Dispute over compensation sacks fire dept. [The Record-Eagle, Traverse City, Mich.]

July 14--INTERLOCHEN -- A dispute over a soaring workers' compensation insurance bill forced Inland Township officials to sideline their fire department for at least two weeks.

Officials in this small Benzie County community west of Interlochen this week voted to suspend fire-fighting operations after Liberty Mutual Insurance Company canceled its workers compensation coverage for non-payment.

Neighboring fire departments in Elmira and Homestead townships agreed to cover Inland's emergency calls.

"I've been sick about it," said Paul Beechraft, Inland Township supervisor. "But if somebody got hurt out there they wouldn't be covered."

Inland Fire Chief Skip Hampton said he agreed with the board's decision to shut the department's doors until coverage is restored. But it hurt when the vote came down, all the same.

"I knew about it earlier that day, but I still felt surprised," Hampton said. "Our guys are a little bummed and disappointed, but we're all anxious to get it cleared up and get back to work."

Liberty Mutual audited the township for its 2011 operations in May, then billed the community $20,800. The township's normal bill for a year of coverage is $1,100, Clerk Marilyn Wareham said.

Worker's compensation insurance covers lost wages and medical costs for on-the-job injuries. Instead of basing Inland Township's cost on township employees, Liberty Mutual included every contractor and subcontractor who worked for or through the township in 2011.

That included the lawn service that cuts the cemetery grass and the township attorney. The township's purchase of a new town hall that required extensive remodeling in 2011 prompted the broadened coverage requirements, said Derrick Scaffiaferro, the township's insurance agent.

Township officials did not obtain certificates of liability and worker's compensation coverage from the contractor and subcontractors on the project and couldn't produce documentation when the auditor visited in May.

Beechraft spent the last 45 days collecting certificates that proved those workers had their own coverage. He whittled the cost to $10,600, but wasn't able to provide all details the auditors sought.

"Now Liberty Mutual wants a copy of some contractors' business cards to prove they do business with other people," Beechraft said. "It's just crazy unbelievable. We've never experienced this before."

Jeff Morse, Inland's former fire chief, said "it hurts" to see the department he founded in 2010 closed, if only temporarily.

"I like the board, they are all good people. I just think it got away from them," Morse said. "This is a new experience for them ... and the learning curve is so huge I don't think it ever ends."

Liberty Mutual provided a 30-day cancellation notice and ended the insurance July 7. Beechraft paid the bill on July 9.

"I put it on my own personal credit card," Beechraft said. "I maxed out two cards to do it. If I get a flat tire, I'm out of luck."

The township board voted to reimburse Beechraft for the charges.

Liberty Mutual won't renew the policy until it completes the 2011 audit and reviews the first six months of 2012. An auditor will visit the township on July 18 and Scaffiaferro said he believes the township now has all of the required documentation it needs.

"So hopefully this will be resolved pretty quick," he said.

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