Category Archives: Workers’ Compensation

Workers’ Compensation Basics: Are You an Employee?

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

Here’s the second blog post in a series on the basics of workers’ compensation.

As its name suggests, workers’ compensation compensates employees for on-the-job injuries. About 95 percent of time, the question of whether an injured worker is an employee is a simple “yes.” If you are paid a regular salary or by the hour via a regularly scheduled paycheck where your employer takes deductions out for Social Security, unemployment, Medicare, etc., you are most likely an employee.

But sometimes the issue of whether you are an employee isn’t as simple. Some states may exclude household and farm workers. Some states may exclude employees performing work for the business outside of the regular course of business hours. An employer might try to exclude an employee from workers’ compensation benefits by alleging the employee is an independent contractor.

If you are hurt on the job and your employer or their insurance company is claiming that you aren’t covered by workers’ compensation, you need to contact an experienced workers’ compensation attorney. Laws about which employees are covered by workers’ compensation are very specific and vary by state. You need an attorney who can tell you whether you are in fact covered by workers’ compensation, and, if not, what other possible ways there would be to compensate you for your injuries.

Read the first blog post in the series by clicking on this link: What is Workers’ Compensation?

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Yes, Monetary Benefits Are Available For Injured Volunteer Firefighters

I recently read the news about a benefit fundraiser being held for the widow of a Long Island volunteer firefighter who died in the line of duty when the floor he was on during a fire collapsed. The volunteer, only 43 year old, left behind a widow and a 19-year-old daughter. He had served his community for 17 years as a volunteer and in addition, worked for the Nassau County Public Workers Department. This tragedy once again reminds us of the dangers of the firefighting profession.

Most New York City residents are protected by a paid force of brave men and women who are employed by the City. The Fire Department of New York is the largest municipal fire department in the United States, employing more than 10,000 uniformed firefighters. I am proud to say that my brother Danny serves as a Lieutenant in the FDNY, and my brother Bob and my dad are both retired from the force.

There are still nine volunteer fire companies left in New York City that respond to calls in their neighborhoods; more than half of them are located in Queens – West Hamilton Beach, Broad Channel and the Rockaways. As these men and women are not compensated for their service to their communities, most of them have paying jobs elsewhere. However, they are still entitled to benefits if they are ever injured on the job. The New York State Workers’ Compensation Law provides benefits for those volunteers injured in the “line of duty” or engaged in activities pursuant to orders or authorization. These duties include, but are not limited to, participation in fire drills; travel to and from fire calls or authorized activities; firehouse duties; property inspections; attendance at fire instruction and training; and authorized drills, parades, funerals, reviews or tournaments. An “injury” includes any disablement of a volunteer firefighter that results from services performed in the line of duty and any disease that may arise from an injury.

Monetary benefits include payments for loss of earning capacity up to $400 per week, death benefits to surviving spouse and/or minor children up to $800 per week, and schedule loss-of-use awards based upon loss of function to a limb, loss of vision, loss of hearing, and facial disfigurements. Additional monetary awards are given to cover funeral expenses. Furthermore, volunteer members are entitled to receive necessary medical care for treatment and recovery from their disabilities. Notice must be given to the proper party within 90 days of the incident, and claims must be filed within two years of the accident or death.

In many instances the monetary awards are inadequate to properly compensate an injured volunteer or a surviving spouse or child of a hero. The fact that a fundraiser is even necessary for the family of the firefighter who was killed in Long Island is inconceivable. While it is clear that Volunteer Firefighter benefits will never truly compensate for those who are injured or killed on the job, the knowledge that there are benefits available will hopefully ease some of the financial strains for those in our community who serve. I saw a wonderful quote recently that said “volunteering is the ultimate exercise in democracy. You vote in elections once a year, but when you volunteer, you vote every day about the kind of community you want to live in.” So to those who serve, I am truly grateful, and to the family of fallen hero Joseph Sanford, Jr. – his sacrifice will never be forgotten.

Catherine M. Stanton is a senior partner in the law firm of Pasternack Tilker Ziegler Walsh Stanton & Romano, LLP. She focuses on the area of Workers’ Compensation, having helped thousands of injured workers navigate a highly complex system and obtain all the benefits to which they were entitled. Ms. Stanton has been honored as a New York Super Lawyer, is the past president of the New York Workers’ Compensation Bar Association, the immediate past president of the Workers’ Injury Law and Advocacy Group, and is an officer in several organizations dedicated to injured workers and their families. She can be reached at 800.692.3717.

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Avoid the Pitfalls of Auto-Pay Agreements

Today’s post comes from guest author Kit Case, from Causey Law Firm.

Many of my clients tell me, with fear in their voice, that they have one or more bills set to automatically pull from their bank accounts, but they have no money in the bank to cover the payment and will face overdraft charges if the payment pulls from their account. Typically, these are car payments, as many auto loan lenders offer lower rates if the purchaser agrees to set up automatic payments. Some businesses, like your local gym, may require auto-pay agreements. It seems like a good idea, when one is working.

Add an injury or disability into the mix, though, and it can become your worst nightmare. Even under the best circumstances, an injured worker that is receiving their time loss compensation benefits – often 60 – 65% of pre-injury wages, or a much smaller percentage if they were a high wage earner and have hit the ceiling of compensation rates – will most certainly not be getting paid on the same schedule as their payroll department was using. Juggling bills is hard enough with decreased income levels, but the forfeiture of control over the ebb and flow of funds in your bank account can put you in financial peril after an injury.

If you find yourself in the scenario I have described, try contacting your lender or service provider to inquire about making changes to the agreement you signed – or terminating the agreement, if needed – to at least make the drafts from your account occur on a better schedule but, preferably, to take back control of the payments. You should maintain the ability to make payments to creditors on your own schedule when funds are available. The auto-draft agreements are a contractual agreement, though, and you may need legal assistance to alter them. In my experience, though, lenders are usually able to work with their clients to maintain the integrity of their loans. In the long run, repayment is their goal and facilitating your ability to manage your payments is in their best interest, too.

Photo credit: 401(K) 2013 / Foter / CC BY-SA

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“Cost-Shifting” Exposed: How Injured Worker Medical Care Decisions Are Made (And Who Pays)

Medical coverage is a topic on everyone’s mind. Obamacare, while controversial, has started a real dialogue in this country regarding health care. Regardless of whether you are in favor of the current law, most Americans want affordable health care for themselves and their families.

Many employers pay for a substantial amount of their workers’ premiums as a benefit to them, and take this into consideration when making salary decisions due to the high cost, thereby leaving workers to pay for all or some of their medical coverage. Sometimes insurers pay for benefits that are not their responsibility because the proper entity refuses to pay. This is known as cost shifting. As a practitioner in the field of Workers’ Compensation, this idea of cost shifting has become an all too common occurrence.

By way of background, as a result of social reform, most states enacted some form of Workers’ Compensation legislation in the early 20^th Century. In exchange for timely payment of medical and indemnity benefits, workers gave up the right to sue their employers. In 2007 in New York, there was a series of further reforms that led to compromise between labor groups, the insurance industry and the Business Counsel. There was an increase in the amount of weekly benefits to injured workers to conform with the State average weekly wage (now a maximum of approximately $800 per week) in exchange for a limit on the amount of weeks an injured worker is entitled to receive these benefits. Additionally, medical treatment guidelines have been introduced with the premise that they would streamline costs and get injured workers faster and more effective medical care. These guidelines are based upon the principles of Evidence Based Medicine (EBM), which is the use of clinical trials and data to determine whether a specific treatment should be recommended for a specific diagnosis. It is sometimes referred to as “cookbook” treatment.

In New York, the Court of Appeals recently ruled by a 4-3 margin that any treatment not specifically included and pre-authorized is presumptively unnecessary. In other words, if a treatment requested is not within the medical treatment guidelines, it is denied. This takes the decision making out of the hands of the treating physician who is really in the best position to determine what treatment would be most beneficial for patients. In order to overcome this presumption, the doctor now must engage in what has been seen in most cases as an exercise in futility to request a variance to overcome this presumption.

The New York Committee for Occupational Safety and Health (NYCOSH) reported that the New York State Workers’ Compensation Board received 202,643 variance requests in the first 10 months the guidelines were implemented. A quarter of the requests were rejected by the Board immediately. The rest can lead to protracted litigation. As a result, in many instances injured workers will now shift the cost to another party, such as their own private insurance, Medicare or even worse, pay for the treatment out of pocket. It is the path of least resistance. We all pay an additional price for medical costs borne by group health insurance carriers, Medicaid, and Medicare that should in fact be paid by Worker’s Compensation insurers. This cost shifting may increase Workers’ Compensation insurance profits, but it hurts both the employers’ and the employees’ bottom line. Injured workers don’t stop needing treatment just because their medical claim is denied. Someone has to pay for the cost of lost time and medical treatment. It is time that the proper party step up and take responsibility.

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Injured Worker Stakeouts: Do Private Investigators Commit Fraud?

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

Have you noticed a suspicious vehicle lurking in your neighborhood lately, or is there a stranger that seems to be everywhere you go? If you have an active workers’ compensation claim, then you may not be imaging things. More and more, we are seeing insurance companies willing to spend thousands of dollars to hire private investigators to conduct clandestine surveillance of an injured worker’s daily activities and documenting these activities with video cameras. This type of surveillance often comes as a shock to our clients.

When these situations arise, the question we hear most often is, “Can they do that? Is this legal?” The answer is yes. Private investigators may photograph or video people in their private residences so long as they are clearly visible to the general public and there is no expectation of privacy. They can also conduct a full background investigation and obtain information about any other claims you made for personal injuries or if you have ever been charged with a crime.

While there are honest private investigators in the field, there are also those who will cheat. One investigator deflated an injured worker’s tire and then videotaped the person “working” to fix the flat tire. Another investigator reported talking on the phone to someone who told him that an injured worker was working while also receiving workers’ compensation benefits. A follow up done by our firm proved that the person with whom the investigator claimed to have talked has a serious hearing impairment and could not use the telephone.

Injured workers need to be aware that surveillance can happen in any case. It has become part of the workers’ compensation system. By the way, if you do notice a suspicious car parked near your home, call the police.

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Cost Shifting: Worker’s Compensation Dirty Little Secret

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

Today I taught worker’s compensation “Offsets” in the course I teach at Marquette Law School. The students were aghast at the amount of “cost shifting” that occurs in worker’s compensation: that is, medical costs paid by a variety of sources other than worker’s compensation for medical expenses that should be paid by the worker’s compensation insurer.

We all pay an additional price for medical costs borne by group health insurance carriers, Medicaid, and Medicare that should in fact be paid by worker’s compensation insurers. This “cost shifting” occurs in two significant ways. First, if the claim is denied by the worker’s compensation insurance carrier, medical costs may be paid by the worker’s group health insurance or other private insurance company, or through State Medicaid or federal Medicare programs (the cost of which we all pay in taxes). When those claims are settled, the worker’s compensation insurer routinely saves money by reduced negotiated payment contracts with medical providers, between the provider and the group health carrier, Medicare, or Medicaid (rather than the “full boat” payments that should be paid by the worker’s compensation insurer). If the treatment is deemed work-related after a hearing, the worker’s compensation insurer will pay the other insurer, but at reduced rates.

Second, since only about one in ten cases involves any kind of litigation, workers who are not represented routinely bill their group or other insurance carrier for medical treatment that should be paid by worker’s compensation. Bolstering this notion is a recent article in the Insurance Journal. In the article Jonathan Gruber, Professor of Economics at M.I.T. was quoted indicating that worker’s compensation carriers should see fewer claims as a result of more Americans obtaining health insurance under the Affordable Care Act. He said “As more people have health insurance there is less need for them to have injuries covered by worker’s compensation and this should lower worker’s compensation costs.” Nowhere in this analysis is the notion that the appropriate payor for a worker’s compensation injury should be a worker’s compensation insurer, not health insurance premiums (which are shared by us all) nor Medicare and Medicaid (again shared by us all in the form of taxes).

Workers hurt on the job should have their medical treatment paid by the worker’s compensation insurer, who has received a premium for that risk from the worker’s employer. Cost shifting may increase worker’s compensation profits, but it hurts both the employers’ and the employees’ bottom line.

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2014 Top Ten Workers’ Compensation Fraud Cases

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

	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 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.

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 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, 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, 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)

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.[/caption] 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 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

Website: www.jernlaw.com

Facebook: https://www.facebook.com/jerniganlawfirm

Twitter: @jernlaw
Blog: www.ncworkcompjournal.com

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Workers' Law Watch

Published by Pasternack Tilker Ziegler Walsh Stanton & Romano LLP

Published by:

Category Archives: Workers’ Compensation

Workers’ Compensation Basics: Are You an Employee?

Yes, Monetary Benefits Are Available For Injured Volunteer Firefighters

Avoid the Pitfalls of Auto-Pay Agreements

“Cost-Shifting” Exposed: How Injured Worker Medical Care Decisions Are Made (And Who Pays)

Injured Worker Stakeouts: Do Private Investigators Commit Fraud?

Cost Shifting: Worker’s Compensation Dirty Little Secret

2014 Top Ten Workers’ Compensation Fraud Cases