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February 10, 2009

Computer coding error corrected in Retrospective Rating Program

TUMWATER – The Department of Labor & Industries (L&I) said today it has corrected a duplicated line of computer coding, which will result in lower refunds for many participants in the Retrospective Rating Program (Retro), beginning this month.

The error goes back to at least 1994 and was found now by the agency’s actuaries as they prepared data for a legislative request to review Retro. 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.

The Retro program rewards good workplace-safety practices by issuing refunds if a participant has lower workers’ compensation costs than expected. If costs are higher than expected, they may be assessed additional premiums.

L&I Director Judy Schurke 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 the workers’ compensation State Fund, which is made up of insurance premiums paid by Washington employers and employees. The State Fund insures 171,000 employers and more than 2.5 million workers in Washington, not including those who are self-insured.

“Once the department identified this problem, they 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 their data and suggest recommendations.” The Auditor’s Office also confirmed there was no loss of state funds.

Schurke said the duplicated line of coding was not detected in several past independent reviews of Retro. Those reviews were thorough, but none appeared to have reviewed the actual computer coding used to calculate refunds and assessments.

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For media information: Steve Pierce, L&I, 360-902-5412

 

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