Monthly Archives: December 2011

$ Billions In Employer Fraud: Top 10 Cases of 2011

Company owners fund lavish lifestyles with the money they steal through fraud.

When we hear about workplace fraud, most of us think of a worker faking an injury to receive benefits that he or she does not deserve. While that kind of fraud does exist, it is minor compared to the big money lost to fraud from companies.

The big money lost to fraud comes from companies, not workers.

Companies are cheating the government out of billions of dollars a year. It baffles me why we never hear about this, especially when, just by prosecuting these bad actors for defrauding the system, states could close large portions of their budget deficits without raising taxes or cutting spending, the overall cost of the workers’ compensation system would be lower, and costs to law abiding employers would be less.

Companies are stealing, and we are stuck paying the bills.

When companies commit workers’ compensation fraud and other kinds of payroll fraud — under-reporting or misreporting the number of employees on their payroll — they do major damage to working people’s lives in 2 major ways:

  1. State workers’ compensation insurance funds are left under-funded, and taxpayers may be called upon to replenish them. It’s a dollar out of your pocket and tacked onto the profits of the company.
  2. Workers are left without insurance if they are hurt on the job. Uninsured injured workers often receive poor medical care, or none at all. When these workers do receive medical care, often tax-supported hospitals or Medicaid (taxpayers again) are left to foot the bill while their employers pocket the profits from not having paid for insurance that they are required by law to have. Middle class workers who have prudently saved all of their lives can end up on the edge of bankruptcy. It’s why companies are required by law to provide workers’ compensation insurance.

This is not a new problem

I have been tracking this issue for over 20 years, as an adjunct professor of workers’ compensation law at NC Central University School of Law and somebody who has been practicing in this field for 30 years, as well as in my capacity as chair of the Workers’ Injury Law and Advocacy Group’s (WILG) national Fraud Task Force. In that time, I have consistently seen companies break the law. Even worse, for the small number of companies that do get caught, the cases are often settled for less than the amount the company saved by acting illegally. You and I wouldn’t expect to keep the stolen cash if we robbed a bank, so why do these employers keep some of their ill-gotten gains when robbing the government? When the victim is the taxpayer, it apparently pays to break the law.

We all need to come together to hold companies accountable for their legal obligations. If we did that, we wouldn’t be forced to make the choice between paying more in taxes and firing teachers and police. This enforcement issue is not about higher taxes; it’s about catching thieves who hide in offices and behind spreadsheets.


This top 10 list represents just a small portion of the company fraud cases in the news this year. More importantly, the total amounts stolen are just a fraction of the amounts companies have managed to steal. For every company that has been caught, we can only assume many more are getting away with the same crime.

Of the $2 billion worth of fraud in just 2 of the following cases, only $498 million has been recovered. That’s over $1.5 BILLION that these employers got away with stealing. Once again, big business wins, while workers and taxpayers lose, big time.

  1. Insurance giant AIG commits $1 billion in workers’ compensation fraud.

    AIG settled the $1 billion suit for $450 million.

    This week, a federal judge approved a settlement by American International Group, Inc. to pay $450 million for shortchanging state insurance pools by nearly $1 billion. This is the same AIG that taxpayers bailed out during the 2007 economic crisis, and just last year they paid $146.5 million in fines, taxes and assessments in a settlement with all 50 states over workers’ compensation reporting errors. A good recovery, but the settlement leaves a potential $550 million in unrecovered funds.

  2. Compensation Risk Managers commits $1 billion in fraud, forcing many small businesses to close.Compensation Risk Managers (CRM), a company that acted as trust administrator for small business in New York State who self-insured for workers’ compensation, was sued in 2009 for $400 million in a lawsuit for fraud. CRM was deliberately underestimating the liabilities of many businesses, Continue reading

3 Keys To A Safe Holiday – A Last Minute Decorating Checklist

We normally focus on workplace safety, but during the holidays, many of our readers will spend time at home with their families. Holiday decorations are an important tradition, but these decorations, both new and old, can turn a festive holiday into a dangerous one. These important tips will show you how to make your holiday a safe holiday.

1. Trees

christmas tree

Keep trees away from radiators

If you decide to buy an artificial Christmas tree, it should be fire resistant. Check the tags or labels for this. While “fire resistant” doesn’t mean “fire proof,” it is a step in the right direction.If you buy a natural Christmas tree, check to make sure it is fresh. You can tell a tree is fresh if its needles are green and don’t bend of break between your fingers. Also, the bottom of a fresh tree will have sticky resin and, if you tap the tree on the ground, won’t shed too many needles. Keep your natural tree watered. This means checking the stand every day, especially in a heated room.

No matter what kind of tree you have, do not place it near fireplaces, vents and radiators. Continue reading

The Workers' Compensation Medicare Set-aside Portal (WCMSAP) Has Gone Live

With the new WCMSAP you can directly enter case information and more.

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

The Workers’ Compensation Medicare Set-aside Portal (WCMSAP) application has gone “live” and is now available for users. WCMSAP allows submitters of Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs) to directly enter case information, upload documentation, and receive case status information through the use of a secure Web portal. This site provides an interface for entry of Workers’ Compensation Medicare Set-Aside Arrangements (WCMSA) proposals. Attorneys, Medicare beneficiaries, claimants, insurance carriers and WCMSA vendors may use this site to enter the case information directly. Through the web-based application you can:

• Create a work-in-progress case
• Submit WCMSA cases
• Perform case lookups
• Append documentation to a case

The site also provides Continue reading

How Employer Fraud Is Destroying Our Middle Class


Last September I invited Dan Reilly from the Teamsters to give a continuing legal education talk at the annual conference of the Workers’ Injury Law & Advocacy Group. Dan presented on the topic of employer fraud, and in particular on an increasingly common practice known as misclassification. The video above is just a short clip from an interview we did after his talk. I’ll continue to share more clips from our fascinating conversation on this blog from time to time.

These workers have no benefits, and none of the protections that they should legally have. They simply do not have a safety net.

The term misclassification sounds innocent enough, but in reality it is a growing practice of exploitation that is taking away the rights of working people all across the United States.

Companies like FedEx “misclassify” workers who do the same jobs that full-time employees do by calling them independent contractors. This practice saves companies significant amounts of employee-related costs such as health care, workers’ compensation, unemployment taxes and other benefits.

What misclassification means for these independent contractors is up to 25% less salary than Continue reading

Asbestos, Railroads and The US Supreme Court

Railroad workers install deadly asbestos fiber.

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

For decades railroad equipment, including engines, were heavily insulated with asbestos fiber, a known carcinogen and causally related to mesothelioma, a rare and fatal cancer. Many lawsuits have been filed by victims and their families to recover benefits against the suppliers, manufacturers and distributors of asbestos fiber. In November, The US Supreme Court heard oral argument to determine whether state laws were preempted under Federal law and that state laws were not applicable in judging the lawsuits.

The initial claims for asbestos related diseases were filed as workers’ compensation claims in the United States. Soon it was revealed that the suppliers, distributors and health research (trade) organizations were concealing information to the workers as to the deadly dangers of asbestos fiber. As asbestos related disease, including mesothelioma, became epidemic, tens of thousands of civil claims were filed. Continue reading

Temporary Holiday Workers Face Hazards of the Season

Crowds of holiday shoppers can create dangerous conditions for temporary employees.

Today’s post comes to us from Jon Gelman of New Jersey. In today’s tough economy, temporary employment is a holiday blessing for many, but it can come with some very real dangers.

This holiday season, more than in the past, there will be a serious challenge to workers who are taking on temporary jobs. As the economy continues to be in the ditch, more people are being hired for jobs for which they are untrained and unfamiliar. Injuries will result.

Temporary employees who are injured at work are not accustomed to the procedural requirements to give their employers notice of the injury, and the correct manner and method to seek approved medical treatment. Additionally, benefits paid to seasonal workers are notoriously low and paid sporadically so the computation of rate benefits becomes an issue. Continue reading

Cost Shifting: The Dirty (not so little) Secret of Workers' Comp

Today’s post comes to us from my colleague Tom Domer of Wisconsin. This is isn’t the first post that has appeared on this blog on unethical and illegal employer practices. In the future, we will continue to cover issues like cost shifting and worker misclassification, which pose ever increasing problems for today’s workers. 

Seasoned workers’ compensation practitioners know some employers and worker’s comp carriers consciously employ questionable tactics to limit their exposure. They mischaracterize high risk employee job titles as low risk to reduce premiums; they call long-term employees “Independent Contractors” to get them off worker’s compensation roles; they hire doctors to render boilerplate predictable opinions to deny claims; and they discourage genuine worker’s comp claims by telling employees to submit work-related medical bills to group insurers, Medicare or Medicaid.

They discourage genuine workers’ comp claims by telling employees to submit work-related medical bills to group insurers, Medicare or Medicaid.

This last piece of fraud is extremely nefarious, especially since medical costs now exceed indemnity payments in Wisconsin and most other states. The cost shifting means we all pay (as increased group health premiums and taxes) for medical expenses that should be paid by worker’s comp carriers. In states such as Wisconsin where work injury related treatment expenses are paid at doctors’ usual and customary rates, shifting the cost to a group carrier, Medicare or Medicaid saves worker’s comp carriers millions.

The cost shifting means we all pay (as increased group health premiums and taxes) for medical expenses that should be paid by workers’ comp carriers.

Denial of a claim by using “legitimate doubt” or purchasing the opinion of an adverse medical examiner results in medical treatment provided at reduced negotiated rates through non-workers’ comp coverage (Union health care, Medicare, Medicaid, etc.). Continue reading

7 Tips for Healing

Many people are confronted with death or disability whether as a result of an accident or otherwise. We do our best to help those who were wronged by another or hurt on the job to receive compensation for their injuries. But compensation cannot cure the underlying problem, only help to make life more bearable. True healing is as much a mental as a physical process.

The following tips for healing have been adapted from the writings of Dr. Bernie Siegal, the author of many books including Love, Medicine, and MiraclesPeace, Love, and Healing; and 365 Prescriptions for the Soul. We hope you find these tips helpful in your healing process.

  1. Accept your illness: you know the illness is there, but you also know the future will be something you can handle so it’s no longer a burden.
  2. See the illness as a source of growth: our primitive nervous system tells us that if we have a loss you grow something to replace what was lost.
  3. View your illness as a positive redirection in your life: your whole life changes when you say that something is just a redirection. You are then at peace.
  4. Understand death or recurrence is not a failure if steps 1,2 or 3 are accomplished, but a further choice or step: when you accept the inevitability of death (which comes to all of us ) you begin to realize that the time you really have is right now.
  5. Learn self-love and peace of mind and the body responds: when you believe you are a worthwhile person, and you tell yourself that you are here to give something to the world, your immune system responds positively. Continue reading