Category Archives: Employer Fraud

Workers Can’t Wait to Cash In?

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

It’s not uncommon in the workers’ compensation arena that we hear allegations of malingering or workers being hurt on purpose to reap the monetary rewards of a work injury. Some employers refuse to settle a case as long as the worker is still employed by the company, fearing a large monetary settlement will encourage other workers to get injured.  The limited benefits of a workers’ compensation claim make these assertions ridiculous.  Specifically, no benefits are paid for the pain and suffering.  Additionally, the reality is that many states compensate a permanent injury for only a matter of weeks or years.  The worker and his or her family are left to deal with the ongoing effects of these injuries for the balance of their lifetime. 

The Insurance Journal listed the top 10 leading causes “of serious, nonfatal workplace injuries” from “2012 claims data for injuries lasting six or more days and ranked the injuries by total workers’ compensation costs,” according to a recent article.

Not surprisingly, horseplay or purposefully getting injured was not among them. In fact, the leading cause of workplace injuries is ironically enough – overexertion! Overexertion and other exertion-related injuries made up almost a third of all workplace injuries. So much for the theory of money-hungry workers playing around or purposefully getting injured. Falls comprise two of the top 10 leading causes of workplace injuries, making up a total of just over 24 percent of all injuries.  Being struck by or striking objects combined for around 15 percent. Motor vehicle accidents (5.3 percent) and repetitive movements (3.1 percent) round out the top 10 list. The full list is detailed below. In total, the 10 most common work injuries accounted for almost 84 percent of all injuries.     

  1. Overexertion 25.3 percent
  2. Falls on same level 15.4 percent
  3. Struck by object or equipment 8.9 percent
  4. Falls to lower level 8.6 percent
  5. Other exertions or bodily reactions 7.2 percent
  6. Roadway incidents 5.3 percent
  7. Slip or trip without fall 3.6 percent
  8. Caught in or by equipment or objects 3.5 percent
  9. Repetitive motions 3.1 percent
  10. Struck against object or equipment 2.9 percent

The Occupational Safety and Health Administration (OSHA) reports that workplace deaths have decreased from 38 per day in 1970 to 12 per day in 2012, according to the article. Additionally, OSHA reports occupational injury and illness rates have declined 67 percent since 1970, all while employment has almost doubled.

Despite these accomplishments, insurance companies and large employers continue to lobby state legislatures about the injustice and cost of workers’ compensation benefits. In reality, workers and their families continue to bear the real burdens of workplace injuries.

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Stolen Money: Wage Theft by Employers Common

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

We all know that money is stolen from hard-working people every day in the form of robberies, burglaries and other thefts, but you might be surprised to learn that employers steal more money from hard-working people than robberies, burglaries, larcenies and auto thefts combined.

Although these numbers are based on 2012 data, the same probably holds true still today. The most unfortunate part of these statistics is that the victims of wage theft are usually the people who can afford the theft the least.

What is wage theft?

“Wage theft covers a variety of infractions that occur when workers do not receive their legally or contractually promised wages,” according to wagetheft.org.

“Common forms of wage theft are non-payment of overtime, not giving workers their last paycheck after a worker leaves a job, not paying for all the hours worked, not paying minimum wage, and even not paying a worker at all.”

What is even more sobering is to think based on these statistics: they get the numbers regarding traditional theft from what is reported to police, whether it is recovered or not. They get the data for wage theft based on what is: reported, looked into, taken to court, and won back for employees. So, I would be willing to assume that the numbers of wage theft are actually much larger, in reality.

Fortunately, there are remedies under state and federal laws to recover from those thieving employers engaging in wage theft. Even if it is something that seems small, like employers keeping a percentage of tips, it is still wage theft and is actionable in civil court. Contact a lawyer if you suspect your employer of engaging in the activities described above.

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$46 Million Stolen: 2013’s Top Ten Workers’ Compensation Fraud Cases

Professor Leonard T. Jernigan Jr. has compiled a list of 2013’s Top 10 Workers’ Compensation Fraud Cases

Today’s post comes from guest author Leonard Jernigan, from The Jernigan Law Firm.

Employer Fraud Cases (9):$44,064,492.00
Employee Fraud Cases (1): $1,500,000.00
Total: $45,564,492.00

Every year we hear about fraud in Workers’ Compensation cases and the public believes the fraud is employee driven. However, in 2009 I began tracking the Top Ten Fraud Cases and 100% of the Top Ten between 2009-2012 involved employers or shady characters posing as legitimate businesses. The amount of employer fraud is staggering. In 2013 one employee fraud case did crack the Top Ten, so the record is now 49-1 (employer fraud v. employee fraud) over the past five years.

  1. Florida: Owners of Diaz Supermarkets in Miami-Dade are Accused of $35 Million Fraud (4/16/13)

    John Diaz and his wife Mercedes Avila-Diaz owned and operated four supermarkets in the Miami-Dade area. They have been arrested and accused of workers’ compensation fraud and other fraudulent transactions totaling $35 million. One business they operated had no coverage for employees for ten years. They allegedly engaged in a scam to help subcontractors obtain false certificates of insurance that allowed the subs to work for general contractors who required the certificates.

  2. California: Hanford Farm Labor Contractor Convicted of Fraud in the Amount of $4,195,900 (12/6/2013)

    Richard Escamilla, Jr.

    Richard Escamilla, Jr. (47), owner of ROC Harvesting, misrepresented information to workers’ compensation insurance carriers by using new business names to obtain insurance and avoid providing a claim history. Escamilla pleaded guilty on October 29th and was sentenced to pay restitution of $4.1 million and serve six years in prison.

  3. Michigan: Insurance Executive Embezzled $2.6 Million from Workers’ Comp TPA (06/06/2013)

    Jerry Stage

    Jerry Stage (67), the former CEO of a non-profit workers’ compensation insurance company, and George Bauer (55), the bookkeeper, both pleaded guilty to embezzling from the Compensation Advisory Organization of Michigan (CAOM) for more than a decade. Mr. Stage embezzled $2.6 million from the company and conspired with Mr. Bauer to cover up the embezzlement.

  4. California: Employee Wasn’t Wheelchair Bound After All – Fraudulently Took $1.5 Million in Benefits (8/9/13)

    Yolandi Kohrumel

    Yolandi Kohrumel, 35, claimed for nine years that she was wheelchair bound after complications from toe surgery, but after she had collected $1.5 million in benefits it was revealed her claim was false. Her father, a South African native, was also engaged in the scam. Both pleaded guilty to insurance fraud, grand theft and perjury. Ms Kohrumel was sentenced to one year in jail, plus restitution.

  5. California: Father and Son Landscapers Accused of $1.45 Million in Insurance Fraud (5/7/13)

    Sunshine Landscaping

    Jesse Garcia Contreras (57) and Carlos Contreras (33), who operate a Thousand Palms landscaping business, are accused of committing $1.45 million in insurance fraud. They are accused of defrauding the California State Compensation Insurance Fund by misclassifying employees from January 2008 to March 2012. Mr. Jesse Contreras is the president and CEO of Sunshine Landscaping and his son is Director of Accounting. If convicted, they each face up to 19 years and 8 months in prison.

  6. Florida: Workers’ Compensation Check Cashing Operation Charged with $1 Million in Fraud (2/27/13)

    As a result of its investigation of I&T Financial Services, LLC, a company that was allegedly set up to execute a large scale check cashing scheme for the purpose of evading the cost of workers’ compensation coverage. Domenick Pucillo, the ringleader of the fraud scheme, was arrested and charged with filing a false and fraudulent document, forgery, uttering a forged instrument, and operating an unlicensed money service business. If convicted on all charges, he faces up to 45 years in prison. $1 million was seized during this investigation.

  7. West Virginia: Coal Company Contractor in Mingo County Caught in $405,000 Scam to Avoid Workers’ Comp Premiums (11/6/13)

    Bank of Mingo

    Jerame Russell (50), an executive with Aracoma Contracting, LLC, a company that provided labor to coal companies on a contract basis, entered a guilty plea to a scam that involved funneling over $2 million through a local bank to pay employees in cash, thus avoiding payroll taxes and $405,000 in workers’ compensation premiums. Aracoma also bribed an insurance auditor to cover up its true payroll.

  8. Ohio: Roofing Business Owners Guilty of $283,592 in Workers’ Comp Fraud (7/30/2013)

    Frederick Diebert

    The owners of Triple Star Roofing were found guilty of fraud on July 15 for failing to report payroll to the Ohio Bureau or Workers’ Compensation(BWC). The company failed to report to the BWC from 2004 to 2008, resulting in under-reported premiums of $283,592.

  9. Florida: Owner of Staffing Company arrested for $130,000 in Workers’ Comp Fraud

    Preferred Staffing of America, Inc.

    The owner of Preferred Staffing of America, Inc., a temporary staffing agency in Tampa, has been arrested for allegedly running an organized workers’ compensation fraud scheme. Preferred Staffing’s owner misled clients into believing that his company was a licensed professional employer organization (PEO) and could provide workers’ compensation insurance coverage. Employers were reportedly charged more than $130,000 for workers’ compensation insurance and other services that were never provided.

For more information, contact: Leonard T. Jernigan, Jr. Adjunct Professor of Workers’ Compensation N.C. Central School of Law The Jernigan Law Firm 2626 Glenwood Avenue, Suite 330 Raleigh, North Carolina 27608 (919) 833-0299 ltj@jernlaw.com www.jernlaw.com @jernlaw

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