Monthly Archives: December 2012

The Costs and Complications of The Other Disease on Workers' Compensation Claims

Source: NCCI

Today’s post comes from guest author Jon Gelman from Jon Gelman, LLC – Attorney at Law.

Employers and their insurance companies are responsible for the treatment of all medical conditions that arise from an industrial accident or exposure. A recent study published by The National Council on Compensation Insurance (NCCI) concludes that costs are soaring as medical conditions become more complicated by other conditions known as comorbidity diagnoses. These conditions are frequently: obesity, hypertension, drug abuse, chronic pulmonary conditions, and diabetes.

While the average medical cost for a workers’ compensation claim is approximately $6,000, the medical cost of an individual claim can be a few hundred dollars or millions of dollars. In 2010, an NCCI study found that claims with an obesity comorbidity diagnosis incurred significantly higher medical costs than comparable claims without such a comorbidity diagnosis. Relative to that study, this study expands the number of comorbidities examined and provides additional information on both the types of claimants receiving comorbidity diagnoses and the types of providers submitting comorbidity diagnoses.”

KEY FINDINGS

  • The share of workers’ compensation claims with a comorbidity diagnosis nearly tripled from Accident Year 2000 to Accident Year 2009, growing from a share of 2.4% to 6.6%. Claims with a comorbidity diagnosis have about twice the medical costs of otherwise comparable claims.
  • Comorbidity diagnoses for hypertension are the most prevalent of those investigated.
  • The initial comorbidity diagnosis tends to occur early in the life of a claim.
  • Hospital and physician visits account for a majority of visits resulting in a recorded comorbidity diagnosis.
  • Only a small portion of visits result in the recording of a comorbidity diagnosis.

View complete report: Comorbidities in Workers Compensation

 

 

$97 Million In Fraud: 2012's Top 10 Workers' Compensation Fraud Cases

Over the past few years, many states have aggressively gone after workers’ compensation fraud (whether it’s the employee or the employer) and the amount of employer fraud being discovered continues to be staggering, notwithstanding these efforts.

Legitimate business owners that pay for workers’ compensation, as required by law, are at a competitive disadvantage with those who cheat the system, and when people suffer a workplace disability and have no insurance local businesses that provide goods and services feel the pain along with health care providers who cannot get properly paid for their services. The cost of medical care and disability ends up being shifted to the taxpayer through Social Security, Medicare and Medicaid, and in states where compliance is not vigorously enforced a culture of cheating continues. The top ten cases for 2012 are listed below.

 

2012 TOP TEN WORKERS’ COMPENSATION FRAUD CASES
Total Fraud: $97,466,500.00

1. ‘Operation Dirty Money,’ Stings Workers’ Comp Fraud Check Cashing Scheme

Florida: July 27, 2012

CFO Jeff Atwater and Broward Sheriff Al Lamberti announced multiple arrests in Operation Dirty Money.

Multiple arrests were announced in Florida’s joint task force’s ‘Operation Dirty Money,’ which led to the arrest of alleged ringleader Hugo Rodriguez, owner of the Oto Group, Inc., and seven other individuals. Mr. Rodriguez was the facilitator of 10 known shell companies that funneled in excess of $70 million in undeclared and undetected payroll through different money service businesses.

By using shell companies, Rodriguez was able to run a large construction operation and avoid paying the cost of workers’ compensation coverage, leaving employees at risk and scamming legitimate businesses.

 

2. Firms Face Charges for Skipping Workers’ Comp Payments

Ohio: May 13, 2012

Thousands of Ohio companies violated state law by not paying their most recent workers’ compensation premium, which can drive up insurance costs for businesses that follow the rules, a Dayton Daily News analysis found.

The bureau identified about 41,247 private employers in the state that failed to report their payroll data and submit premium payments by the deadline. As of May, more than 12,200 accounts remain outstanding, and those companies owe an estimated $5.6 million in premiums.

 

3. Case Proves Employee Leasing too Good to be True

Texas: July 10, 2012

$4,466,500.00 was awarded in a Texas court against a staffing agency and its workers’ compensation insurance company. Jackson Brothers Hot Oil Service hired Business Staffing, Inc., (BSI) in 1999 and required BSI to have workers’ compensation insurance for its leased employees. BSI had 150 client companies with 2,000 employees.

BSI bought a policy from Transglobal Indemnity for a total premium of $4,100.00 to cover all its employees. After failing to pay the medical bills of a 27-year-old oil field worker who was in an explosion and had 18 surgeries, the employee and Jackson Brothers sued BSI and Transglobal for fraud. Neither Transglobal (who had its corporate headquarters in the Turks and Caicos Islands) nor BSI had a license to conduct insurance business in Texas.

4. Business Owner Faces Insurance-fraud Charges

California: May 2, 2012

George Osumi was indicted on numerous felony counts.

Construction business owner George Osumi of Irvine, California was indicted on numerous felony counts of misrepresenting facts to the State Compensation Insurance Fund, among other charges.

From December 2001 to March of 2006, Mr. Osumi committed workers’ compensation premium fraud by reporting his payroll to SCIF at just over $1 million, under-reporting over $3.5 million in payroll. This fraud resulted in a loss of over $814,000.00 in premium owed to the insurance fund.

5. Watertown Roofing Company and its Owners Plead Guilty and are Sentenced for Labor Violations

Massachusetts: January 11, 2012

Newton Contracting Company misclassified half of its workforce as subcontractors.

The Massachusetts Insurance Fraud Bureau discovered that the company, Newton Contracting Company, Inc., owned by Shaun Bryan and Antoinette Capurso-Bryan, misclassified half of its workforce as subcontractors, as well as failing to disclose to auditors more than $3.4 million of their company’s misclassified subcontractor payroll during its annual workers’ compensation audits.

6. 7-Year Sentence in $3.1 Million Fraud Case

California: November 30, 2012

Steven Morales, 65, of Wildomar, CA was convicted and sentenced to seven years in prison for his part in a $3.1 million workers’ compensation scheme. His son Brian was also convicted and sentenced to 4 years in prison. Morales and his son had set up a sophisticated system of shell companies to hide payroll and avoid paying workers’ compensation premiums.

 

7. Construction Company President Accused of Payroll Fraud

Florida: March 29, 2012

Randall Seltzer, president of Navarre Industries, Inc., was charged with multiple felony counts, including workers’ compensation fraud. An investigation by Florida’s Department of Financial Services’ Division of Insurance Fraud revealed that Seltzer systematically and intentionally under-reported his corporation’s true payroll to his insurance carrier. The department’s Division of Workers’ Compensation issued the company two stop-work orders within a five-year period.

Seltzer allegedly established a shell corporation in 2011 to intentionally violate the stop-work orders and continue operating his construction business illegally. If convicted, Seltzer could face up to 30 years in prison and pay over $2.8 million in restitution.

8. CFO Jeff Atwater Announces Arrest of Owner of Fake Company for Creating Fraudulent Insurance Certificates and Avoiding Millions in Premiums

Florida: April 13, 2012

Yucet Batista allegedly used a shell company to commit large-scale fraud.

Yucet Batista was arrested for allegedly creating more than 250 fraudulent certificates of insurance to help uninsured contractors avoid $2.1 million in workers compensation premiums.

Batista created the company and obtained the workers’ compensation insurance policy for the purpose of “renting” it, or making it available to dozens of uninsured subcontractors for a fee.

 

9. Audits Uncover Almost $1.2 million in Workers’ Compensation Violations at Boston Marriott Project

Massachusetts: September 4, 2012

In 12 audits conducted by the Joint Enforcement Task Force on the Underground Economy and Employee Misclassification and the Executive Office of Labor and Workforce Development, it was discovered that there were $584,249.00 in misclassified 1099 wages and $584,287 in unreported W-2 earnings, for a total of $1,171,536.00 in unreported wages by subcontractors on the Marriot renovation project.

Six companies misclassified workers as contractors rather than employees, and seven companies failed to report wages. Among the worst of the offenders were one company that misclassified 28 workers and failed to report over $410,000.00 in wages; another failed to report $462,081 in W-2 wages.

10. Inn Owners Facing Workers’ Compensation and Insurance Fraud Charges

California: June 13, 2012

Owners of the historic Brookdale Inn and Spa are facing trial on charges of falsifying wage information to obtain lower insurance premiums.

The owners of historic Brookdale Inn and Spa, Sanjiv and Neelam Kakkar, are facing trial on charges that they falsified wage information to obtain lower insurance premiums. According to records, the couple paid approximately $800,000 less in insurance premiums than they should have over a period of several years.

Are You Suffering From Symptoms Of Chronic Stress? Take the Stress Test!

Today’s post comes from guest author Kit Case from Causey Law Firm.

Signs of Chronic Stress:

Cognitive symptoms

•          Memory problems

•          Inability to concentrate

•          Poor judgment

•          Pessimistic approach or thoughts

•          Anxious or racing thoughts

•          Constant worrying

Emotional symptoms

•          Moodiness

•          Irritability or short temper

•          Agitation, inability to relax

•          Feeling overwhelmed

•          Sense of loneliness and isolation

•          Depression or general unhappiness

Physical symptoms

•          Aches and pains

•          Diarrhea or constipation

•          Nausea, dizziness

•          Chest pain, rapid heartbeat

•          Loss of sex drive

•          Frequent colds

Behavioral symptoms

•          Eating more or less

•          Sleeping too much or too little

•          Isolating oneself from others

•          Procrastinating or neglecting responsibilities

•          Using alcohol, cigarettes, or drugs to relax

 

Take the Stress Test for Adults:

Thomas Holmes and Richard Rahe in 1967, examined the medical records of over 5,000 medical patients as a way to determine whether stressful events might cause illnesses. Patients were asked to tally a list of 43 life events based on a relative score. A positive correlation was found between their life events and their illnesses.

Their results were published as the Social Readjustment Rating Scale (SRRS), known more commonly as the Holmes and Rahe Stress Scale.

To measure stress according to the Holmes and Rahe Stress Scale, the number of “Life Change Units” that apply to events in the past year of an individual’s life are added and the final score will give a rough estimate of how stress affects health.

Note: the table, below, is from the Wikipedia page on this subject.  For a fee of $5.00, you can go directly to Dr. Rahe’s website and obtain the full test materials as well as background information and details of this and other products and services available.

To measure stress according to the Holmes and Rahe Stress Scale, the number of “Life Change Units” that apply to events in the past year of an individual’s life are added and the final score will give a rough estimate of how stress affects health.

Life event Life change units
Death of a spouse 100
Divorce 73
Marital separation 65
Imprisonment 63
Death of a close family member 63
Personal injury or illness 53
Marriage 50
Dismissal from work 47
Marital reconciliation 45
Retirement 45
Change in health of family member 44
Pregnancy 40
Sexual difficulties 39
Gain a new family member 39
Business readjustment 39
Change in financial state 38
Death of a close friend 37
Change to different line of work 36
Change in frequency of arguments 35
Major mortgage 32
Foreclosure of mortgage or loan 30
Change in responsibilities at work 29
Child leaving home 29
Trouble with in-laws 29
Outstanding personal achievement 28
Spouse starts or stops work 26
Begin or end school 26
Change in living conditions 25
Revision of personal habits 24
Trouble with boss 23
Change in working hours or conditions 20
Change in residence 20
Change in schools 20
Change in recreation 19
Change in church activities 19
Change in social activities 18
Minor mortgage or loan 17
Change in sleeping habits 16
Change in number of family reunions 15
Change in eating habits 15
Vacation 13
Christmas 12
Minor violation of law 11

Score of 300+: At risk of illness.

Score of 150-299+: Risk of illness is moderate (reduced by 30% from the above risk).

Score 150-: Only have a slight risk of illness.

 

Recommended methods for relieving chronic stress include exercise (which can be modified to accommodate physical restrictions after an injury), meditation, music therapy, breathing techniques, and such simple things as companionship – from a pet, friend or family member.

 

Holding Individuals Accountable For Workplace Safety Violations

British Petroleum (BP) supervisors Donald J. Vidrine and Robert Kaluza were indicted on manslaughter charges in the deaths of 11 fellow workers in connection with the 2009 Deepwater Horizon explosion in the Gulf of Mexico. David Rainey, a BP deepwater explorer, was charged with obstruction of Congress and lying about the size of the spill. These indictments were in addition to a record $4.5 billion in criminal fines that BP agreed to pay for the disaster, which will be paid out over 5 years.

 Mr. Vidrine and Mr. Kaluza were negligent in their supervision of key safety tests performed on the drilling rig, and they failed to phone engineers on shore to alert them of problems in the drilling operation. These charges carry maximum penalties of 10 years in prison on each “seaman’s manslaughter” count, 8 years in prison on each involuntary manslaughter count and a year in prison on a Clean Water Act count. Mr. Rainey obstructed Congressional inquiries and made false statements by underestimating the flow rate to 5,000 barrels a day even as millions were gushing into the Gulf. He faces a maximum of 10 years in prison.

 By charging individuals, the government was signaling a return to the practice of prosecuting officers and managers, and not just their companies, in industrial accidents where reckless and wanton conduct is involved. The practice of charging individuals was more prevalent in the 1980s and 1990s but has recently been a rare occurrence, with company fines being the only penalty sought. Some wonder if the $4.5 billion criminal settlement is enough to penalize a corporation after 11 people were killed, and that if a culture of  disregard for safety exits in a corporation that is “too big to fail” then the only way to stop that culture is to send those who knew about it to jail. We shall see. 

 

Workplace Violence and Sandy Hook Elementary School

In light of the horrific elementary school shootings in Newtown, Connecticut last week it may be time to re-evaluate workplace violence, which seems to be increasing at an alarming rate. Technically, workplace violence is any act where an employee is abused, threatened, intimidated, or assaulted in the workplace. It can include threats, harassment, and verbal abuse, as well as physical attacks by someone with an assault rifle. 

Two million American workers are victims of workplace violence every year. What’s worse is that workplace violence is one of the leading causes of job-related deaths in the United States. Last year, for example, one in every five fatal work injuries was attributed not to accidents but to workplace violence,  and  some employees are at an increased risk for harm. For example, employees who work with the public or who handle money are more at risk (i.e. bank tellers, pizza delivery drivers, or social workers). According to the 2011 Census of Fatal Occupational Injuries by the U.S. Dept. of Labor, robbers were found to be the assailants in almost a third of homicide/workplace violence cases involving men, whereas female workers were more likely to be attacked by a relative (i.e. former spouse or partner) while at work.  

Preventing workplace violence is a challenging task and OSHA advises employers to create a Workplace Violence Prevention Program. Creating a safe perimeter for employees is crucial. Likewise, having an emergency protocol in place should reduce the number of fatalities in an attack, and that’s exactly what happened at the Sandy Hook Elementary School in Connecticut when the school’s protocol saved the lives of many children.

I Was Offered a Severance Agreement. Now What?

If you are given a severance agreement, consult with an attorney

Today’s post comes from guest author Jon Rehm from Rehm, Bennett & Moore.

Federal law requires that many employees who are offered severance agreements be advised by their employers to consult with an attorney before signing a severance agreement. If you have a severance agreement, you should consult with a knowledgeable employment-law attorney as soon as possible. Almost all severance agreements have a short time period, usually no more than 21 days, for the employee to accept the agreement. Here are some of the factors to consider in whether to accept a severance agreement.

If you have a severance agreement, you should consult with a knowledgeable employment-law attorney as soon as possible.

A. The value of the certainty of a severance agreement versus the uncertainty of a wrongful-termination suit. This requires an attorney to evaluate the strength of any possible employment-law claims you might have against your former employer. In many cases, the value of a certain amount of guaranteed severance pay is worth more than the uncertain outcome of a wrongful-termination claim that might not resolve for at least a year. Certain types of unfair-employment practices create more fear of litigation for employers than others. Employers are often willing to pay severance in order to avoid the expense and uncertainty of litigation. This fear can give employees some leverage in negotiations, which could lead to an increase in severance pay. However, every situation is different.

If an employee decides to reject severance and pursue a wrongful-discharge claim, a knowledgeable employment-law attorney can advise you on your chances of receiving unemployment benefits. Employers, especially smaller ones, will often fight unemployment claims if there are bad feelings surrounding a termination. If an employee is found to have been fired for misconduct, they are potentially losing many thousands of dollars in unemployment benefits. Before you reject severance, you should know your chances for receiving unemployment benefits.

B. A knowledgeable employment attorney may be able to review the severance agreement and find contract provisions to offer the employer in order to increase the severance pay. The fear of litigation is a stick, but sometimes employees can offer carrots in the form of favorable contract language to increase severance benefits.

C. Severance pay is not the only consideration in a severance agreement. A standard severance agreement often includes a provision that the employee is eligible for COBRA. COBRA requires that the employee pay the entire premium for health insurance. Sometimes employers are willing to pay that COBRA premium for a period of time.

Another possible severance benefit is the guarantee of a positive reference. A severance agreement is a contract releasing any claims – usually with the exception of workers’ compensation (see below) – by the employee against the employer. However, if the employer breaches the contract in regards to a positive reference, that can give the employee a breach-of-contract claim if the severance agreement is drafted properly. Many companies are willing to check out what employers are saying about former employees for a reasonable fee, so employees can enforce contract provisions regarding positive references

D. Workers’ Compensation. The laws regarding settling a workers’ compensation claim are very precise. I have never seen a severance agreement that creates an enforceable release of a workers’ compensation claim. However a savvy employer may be able to release your workers’ compensation claim through a severance agreement under recent changes in Nebraska’s workers’ compensation law. This is why you should consult with a lawyer who is familiar with fair employment and workers’ compensation law. This is especially true if you have an ongoing workers’ compensation claim against your employer.

E. You still might be able to bring a wrongful termination suit even if you signed a severance agreement. The Equal Employment Opportunity Commission has provided guidelines about when a severance agreement is not binding on the employee. If you feel you were railroaded into signing a severance agreement, it still might be worth your time to consult with a knowledgeable employment attorney.

Does A Pre-Existing Injury Mean I Can't File A Claim?

A preexisting injury does not stop a claim

Today’s post comes from guest author Matthew Funk from Pasternack Tilker Ziegler Walsh Stanton & Romano.

QUESTION: I HAVE A PREEXISTING INJURY TO THE SAME BODY PART I HURT AT WORK. DOES THIS MEAN I CANNOT CLAIM WORKERS COMPENSATION BENEFITS?

ANSWER: A PREEXISTING INJURY DOES NOT STOP A CLAIM.  FILE THAT CLAIM!    

Joe Worker was a high school quarterback.  Until that knee injury sidelined his dreams of playing for the NFL.  So he became one of the best construction workers New York City could ask for.  Until one day, on the job, Joe tripped over stuff somebody should have put away, and landed on that bad knee. Now, if his knee hadn’t been so screwed up in the first place, Joe would have been fine.  He would have dusted himself off and gone on with the day.  But the old injury flared up and Joe was sidelined again.  Joe didn’t know what to do.  It was, after all, his bad knee that made things worse, not a minor trip and fall on the job.  So he hesitated filing a new claim.  What should he do?

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From Hand to Mouth – Workers Need to Concerned About Chemical Safety

The inadvertent and dermal conceptual model

Today’s post comes from guest author Jon Gelman from Jon Gelman, LLC – Attorney at Law.

A recently published a paper about the inadvertent ingestion of chemicals at work from contact between the mouth and contaminated hands or objects highlights how dangerous exposure could occur at work.  The inadvertent ingestion is a potentially significant source of occupational exposure and there needs to be a greater focus on assessment of risks from hand-to-moth contacts and more done to control such risks.

“The latest research is part of a project to develop a predictive model to estimate inadvertent ingestion exposure. To better understand this route of exposure we developed  a new integrated conceptual model for dermal and inadvertent ingestion. It consists of eight compartments (source, air, surface contaminant layer, outer clothing contaminant layer, inner clothing contaminant layer, hands and arms layer, perioral layer, and oral cavity) and nine mass transport processes (emission, deposition, resuspension or evaporation, transfer, removal, redistribution, decontamination, penetration and/or permeation, and swallowing) that describe event-based movement of substances between compartments (e.g. emission, deposition, etc.). We plan to use the conceptual model to guide the development of predictive exposure models for both the dermal and the inadvertent ingestion pathways.”

Gorman Ng M, Semple S, W Cherrie J, et al. The Relationship Between Inadvertent Ingestion and Dermal Exposure Pathways: A New Integrated Conceptual Model and a Database of Dermal and Oral Transfer Efficiencies. Ann Occup Hyg Published Online First: 23 July 2012. doi:10.1093/annhyg/mes041

Cherrie JW, Semple S, Christopher Y, et al. How important is inadvertent ingestion of hazardous substances at work?Ann Occup Hyg 2006;50:693–704.

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For over 3 decades the
 Law Offices of Jon L. Gelman  1.973.696.7900  jon@gelmans.com have been representing injured workers and their families who have suffered occupational accidents and illnesses.

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