quarterly performance reports in person, and the Director, or the Director s designee, will review and discuss the performance reports with AIG s representative. After four quarters of performance data has been reported and discussed with AIG, DCBS will conduct an audit of the claims in AIG s file audit samples to verify the reported performance. DCBS will sample and audit other claims as well in order to ensure that acceptable levels of performance is generalized to all claims. Claims processing performance will be based upon the percentages of file audit volume identified in AIG s performance matrix, Exhibit B, as specified on the effective date of the Stipulation and Agreement. AIG shall identify and maintain a record of claims selected in each performance category and report the total universe of claims in each category from which the audit samples are selected. The data must be reported for each AIG insurer individually. If there are five or fewer applicable claims in any given category, AIG must review and report audit results on all claims within the category, however, the statistics from these small samples will not be used in consideration of potential penalties. Any proposed changes to the performance matrix require written approval by the Director and AIG. If one or more of the AIG companies performance falls below the standards applicable to all Oregon workers compensation insurers, the Director may require additional performance reporting and may conduct additional audits to ensure injured workers receive accurate and timely benefits. Page 4 of 5 Stipulation and Final Order Exhibit A, AIG, Case No. INS

15 3. CLAIMS PROCESSING LOCATIONS A. By July 1, 2007, AIG must provide the Director a list of all service companies of the locations where AIG claims are being processed for each AIG insurance company with Oregon claims. By September 1, 2007, AIG shall provide copies of proper service agreements will all service companies. Each AIG insurer must maintain eight or less claims processing locations in Oregon. AIG must advise the Director, prior to and in writing, and submit a copy of the service agreement, whenever they elect to use a service company they have not already registered for one or more of their insurers. B. When AIG changes claims processing locations, AIG must provide at least 10 days prior notice to workers with open or active claims, their attorneys, and attending physicians. The notice must provide the name of a contact person, telephone number, and mailing address of the new claim processor. C. By August 1, 2007, AIG must notify the Director of the claims that will be transferred, contact information for both the sending processor and receiving processor of the claims (to include a contact person, telephone number, mailing address, and physical address where the claims are to be processed) and a listing of the claims being transferred which identifies the sending processor s claim number, worker name, worker s social security number, and date of injury. The list must also include the employer s WCD number and the WCD claim number, if known. D. By September 1, 2007 AIG must have completed the transfer of all claims, including run-off claims (ongoing workers compensation claims of Oregon employers previously insured by AIG), as necessary to ensure all claims for each AIG insurer are being processed at no more than eight Oregon authorized claims processing locations. Page 5 of 5 Stipulation and Final Order Exhibit A, AIG, Case No. INS

16 Oregon Compliance Report Card Third Party Administrator Name Dates Reviewed Submitted By Insurer Audit Mechanism Estimated Audit Volume (relative to respective review - per claim / per payment / per response referenced in column I) Due Date Measurement Statutory Reference # Payments Reviewed # Timely % Timely Claims Performance Group 1 A. Timely first payment of TD B. Timely claim acceptance / denial Manual and Usage of 1502 Forms 90% - 100% Manual and Usage of 1502 Forms; Work towards Systematic Approach as well 90% - 100% Within 14 days of employer's knowledge of injury (with loss time authorization) Within 60 days of employer's date of knowledge Date Initial TD check issued - Date of Employer ORS ; OAR Knowledge 0150 Date of Accept/Deny decision - Date of Employer Knowledge ORS ; OAR C. Timely closure of claims Manual 25% - 33% Within 14 days of activity qualifying for closure Date Claim is Closed - Date of Activity ORS ; OAR D. Accurate closure of Claims # Claims Reviewed # Correct % Correct D1. Temporary disability authorized correctly Manual 25% - 33% N/A D2. Medical stationary or qualifying date correct Manual 25% - 33% N/A D3. Authority to issue closure Manual 25% - 33% N/A D4. Permanent disability rating correct Manual 25% - 33% N/A D5 Sufficient information to rate permanent disability Manual 25% - 33% N/A Appropriate TD authorization ORS ; OAR as compared to statute 0020; OAR Appropriate stationary date or qualifying date as compared to statute Appropriate closure as compared to statute Appropriate PD rating as compared to statute Appropriate PD rating as compared to statute ORS ; OAR ; OAR ORS ; OAR ; OAR ORS ; OAR ; OAR ; ORS ; OAR ; OAR ; Claims Performance Group 2 E. Timely payment of subsequent temporary disability, permanent disability, and fatal benefits E1. Subsequent temporary disability payments E2. Permanent partial disability payments systematic approach 15% - 20% systematic approach 25% - 33% Once every two weeks (14 days) Initial Payment Due 30 days from final order; subsequent payments due in monthly intervals Issue Date of Current TD Check - Issue Date of Previous TD Check ORS ; OAR Date Initial PPD check - Date Final Order received; Issue Date of Current PPD Check - Issue Date of Previous PPD Check OAR # Payments Reviewed # Timely % Timely E3. Permanent total disability payments systematic approach 90% - 100% Initial Payment Due 30 days from order; subsequent payments due in monthly intervals Issue Date Initial PTD check - Date Order received; Issue Date of Current PTD Check - Issue Date of Previous PTD Check OAR E4. Fatal benefit payments systematic approach 90% - 100% Initial Payment Due 30 days from order; subsequent payments due in monthly intervals Issue Date Initial DB check - Date Order received; Issue Date of Current DB Check - Issue Date of Previous DB Check OAR of 4 Stipulation and Final Order Exhibit B, AIG, Case No. INS

17 Third Party Administrator Name Dates Reviewed Submitted By Insurer F. Audit Mechanism Estimated Audit Volume (relative to respective review - per claim / per payment / per response referenced in column I) Due Date Measurement Statutory Reference # Payments Reviewed # Timely % Timely Accurate payment of all temporary and permanent disability, and fatal benefits # Claims Reviewed # Correct % Correct F1. Temporary total disability systematic approach 15% - 20% N/A Accurate amounts of benefits paid as determined by appropriate AWW determination, appropriate benefit rate determination, and appropriate disability date determination ORS ; OAR F2. Temporary partial disability systematic approach 15% - 20% N/A Accurate amounts of benefits paid as determined by appropriate AWW determination, appropriate benefit rate determination, and appropriate disability date determination ORS ; OAR F3. Permanent partial disability payments systematic approach 15% - 20% N/A Accurate amounts of benefits paid as determined by appropriate AWW determination, appropriate benefit rate determination, and appropriate impairment determination ORS ; OAR ; OAR F4. Permanent total disability payments systematic approach 90% - 100% N/A Accurate amounts of benefits paid as determined by appropriate AWW determination, appropriate benefit rate determination, and appropriate disability determination ORS ; OAR F5. Fatal benefit payments systematic approach 90% - 100% N/A Accurate amounts of benefits paid as determined by appropriate AWW determination, appropriate benefit rate determination, and appropriate benefit eligibility determination ORS G Timely determination of vocational eligibility H. Timely and accurate reimbursements to workers systematic approach 90% - 100% Within 35 days of qualifying activity or request Worker Notification Date - Date of qualifying activity or request ORS ; OAR # Payments Reviewed # Timely % Timely H1. Timely reimbursement of related services costs systematic approach 90% - 100% Within 30 days of receipt of request Issue Date of Reimbursement - Receipt date of request ORS ; ORS H2. Accurate reimbursement of related services costs systematic approach 90% - 100% N/A Accurate reimbursement of lodging, meal, and travel expenses OAR ; Bulletin of 4 Stipulation and Final Order Exhibit B, AIG, Case No. INS

18 Third Party Administrator Name Dates Reviewed Submitted By Insurer Audit Mechanism I. Timely payment of medical bills Systematic Approach 5c % Estimated Audit Volume (relative to respective review - per claim / per payment / per response referenced in column I) Due Date Measurement Statutory Reference Within 45 days of receipt of billing or 14 days of acceptance (whichever is later) Issue Date of Medical Payment - Receipt Date of Bill OAR # Payments Reviewed # Timely % Timely J. Appropriate processing of nondisabling claims # Claims Reviewed # Correct % Correct J1. Timely claim acceptance/denial Systematic Approach 90% - 100% Within 60 days of employer's date of knowledge J2. Appropriate notices to workers Manual 10% - 20% N/A Date of Accept/Deny decision - Date of Employer Knowledge Appropriate filing of Initial Notice of Acceptance, Notice of Closure ORS ; OAR ORS ; OAR K. Accurate reporting to director # Reports Reviewed # Correct % Correct K1. First temporary disability payment reports Manual 25% - 33% N/A K2. Claim acceptance/denial reports Manual 25% - 33% N/A K3. Form Notice of Closure Manual 25% - 33% N/A K4. Retroactive Reserve Fund Requests Manual 25% - 33% N/A L. L1. Timely response to injured workers, their representatives, and the Director Timely delivery of requested records (discovery) to workers/attorneys Manual along with Compliance Log; Work towards Systematic Approach as well 90% - 100% Within 14 days of receipt of request Data provided to the State is accurate as compared to that captured in claims system or file OAR Data provided to the State is accurate as compared to that captured in claims system or file OAR Data provided to the State is accurate as compared to that captured in claims system or file OAR ; Bulletin 139 Data provided to the State is accurate as compared to that captured in claims system or file OAR Mail Date of Response - Receipt Date of Request OAR # Responses Reviewed # Timely % Timely L2. Timely response to worker request for claim reclassification Manual along with Compliance Log; Work towards Systematic Approach as well 90% - 100% Within 14 days of receipt of request Mail Date of Response - Receipt Date of Request ORS ; OAR L3. Timely response to worker request for claim closure Manual along with Compliance Log; Work towards Systematic Approach as well 90% - 100% Within 10 days of receipt of request Mail Date of Response - Receipt Date of Request ORS ; OAR L4. Timely response to worker request for vocational assistance Manual along with Compliance Log; Work towards Systematic Approach as well 90% - 100% Within 35 days of receipt of request Mail Date of Response - Receipt Date of Request ORS ; OAR of 4 Stipulation and Final Order Exhibit B, AIG, Case No. INS

19 Third Party Administrator Name Dates Reviewed Submitted By Insurer Audit Mechanism Estimated Audit Volume (relative to respective review - per claim / per payment / per response referenced in column I) Due Date Measurement Statutory Reference # Payments Reviewed # Timely % Timely L5. Timely response to Director inquiry Manual along with Compliance Log; Work towards Systematic Approach as well 90% - 100% Within timeframe specified in Director's inquiry letter Mail Date of Response - Receipt Date of Request ORS L6. Timely response to Director Order Manual along with Compliance Log; Work towards Systematic Approach as well 90% - 100% Within timeframe specified in Director's Order Mail Date of Response - Receipt Date of Request ORS Definitions Benefits are deemed paid when addressed to the last known address of the worker or beneficiary and deposited in the U.S. Mail or deposited in the worker s or beneficiary s account by approved electronic equivalent. Payments falling due on a weekend or legal holiday under ORS and ORS may be paid on the last working day prior to or the first working day following the weekend or legal holiday. Subsequent payments may revert back to the payment schedule prior to the weekend or legal holiday. Documents are deemed mailed when addressed to the last known address of the claimant, claimant s beneficiary or claimant s attorney and deposited in the U.S. Mail. 4 of 4 Stipulation and Final Order Exhibit B, AIG, Case No. INS