Author Archives: Thomas Domer

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.

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.

What Do You Mean, I Can’t Sue My Employer?

OSHA find the owner of the Didion Milling Plant in connection with an explosion that killed 2 workers and injured several more.

I sat down this morning with a television reporter interviewing me about a horrific explosion in Wisconsin that killed 5 workers and injured many more.  The explosion on May 31, 2017 at the Didion Ethanol Plant in Cambria, Wisconsin occurred when corn dust exploded, destroying the entire plant.  OSHA hit the company with a $1.8 million fine, calling it a preventable explosion.

The reporter’s question to me was “Why can’t the employees sue their employer?”  The answer goes back over 100 years in Wisconsin to the “Grand Bargain” that was struck between management and labor.  Sometimes referred to as the “great tradeoff,” employees traded away their right to sue their employer, even for egregious safety violations, in return for wage loss and medical benefits to be paid regardless of fault.  The goal was to relieve the injured employee from the burden of paying for medical care and replace lost wages.  At the turn of the 20th Century, Wisconsin workplaces were often dangerous places, and employers had little incentive to make them safer.  Injured workers could rarely afford the kind of legal cost for recovery efforts in court and employers benefitted by use of contributory negligence, assumption of risk and co-employee negligence as bars to an employee’s recovery in court.

The administrative system that was established by worker’s compensation was created to provide a direct remedy to the employer and to limit (by Exclusive Remedy) litigation against the employer.  The system was supposed to insure a method of providing benefits to an injured employee during the period of disability and to ensure the employees were not reduced to poverty because of injuries.

Speed, dependability, and financial assistance were components of the new system, and by making employers responsible for injury, the law offered strong incentives to make workplaces safer.  Unfortunately, that has not occurred.  The latest statistics indicate that over 100 people die annually in Wisconsin and over 5,000 annually across the nation.

Revealing to a grieving widow that the remedy available is limited to four times the deceased worker’s annual income is precious little consolation for loss of a spouse’s life and lifetime income.

Work-Related Falls Cause Serious Injuries And Death

“It’s not the fall that gets you” the old skydiving joke goes, “It’s the sudden stop at the bottom.” Falls are one of the greatest dangers in workers’ compensation. We fear many other perils, but more than half a million people die worldwide each year after falling. Falls are the second leading cause of death by injury, after car accidents. In the United States, falls cause over 30,000 deaths per year (more than four times the number caused by drowning and fires combined). Nearly three times as many people die in the U.S. after falling as are murdered by firearms.

As a cause of injury, falls are even more significant. More patients go to Emergency Rooms in America after falling than from any other form of accident according to the Centers for Disease Control and Prevention. Falls account for nearly three times the number of those injured by car accidents. The cost is also huge. Falls account for more than one-third of Emergency Room budgets and often lead to more expensive injury claims. 

Since falls can happen anywhere at any time to anyone, it is not surprising they are prevalent. The most dangerous spots for falls are interior settings of every day life such as supermarket aisles and stairways. Any fall can change life profoundly, taking a worker, for example, from a healthy life to a grave disability instantly.  Interestingly, scientists are now encouraging people to learn how to fall to minimize injury. Training in how to fall can actually help determine the outcome of the injury.  (The Week, September 8, 2007). Most research in the area of falls relates to “balance maintenance,” how we perform activities like standing, walking, and transferring without losing balance. Another factor in the seriousness of the injury after a fall is what condition one is in at the time of the fall. A Yale School of Medicine study ( published in The Journal of American Medical Association in 2013) found the more serious a disability one had beforehand, the more likely you will be severely hurt by a fall. Scientists studying falling are developing “safe landing” responses to help limit damage from falls. The key, apparently, is to roll and to try to let the fleshiest parts of your body absorb the impact. Young people often break their wrists because they shoot their hands out quickly when falling. Older people break their hips because they do not have their hands out quickly enough. Most scientists indicate if you are falling, protect your head first. Significant research in this are continues.

Trump Dumps Workplace Safety

When FBI Director James Comey calls President Trump a liar, the world takes notice, but when Trump lies about workplace safety, the world takes little notice.  Trump’s administration has recently provided significant “relaxation” in the government’s approach to occupational safety.  The administration recently delayed action on a rule that would require the employer to electronically report workplace injuries so they can be posted for the public.  OSHA has also put off enforcement of an Obama-era standard for silica, a mineral linked to a disabling lung disease and cancer.  I’ve dealt with many silica exposure claims in Wisconsin particularly coming from the Kohler Corporation in Kohler, Wisconsin where silica is a necessary ingredient in many bathroom fixture manufacturing processes.  The administration has also proposed changes in beryllium exposure limits.  After 40 years of development a new rule under the Obama administration was set to lower workplace exposure to beryllium a mineral linked to a lung disease estimated to kill 100 people annually.  The nation’s largest beryllium producer had agreed to back the new restrictions.  A few weeks ago as the rule was going into effect the new administration proposed changes that many expect may exempt major industries from this tougher standard. 

When asked about the Trump administration’s approach to workplace safety a White House spokesman said “The President and his administration care very much about worker safety…”  Yet another lie.  See also Under Trump, Worker Protections Are Viewed With New Skepticism

Trump’s Budget Cuts and Social Security Disability: Is “Fraud Suspicion” Underlying the Cuts?

Budget Director Mick Mulvaney echoed the mantra of many conservative Republicans who suspect that folks who are Social Security Disability recipients are fraudulent.  “If you are on disability insurance and you’re not supposed to be, you are not truly disabled, we need you to go back to work.”  This conservative trope reflects, without any evidence to substantiate it, the same kind of misinformation about employee fraud that pervades perceptions of workers’ compensation fraud. 

As I have often written about in the past, the public’s perception of injured individuals (whether collecting workers’ compensation or Social Security Disability benefits) is vastly overinflated.  The statistics indicate only about one-sixth of one percent of injured workers in Wisconsin are fraudulent.  That’s about 2 in 10,000.

The Trump administration budget proposed up to $64 billion in cuts to Social Security Disability Insurance expenditures, directly contradicting Trump’s campaign promises not to cut Social Security.  The cuts stem mostly from new program rules and processes, and requirements for mandatory participation by program applicants to move disabled beneficiaries from SSDI to work.

While returning to work is always a laudable goal (for both workers’ compensation and Social Security Disability), the last eight times that budget proposals have initiated programs to promote return to work “none of the findings reported to date show they would likely lead to a substantial reduction in case load sizes.”  http://www.researchondisability.org/docs/default-document-library/ssa-back-to-work-06-2012.pdf?sfvrsn=2

Through their contributions to Social Security, workers earn a measure of protection against disability retirement and death.  (Disability insurance protects a worker against loss of earnings due to a significant work limiting impairment, and workers earn this protection by having worked and contributed to Social Security.)  Many of my work-injured employees ultimately end up on Social Security Disability and this protection is particularly important to older Americans.  Most people receiving Social Security Disability benefits are in their 50s or early 60s and most had only unskilled or semi-skilled jobs.  Without a college degree, benefits are not significant (averaging about $1,200 per month).  However, over half of Social Security beneficiaries rely on these benefits for 75% or more of their total income. 

The proposed budget cuts to Social Security are another slap in the face to injured workers.