When the workers’ compensation inspector arrives unannounced at your clinic: a cautionary tale for DCs
WORKERS’ COMPENSATION ISSUES AND PENALTIES IN SOME
STATES can be practice-breakers for small chiropractic or medical clinics. Many doctors of chiropractic not only own clinics but also act as managers, which includes an overabundance of responsibilities.
Schedules get busy with treatments, marketing and compliance, along with keeping track of law changes as responsible licensed physicians.
The surprise inspection
The following is a glimpse into the day a workers’ compensation inspector walks into your office unannounced. The goal is to include useful information on how to avoid penalties and meet state requirements.
Imagine the normal Monday mid-morning rush is in full swing in your single-doctor clinic, including navigating patients and scheduling while jumping room to room. Suddenly your clinic manager gives you an always-concerning look and pulls you into an empty room, but this time to say there is an inspector in the clinic. Now as the anxiety kicks in and the mind is racing, you wonder — are all registrations up to date? All compliance posters hung? Fire extinguishers charged? Clinic current to all health codes?
Then you are told it is a “surprise” department of financial services inspection. In my small clinic my mother is our manager, and we are way too busy for this to be a “Ha-ha, you got me!” moment, so I know immediately this is serious.
The first question is what you may have already thought — “Why the department of financial services?” This was the first lesson in my state, that the department of commerce regulates workers’ compensation. Our posters were up to date, but that was not the real reason for the inspection — it was to see how many employees I had working at that time. We usually have two or three employees, including myself, as well as an independent contractor. But this day we happened to have a crossover chiropractic assistant shift due to an employee’s first day returning from maternity leave. Worse timing could not have been possible.
Employee numbers
Most business owners in my state know that, according to Florida Chapter 440, if you have four or more employees working at one time, including yourself as the owner, you need workers’ compensation insurance. Many also know that as a business owner you can exempt yourself through the state. But if you are anything like myself, just more than 10 years in practice, I tried to exempt myself through the previously-arduous process of mailing documents to the state, after which I was denied.
Here was the second lesson. After explaining this to the workers’ compensation inspector, he stated that the laws had changed and I am now eligible to be exempt. One can now file the exemption online and it is very quickly processed. This is one of the most important takeaways. Regardless, I explained this to the inspector, who said it did not matter, and he quite obviously did not care whatsoever, continuing to state he was going to immediately shut the clinic down on the spot.
Was this even legal? Unfortunately it is completely legal, and in the middle of my mid-morning rush, with patients now asking questions, I had to sign a form that I would report to the department of commerce with a $1,000 deposit on my fine, or I would be immediately shut down. Also stated in the forms was that a full two-year payroll audit was now mandatory, and the fine is equal to two times the amount the employer would have paid in premiums.
Fines and legal recourse
At this point I called my business attorney and the state chiropractic association legal counsel. They attempted to assist, but basically said pay the fine and do whatever they say. For myself the ironic part was the next day when I went to the department of commerce building to pay the $1,000 deposit. I had to sign a form stating that I would perform a full two-year payroll audit and pay whatever the fine was calculated to be — without knowing the amount!
Yes — sign to pay an unknown fine amount, or the clinic will be closed. If your blood pressure is rising just reading this, mine was about to go nuclear, but you have to just sign and get back to work.
Now let us not forget the two-year payroll audit and what comes with it. If you get all of the requested information to the auditor within 21 days, you can possibly get a 25% reduced fine.
The question then becomes, what is required in the 24-month audit? In this case we had to supply:
- W-2s/940/941/RT-6
- Biweekly payroll summaries and timesheets
- Business tax returns
- Statements clarifying class codes for employees
‘Nobody has the time’
As I told my good friend Dr. Jake, president of our local chiropractic society, “Nobody has the time to deal with this or the stress in wondering if the fine is $5,000, $10,000 or more.” There was a small “win” because I really was almost always in compliance, so when the auditor stated that I had pretty much the smallest fine they had ever seen, in the hundreds after deposit, there was a small feeling of vindication.
Now I had planned to appeal the case, but due to the minimal amount I paid, I called it closure.
Compliance is twofold: education and follow-through. How would your practice fare against a 24-month audit? Laws change, and we as employers have to keep up with these changes to protect our medical businesses and avoid the workers’ compensation inspector.
A.J. HUNZIKER, DC, attended Palmer College of Chiropractic-Florida and practices in Jacksonville Beach, Fla. He also majored in biomedical physics and minored in chemistry at the University of Wisconsin-La Crosse and was a U.S. Army active duty veteran of the 101st Airborne Division from 1995-98. He can be contacted at american-chiropractic.net.
