A self-insured employer has denied a claim but the file does not properly document the reason for the denial. What is the amount of the penalty?

A self-insured employer has denied a claim but the file does not properly document the reason for the denial. What is the amount of the penalty?

• A. $500
• B. $1000
• C. $5000
• D. $10,000

Answer: (C)

When a self-insured employer denies a claim, the denial must be documented in the file with a specific, written reason. If that documentation is missing or inadequate, a penalty is imposed to enforce proper claim handling and ensure the employee understands why benefits are denied. The fixed amount for this documentation deficiency is five thousand dollars. Smaller penalties wouldn’t address the seriousness of omitting the denial rationale, while a much larger amount would be disproportionate for this particular deficiency.

When a self-insured employer denies a claim, the denial must be documented in the file with a specific, written reason. If that documentation is missing or inadequate, a penalty is imposed to enforce proper claim handling and ensure the employee understands why benefits are denied. The fixed amount for this documentation deficiency is five thousand dollars. Smaller penalties wouldn’t address the seriousness of omitting the denial rationale, while a much larger amount would be disproportionate for this particular deficiency.