Category Archives: Workplace Injury

2014 Top Ten Workers’ Compensation Fraud Cases

Number Value
Non-Employee Fraud Cases 9 $ 74,876,000.00
Employee Fraud Cases 1 $ 450,000.00
Total $ 75,326,000.00

Five of the top ten fraud cases in 2014 are from California. The other five cases are from Florida, Texas, Arizona, Washington and Georgia. As usual, non-employee fraud cases dominated the list and the dollar amounts are staggering, led by the $36 million over-billing case out of southern California. An emerging issue is the misclassification of workers, and we will likely see more of these cases in 2015 as enforcement steps up in this area.

1. (California) Medical Equipment Company Overbills $36 Million (3/17/14)

The owners of Aspen Medical Resources were indicted in on 49 felony counts of fraud.

The owners of Aspen Medical Resources were indicted in on 49 felony counts of fraud.

The owners of Aspen Medical Resources had all their assets seized and put into receivership by the Orange County District Attorney. They were indicted in on 49 felony counts of fraudulent overbilling of $36 million for hot-cold physical therapy machines. Although these machines retail between $250 and $500 Aspen often billed Southern California workers’ compensation claims departments thousands of dollars each time a machine was rented.

 

2. (California) 15 Medical Professionals Indicted in $25 Million Scheme – Small Child Dies (6/24/14)

Ahmed Kareem, one of 15 doctors accused of participating in a workers’ compensation scam.

Dr. Ahmed Kareem   is accused of participating in a workers’ comp scam.

Fifteen doctors, pharmacists and other medical professionals in Southern California were charged in a $25 million workers’ compensation scam which was linked to the death of a baby. Prosecutors alleged insurance fraud and conspiracy in the 44 count indictment which detailed that the head of a workers’ compensation claims management firm hired pharmacists to produce a pain-relief cream and then gave kickbacks to the doctors that prescribed it and conspired to submit phony claims. A 5-month old boy ate the cream and died when his mother, who was using the prescribed cream for back and knee pain, allowed her son to suck her fingers to sooth him. The next morning he was found dead and tests showed he had ingested lethal amounts of drugs in this cream.

 

 

3. (California) Lowe’s Settled Independent Contractor Misclassification Case for $6.5 Million (7/3/14)

Lowe’s misclassified its installers as independent contractors, rather than employees.

Lowe’s misclassified its installers as independent contractors, rather than employees.

Over 4,000 “Lowe’s professionals” in California are members of a class action alleging that Lowe’s misclassified its installers as independent contractors, rather than employees, thus depriving them of a variety of employee benefits, from workers’ compensation insurance coverage to 401(k) plan participation. Lowe’s, without admitting liability, recently settled the case after mediation for a sum that could be as much as $6.5 million. The plaintiffs claimed that Lowe’s retained and exercised control over their work by requiring them to identify themselves as working for Lowe’s, wear Lowe’s hats and shirts, and attend training by Lowe’s.

 

4. (California) Paving Company Cheats System of $4 Million (6/19/14)

Sabas & Lucia Trujillo

Sabas & Lucia Trujillo face criminal charges for workers’ comp’ fraud.

Five owners (Sabas Trujilo, Lucia Trujilo, Rick Trujilo, Laura Fitzpatrick and Alex Trujilo), operators and employees of a Corona, California based paving company are facing criminal charges for alleged wage theft, premium fraud, workers’ compensation and payroll fraud. The Riverside County District Attorney’s Office alleges that the individuals’ criminal actions enabled them to illegally obtain about $4 million. After launching an investigation, the state obtained search warrants for both companies, seizing computers and bank, payroll and other documents. The state conducted several wage audits on several hundred projects, which ultimately led to the filing of criminal charges.

 

5. (Florida) False Insurance Certificates Check Cashing Scheme Defrauds Insurance Company of $1 Million (11/18/14)

Arturo Santos Zuniga paid laborers cash to avoid paying workers' comp'.

Arturo Santos Zuniga paid laborers cash to avoid paying workers’ comp.

Arturo Santos Zuniga, who also went by the name David Hernandez, was busted for paying laborers in cash to avoid paying workers’ compensation insurance premiums. Zuniga paid a North Lauderdale man to create and insure a fake or “shell” company, Behar Services Incorporated, and “rented” out insurance certificates to uninsured subcontractors in South Florida. Payments to the uninsured subcontractors were made through checks to the fake company, which were then cashed at check cashing stores. Behar Services Incorporated got its insurance policy by saying it had 10 employees doing carpentry and office work with an annual payroll of $210,000. The annual premium was about $26,500. Law enforcement financial reports show that just in the months from July to October, more than $7.3 million had been cashed out at check cashing stores to Behar Services Incorporated and/or the North Lauderdale man who started the company. A $7.3 million payroll would have cost more than $1 million more than the existing policy. No estimate of lost tax revenue was given.

 

6. (Texas) Man to Pay $806,000 for Underreporting Payroll to Workers’ Comp Carrier (3/11/14)

Howard Douglas Whiddon of Travis County was ordered to pay $806,000 in restitution.

Howard Douglas Whiddon was ordered to pay $806,000.

Howard Douglas Whiddon was ordered to pay $806,000 in restitution to workers’ compensation insurer Texas Mutual Insurance Co. after pleading guilty to workers’ comp fraud-related charges. He intentionally misrepresented the payroll of a related company, thus lowering his premiums. Mr. Whiddon was sentenced by a Travis County, Texas court to 10 years of deferred adjudication and 160 hours of community service.

 

7. (Arizona) Paul Johnson Drywall Inc. Agreed to Pay $600,000 in Back Wages, Damages and Penalties to 445 Employees (5/19/14)

Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees.

Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees.

Paul Johnson Drywall Inc. classified its workers as “members/owners” instead of employees, which stripped them of workers’ compensation and other protections afforded to employees. The owner, Robert Cole Johnson agreed to take concrete steps to ensure that misclassification of its workforce does not occur again and to pay $556,000.00 in overtime back wages and liquidated damages to at least 445 current and former employees. The employer also agreed to pay $44,000.00 in civil monetary penalties. Investigators found that the drywall contractor violated the Fair Labor Standards Act overtime and record-keeping provisions.

8. (Washington) Summit Drywall, Inc. Ordered to Pay $550,000 in Unpaid Wages and Damages to 384 Workers (2/20/14)

The owner of Summit Drywall, Inc. was ordered to pay damages to 384 employees.

Summit Drywall’s owner was ordered to pay damages to employees.

Thomas Kauzlarich, the owner of Summit Drywall, Inc. was ordered to pay $550,000 in overtime back wages and liquidated damages to 384 current and former employees. An investigation showed that the company violated the Fair Labor Standards Act’s overtime and record-keeping provisions from October 15, 2009 to April 15, 2013. The article did not report the amount of reduced workers’ compensation premiums paid.

 

 

9. (Georgia) Nurse Gets 5 Years in Prison for $450,000 Bogus Workers’ Comp Claims (8/26/14)

A VA nurse from Glenwood, GA, will serve five years in prison for mail fraud and fraudulent claims.

A VA nurse from Glenwood, GA, will serve five years in prison for mail fraud and mailing fraudulent claims.

Loretta Smith, a VA nurse from Glenwood, GA, will serve five years in prison and must repay $450,000.00 in federal funds by filing bogus workers’ compensation claims, pleading guilty to two counts of mail fraud in the mailing of fraudulent claims, in which she received more than $450,000.00. She agreed to forfeit the equivalent of $454,740.06 in cash, real estate and other property. She was also sentenced to three years probation after her release.

 

10. (California) Drywall Company Owners Arraigned on $420,000 in Fraud Charges (12/11/14)

The owners of a defunct drywall company, National Drywall in San Bernardino, CA, were arraigned on charges that they defrauded their workers’ compensation insurance carrier of $260,000.00 and stole $160,000.00 from their workers.

 

Honorable Mention – (Oregon) Uncooperative Hillsboro Businessman Convicted of $481,519 Tax Evasion – Only Gets 30 Days In Jail (9/30/14)

Stephen Nagy engaged in fraudulent schemes to evade payment of payroll taxes.

Stephen Nagy engaged in fraudulent schemes to evade payment of payroll taxes.

Stephen Nagy was the former president of Hillsboro-based S&S Drywall Assemblies. The IRS assessed the company $481,519 in federal employment taxes, penalties and interest between June 2009 and September 2010. Nagy met with the IRS and chose not to comply with the payment plan and engaged in a variety of interrelated fraudulent schemes to evade the payment of the delinquent payroll taxes. Nagy intimidated, manipulated, and threatened the loss of much needed jobs to gain the cooperation of his employees. Special agents of the IRS learned that Nagy had transferred all of S&S Drywall Assemblies income, contracts, receivables and assets to ASM Drywall, Inc. a shell company he created and placed in his sister’s name. The Oregon attorney general prosecuted Nagy in 2011 on allegations of criminal anti-trust and racketeering. He was sentenced to 30 days in jail and five years of supervised probation.

For more information, contact:
Leonard T. Jernigan, Jr.
Adjunct Professor of Workers’ Compensation
N.C. Central University School of Law

The Jernigan Law Firm
2626 Glenwood Avenue, Suite 330
Raleigh, North Carolina 27608
(919) 833-0299
neb@jernlaw.com
www.jernlaw.com
@jernlaw
Blog: www.ncworkcompjournal.com

“Opting Out” of Worker’s Compensation Hurts Workers and Employers (Part 2)

Today’s post comes from guest author Tom Domer, from The Domer Law Firm.

Last week we explained Wisconsin’s rich history of protecting injured workers through its mandatory workers’ compensation system. This week we’ll look at what is happening in Texas and Oklahoma, where it is not mandatory for employers.

Alternative worker’s compensation programs( like that of Texas’—and now Oklahoma— non-subscriber / “Opt Out” scheme) have the potential to significantly reduce workplace safety. Since experience rating is a fundamental component of worker’s compensation insurance systems, the comp system provides economic incentives to employers through reduced insurance costs to companies with reduced injury rates and safe workplaces.  Texas’ “opt out” option  means that an employer can choose to be self insured or become a non-subscriber and opt out of worker’s compensation insurance entirely. Those employers opting out of worker’s compensation systems are not experience rated and there is no economic incentive to reduce workplace injuries and ensure safe work environments for their employees.

Most recently on April 17, 2013 a fertilizer plant exploded in Texas, killing 15 and injuring approximately 200 people. EMS workers, firefighters, and other first responders were among the casualties.  The West Fertilizer Company was approved to have no more than 400 pounds of ammonium nitrate in the plant, but instead, 270 tons were reported to be on site. West Fertilizer failed to inform the Department of Homeland Security of the amount of fertilizer it had. Texas had as well the worst recorded industrial accident in America in 1947 when 3,200 tons of ammonium nitrate resulted in almost 600 deaths and 3,500 injuries.

Texas has the worst work-related fatality rate in the nation.

Texas has the worst work-related fatality rate in the nation. According to the Bureau of Labor Statistics, 433 reported fatalities occurred in 2011 alone in Texas with the highest (4.79 per 100,000 workers) for the last ten years. (Oklahoma is in line to follow). 

Oklahoma’s worker’s compensation measure was signed into law May 5 and it drastically changes how Oklahomans are compensated for on the job injuries. Republican Governor Mary Fallin has tried to change the worker’s compensation system for over 20 years in State politics.  She indicated the bill would reduce costs for businesses. The law changes worker’s compensation system from a judicial to an administrative one, allowing businesses to opt out of the worker’s compensation systems as long as they provide “equivalent” benefits to injured workers. Opponents of the law indicate that it is unfair to injured workers because it will reduce their benefits. The implementation of “equivalent” benefits, and what kind of injuries are covered or uncovered by those who “opt out” of the system is yet to be determined.

Cautionary note to employers: since those employers that “opt out” of worker’s compensation are no longer allowed the benefit of the exclusive remedy provision of worker’s compensation, workers who are not covered by worker’s compensation can sue their employers. For example, in a recent Colorado case where an undocumented worker (who by Statute in Colorado was not covered under worker’s compensation) received over a $1 million verdict against the negligent employer.

http://en.wikipedia.org/wiki/List_of_industrial_disasters

Worker’s compensation systems benefit both employers and workers, and the dangers of opting out of the system means a retreat to harsh industrial conditions, producing  the same kind of inequities  that workers’ comp remedied over a century ago. The situation calls to mind the maxim that those who don’t remember history are doomed to repeat it.

The 12 Things You Must Do If You Are Hurt At Work

Today’s post comes from guest author Paul J. McAndrew, Jr. from Paul McAndrew Law Firm.

Injured workers call me all the time asking me what they need to do to make sure they protect their legal rights.  If you are hurt on the job, whether it is due to an acute traumatic injury (like cutting yourself on a saw), cumulative-trauma injury (like carpal-tunnel syndrome) or some other job-related injury, there are several basic things you should do. If you do not do any of the things on the list below, you may lose your rights under Iowa’s workers’ compensation law. 

Although there may be rare exceptions to this list,  following it will leave you reasonably secure that your rights are protected:

  1. Report the injury. By “injury,” I mean almost any condition including but not limited to (a) an acute traumatic injury, (b) a cumulative-trauma injury, or (c) a disease or a hearing loss. You should report the injury to your supervisor or company nurse (for clarity we’ll just call these people your Supervisor from here on out), making clear your injury was caused by work. Under Iowa law, you need to make the report within 90 days of the date of your injury.
  2. Make sure your Supervisor prepares a company accident report.  If your Supervisor won’t prepare the report, Continue reading

Why Do Roofers Fall From Roofs? Is it just because of gravity?

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

Today I received an urgent call from attorney representing a client in New Jersey who fell from a roof. Before she told me the job description of the injured worker, now in a coma, I correctly anticipated that it was probably a roofer who had fallen from a roof, yet again.

This scenario has played out in workers’ compensation claims for decades. How the accident happened is usually an argument with the employer. The employer claims that the employee was either intoxicated or not following safety precautions. My instinct always tell me that this is probably incorrect, since roofers tend to lose their balance and fall for many other reasons, including “gravity.”  Some reason a deprivation of oxygen and/or exposure to toxic neurological irritants contained in the roofing materials, and weather related events that make roofs slippery.

Continue reading

“Opting Out” of Worker’s Compensation Hurts Workers and Employers (Part 1)

Today’s post comes from guest author Tom Domer from The Domer Law Firm.

More than a century ago, Wisconsin’s initial efforts in worker’s compensation led the nation. In 1911 Wisconsin became the first state in the nation to place a broad constitutionally valid worker’s compensation system into operation. Recent events, specifically Oklahoma’s passing legislation to allow employers to “opt out” of worker’s compensation (following the “lead” of Texas) calls into question the great bargain made between employers and workers over a century ago. Prior to the enactment of worker’s compensation in the early 20th Century, workers who were injured on the job had to overcome three common law obstacles in order to recover from their employer.

Under contributory negligence, a worker could not recover from the employer if the worker had been negligent in any way and that negligence contributed to the accident, regardless of how negligent the employer may have been.

Under assumption of risk, if a worker knew or should have known of the danger inherent in the task at issue before undertaking it, the employer was not liable for an accident arising from the task even if the employee was not negligent.

Under the fellow servant rule, employers could not be held liable for accidents caused by fellow employees. 

The combined effect of these common law defenses served to deny Continue reading

Nanotechnology in the Workplace

During cancer research in 1986 an accident created the first man-made nanoparticle, an incredibly small particle which can absorb radiant energy and theoretically destroy a tumor. One type of nanoparticle is 20 times stronger than steel and is found in over 1,300 consumer products, including laptops, cell phones, plastic bottles, shampoos, sunscreens, acne treatment lotions and automobile tires. It is the forerunner of the next industrial revolution.

What is the problem? Unfortunately, nanoparticles are somewhat unpredictable and no one really knows how they react to humans. A report out of China claims that two nano-workers died as a result of overexposure, and in Belgium five males inhaled radioactive nanoparticles in an experiment and within 60 seconds the nanoparticles shot straight into the bloodstream, which is a potential setup for disaster. In a survey of scientists 30% listed “new health problems” associated with nanotechnology as a major concern.

Lewis L. Laska, a business law professor, wrote an article in Trial Magazine (September, 2012) in which he advised lawyers to become knowledgeable about nanoscience and be aware of the potential harm to workers and others who come in contact with this new technology, particularly because the EPA, FDA and OSHA have neither approved nor disapproved the use of nanostructures in products. It has been said that workers are like canaries in the cage (in mining operations), and if nanoscience is a danger then workers’ compensation lawyers will be the first to see it and appreciate it.

Who Calls The Shots, Your Employer-Selected Doctor Or The Insurance Company?

Insurance companies sometimes tell doctors that they will not pay for procedures that the doctor says are medically appropriate.

Today’s post comes from guest author Nathan Reckman from Paul McAndrew Law Firm.

In Iowa, employers have the right to control an injured worker’s medical care. This means that if you are injured at work, your employer gets to send you to a doctor of their choosing. The doctors chosen by the employer are called “authorized treating physicians.” In theory, after an employer chooses their authorized treating physician, they are required to pay for any care that doctor believes is necessary to treat the work injury. In practice, the employer and their workers’ compensation insurance company often try to interfere with the care the injured worker is entitled to by refusing to pay for procedures or tests recommended by their handpicked doctor.

Typically, when an authorized doctor suggests an expensive course of care (like surgery) the first thing the doctor will do is check with the insurance company to make sure the surgery is going to be paid for. Instead of immediately scheduling the needed surgery, the doctor will wait until the insurance carrier agrees to pay for the procedure. Doctors do this so they don’t have to worry about how they are going to be paid. Asking for this unneeded authorization from the insurance company means the insurance company now has a say in determining what individual procedures are proper for the care of the work injury.

We often see injured workers whose injury was initially accepted by the employer until the doctor requests authorization for an expensive surgery. When faced with the additional cost of surgery, the insurance carrier denies the work injury hoping the injured worker will either forego surgery or try to pay for the surgery through other means, such as their personal health insurance.

This situation may also arise when the authorized doctor recommends expensive diagnostic procedures, like CT scans, or refers the injured worker to a specialist, for example a psychiatrist for depression related to the work injury.

To make sure your rights are protected, it’s often helpful to have an experienced workers’ compensation attorney on your side if you’re facing a situation where your employer is trying to interfere with the decisions of their handpicked doctor. Injured workers should get the care that their doctor, not an insurance company, determines is medically appropriate.

PTSD and Police Officers at the Newtown Massacre

First responders may develop PTSD after a traumatic event.Post-Traumatic Stress Disorder (PTSD) is a type of anxiety disorder that can occur after a person has seen or experienced a traumatic event that involved the threat of injury or death. In civil war battles a soldier may be sitting next to his best friend when a cannonball takes off his friend’s head. The horror of such events put some soldiers out of action. Similarly, police officers have a higher incidence of PTSD/Anxiety Disorders than the general public due to the gruesome scenes and situations that they witness in their occupation. Classic symptoms of PTSD fall into three main categories: (1) reliving the event (such as nightmares and flashbacks); (2) avoidance (including feeling detached, numb, and avoiding things that remind them of the event); and (3) arousal (including difficulty concentrating, startling easily, and difficulty falling asleep).

Some of the police officers who responded to the shootings in Newtown, Connecticut are suffering from PTSD, calling it the worst crime scene they ever walked into. They are suffering from severe emotional distress and shock and have been unable to return to work due to the trauma they witnessed. Unfortunately, PTSD is not covered by workers’ compensation in Connecticut. Therefore they have been forced to use vacation and sick time to cope with the situation.

Our law firm has represented multiple police officers who have developed PTSD as a result of the gruesome scenes and situations they have been involved in at work. Fortunately, PTSD may qualify as an occupational disease under North Carolina workers’ compensation law. Hopefully the Connecticut legislature will amend their statutes in light of the school shootings to help these police officers get medical care and get back to work as quickly as possible.