Category Archives: Insurance

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 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.)

New Underwriting Workers’ Compensation Industry Rankings

Injured workers who have been denied benefits by Travelers, The Hartford, AIG, Liberty Mutual, and Berkshire Hathaway will be pleased to know those five insurance carriers are industry leaders in writing premiums for employers. Travelers has received $3,840,000,000 premium dollars (a 52.4% changes since 2009; The Hartford $3,012,000,000 (a 28% change since 2009). AIG and Liberty Mutual have lost market share but Berkshire Hathaway at $1,742,000,000 has increased its market share by 408.5%. Berkshire Hathaway and Travelers are among the insurance carriers that have posted the highest underwriting profits in the last five years.

Profits for workers’ compensation insurance carriers over the last five years have been significant, as has been reported in my prior blogs.  This news is small consolation for injured workers whose benefits continue to decline.


$46 Million Stolen: 2013’s Top Workers’ Compensation Fraud Cases

Professor Leonard T. Jernigan Jr. has compiled a list of 2013’s Top 10 Workers’ Compensation Fraud Cases

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

Employer Fraud Cases (9):$44,064,492.00
Employee Fraud Cases (1): $1,500,000.00
Total: $45,564,492.00

Every year we hear about fraud in Workers’ Compensation cases and the public believes the fraud is employee driven. However, in 2009 I began tracking the Top Ten Fraud Cases and 100% of the Top Ten between 2009-2012 involved employers or shady characters posing as legitimate businesses. The amount of employer fraud is staggering. In 2013 one employee fraud case did crack the Top Ten, so the record is now 49-1 (employer fraud v. employee fraud) over the past five years.

  1. Florida: Owners of Diaz Supermarkets in Miami-Dade are Accused of $35 Million Fraud (4/16/13)

    John Diaz and his wife Mercedes Avila-Diaz owned and operated four supermarkets in the Miami-Dade area. They have been arrested and accused of workers’ compensation fraud and other fraudulent transactions totaling $35 million. One business they operated had no coverage for employees for ten years. They allegedly engaged in a scam to help subcontractors obtain false certificates of insurance that allowed the subs to work for general contractors who required the certificates.

  2. California: Hanford Farm Labor Contractor Convicted of Fraud in the Amount of $4,195,900 (12/6/2013)

    Richard Escamilla, Jr.

    Richard Escamilla, Jr. (47), owner of ROC Harvesting, misrepresented information to workers’ compensation insurance carriers by using new business names to obtain insurance and avoid providing a claim history. Escamilla pleaded guilty on October 29th and was sentenced to pay restitution of $4.1 million and serve six years in prison.

  3. Michigan: Insurance Executive Embezzled $2.6 Million from Workers’ Comp TPA (06/06/2013)

    Jerry Stage

    Jerry Stage (67), the former CEO of a non-profit workers’ compensation insurance company, and George Bauer (55), the bookkeeper, both pleaded guilty to embezzling from the Compensation Advisory Organization of Michigan (CAOM) for more than a decade. Mr. Stage embezzled $2.6 million from the company and conspired with Mr. Bauer to cover up the embezzlement.

  4. California: Employee Wasn’t Wheelchair Bound After All – Fraudulently Took $1.5 Million in Benefits (8/9/13)

    Yolandi Kohrumel

    Yolandi Kohrumel, 35, claimed for nine years that she was wheelchair bound after complications from toe surgery, but after she had collected $1.5 million in benefits it was revealed her claim was false. Her father, a South African native, was also engaged in the scam. Both pleaded guilty to insurance fraud, grand theft and perjury. Ms Kohrumel was sentenced to one year in jail, plus restitution.

  5. California: Father and Son Landscapers Accused of $1.45 Million in Insurance Fraud (5/7/13)

    Sunshine Landscaping

    Jesse Garcia Contreras (57) and Carlos Contreras (33), who operate a Thousand Palms landscaping business, are accused of committing $1.45 million in insurance fraud. They are accused of defrauding the California State Compensation Insurance Fund by misclassifying employees from January 2008 to March 2012. Mr. Jesse Contreras is the president and CEO of Sunshine Landscaping and his son is Director of Accounting. If convicted, they each face up to 19 years and 8 months in prison.

  6. Florida: Workers’ Compensation Check Cashing Operation Charged with $1 Million in Fraud (2/27/13)

    As a result of its investigation of I&T Financial Services, LLC, a company that was allegedly set up to execute a large scale check cashing scheme for the purpose of evading the cost of workers’ compensation coverage. Domenick Pucillo, the ringleader of the fraud scheme, was arrested and charged with filing a false and fraudulent document, forgery, uttering a forged instrument, and operating an unlicensed money service business. If convicted on all charges, he faces up to 45 years in prison. $1 million was seized during this investigation.

  7. West Virginia: Coal Company Contractor in Mingo County Caught in $405,000 Scam to Avoid Workers’ Comp Premiums (11/6/13)

    Bank of Mingo

    Jerame Russell (50), an executive with Aracoma Contracting, LLC, a company that provided labor to coal companies on a contract basis, entered a guilty plea to a scam that involved funneling over $2 million through a local bank to pay employees in cash, thus avoiding payroll taxes and $405,000 in workers’ compensation premiums. Aracoma also bribed an insurance auditor to cover up its true payroll.

  8. Ohio: Roofing Business Owners Guilty of $283,592 in Workers’ Comp Fraud (7/30/2013)

    Frederick Diebert

    The owners of Triple Star Roofing were found guilty of fraud on July 15 for failing to report payroll to the Ohio Bureau or Workers’ Compensation(BWC). The company failed to report to the BWC from 2004 to 2008, resulting in under-reported premiums of $283,592.

  9. Florida: Owner of Staffing Company arrested for $130,000 in Workers’ Comp Fraud

    Preferred Staffing of America, Inc.

    The owner of Preferred Staffing of America, Inc., a temporary staffing agency in Tampa, has been arrested for allegedly running an organized workers’ compensation fraud scheme. Preferred Staffing’s owner misled clients into believing that his company was a licensed professional employer organization (PEO) and could provide workers’ compensation insurance coverage. Employers were reportedly charged more than $130,000 for workers’ compensation insurance and other services that were never provided.

For more information, contact: Leonard T. Jernigan, Jr. Adjunct Professor of Workers’ Compensation N.C. Central School of Law The Jernigan Law Firm 2626 Glenwood Avenue, Suite 330 Raleigh, North Carolina 27608 (919) 833-0299 @jernlaw

Worker Privacy Concerns : Employers’ Access to Employees’ Prior Worker’s Compensation Claims

Republican legislators are feeling their oats these days. Throughout the Midwest, legislators are depriving workers of collective bargaining rights and trying to restrict workers’ rights in workers’ compensation claims.

In Missouri, workers’ compensation legislation was recently proposed that would have permitted an employer to provide a potential hire’s name and Social Security number so an employer could identify the potential employee’s prior workers’ compensation claims and the status of those claims. The Missouri Division of Workers’ Compensation estimated an online data base that would include over a half million claim records with over 10,000 records added each year.

To his credit, Democratic governor Jay Nixon vetoed this proposed online data base which would allow businesses to check a prospective employee’s workers’ compensation claims. He said it was “an affront to the privacy of our citizens and does not receive my approval.” As expected, supporters of the workers’ compensation data base (employers primarily) said the legislation would speed the hiring process and help bosses and workers. Regularly, information about workers’ compensation claims is available by written request and takes about two weeks to arrive.  Supporters of the legislation indicated the law was “preventing workers’ compensation abuses.”

Wisconsin’s workers’ compensation records are subject to Wisconsin public records law, except for records identifying an employee’s name, injury, medical condition, disability, or benefits – which are confidential.  Authorized requestors are limited to parties of the claim (the employee, the employer, and the insurance carrier), an authorized attorney or agent, a spouse or adult child of a deceased employee. Workers’ Compensation Division staff may provide limited confidential information regarding the status of claims to a legislator or government official on behalf of a party. In addition, workers’ compensation staff are not permitted by law to conduct a random search to determine if other injuries have been reported.

If the requestor is the same employer or insurance carrier involved in a prior injury, then access will be allowed. If the requestor is a different employer or insurance carrier but they make a reasonable argument that the prior injury and the current injury are related, access may be allowed. For example, the Department considers injuries “reasonably related” if the two injuries involve the same body areas. 

Simply put, in Wisconsin, at least for the present, claimant information is confidential and not open to the public, other than to the parties to a current claim.

Voter Fraud / Worker’s Comp Fraud Same Scare Tactics

Studies indicate that employee worker’s compensation fraud is minimal

I’ve said several times in this blog that I view most news through the prism of a lawyer represented injured workers. This morning’s headline noted “Democrats Reject Fraud Tales – Say Make Voting Easier”. Republicans have focused on the voter fraud issue in an attempt to limit voting from those who they assume will vote against them (employees, poor people, people of color). Republicans have resisted efforts at mandatory early voting periods and same day registration to make it easier to cast ballots. Their argument is eerily similar to the scare tactics employed by employers and insurers in worker’s compensation fraud. 

Studies indicate voter fraud throughout the United States is virtually absent.

However, statistic belie these claims. Studies indicate voter fraud throughout the United States is virtually absent. In the same manner, employers and insurers routinely harp on the issue of employee worker’s compensation fraud (alleged malingering, etc.) and studies also indicate that employee worker’s compensation fraud is minimal at best (in Wisconsin studies suggest less than one-sixth of one percent). On the other hand, employer fraud (misreporting classifications of employees, classifying employees as Independent Contractors rather than employees) is rampant and costs the industry millions of dollars.