The Workers’ Comp Fraud Blotter Update a Selection of Interesting Cases
Nevada Man Sentenced for Insurance Fraud
What Happened
A worker was hit with a 2,000 pound roll of paper at work and was placed on permanent disability by doctors who said he was unable to work. The claimant told doctors and nurses he could not get around without a wheelchair or cane and he could not drive due to pain. He claimed he could not even fix his breakfast.
Nevada’s attorney general disagreed saying the worker portrayed himself as being homebound and needed help from a school-aged family member who stayed with him all day.
Videos taken by insurance investigators showed the defendant walking out of a store with a 24 pack of Pepsi and Coke and he was seen driving.
The employer paid nearly $246,000 in permanent workers’ compensation benefits to their employee.
What the Court Decided
The judge sentenced the defendant to 12 to 32 months in prison, but gave him probation for three years, meaning he will only serve a jail sentence if he breaks probation. In addition, he must do eight hours of community service per month and pay $6,700 in restitution and forfeits all future workers’ compensation benefits.
The AG’s office and Employers Insurance say this kind of fraud affects everyone as the cost of workers’ comp claims are spread across the premiums paid by all businesses. The more claims and payouts, the more it cost. In the end costs are passed on to every Nevada consumer. (workersxzcompxzkit)
Extracted: LasVegasNOW Eyewitness News
This blog originally appeared on the LexisNexis Workers’ Compensation Law Center.
Reposted with Permission Visit LexisNexis for more information and full reports.
http://law.lexisnexis.com/practiceareas/Workers-Compensation-Law-Blog/Workers-Compensation/Workers-Comp-Fraud-Blotter-7232009
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New York Employer Nabbed in Certificate Scheme
New York State Insurance Fund officials reported the arrest of the owner of a Suffolk County flooring company who allegedly provided a general contractor with phony certificates of insurance indicating he had workers’ compensation coverage when in fact he did not.
The man’s company was hired as a subcontractor by another contractor who was insured by NYSIF. The defendant is accused of submitting two fraudulent certificates to the hiring contractor falsely indicating he had coverage with NYSIF.
The alleged fraud resulted in additional premiums of over $1,000 being charged to the hiring contractor.
The defendant was charged with fraudulent practices, a felony violation of the Workers’ Compensation Law. Investigators say during their investigation, the employer allegedly admitted preparing the false documents. He was released on his own recognizance and awaits further court action. (workersxzcompxzkit)
Author: Robert Elliott, J.D.
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Employee Must Pay Back $10,000 in Workers' Comp Fraud Case A retired sergeant with the San Joaquin County, California Sheriff's Office offered a plea of no contest to misdemeanor workers' compensation fraud charges for allegedly drawing disability payments while working on his Montana retirement home. A judge ordered the 51-year-old retiree to pay back $10,000 and serve one year probation as part of the negotiated plea deal. The defendant initially was looking at two felony counts on charges he fraudulently collected $56,000 in compensation payments. (workersxzcompxzkit) According to the San Joaquin County Deputy District Attorney's Office, investigators saw the defendant working on his Montana home even though he was receiving workers' comp benefits on a claim he had physical limitations. Author: Robert Elliott, J.D.
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$400,000 Workers’ Compensation Scheme Unraveled
The Workers’ Comp Fraud Blotter Update
Employee or employer fraud – which is the greater problem? Double dippers, false claims, misclassification of workers, and payroll underreporting, are just some of the more common types of fraud we read about in the media and government press releases. But complex insurance fraud schemes, such as premium fraud, can cost up to hundreds of millions of dollars. Healthcare provider fraud also generates losses in the millions of dollars. Each week we will survey what the media, state agencies, insurance companies, and others report in terms of workers’ compensation fraud.
A Chicago insurance agent pleaded guilty this month to four Class 3 felony charges in Lake County Court, the Illinois Department of Insurance (IDI) announced today. The insurance agent, licensed by IDI, operated an insurance agency based in Waukegan.
Working with the Waukegan Police Department and the Lake County State’s Attorney’s office, IDI investigators concluded the agent allegedly fabricated false insurance certificates for 22 north suburban businesses and bilked clients for approximately $400,000 he then used for personal expenses.
“Workers’ compensation fraud imposes unnecessary cost on employers and employees, and will be investigated and prosecuted to the fullest extent of the law,” said Michael T. McRaith, Director of the Illinois Department of Insurance. “We commend the Waukegan Police and the Lake County State’s Attorney for the great work and successful collaboration that led to this conviction.”
According to IDI investigators, the agent “willfully forged hundreds” of insurance certificates, misrepresenting that client payments for premiums had been forwarded to insurers for coverage. Investigators also found many of agency clients paid in cash for workers’ compensation coverage, supposedly receiving a lower, discounted premium for these cash payments.
Bogus policies were renewed when clients’ policy periods were near or past the lapse deadline, with clients visiting the agent personally to make cash payments. When clients needed additional proof of insurance for a specific project, a fraudulent certificate was created. As a result of a guilty plea, the agent was sentenced to 30 months probation with the following conditions:
1. Serve a term of periodic imprisonment and follow all rules of periodic imprisonment, for a period of 12 months. Two months to be served as periodic imprisonment and 10 months to be served on electronic home monitoring.
2. The defendant shall be released for work, specifically released as necessary for his limousine work assignments and his license service business.
3. Make restitution in the total amount of $97,136 divided among 24 separate victims.
4. Be subject to random urine and breathalyzer testing.
5. Provide a DNA sample for testing.
The IDI workers’ compensation fraud unit was created in the workers’ compensation reform law passed in 2005. Throughout the state of Illinois, Department investigators work with local law enforcement and prosecutors, as well as the office of Attorney General. (workersxzcompxzkit)
The objective of IDI’s investigative efforts is to reduce the instances of workers’ compensation fraud and, thereby, improve the cost of premiums for employers and the claims-settlement process for injured workers.
This blog originally appeared on the LexisNexis Workers’ Compensation Law Center.
Reposted with Permission Visit LexisNexis for more information and full reports.
http://law.lexisnexis.com/practiceareas/Workers-Compensation-Law-Blog/Workers-Compensation/Workers-Comp-Fraud-Blotter-712009
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The State Board of Workers’ Compensation, following an investigation, alleges a Bainbridge police officer and his mother were responsible for taking tens of thousands of dollars from local businesses and charged them with insurance fraud.
According to WALB-TV, the officer and his mother owned a Bainbridge business providing payroll and insurance services to other area business. The two are accused of collecting more than $22,000 from an Albany business, and using it for their own benefit.
Investigators say the company allegedly pocketed the money from clients after taking fees from a number of individuals and held on to the premiums paid in from September through December of 2008, amounting to more than $30,000.
The company allegedly running this scheme had its compensation insurance policy cancelled for lack of payment, but investigators say the business kept on collecting premium payments and keeping the payments for themselves. (workersxzcompxzkit)
The officer is suspended without pay from the police department, pending the outcome of the case.
Author: Robert Elliott, J.D.
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California Man in Jail
California Insurance Commissioner Steve Poizner reported the arrest of a Santa Paula man, charged with one felony count of insurance fraud.
CDI investigators determined the defendant claimed he was injured on the job while working for Chicago for Ribs in Ventura. The individual was placed on total temporary disability by his doctor, and collected more than $30,000 in disability payments from May 2007 through August 2008.
While collecting total temporary disability payments, he allegedly applied for and obtained a position at Teppan Steak House in Oxnard from December 2007 through August 2008. The defendant allegedly used a fictitious name and social security number when he applied for the job. (workersxzcompxzkit)
He was specifically asked if he was employed while collecting total temporary disability payments at his deposition, and allegedly denied that he was employed.
Author: Robert Elliott, J.D.
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The Workers’ Comp Fraud Blotter
Employee or employer fraud – which is the greater problem? Double dippers, false claims, misclassification of workers, and payroll underreporting, are just some of the more common types of fraud we read about in the media and government press releases. But complex insurance fraud schemes, such as premium fraud, can cost up to hundreds of millions of dollars. Healthcare provider fraud also generates losses in the millions of dollars. Each week we will survey what the media, state agencies, insurance companies, and others report in terms of workers’ compensation fraud.
The Richmond Police Department (RPD) seeks to fire its fourth highest ranked officer citing workers compensation fraud.
RPD said the police captain claimed workers’ compensation after he tore a tendon while watching television at home last year. One of the officer’s attorney said the claimant reported he felt something go “pop” when he jumped off the sofa to celebrate a play while watching a sporting event in April 2008.
The city accuses the police captain of fraud, as his injury undeniably happened away from work. But the 29-year veteran, embroiled in a racism lawsuit against the department since 2006, views the action against him as further evidence of discrimination and retaliation.
“After Captain “Ross” (name changed) returned to work, the city of Richmond placed him on administrative leave, and he has remained on administrative leave for close to a year,” said an attorney for the officer, who also represents six other city police managers in the racism complaint. “They do not want him to return.”
City officials declined to elaborate, citing privacy laws for police and public employees limiting disclosure of information in disciplinary cases. Captain “Ross” has appealed a notice of termination he received this month and will argue his case during a closed hearing in the near future.
“It’s an ongoing personnel matter, and can’t be discussed publicly.” city’s Human Resources Director said. He expressed confidence the process will run its course and there will be an appropriate finding.
The police captain tried to return to work in August. His attorney, who represents him in his civil suits, said his client submitted the workers’ compensation claim because his injury could have been cumulative and therefore work-related as Captain “Ross” has had previous, similar injuries during his career.
“This is perhaps the weakest termination allegation I have ever seen. There’s no question that these charges were levied because of Captain Brown’s lawsuit,” an attorney representing the police office in his labor grievance.
His attorney claims the city’s argument focuses on a negligible “inconsistent statement” in Captain “Ross’” paperwork, trumped up to railroad his client out of his job. The dispute will live on well after any appeal hearing, he added, as an item of evidence in a federal lawsuit filed in 2007, claiming the department retaliated against “Ross” and others for suing in state Superior Court over perceived racism in 2006.
“Ross” pleaded no contest in 1985 to a misdemeanor charge of selling cars without a license, fallout from claims of fellow officers that he defrauded them by failing to deliver after they paid him to find and import expensive German vehicles.
The city’s Human Resources Department handled the investigation in the workers’ compensation case, not the Police Department’s Professional Standards Unit, sources inside and outside the department confirmed, and also hired a private investigator for the case.
City officials have denied all assertions in the past racism suits, even hiring the former head of the State Bar to investigate, but he found little evidence supporting the plaintiffs’ claims.
The suit against the city will continue in Contra Costa County Superior Court, however, with the claimant and six other plaintiffs. A jury trial is set tentatively for December.
Source: An article by Karl Fischer, West County Times with contributions by staff writer, Malaika Fraley. This blog originally appeared on the LexisNexis Workers’ Compensation Law Center.
Reposted with Permission Visit LexisNexis for more information and full reports.
http://law.lexisnexis.com/practiceareas/Workers-Compensation-Law-Blog/Workers-Compensation/Workers-Comp-Fraud-Blotter-712009
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Do not use this information without independent verification.
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©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
What Employers Must NOT Do A Massachusetts man and his business were recently on charges of allegedly providing inaccurate payroll information to their insurer and payroll administrator to secure a lower workers' compensation premium and to avoid paying the full amount of unemployment insurance and state income tax. Arraignment is scheduled in Middlesex Superior Court in July, 2009.(workersxzcompxzkit) The charges are Unemployment Fraud (10 counts), Failure to Withhold State Income Tax (31 counts), Workers' Compensation Fraud (3 counts), and Larceny Over $250 (3 counts). The Insurance Fraud Bureau of Massachusetts (IFB) referred this case to the Attorney General's Office in September 2008 after an investigation into the company's payroll and an insurance claim filed by an employee allegedly not on the company payroll. According to authorities, workers' compensation was purchased for the policy years from September 2002 to September 2005. Authorities allege in an effort to obtain a lower workers' comp premium, the employer underreported its actual payroll by not reporting payments to undisclosed employees and not reporting overtime compensation. Authorities said the matter was referred to IFB for investigation after an auditor from insuring company discovered corporate tax returns filed by the man and the business for nearly $400,000 in payments to subcontractors, not disclosed in the premium audit. As a result of this alleged premium avoidance scheme, the business underpaid its workers' compensation insurer a total of $51,850 in premium payments. Author: Robert Elliott, J.D.
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©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Approximately 185,000 employers have workers' comp insurance policies with NYSIF, making up about 36 percent of the New York market. Employers cannot be too vigilant in controlling fraud and taking appropriate action in fraud prevention and reporting. A Case Study Pair Arrested on Workers Comp Fraud Charges Two claimants who allegedly returned to work while collecting workers' compensation benefits were arrested on fraud charges in separate investigations initiated by the New York State Insurance Fund involving a potential combined future savings of nearly $600,000. The first worker, was arrested by Utica Police as part of a warrant sweep. He is charged with felonies including insurance fraud, perjury, offering a false instrument for filing and fraudulent practices. Investigators said surveillance allegedly the man working as a carpenter during the same time period he collected wage replacement benefits for an injury he said he sustained as a carpenter in 1999, for which he allegedly collected $10,200 in benefits he was not entitled to by returning signed statements to NYSIF stating he had not returned to work since the injury. He allegedly also denied any employment in sworn testimony before the Workers' Compensation Board. The worker, classified with a "temporary total" disability, could have received up to $60,411 over the life of his claim, which is the amount investigators estimated as the potential future savings in his case. In a separate case, Rochester State Police a second workers charging him with insurance fraud, offering a false instrument for filing, grand larceny and violating the Workers' Compensation Law – all felonies. Investigators said this worker received workers' comp benefits for an abdomen injury he claimed in 2006 while working for a Rochester based company, allegedly receiving $4,673 in benefits he was not entitled to by returning to work for another Rochester company while returning signed statements to NYSIF saying he had not returned to any form of work. (workersxzcompxzkit) As a result this arrest, NYSIF estimated the potential future savings of $525,743 the man could have received over the life of his claim. Author: Robert Elliott, J.D.
Visit Our Websites: Reduce Your Workers Comp: www.ReduceYourWorkersComp.com/ Workers Comp Kit: www:workerscompkit.com/ Try Our FREE WC Best Practices Quick Check: http://www.workerscompkit.com/intro/ See Our: Workers' Compensation Toolkit: Corner.advisen.com/wc Workers' Comp Kit Books & Guides: Corner.advisen.com/wcbooks More FREE tools to try: WC Calculator: www.reduceyourworkerscomp.com/calculator.php TD Calculator: www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php WC 101: www.ReduceYourWorkersComp.com/workers_comp.php Follow Us On Twitter: www.twitter.com/WorkersCompKit View the Entire Blog: http://blog.reduceyourworkerscomp.com/ Do not use this information without independent verification. All state laws vary.
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Employees or Independent Contractors: How to Tell the Difference New York Attorney Ted Ronca, has some tips on how to differentiate between an "employee" and an "independent contractor". Cutting workers' compensation premiums by calling your employees independent contractors is not a new idea or a smart idea. It is a device easily detected, fraught with peril and contains unanticipated "heads-I-win-tails-you-lose" traps for the unwary. At first, the idea seems to have benefits for both employer and employee. The employer ceases paying for workers' compensation, short term disability, unemployment and Social Security – quite a savings. The employees are persuaded to go along by being told of the vast new tax deductions they will have with their new businesses "from home." But what does a truly "independent contractor" (IC) look like? They have: 1. More than one "customer" often called "clients" 2. Variable hours with each customer set by the IC 3. A fixed address that is their own 4. If home based, a "bona-fide" office meeting IRS standards 5. Usually a recorded business name, license, federal identification number 6. A listed business phone number 7. Usually an accountant and filing a business return 8. Usually business cards 9. Their own tools, equipment and vehicles 10. Their own business bank accounts When more than half of these are not present, the scheme quickly falls apart. What also gives it away is the employer is using people as "independent contractors" for tasks almost always performed only by full-time employees. The obvious downside for the employer, when detected, is having to pay past premiums with additional penalties, often quite substantial. But there is more – much more. The IRS becomes involved, as does Social Security and state and local laws. (An audit quickly leads to scrutiny of the returns of ALL employees, not all of whom will cooperate with the scheme or remain silent.) And, in the worst of scenarios, the "independent contractor" might have an injury on the employer's premises. When that happens, the employer is no longer protected by the exclusivity of workers' compensation, unless they, and the employee, immediately confess to the fraud – a course that is unsure at best. As the explanations grow the scrutiny becomes more intense. The amounts of money, if the scheme is being carried on with a number of employees, is enough to attract the interest of state attorneys general and federal law enforcement, as well as disgruntled, or just plain honest, employees who stand to collect substantial rewards for making a discreet phone call. (workersxzcompxzkit) For over a decade, law enforcement has known workers compensation fraud lights up the paper trail to tax fraud – and follows it with zeal. An employer is wise to remain out of that spotlight. Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers' compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100.
Visit Our Websites: Reduce Your Workers Comp: www.ReduceYourWorkersComp.com/ Workers Comp Kit: www:workerscompkit.com/ Try Our FREE� WC Best Practices Quick Check: http://www.workerscompkit.com/intro/ See Our: Workers' Compensation Toolkit: Corner.advisen.com/wc Workers' Comp Kit Books & Guides: Corner.advisen.com/wcbooks More FREE tools to try: WC Calculator: www.reduceyourworkerscomp.com/calculator.php TD Calculator: www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php WC 101: www.ReduceYourWorkersComp.com/workers_comp.php Follow Us On Twitter: www.twitter.com/WorkersCompKit View the Entire Blog: http://blog.reduceyourworkerscomp.com/ Do not use this information without independent verification. All state laws vary.
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