REGULATORY ANALYSIS
FOR AMENDMENTS TO RULE 4 OF THE
WORKERS' COMPENSATION RULES OF PROCEDURE
7 CCR 1101-3

1.	Description of classes of persons who will be affected by the rules, including classes that will bear the costs of the rules and classes that will benefit from the rules.
The classes of persons affected by the rules are all persons and entities involved in the Colorado Workers’ Compensation system.  This includes, but is not limited to, injured workers, health care providers, insurance carriers, third party administrators and employers.

2.	Description of the probable quantitative and qualitative impact of the adopted rules, economic or otherwise, upon the classes of affected persons.

The main purpose of this adopted rule was is to update and clarify procedures, and to be in compliance with the statutory mandate to promulgate a rule on this topic.
The revisions provide information to those responsible for adjusting claims and assist them in understanding the Division’s audit authority, responsibilities methods and process.  The revisions inform adjusters of matters that are subject to audit and the compliance level that is considered satisfactory.  The revisions also provide the circumstances under which the director may order a fine for repeated violations as well as the criteria for determining the amount of any fines imposed.  It is anticipated that some insurers will be required to pay a fine due to repeated poor performance with adjusting claims.  On the other hand, the adopted rule should increase efficiency and assist persons in implementing required actions since the failure to do so may result in a fine.   

3.	Probable costs to the agency and other agencies of the implementation and enforcement of the adopted rules and any anticipated effect on state revenues.

No impact on costs or revenues is anticipated as a result of the rule changes.  

4.	Comparison of the probable costs and benefits of the adopted rules to the probable costs and benefits of inaction. 

Adoption of this rule will benefit insurers by notifying adjusters of the Division’s audit authority and the consequences for repeated claims adjusting violations. Insurers will also benefit from information and clarification of matters that are subject to audit, knowledge of satisfactory compliance levels for claims adjusting, and the Division’s audit responsibilities, authority, methods and process. This rule will clarify procedures and expectations and should therefore decrease uncertainty and increase efficiency. As a result there should be fewer errors in claims handling and injured workers should receive the benefits to which they are due. The revision will not result in higher claims adjusting costs unless there are repeated violations of statutory and/or rule requirements resulting in escalating fines. Not taking this action would result in the Division being out of compliance with a statutory mandate.

5.	Determination of whether there are less costly or less intrusive methods for achieving the purpose of the rules.

There are no known less costly or less intrusive means.   

6.	Description of any alternative methods for achieving the purpose of the proposed rules that were seriously considered by the agency and the reasons they were rejected in favor of the adopted rules.

 Because of the nature of this adopted rule no alternative methods were seriously         considered. 

Copies of the Notice of Public Hearing were provided to the:

Colorado Association of School Boards, 
Colorado Counties, Inc.
Colorado Municipal League
Special District Association of Colorado
Colorado Health and Hospital Association
Colorado Association of Commerce and Industry
Mountain States Employers Council
Colorado Self-Insurers Association