Policy Name:	Retroactive Coverage and Penalty Abatement
Policy #:	EP-18-01
Code/Rule Reference	Ohio Administrative Code (OAC) 4123-14-03, 4123-14-06.
Effective Date:	January 1, 2022
Approved:	Rex Blateri, Interim Chief of Employer Services
Origin:	Employer Policy
Supersedes:	The Retroactive Coverage and Penalty Abatement policy dated December 12, 2019.
History:	Revised February 16, 2022; January 31, 2020; May 15, 2018; March 3, 2016; January 11, 2016; July 1, 2015; September 10, 2014; August 20, 2012. New policy issued September 1, 2008.
Review Date:	October 1, 2024

 

I.       Policy Purpose

 

To guide Ohio Bureau of Workers’ Compensation (BWC) staff in processing employer requests for retroactive coverage and penalty abatement when the lapse in coverage or penalty results from good cause, BWC error, or an extenuating circumstance.

II.     Applicability

The policy applies to BWC Call Center, BWC Employer Services, employers, and authorized representatives.

III.   Definitions

A.      Default in payment: Occurs when an employer fails to timely pay an installment, resulting in a lapse in coverage. The lapse effective date is the first day of the month following the installment due date.

B.      Extenuating circumstance: A substantial reason, or mitigating factor, that justifies granting the employer's request for relief.

C.      Good cause: A substantial reason, one that affords a legal justification or legal excuse, as defined in OAC 4123-14-03.

D.     Grace period: A time frame during which BWC will not assess a penalty for late payments or late reporting.

E.      Lapsed: Coverage status applied to an employer's policy who fails to pay the required premium by the established due date. This status indicates the workers' compensation coverage has been suspended.

F.      Penalty: Fee assessed by BWC to employers who fail to pay the required premium by the expiration of applicable grace period.

G.     Policy in good standing: The employer is current on all payments due BWC and is in compliance with BWC laws, rules, and regulations at the time of the request.

H.     Reinstatement: Coverage status applied to an employer's policy that indicates workers' compensation coverage has been restored effective on the date BWC received full payment for any and all delinquent premium(s).

IV.   Policy

A.      Background.

1.      An employer may request retroactive coverage and penalty abatement to cover a claim, to qualify for a BWC program, or to lessen the financial impact of a lapse in coverage.

2.      As set forth in OAC 4123-14-03, the BWC Administrator may for "good cause" shown:

a.      Waive a default in the payment of premium by an employer where workers' compensation coverage has lapsed for a period less than sixty (60) days. If such a waiver is granted, the employer's workers' compensation coverage including elective coverage will be reinstated retroactively.

b.      Abate penalties imposed on an employer for failing to comply with the Ohio workers' compensation statutes. See the Prospective Billing Installment Payments and Penalties for Late Payment and Reporting policies for additional information.

3.      As set forth in OAC 4123-14-06, unless a different time is provided by the Revised Code or the Administrative Code for such matter, an employer must file a protest or appeal of BWC's decision on the request, protest, petition, or application within two years of receipt of BWC's determination.

B.      Employer requirements.

1.      BWC will only consider retroactive coverage if the period of lapsed coverage is less than sixty (60) days; i.e., fifty-nine (59) days or less. An employer with a lapse in coverage over fifty-nine (59) days may be granted penalty abatement, however, the employer may not be granted retroactive coverage. For example, an employer with a lapse period of sixty-five (65) days who can show "good cause" is denied retroactive coverage but may be granted penalty abatement.

2.      A request for retroactive coverage and/or penalty abatement must be submitted to BWC by the employer or the employer's authorized representative as required by OAC 4123-14-03. An employer may use the Lapse and Penalty Forgiveness (U-59 Lapse Forgiveness) form to file a request.

a.      Employers requesting retroactive coverage cannot be granted penalty abatement unless both are requested.

b.      All requests for relief must fully explain the reasons for the relief sought.

c.       BWC may hold a request in abeyance until the request is fully completed, and the employer will be notified accordingly.

3.      Retroactive coverage or penalty abatement may only be granted if the employer's policy is in good standing. Good standing means:

a.      The employer is current on all payments due to BWC as defined in OAC 4123-17-14 and is in compliance with BWC laws, rules, and regulations;

b.      Any outstanding balances must not be past due, or the outstanding balances must be in an appeal status;

c.       The employer's coverage must be active or reinstated;

d.      The employer must have completed all payroll reporting requirements; and

e.      The employer must be current on the payment schedule of any part-pay agreement it has entered for any outstanding balances.

C.      Resolution of complaints.

1.      Employer complaints are processed under the General Employer Complaint Policy. BWC staff will refer to section IV of the General Employer Complaint Policy for examples of extenuating circumstances. An employer with an extenuating circumstance that does not qualify as good cause may be eligible for the one-time violation scenario, also referred to as One-Time Forgiveness (OTF), outlined in section IV.C.4 below.

2.      Examples of BWC errors which would allow granting an employer's request for relief are found in section IV.D below.

3.      Specific extenuating circumstances that meet the "good cause" standard for retroactive coverage and penalty abatement are found in section IV.E below.

4.      As set forth in OAC 4123-14-03, for employer complaints filed on or after December 12, 2019:

a.      If unable to establish good cause as defined above, the employer may show "good cause" if the default is a one-time violation of the payment of premium or the filing of the annual payroll report.

b.      For additional information about the annual payroll report, see the Payroll True-Up policy.

c.       The employer must meet all requirements set forth in section IV.B of this policy to qualify for good cause under the one-time violation.

d.      Once the employer uses the one-time violation to show "good cause," it is no longer available to the employer.

D.     BWC and Attorney General (AG) errors.

1.      An employer can be granted relief based on BWC or AG error regardless of the length of the lapse period and the employer is not required to use the relief outlined in OAC 4123-14-03.

2.      Example of a BWC error which would allow granting an employer's request for relief: The employer just opened its business and contacted BWC about how to pay its premium and was given inaccurate information. This information was in writing from BWC, relied upon, and documented by the employer.

E.      Extenuating circumstances that meet the “good cause” standard for retroactive coverage and penalty abatement.

1.      Third party errors or omissions: Bank error or delivery service error in processing an employer payment or delivering a payment to BWC. This circumstance may also be used if the post office did a poor job forwarding the employer's mail.

a.      Such errors must be documented by letter or sworn statement from the bank or delivery service.

b.      The bank or delivery service error must be the sole reason for the untimely payment or reporting.

c.       Examples:

i.        An employer mails the payment to BWC on August 14. However, the post office returns the envelope and check to the employer with a letter stating the envelope was caught in a mail machine and badly damaged. The employer immediately issues a new check and mails it to BWC on September 4. BWC receives the payment on September 6. The employer provides BWC with copy of the post office letter and a copy of the damaged envelope.

ii.      An employer attempts to make an installment payment prior to the due date, using BWC's website. However, the payment is deemed NSF, non-sufficient funds, even though the employer had sufficient money in the account to cover the payment. The employer secures a letter from its bank stating that, due to a computer error, the bank erroneously did not honor the payment.

2.      A new employer defaults on the first installment: The employer fails to timely pay the first installment resulting in a lapse.

a.      The following conditions must be met:

i.        The employer meets all requirements set forth in sections IV.B.2 through IV.B.3 of this policy;

ii.      The employer reinstated coverage within fifty-nine (59) days of the first invoice due date; and

iii.    The employer must show good cause, or pursuant to OAC 4123-14-03, use the one-time violation of the payment of premium.:

b.      BWC may grant retroactive elective coverage, when applicable. See Elective Coverage policy.