Category Archives: Legislation

What’s the Matter With Kansas (a/k/a North Carolina)? – Part 2

In reviewing  workers’ compensation  legislation since 2010,  when the conservative majority took over the government in North Carolina, in Part I it was noted that Deputy Commissioners (administrative law judges) will lose their job security, effective July 1, 2015, and that insurance policies can be cancelled easier to help out general contractors, but what else has been passed?

Previously, if a worker was totally disabled for life he got lifetime disability (recognizing that there is no cost of living adjustment in future years and there is a cap on the dollar amount of  weekly benefits he could get). In 2011 the legislature limited benefits to 500 weeks (9.6 years). Brain injuries and other catastrophic injuries can continue beyond 500 weeks, but if the employee is still disabled and outside these exceptions, what happens? The insurance company is off the hook, and the taxpayer starts paying the price of the injury through social programs. The employer also gets a 100% credit on workers’ compensation for any Social Security retirement benefit the worker may receive. 

An insurance company can now seek an “independent” medical exam, even though the claim  has been denied. If an employee wants to be seen by a physician of her choice to review a permanent disability determination made by the insurance company’s selected physician, she can do so but the Commission is directed by legislation to “either disregard or give less weight to” any opinions that are not related to the impairment issue. The 2011 legislature required the Industrial Commission to review its administrative rules and after spending a year doing so, all but three of the rules were “disapproved” by the 2013 legislature. The process will now start over. The legislature has also made it more difficult for the employee to obtain documents from the employer by legislating that a subpoena for documents shall not issue less than 30 days prior to the hearing date. A process that is supposed to be “as summary and simple as reasonably may be” is now full of traps for unsophisticated employees (and their attorney, if they have one).

What's the Matter With Kansas (a/k/a North Carolina)?

What's The Matter With Kansas?In 2004 Thomas Frank, a journalist and historian, wrote a book entitled “What’s the Matter With Kansas?” It detailed the rise of political conservatives who obtained power by using hot button social issues, then passed legislation that worked against the economic interests of the vast majority of the citizens of Kansas. North Carolina has become the new Kansas. Conservative Republican legislators took control in 2010 and a Republican Governor, Pat McCrory, joined them in 2012. What has happened in the field of workers’ compensation with this new majority?

On August 23, 2013 Governor McCrory signed into law new legislation (HB 74) which removed Industrial Commission judges (Deputy Commissioners) from the State Personnel Act, effective July 1, 2015. These judges hear the initial claims of injured workers and in 2015 they will no longer be protected from being hired and fired “at will.” It is quite apparent that political interests will be looking over their shoulders as they make decisions about compensation and medical treatment for injured employees. Most of the public seems to be unaware of this significant alteration of the judicial system as it relates to workers’ compensation claims.

The 2013 legislature made it easier for workers’ compensation insurance companies to cancel policies, and for general contractors to escape liability when they failed to get a certificate of insurance from a sub-contractor. Several appellate cases had previously held that if a green-card receipt from a registered notification of cancellation could not be produced by the insurance company, the policy would still be in effect. If there is no insurance coverage for a seriously injured employee, who picks up the bill? Medicaid, Medicare and Social Security (in short, the U.S. taxpayer) gets stuck. North Carolina, unlike most other states, has no uninsured employers’ fund.  It’s just tough luck for those folks who legitimately get injured on the job but who have an employer who didn’t get required insurance.  An investigative report in 2011 indicated there are as many as 30,000 uninsured employers in this state, yet nothing has been done legislatively or administratively to address this problem.

Since 1929 the overriding principle of the Workers’ Compensation Act in North Carolina has been to provide injured workers with limited benefits, but speedy medical care and a prompt resolution of the claim. However, the system in North Carolina is becoming much more complex, time consuming and expensive, and the tinkering with the system seems never–ending by the conservative majority, which clearly seems to favor big business and insurance interests over the injured worker or the taxpayers who pick up bills that should be covered by insurance. Part II of this blog will discuss other legislative changes made since 2010. Stay tuned.

Changes to Medical Motions in NC: North Carolina Workers’ Compensation Bill (SB 174)

North Carolina State Legislative Office Building

This week Senate Bill 174 passed the House Committee with some changes that preserve the rights of injured workers to have telephone hearings to get their benefits restarted and medical treatment expedited. For at least the past five years, injured workers have had the right to have emergency medical and urgent medical issues (i.e. surgery approval or treatment approval) heard quickly before the Industrial Commission. Usually a telephone hearing was scheduled within five days of the original motion and a final order was filed within two weeks of the original motion!

This was a great benefit to injured workers and helped restore them to their pre-injury condition. Physical therapy orders and medical records were considered by the Deputy Commissioners and a ruling was rendered. Thus, not only was this procedure good for injured workers, it was good for business too because it helped workers get the needed medical treatment as soon as possible and back to work.

Senate Bill 174 initially sought to curtail these medical motions significantly. However, after full discussion from both sides of the table, a compromise was reached. Although the expedited medical motion process has changed, we are very glad that this process is still available to injured workers. The final bill will be voted on by the House and Senate in the near future.

Thanks to everyone who contacted their North Carolina House representatives to discuss this bill.

$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.

Should Genetic Medical Information Be Given to Workers' Compensation Insurance Companies?

Federal law provides that employers with 15 or more employees cannot discriminate against employees because of genetic information.

Under a 2009 Federal law called GINA (the Genetic Information Nondiscrimination Act), employers with 15 or more employees cannot discriminate against employees because of genetic information. That information may include a past or present medical history (for example: breast cancer, diabetes, depression, or colon cancer) of family members.  GINA prohibits disclosure of this sensitive information by employers and prohibits the employer from even making a request for such information. If they have this information, it must be kept in a file that is separate from the regular personnel file.

The EEOC (Equal Employment Opportunity Commission) has made regulations, effective January 10, 2011, to enforce this federal statute and allows an action for damages, including punitive damages, reinstatment and back pay, and reasonable attorney’s fees.

In the workers’ compensation setting, this information is sometimes gathered by medical experts conducting independent medical exams, by nurse case managers who may seek to find out any and all medical information about the injured worker’s family as well as the injured worker, or by family physicians who have made non-work-related entries in the medical records.  However, GINA has allowed an exception to the overall thrust of the legislation by stating that if the information is relevant to the workers’ compensation claim, it can be disclosed. The legislation gives no definition of the term “relevant” and makes the interaction between the health care provider, the carrier, the employer and the employee complicated, to say the least. Lawyers who represent employees and employers should be aware of GINA and protect sensitive genetic information from disclosure, and claimants should make sure their physician is aware of it as well.

 

 

NC Legislation on Compliance – Something Strange is Happening Here

Last Friday (June 22, 2012) the NC Legislature passed an insurance bill (HB 237), allegedly to help the N.C. Industrial Commission track employers to make sure they obey the law and purchase workers’ compensation insurance when they have three or more employees. This bill keeps information confidential that is sent from the Rate Bureau (the private body that tries to set insurance rates for workers’ compensation and other insurance premiums in this state) to the N.C Industrial Commission. It adds the Industrial Commission to an existing statute (NCGS Section 58-36-16) that allows information about an employer’s experience rate modifier and other sensitive information from the Rate Bureau that is already being sent to the Department of Labor.

With as many as 30,000 employers with no insurance (according to a recent article in the News and Observer, and this information was revealed by gaining access to these public records) there is now more reason than ever to maintain the public status of this information. So, why would the legislature want to make this information exempt from public disclosure?

It makes sense that the Industrial Commission keep this information confidential and not allow it to become a “public record.” In North Carolina we have a law (NCGS Section 132-1) that says any document concerning the transaction of business within a government agency should be open to the public, unless otherwise specifically provided by law, since such documents are the “ property of the people.”

The strange part of the bill is another section (NCGS Section 58-36-17) that that says the Rate Bureau shall provide information indicating “the status of workers’ compensation insurance coverage” and that this information shall also be kept confidential and specifically exempted from the public records law. The problem is that another statute already requires employers to provide this information directly to the Industrial Commission under NCGS Section 97-94(a), and that information is currently not exempt from the public records law.

There is nothing sensitive about it. It simply provides proof that the employer has insurance, and that is key information for the public to have. With as many as 30,000 employers with no insurance (according to a recent article in the News and Observer, and this information was revealed by gaining access to these public records) there is now more reason than ever to maintain the public status of this information. So, why would the legislature want to make this information exempt from public disclosure? Something strange is happening here. The legislation is on the Governor’s desk to be signed. It will be interesting to see if she signs it.

NIOSH Acts To Prevent Lifting Injuries For Home Healthcare Workers

Today’s post comes to us from my colleague Jon Gelman of New Jersey.

The National Institute for Occupational Health and Safety (NIOSH) has published educational information to prevent musculoskeletal injuries at work. Injuries caused by ergonomic factors have been a major issue of the Federal government for decades and have been the basis for repetitive trauma motion claims for workers’ compensation benefits. While the Clinton-Democratic administration had advocated strongly for ergonomic regulations, the Bush-Republican administration took action to reject the reporting of ergonomic injuries to OSHA.

A work-related musculoskeletal disorder is an injury of the muscles, tendons, ligaments, nerves, joints, cartilage, bones, or blood vessels in the arms, legs, head, neck, or back that is caused or aggravated by work tasks such as lifting, pushing, and pulling. Symptoms include pain, stiffness, swelling, numbness, and tingling.
Lifting and moving clients create a high risk for back injury and other musculoskeletal disorders for home healthcare workers. Continue reading

Can the Famous Stanford Prison Experiment Explain Arbitrary Benefit Denial by Insurance Adjusters?

Stanford Prison Experiment Guard

A Stanford student playing the part of a guard

Over the years I’ve seen a handful of workers’ compensation adjusters who seem to forget that injured employees are real people who have families and are going through a difficult time, physically and psychologically, because of a workplace accident.

Adjusters have complete authority over people who are subject to their control. In 1971, a Stanford psychology professor wanted to answer the question: What happens if you take good people and give some of them absolute power over others?

What happens if you take good people and give some of them absolute power over others?

He set up an experiment to see how Stanford students would behave if they suddenly found themselves in a prison, either as guards or as prisoners. The basement of the psychology building was transformed into a prison, and students who volunteered for the experiment were randomly assigned as a prisoner or a guard.

The results were horrifying Continue reading