Employee Workers’ Compensation Fraud? No – Employer Fraud Rampant.

Attorney Leonard Jernigan compiled a list of the biggest workers’ compensation frauds

My friend and colleague Len Jernigan has again compiled the Top 10 Workers’ Compensation Fraud Cases for 2017.

 His results emphasize a theme that has been present for the last dozen years during which he has been compiling a “Top 10” list.  This year the Top 10 non-employee fraud cases resulted in fraud totaling just under $700 million.  Employee fraud cases resulted in zero fraud.  Seven of the Top 10 cases were from California, two from Texas, and one from Tennessee.

The cases involve health care fraud, where doctors prescribed inappropriate medications to pharmacies they operated, overbilling schemes for durable medical equipment, mail fraud, kickback schemes, referral of patients for unnecessary care, and prescribing unnecessary treatment.

A recurring theme, falsifying documents and under-reporting payroll to workers’ compensation insurance companies also appeared in the Top 10.  In one notorious case, the owners of a hotel hid the existence of 800 housekeeping and janitorial workers to avoid paying workers’ compensation insurance rates and payroll taxes.  The list also contains references to dishonest employers misclassifying more and more workers as independent contractors.  This misclassification is a fraud that wrongfully denies these employees workers’ compensation when injured, denies the government millions of dollars in payroll taxes to support Medicare, Social Security, Unemployment Compensation, and the fundamental rights of the workers.  Simply put, this misclassification is another employers shift the cost of accident and injury to the taxpayers and the fraud continues.

Small Businesses Don’t Have Workers’ Compensation Insurance

In a new study by Insureon, less than 1 in 5 small businesses carry workers’ compensation.  Although all State regulations require that small businesses have workers’ compensation, this study indicates that workers’ compensation is the least purchased insurance by small businesses.  (In Wisconsin, employers must have workers’ compensation if they hire only one employee paying more than $500 in a quarter or hire any three employees at any one time.)  The President of Insureon Jeff Somers said in an interview with workerscompensation.com that “small businesses often fail to carry workers’ compensation because they truly do not understand their insurance need; there is a major lack of awareness and education which insurers and brokers can alleviate.  One reason for this protection gap is a misplaced anxiety around how much workers’ compensation coverage actually costs, but when you compare the small price. . . the protection workers’ compensation provides makes an investment worth it.”

According to the Bureau of Labor Statistics, almost 3 million workplace injuries were reported by private industry employers in 2016, with nearly one-third resulting in time away from work.  The Insureon statistics showed that one in three businesses reported an incident that could have been covered by a workers’ compensation insurance policy and that one-fifth of all small businesses that filed for bankruptcy in 2016 did so because of lawsuits.  Workers’ compensation protects an employer from a lawsuit.  (In Wisconsin a worker injured by an uninsured employer has access to the Uninsured Employers Fund.  After the Fund pays workers’ compensation benefits, the Fund then pursues reimbursement from the employer.)

The Three Stooges Get Workers’ Comp: Why Backs Trump Knees and Shoulders in Wisconsin

Wisconsin’s unique workers’ compensation system contains one significant distinction, between “limb” injuries and “spine” injuries. Limb injuries (shoulders, elbows, wrists, hips, knees) are not worth as much to the injured worker as a spine injury.

To illustrate this problem to my law students, I use the 3 Stooges example: Moe, Larry and Curly work for a tree service earning $15 per hour or $600 per week. A tree branch falls on all three of them, injuring Moe’s shoulder, Larry’s knee, and Curly’s neck. They are all off work for 10 weeks while they are healing from surgeries required by the injury. During that time they received Temporary Total Disability at two-thirds of their wage or $400 per week, a total of $4,000 for each of them. After they are done healing, all three of their doctors assign a 10% functional disability rating for their injury and a 10- pound lifting restriction, which their employer cannot accommodate.

Moe gets 10% of 500 weeks for his shoulder payable at $362 per week, or a whopping total of $18,100 – making his total workers’ comp recovery just over $20,000.

Larry gets 10% of a knee or 42.5 weeks at $362 per week, or $15,385 – making his total recovery just under $20,000.

Curly, who had a neck injury and surgery, gets 10% of 1000 weeks at $362 per week, or $36,200. However, since he cannot return to the tree company, he also gets a recovery for his Loss of Earning Capacity. Based on his 10- pound restriction and his very limited education, he is probably limited to a minimum wage or part time job which would result in a 50% Loss of Earning Capacity, payable for 500 weeks or a total of $181,000. If his disability is serious enough, he may in fact receive his $400 per week for the rest of his life, bringing his total to well over a half million dollars.

That’s why many workers’ compensation attorneys (and insurance companies) focus their attention on spine injuries.

“Independent” (or are they “Adverse”!) Medical Examinations

Don’t get mad…get an attorney.

Was your worker’s compensation claim just denied by an “independent” medical evaluator?  You are not alone.

Following a work injury, the insurance company legally can require the injured worker’s attendance with an independent medical evaluator, or IME.  The IME doctor is not the worker’s doctor, and the worker does not have to agree with the doctor.  The problem, however, is that many IME doctors disagree with the causation opinion of the treating physician, and then the IME opinion effectively serves as the default legal opinion until the case either goes to court or is settled.   That means that the insurance company’s hired doctor can be used to cut off a worker’s benefits–forcing the case into litigation.

If the treating physician disagrees with the IME report, a worker should consult with an attorney to dispute the IME denial.  After all, the IME is hired by the insurance company.

A recent in-depth article pointed out the potential for bias by insurance company-hired IMEs: Long-time judge: Some ‘independent’ doctors routinely rule against injured workers.  For many in the work comp world, a more appropriate term for these hired doctors is adverse medical examination.  Certainly that is not true of all IMEs, but some physicians–especially those who are not actively seeing patients–seem to curry favor with the insurance company by denying a worker’s medical claim.

When the insurance company doctor disputes a claim, the injured worker needs their own treating doctor and their attorney to push back against the IME denial.


Limits on Medical Treatment Options for Injured Workers?

Doctor choice.  And choice of treatment.  The Wisconsin way.

Unlike systems in other states, an injured worker in Wisconsin has access to their own doctor and what that doctor recommends for medical care.  Wisconsin does not have specific directed care or a panel of worker’s compensation doctors. The choice of medical care and experienced practitioners produces some of the fastest return to work rates in the country, along with low costs per claim.

The only “limit” is the “two doctor rule,” where a Wisconsin injured worker has the right to see their own doctor or to get a second opinion from another doctor.  While any doctor beyond the “two doctor” limit would be excluded from coverage (unless mutually agreed to by the work comp carrier), a worker has the right to see any doctor that is part of the referral chain from the two doctors–making doctor choice virtually unlimited if the worker obtains an appropriate referral!

The recommended medical care should be covered by the work comp carrier is reasonable and necessary to cure from the effects of an injury.  Unless the insurance company has a contrary medical opinion (through an adverse, or “independent” medical evaluator), they generally are responsible for the medical treatment recommended, whether that is therapy, office visits, prescriptions, injections, surgery, etc. 

Other states place limits on the type of treatment a worker can receive.  A recent article revealed that Ohio legislators are limiting when injured workers can have certain prescription medications or surgery (Ohio Imposes Strict Rule on Workers’ Back Surgery, Opioids).  Ohio is required a worker undergo 60 days of “alternative care”, potentially without opiate use, before having a work-related back surgery.

To date, Wisconsin’s legislature preferred the medical expertise of its physicians and their treatment recommendations.  Relying on experienced, quality medical practitioners allows workers swift access to the necessary medical care and recommendations–and puts them back in the workplace fast!


Trump’s Assault on Workers

As a workers’ compensation attorney, I tend to view current events through the prism of their effect on workers and more specifically injured workers.  The Trump Administration has rolled back his predecessor’s strides in environment, labor and finance, civil rights, health care, government reform, immigration, and education.  I would like to specifically address reverses in worker and consumer safety.  The Washington Post updated how Trump is rolling back Obama’s legacy through 16 executive actions, 74 cabinet level agency decisions, 14 congressional review acts, and a piece of new legislation. 

  • Specifically, in terms of worker and consumer safety, the Mine Safety and Health Administration is revising a mining inspection rule published three days after Obama left office by allowing examiners to do their reviews while miners are working letting companies not record hazardous conditions if they are immediately corrected.
  • The Trump Administration Interior Department ordered the National Academy of Sciences, Engineering and Medicine to stop a study of health risks for residents near surface mining operations in the Appalachians.
  • The EPA delayed implementing a rule that would have changed how agricultural workers are protected from pesticides.
  • The EPA is delaying implementation of rule to require manufacturers to label formaldehyde and composite wood products.
  • A Coast Guard plan to regulate firefighting systems on tanker ships and helipads on offshore platforms was withdrawn.
  • Additionally, a Coast Guard rule that would have required all ships and berths to maintain equipment and technical systems for safety was withdrawn.
  • OSHA delayed implementing a rule regulating construction worker exposure to silica (linked to lung disease and cancer).
  • The House and Senate passed a bill signed by President Trump eliminating worker safety regulations aiming to track and reduce workplace injuries and death.
  • The Labor Department removed from its agenda a proposal to stiffen exposure standards for chemical solvents.
  • The Labor Department cancelled plans to lower permissible exposure limits for some substances that had been set in 1971 and cancelled plans to revoke obsolete permissible exposure limits for other substances.
  • The Labor Department removed from its agenda a proposal to tighten exposure standards for styrene, a chemical used in plastics identified as a carcinogen.

This laundry list of anti-worker executive actions, Cabinet-level agency decisions and Congressional review acts reveals the hypocrisy of Trump’s campaign promises to help working families.  Rather, it reveals his completely anti-worker policy.

Am I Being Paid Enough?

Injured workers commonly ask whether they are being paid the correct amount of workers’ compensation benefits.  The question usually pertains to the weekly lost time benefits paid during while healing after an injury.  It is a question I take seriously as the weekly benefit is crucial to the injured worker and their family.  This blog post outlines how the weekly benefits are calculated.  If an injured worker has questions about benefits, they should reach out to an experienced workers’ compensation attorney. 

The starting point for calculations is the worker’s Average Weekly Wage. Specifically, when an injured worker is under restrictions by a treating physician following an injury and the employer cannot provide work, or when the injured worker is taken off work completely by a physician, the insurance company owes “temporary total disability” (also referred to as “TTD”).  Temporary total disability is paid at 2/3 of the injured worker’s “average weekly wage” (also referred to as “AWW”). 

For most workers, the average weekly wage is calculated in two ways under Wisconsin law, and the injured worker is entitled to the higher of the two calculations: 

  1. Hourly Rate x 40:

    The first option is the employee’s hourly wage at the time of the injury multiplied by the hours regularly scheduled to work (usually, full-time, or 40 hrs/week).  For example, an employee making $10 an hour, who usually works 40 hours a week, has an average weekly wage of $400 ($10 x 40).

    There are additional considerations for this equation.  For example, shift differentials (especially important to those in the medical field) should be considered as should overtime if the injured worker was regularly scheduled to work overtime hours.  Also, if the employee works alternating shifts from week to week, this needs to be taken into account.  If any of these apply, it is a good idea to reach out to an attorney to discuss whether the amount being paid is correct.  In my experience, insurance companies will ignore overtime payments and shift differentials when calculating the average weekly wage, which reduces the amount owed to the injured worker.

  2. Average Earning in the Year Before the Injury.

    The second option is the actual gross earnings during the 52 weeks before the injury divided by the number of weeks worked during that period.  For example, if an employee earned $52,000 in the 52 weeks before the work injury, their average weekly wage is $1,000.  The number of weeks worked includes any weeks the employee was being paid, including paid vacation or paid sick leave.

    In addition, all taxable earnings must be included when calculating the gross earnings, including overtime, incentive pay, profit sharing, and bonuses.  Other things of value, including meals, rooms, utilities, rent remission, may also be part of the gross earnings.

The injured worker receives the higher of the two calculations.  The AWW is an essential to a claim–affecting all other workers’ compensation benefits.  An injured worker should ensure they are paid the correct amount.  The Worker’s Compensation Act is designed to protect the worker and provide these wage loss benefits.  If you are injured and question the amount paid, contact an attorney.

Occupational Skin Diseases

Today’s post comes from guest author Anthony L. Lucas, from The Jernigan Law Firm.

In Wisconsin, if a worker suffers an occupational skin disease resulting in a permanent sensitization with loss of job or income, there is a chance to pursue a loss of earning capacity claim.

Occupational skin diseases are one of the most common occupational diseases. The National Institute for Occupational Safety and Health estimates that in the United States more than 13 million workers are potentially exposed to chemicals that can be absorbed through their skin. In 2015, the last year for which data is available, over 15% of the reported occupational diseases were skin diseases.


These diseases include, but are not limited to, contact dermatitis (eczema), allergic dermatitis, skin cancers, and infections. Contact dermatitis, which has symptoms of painful and itchy skin, blisters, redness, and swelling, is the most commonly reported occupational skin disease. Workers in food service, cosmetology, health care, agriculture, cleaning, painting, mechanics, and construction industries and sectors are at risk of developing these diseases.


This type of occupational disease is clearly preventable. To control and prevent exposure to chemicals that cause occupational skin diseases, OSHA recommends that employers switch to less toxic chemicals, redesign the work process to avoid the splashes or immersion, and have employees wear protective gloves and clothing.