Employer fined for insurance offences

Failure to keep a health insurance policy in effect for his employees cost Campbell’s Auto Repairs and Robert Campbell $3,750 in fines last week.  

A fine for failure to produce documents required by a health insurance inspector Wesley Gibson was another $750 and Chief Magistrate Margaret Ramsay-Hale imposed $500 in court costs, for a total of $5,000. 

The period for which employees were not covered ran from 1 July, 2006, to 1 May, 2007. The failure to produce documents occurred on 2 April, 2007, when Mr. Gibson went to the business premises and asked for employee records in order to check up on a complaint. 

In a summary of the evidence before handing down her verdict, the chief magistrate said the matter began when the Health Insurance Commission received a complaint in July 2006 and wrote to Mr. Campbell about it. He responded in a letter written on 21 December, 2006, which was received in January 2007. 

In it, he said he had allowed a policy with Clico to lapse because of certain financial difficulties and he had applied to another company for new coverage. It was accepted that no contract was entered into with another company. 

When inspectors went to his office and asked to see certain records, Mr. Campbell said he could only spare a few minutes. When they asked to speak with the accountant, he said they should come back another day. 

He later went to the health insurance office and presented a receipt for premiums that had fallen due in 2006. 

The defence case, as put forward by attorney Clyde Allen, was that Mr. Campbell understood he was in good standing with Clico when he recommenced payment of premiums, which were more than $1,000 per month. 

Referring to his own letter, in which he said he allowed his insurance to lapse, his evidence was that he had misused the word “lapse”. He relied on a letter titled “Final Warning”, which said the grace period for payment was over and he had to pay by March 2007. 

His position was that he had effected a contract and it was still in force – the insurance company had not yet terminated it. 

Records showed that, having effected the insurance coverage in early 2006, he made payments until May 2006. Then there were no payments until February 2007. That payment was applied to the premium due in June 2006, as the insurance company sought to collect payments outstanding. 

An officer of Clico said that, while the policy was still in place, no benefits were available. 

Mr. Allen argued that since there was a policy in place, the charge of not effecting it was not made out. 

The chief magistrate said she did not think this could be right, since benefits were unavailable. Any other interpretation would make a nonsense of the law, which requires an employer to effect “and continue” a standard health insurance contract, she emphasised in finding the Crown had proved the charge. 

She also found the Crown had properly brought charges against both the company and Mr. Campbell personally and she returned verdicts against both. For failing to produce documents, she dismissed the charge against the company, but found Mr. Campbell guilty because the documents he produced were not what the inspectors had asked for. 

In mitigation, Mr. Allen said Mr. Campbell had not deducted any insurance part-payment from his employees’ earnings: he had paid the full amount. The chief magistrate said that was exactly what the insurance inspector had wanted to know. 

Mr. Allen agreed ignorance of the law is no excuse, but said Mr. Campbell thought his payments were going toward current premiums. 

“This is a point almost every insured person struggles with,” the chief magistrate said. They may be paying large sums of money and remain uninsured because the payments are being applied to premiums past due, she indicated. 

Asked about penalties, Deputy Director of Public Prosecutions Trevor Ward advised on a recent change in the law. He said the 2005 Health Insurance Law provided for a fine in Summary Court of as much as $5,000 for an employer’s failure to provide coverage, and up to $10,000 in Grand Court. An amendment in 2010 changed those maximums to $30,000 and $40,000 respectively, he said. 

The chief magistrate said that since the charges had been brought under the 2005 law, the penalties would also be under the 2005 law.  

The fine against the company was $2,500 and against Mr. Campbell $1,250. He was given until 15 January to pay.