Category Archives: Workers’ Compensation

Alternatives to Workers’ Comp: Paranoia or Possibility

I joined a national organization of lawyers representing injured workers (the Work Injury Law and Advocacy Group) twenty years ago when it was first formed. Then, I heard horror stories about legislators messing with an otherwise stable workers’ compensation system after every election cycle. My colleagues in other states were constantly fighting battles over workers’ compensation “deform.” 

I thought we were insulated in Wisconsin because we had a workers’ compensation advisory council composed of labor and management who every two years fought out a compromise bill and submitted it to the legislature, which automatically rubber-stamped the proposed bill without changes. That changed in Wisconsin in 2014. For the first time in nearly 50 years, the Republican legislature rejected the “agreed upon” bill proposed by the workers’ compensation advisory council, despite the approval of the bill by management members.

Governor Scott Walker’s most recent budget contains a provision to dismantle the workers’ compensation system as we know it. Those of us representing injured workers (and those rational members on the management side) are busy lobbying to remove the workers’ compensation dismantling provisions from the budget.

It is no secret that many major corporations dislike workers’ compensation, despite statistics indicating premiums are at their lowest for employers, and profits at their highest for insurers. However, nearly two dozen major corporations including Wal-Mart, Nordstrom’s and Safeway are behind a multi-state lobbying effort to make it harder for workers hurt on the job to collect workers’ compensation benefits. The companies have financed a lobbying group the Association for Responsible Alternatives to Workers’ Compensation (ARAWC) that has already helped write legislation designed to have employers “opt out” of a State workers’ compensation system. ARAWC has already helped write legislation in Tennessee. That group’s executive director Richard Evans told an insurance journal in November that the corporations ultimately want to change workers’ compensation laws in all fifty states. Lowe’s, Macy’s, Kohl’s, SYSCO Food Services, and several insurance companies are also part of the effort. The mission of ARAWC is to pass laws allowing private employers to opt out of the traditional workers’ compensation plans that almost every state requires businesses to carry. Employers who opt out would still be compelled to purchase workers’ compensation plans, but would be allowed to write their own rules governing when, for how long, and for which reasons an injured employee can receive medical benefits and wages. Two states, Texas and Oklahoma, already allow employers to opt out of State-mandated workers’ comp. In that state, for example, Wal-Mart has written a plan that allows the company to select the physician and the arbitration company that hears disputes. A 2012 survey of Texas companies with private plans found that less half the companies offered benefits to seriously injured employees or the families of workers who died in workplace accidents. 

Oklahoma passed an opt out measure in January 2014 and the oil and gas industry along with major retailers such as Hobby Lobby pushed hard for the change. ARAWC wants to take that Texas and Oklahoma model nationwide. Seeing the workers’ compensation provision in Wisconsin’s budget bill as part of this overall “scheme” may seem paranoid, but the history of recent “deform” legislation suggest the connection is at least a possibility. 

See the complete article at http://www.motherjones.com/politics/2015/03/arawc-walmart-campaign-against-workers-compensation.

Workers’ Comp Programs Further Injure Injured Workers

Those of us who represent injured workers have known for a long time that workers’ compensation does not restore an injured worker to his pre-injury wage or status.  Two reports released in March show how workplace injuries have failed injured workers and leave them deeper in debt.  OSHA released a report indicating the changes in workers’ compensation programs have made it much more difficult for injured workers to receive benefits or medical expenses.  Although employers pay insurance premiums to workers’ compensation insurance companies who are supposed to pay benefits for medical expenses, employers provide just 20% of the overall financial cost of workplace injuries through workers’ compensation according to the OSHA report. 

This “cost shifting” is borne by the taxpayer.  As a result of this cost shifting, taxpayers are subsidizing the vast majority of the income and medical care costs of injured workers.  After a work injury, injured workers’ incomes average more than $30,000 lower over a decade than if they had not been injured.  Additionally, very low wage workers are injured at a disproportionate rate. 

Another report by ProPublica and National Public Radio found that 33 states have workers’ compensation laws that reduced benefits or made it more difficult for those with certain injuries and diseases to qualify for benefits.  Those hurdles, combined with employers and insurers increasing control of medical decisions (such as whether an injured worker needs surgery) reduced the worker’s likelihood of obtaining the medical care needed.

Overall, injured workers who should be paid under workers’ compensation are receiving less benefits and their medical care is being dodged by insurers and paid for by taxpayers through Medicaid and Medicare, or by increased insurance premiums for all of us through group health insurance rate increases.

Our general sense that injured workers are faring poorly is borne out by the research.

Medical Procedures: What do they cost?

Today’s post comes from guest author Leonard Jernigan, from The Jernigan Law Firm.

Blue Cross Blue Shield has created an online pricing tool to help patients compare prices of about 1,200 non-emergency medical procedures. Patients can now search for the best financial deal for services offered within North Carolina.

 By exposing this previously undisclosed information, patients are now able to go and see services according to the databases average procedure costs. The pricing tool also reveals the most expensive and most affordable option for each procedure.

In order to look up costs and doctors available to preform your procedure, you first access the pricing tool at: http://www.bcbsnc.com/content/providersearch/treatments/index.htm#/ . Then, you enter the treatment or service you would like in the first blank, your current location, and how many miles you are willing to travel for the service. Once you have entered all of this information, you just click search and your results will be immediately displayed. You can organize your results by cost, provider name, or distance.

 

To see the original article by John Murawski in The News and Observer explaining the pricing tool, click below:

http://www.newsobserver.com/2015/01/31/4516241_blue-cross-pricing-tool-could.html#storylink=misearch

Facebook Postings Hurt Workers’ Compensation Claims

While Facebook is extremely popular and used by over a billion people every day, no Facebook posting has ever helped an injured worker in a workers’ compensation claim. On the contrary, use of a Facebook page poses real dangers for injured workers pursuing workers’ compensation benefits.

Since Facebook is a public site, anything posted can be used by respondent insurance companies in claims denial. Even the most benign postings (birthday parties, family gatherings, etc.) can pose problems. For example, a grandparent lifting a 30 pound grandchild when doctors have imposed a 10 pound lifting limit could damage a claim. Additionally, nothing prevents an Administrative Law Judge from looking at a Facebook page.  Even innocent posts may be subject to misinterpretation. A picture of the worker riding a motorcycle or fishing taken prior to the injury but posted afterward could place the seed of doubt in an ALJ’s mind that the worker is not as limited as he claims. The best advice is to be extremely careful about what is posted because “friends” are not the only one who can access your Facebook page.

File a Workers’ Comp Claim – Get Fired

A new study from the Workers Compensation Research Institute (WCRI) indicates trust or mistrust in the work relationship plays a significant role in the outcome of a workers’ compensation claim.  In a recent benchmark study in Iowa by WCRI, almost four out of ten workers interviewed reported they were concerned they would be fired or laid off after they were injured. 

The Iowa study reflects similar results in Wisconsin and other benchmark states.  All workers who were interviewed received workers’ comp benefits and experienced more than a week of lost work time.  Additional findings noted two-thirds of the injured Iowa workers had other health conditions (having smoked for ten years or had diabetes or lung conditions).  Obviously those with significant pre-existing conditions had predictably worse results.

2014 Top Ten Workers’ Compensation Fraud Cases

Today’s post comes from guest author Leonard Jernigan, from The Jernigan Law Firm.

  Number Value
Non-Employee Fraud Cases 9 $ 74,876,000.00
Employee Fraud Cases 1 $ 450,000.00
Total $ 75,326,000.00

Five of the top ten fraud cases in 2014 are from California. The other five cases are from Florida, Texas, Arizona, Washington and Georgia. As usual, non-employee fraud cases dominated the list and the dollar amounts are staggering, led by the $36 million over-billing case out of southern California. An emerging issue is the misclassification of workers, and we will likely see more of these cases in 2015 as enforcement steps up in this area.

1. (California) Medical Equipment Company Overbills $36 Million (3/17/14)

The owners of Aspen Medical Resources were indicted in on 49 felony counts of fraud.
The owners of Aspen Medical Resources were indicted in on 49 felony counts of fraud.

The owners of Aspen Medical Resources had all their assets seized and put into receivership by the Orange County District Attorney. They were indicted in on 49 felony counts of fraudulent overbilling of $36 million for hot-cold physical therapy machines. Although these machines retail between $250 and $500 Aspen often billed Southern California workers’ compensation claims departments thousands of dollars each time a machine was rented.  

2. (California) 15 Medical Professionals Indicted in $25 Million Scheme – Small Child Dies (6/24/14)

Ahmed Kareem, one of 15 doctors accused of participating in a workers’ compensation scam.
Dr. Ahmed Kareem   is accused of participating in a workers’ comp scam.

Fifteen doctors, pharmacists and other medical professionals in Southern California were charged in a $25 million workers’ compensation scam which was linked to the death of a baby. Prosecutors alleged insurance fraud and conspiracy in the 44 count indictment which detailed that the head of a workers’ compensation claims management firm hired pharmacists to produce a pain-relief cream and then gave kickbacks to the doctors that prescribed it and conspired to submit phony claims. A 5-month old boy ate the cream and died when his mother, who was using the prescribed cream for back and knee pain, allowed her son to suck her fingers to sooth him. The next morning he was found dead and tests showed he had ingested lethal amounts of drugs in this cream.

3. (California) Lowe’s Settled Independent Contractor Misclassification Case for $6.5 Million (7/3/14)

Lowe’s misclassified its installers as independent contractors, rather than employees.
Lowe’s misclassified its installers as independent contractors, rather than employees.

Over 4,000 “Lowe’s professionals” in California are members of a class action alleging that Lowe’s misclassified its installers as independent contractors, rather than employees, thus depriving them of a variety of employee benefits, from workers’ compensation insurance coverage to 401(k) plan participation. Lowe’s, without admitting liability, recently settled the case after mediation for a sum that could be as much as $6.5 million. The plaintiffs claimed that Lowe’s retained and exercised control over their work by requiring them to identify themselves as working for Lowe’s, wear Lowe’s hats and shirts, and attend training by Lowe’s.

4. (California) Paving Company Cheats System of $4 Million (6/19/14)

Sabas & Lucia Trujillo
Sabas & Lucia Trujillo face criminal charges for workers’ comp’ fraud.

Five owners (Sabas Trujilo, Lucia Trujilo, Rick Trujilo, Laura Fitzpatrick and Alex Trujilo), operators and employees of a Corona, California based paving company are facing criminal charges for alleged wage theft, premium fraud, workers’ compensation and payroll fraud. The Riverside County District Attorney’s Office alleges that the individuals’ criminal actions enabled them to illegally obtain about $4 million. After launching an investigation, the state obtained search warrants for both companies, seizing computers and bank, payroll and other documents. The state conducted several wage audits on several hundred projects, which ultimately led to the filing of criminal charges.

5. (Florida) False Insurance Certificates Check Cashing Scheme Defrauds Insurance Company of $1 Million (11/18/14)

Arturo Santos Zuniga paid laborers cash to avoid paying workers' comp'.
Arturo Santos Zuniga paid laborers cash to avoid paying workers’ comp.

Arturo Santos Zuniga, who also went by the name David Hernandez, was busted for paying laborers in cash to avoid paying workers’ compensation insurance premiums. Zuniga paid a North Lauderdale man to create and insure a fake or “shell” company, Behar Services Incorporated, and “rented” out insurance certificates to uninsured subcontractors in South Florida. Payments to the uninsured subcontractors were made through checks to the fake company, which were then cashed at check cashing stores. Behar Services Incorporated got its insurance policy by saying it had 10 employees doing carpentry and office work with an annual payroll of $210,000. The annual premium was about $26,500. Law enforcement financial reports show that just in the months from July to October, more than $7.3 million had been cashed out at check cashing stores to Behar Services Incorporated and/or the North Lauderdale man who started the company. A $7.3 million payroll would have cost more than $1 million more than the existing policy. No estimate of lost tax revenue was given.

6. (Texas) Man to Pay $806,000 for Underreporting Payroll to Workers’ Comp Carrier (3/11/14)

Howard Douglas Whiddon of Travis County was ordered to pay $806,000 in restitution.
Howard Douglas Whiddon was ordered to pay $806,000.

Howard Douglas Whiddon was ordered to pay $806,000 in restitution to workers’ compensation insurer Texas Mutual Insurance Co. after pleading guilty to workers’ comp fraud-related charges. He intentionally misrepresented the payroll of a related company, thus lowering his premiums. Mr. Whiddon was sentenced by a Travis County, Texas court to 10 years of deferred adjudication and 160 hours of community service.

7. (Arizona) Paul Johnson Drywall Inc. Agreed to Pay $600,000 in Back Wages, Damages and Penalties to 445 Employees (5/19/14)

Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees.
Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees.

Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees, which stripped them of workers’ compensation and other protections afforded to employees. The owner, Robert Cole Johnson agreed to take concrete steps to ensure that misclassification of its workforce does not occur again and to pay $556,000.00 in overtime back wages and liquidated damages to at least 445 current and former employees. The employer also agreed to pay $44,000.00 in civil monetary penalties. Investigators found that the drywall contractor violated the Fair Labor Standards Act overtime and record-keeping provisions.

8. (Washington) Summit Drywall, Inc. Ordered to Pay $550,000 in Unpaid Wages and Damages to 384 Workers (2/20/14)

The owner of Summit Drywall, Inc. was ordered to pay damages to 384 employees.
Summit Drywall’s owner was ordered to pay damages to employees.

Thomas Kauzlarich, the owner of Summit Drywall, Inc. was ordered to pay $550,000 in overtime back wages and liquidated damages to 384 current and former employees. An investigation showed that the company violated the Fair Labor Standards Act’s overtime and record-keeping provisions from October 15, 2009 to April 15, 2013. The article did not report the amount of reduced workers’ compensation premiums paid.

9. (Georgia) Nurse Gets 5 Years in Prison for $450,000 Bogus Workers’ Comp Claims (8/26/14)

A VA nurse from Glenwood, GA, will serve five years in prison for mail fraud and fraudulent claims.
A VA nurse from Glenwood, GA, will serve five years in prison for mail fraud and mailing fraudulent claims.[/caption] Loretta Smith, a VA nurse from Glenwood, GA, will serve five years in prison and must repay $450,000.00 in federal funds by filing bogus workers’ compensation claims, pleading guilty to two counts of mail fraud in the mailing of fraudulent claims, in which she received more than $450,000.00. She agreed to forfeit the equivalent of $454,740.06 in cash, real estate and other property. She was also sentenced to three years probation after her release.
10. (California) Drywall Company Owners Arraigned on $420,000 in Fraud Charges (12/11/14) The owners of a defunct drywall company, National Drywall in San Bernardino, CA, were arraigned on charges that they defrauded their workers’ compensation insurance carrier of $260,000.00 and stole $160,000.00 from their workers.
 
Honorable Mention 

(Oregon) Uncooperative Hillsboro Businessman Convicted of $481,519 Tax Evasion – Only Gets 30 Days In Jail (9/30/14)

Stephen Nagy engaged in fraudulent schemes to evade payment of payroll taxes.
Stephen Nagy engaged in fraudulent schemes to evade payment of payroll taxes.

Stephen Nagy was the former president of Hillsboro-based S&S Drywall Assemblies. The IRS assessed the company $481,519 in federal employment taxes, penalties and interest between June 2009 and September 2010. Nagy met with the IRS and chose not to comply with the payment plan and engaged in a variety of interrelated fraudulent schemes to evade the payment of the delinquent payroll taxes. Nagy intimidated, manipulated, and threatened the loss of much needed jobs to gain the cooperation of his employees. Special agents of the IRS learned that Nagy had transferred all of S&S Drywall Assemblies income, contracts, receivables and assets to ASM Drywall, Inc. a shell company he created and placed in his sister’s name. The Oregon attorney general prosecuted Nagy in 2011 on allegations of criminal anti-trust and racketeering. He was sentenced to 30 days in jail and five years of supervised probation.

 
For more information, contact:
Leonard T. Jernigan, Jr.
Adjunct Professor of Workers’ Compensation
N.C. Central University School of Law
The Jernigan Law Firm
2626 Glenwood Avenue, Suite 330
Raleigh, North Carolina 27608
(919) 833-0299
neb@jernlaw.com
Website: www.jernlaw.com
Facebook: https://www.facebook.com/jerniganlawfirm
Twitter: @jernlaw
Blog: www.ncworkcompjournal.com

Injured Worker Stakeouts: Do Private Investigators Commit Fraud?

Today’s post comes from guest author Leonard Jernigan, from The Jernigan Law Firm.

Have you noticed a suspicious vehicle lurking in your neighborhood lately, or is there a stranger that seems to be everywhere you go? If you have an active workers’ compensation claim, then you may not be imaging things. More and more, we are seeing insurance companies willing to spend thousands of dollars to hire private investigators to conduct clandestine surveillance of an injured worker’s daily activities and documenting these activities with video cameras. This type of surveillance often comes as a shock to our clients.

When these situations arise, the question we hear most often is, “Can they do that? Is this legal?” The answer is yes. Private investigators may photograph or video people in their private residences so long as they are clearly visible to the general public and there is no expectation of privacy. They can also conduct a full background investigation and obtain information about any other claims you made for personal injuries or if you have ever been charged with a crime.

While there are honest private investigators in the field, there are also those who will cheat. One investigator deflated an injured worker’s tire and then videotaped the person “working” to fix the flat tire. Another investigator reported talking on the phone to someone who told him that an injured worker was working while also receiving workers’ compensation benefits. A follow up done by our firm proved that the person with whom the investigator claimed to have talked has a serious hearing impairment and could not use the telephone.  

Injured workers need to be aware that surveillance can happen in any case. It has become part of the workers’ compensation system. By the way, if you do notice a suspicious car parked near your home, call the police.

Retaliation / Refusal to Rehire in Worker’s Compensation

If an employer terminates an employee because of a work injury, or unreasonably refuses to rehire the employee after a compensable work injury, a penalty of up to one year’s lost wages applies. The purpose of Wisconsin’s statute is to prevent discrimination against employees who previously sustained injuries and if there are positions available within the injured employee’s restrictions, to assure the injured person goes back to work with his former employer.

This statutory protection is an exception to the general rule of “at will” employment in Wisconsin – where an employer can hire, fire, and make employment decisions for any reason or no reason at all, except for a discriminatory reason defined by law such as race, gender or religion. Under the Wisconsin Worker’s Compensation Law §102.35(3) a work injury is essentially an additional protected category. In a Refusal to Rehire case, the worker need not prove the reason for discharge in order to make a claim. In fact, the worker satisfies his burden of proof by showing he was an employee with a compensable injury who was subsequently denied rehire. Once established, the burden shifts to the employer to show reasonable cause for not rehiring the applicant. (Other States have similar provisions. See, for example, Ohio Code 4123.90 with similar anti-retaliation provisions.) The burden-shifting model recognizes the realities of the employment relationship and disparate access to information. The employee generally has limited means to prove the “real reason” for his discharge, so the burden is on the employer to establish good cause when the burden shifts.