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Who Benefits From Insurance Company Settlements?

In the past few weeks, numerous stories have been told in the media regarding a huge settlement that was reached with insurance companies that overcharged for workers compensation policies. As the news reports detail, a settlement to the tune of $120 million was reached with four insurance groups to repay overcharged coverage amounts. While this may seem like a great deal for the businesses that have paid other overage, it turns out they may be victims of an unjust system once again.

Business owners pay workers compensation premiums to ensure their workers have protection and coverage should they become injured at the workplace. Employees who find themselves unable to work as a result of a workplace accident or injury receive compensation to cover medical expenses and lost wages. Depending on the severity of the injury, workers may be off of work for several weeks or even months during the recovery period. While this is a necessary expense for business owners, it would stand to reason that any overpayment would be returned to those who actually paid the premiums.

It appears that is not going to be the case in this situation. Once the state of New York discovered the overages, an investigation was launched by the attorney general. Actions were taken to stop the overcharges and legislation was enacted requiring that overpaid amounts be returned. This is where the situation gets complicated. The overpaid amount will not be returned to the businesses but rather to the state of New York.

If you are a business owner who was overcharged for workers compensation insurance, a settlement being paid to the state doesn’t offer much of a benefit does it? In turn the state is benefiting by receiving payment for expenses that didn’t get paid out of state funds from the start. This very point was the topic of an article appearing on timesunion.com and forces us to look more closely at this issue. While business owners are surely appreciative of actions taken by the state to stop the overcharges, one has to wonder why these businesses are not receiving any compensation from the settlement that has been reached?

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