What is the penalty for a self-insured employer who denies a claim without proper documentation?

• A. $500
• B. $1,000
• C. $5,000
• D. $10,000

Answer: (C)

The penalty for a self-insured employer who denies a claim without proper documentation is $5,000. This amount is established to emphasize the importance of maintaining proper documentation for claims and ensuring that decisions are backed by appropriate evidence. Such penalties serve to protect employees from unfair treatment and to hold employers accountable for their claims handling processes.

Employers who operate as self-insured entities assume significant responsibility for managing their claims and must adhere to strict regulatory standards. Failing to document the basis for a denial not only undermines the legitimacy of the employer’s decision but also can lead to significant financial penalties, reinforcing the need for diligent claim management practices.

In this context, the other monetary amounts provided in the choices do not align with the regulatory framework that governs self-insurance practices, highlighting the importance of understanding specific penalties in relation to documentation requirements.