Retro Advisory

Date: February 10, 2009

On February 10, 2009, in an emergency meeting with Retrospective Rating program participants, including the SMART Association and Approach Management Services (AMS), Judy Schurke, Director of the Department of Labor and Industries (L&I) announced a computer coding error. According to Director Schurke, the Department recently discovered a 15-year-old computer coding error that has resulted in inflated refunds to companies participating in the Retrospective Rating program.

L&I is initially estimating the error has resulted in refunds approximately 10% higher than appropriate.

According to L&I, the errant piece of coding was only one small line in the midst of more than 50 pages of total coding for the program, however, because the coding resulted in a double-counting of certain claim costs for non-Retro state fund employers, it skewed the difference in performance between Retro and non-Retro employers. The gross Retrospective Rating refund amount figured by L&I is based on the difference between the two.

The SMART Association and AMS are currently assessing the impact this discovery will have on plan years with remaining adjustments, including the 2005, 2006 and 2007 plan years for the groups with July enrollment, and 2006, 2007 and 2008 plan years for groups with January enrollment. Since refund adjustments are issued via orders with limited protest periods (60 days from the date of the order), any plan years in which the third and final adjustment has already been issued will not be affected by this discovery.

The SMART Association will participate in further discussions with L&I about this matter, as auditors review the Department's coding and come to a definitive conclusion regarding the reported error - or any other errors that may exist - affecting the Retrospective Rating program.

Please click here to view L&I's press release.

Further discussion regarding this matter will take place at upcoming Retrospective Rating group meetings, and any updates will be communicated as soon as possible. However, if you have any questions in the meantime, please do not hesitate to contact Chris Ristine at (360) 252-3650.

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