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2015 Top Ten Workers’ Compensation Fraud Cases

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Leonard Jernigan

Professor Leonard Jernigan

In what has become a yearly tradition, here are the 2015 top 10 workers’ compensation fraud cases, provided by guest author and respected colleague Professor Leonard Jernigan, from The Jernigan Law Firm in North Carolina.

At the time of year when many state legislative bodies are pushing forward in their work representing citizens and talk of “workers’ compensation reform” continues, this blog post focuses on one of the many misconceptions in workers’ compensation. This misconception is that fraud is rampant, and somehow workers plan to hurt themselves or are intentional about it because they’re “in it for the money,” which seems to actually be fairly rare.

This also appears to have been an exceptional year for fraud, with the total in the blog post compiled as $849,500,000. Yes, that’s almost $850 million in workers’ compensation fraud, all of which was found in only five states, with California coming in first with six instances of fraud.

As you can see by both the quantity and dollar value, of his top 10 fraud cases, non-employee cases are dominant over worker fraud, and the dollar cost is quite large for the nine non-employee cases. In the seven years total that Professor Jernigan has compiled the lists, the larger economic fraud of non-workers involved in the workers’ compensation system is dominant in a 67-3 margin.

Based on this information, I would strongly encourage those who are pushing “reform” of the system to avoid limiting treatment access to workers and instead focus on cleaning up the other players, as a start.

Each of the examples affected real people and their loved ones. Fraud against workers tends to be on a much grander scale, and though it has been mentioned in previous blog posts, it is worth saying again that it’s the workers and taxpayers who are on the hook when it comes to situations that include overbilling, workers’ compensation scams, and employers not carrying workers’ compensation insurance. It can be tragic to workers and their loved ones if an employee gets hurt and the employer was cutting costs by not carrying workers’ compensation insurance. Without this safety net, when injured, workers often default to their personal health insurance (if they have any) or rely on the taxpayer-funded safety net, which shifts the cost burden from the businesses involved to the greater society of responsible taxpayers.

Legitimate business owners who pay for workers’ compensation, as required by law, are at a competitive disadvantage with those who cheat the system, and when people suffer a workplace disability and have no insurance local businesses that provide goods and services feel the pain along with health care providers who cannot get properly paid for their services. The cost of medical care and disability ends up being shifted to the taxpayer through Social Security, Medicare and Medicaid, and in states where compliance is not vigorously enforced or business are allowed to opt out of the workers’ compensation system, a culture of cheating and/or lack of transparency continues.

It is unfortunate that this article is necessary, but I appreciate the important work Mr. Jernigan does to compile these fraud cases each year. It makes for very interesting reading and reminds folks that fraud occurs on both sides of the workers’ compensation debate, though not nearly as much by workers’ as people think.

Here are the links to previous years’ posts, which were published in 2015, 2014, and 2013, so they include cases that were compiled regarding 2014, 2013, and 2012, with the post below being 2015’s edition.

I hope that you have a safe and productive 2016.

Number Value
Non-Employee Fraud Cases 9 $ 848,000,000
Employee Fraud Cases 1 $ 1,500,000
Total $ 849,500,000

The top six of our top ten fraud cases of 2015 are from California, a perennial offender. The other four cases are from New York, Washington, Utah, and Massachusetts. As we continue to discover each year, non-employee fraud cases dominated the list. This year’s dollar amounts were particularly large, with nearly $850 million in total frauds. The largest fraud was a $580 million kickback scheme out of southern California. Authorities have begun to enforce the law against companies who have misclassified their workers and we expect to see a continued increase in these enforcement actions, both against our traditional offenders and against some of the sharing economy companies who are now the subject of multiple lawsuits.

1. (California) Surgeons and Owner of Hospital Charged In $580M Kickback Scheme (11/26/15)

(Credit: MoneyTimes) The kickbacks involving millions of dollars are increasing the insurance costs for patients.Such practice corrupts the relationship between doctor and patient, thus polluting medical profession.

(Credit: MoneyTimes) Kickbacks involving millions of dollars are increasing insurance costs for patients.

Five people have been criminally charged for their involvement in a medical kickback scheme that defrauded the California workers’ compensation system and insurance companies of $580 million over eight years. Two of the five charged were surgeons and one was a former owner of Pacific Hospital. The scheme benefited doctors and chiropractors who referred their patients to two Southern California hospitals for thousands of operations.

 

2. (California) FedEx Settles Misclassification Case For $228 Million (6/16/15)2. fedex FedEx has agreed to pay $228 million to resolve claims by 2,300 FedEx Ground pickup and delivery drivers in California. FedEx was labeling drivers as independent contractors in order to avoid the costs of trucks, branded uniforms, scanners, fuel, maintenance of the trucks, insurance and much more. Drivers were also not paid for missed meals, rest periods, or overtime compensation.

 

3. (California) Spanish Translators Caught in $24 Million Workers’ Compensation Fraud Case (12/17/15)Screen Shot 2016-01-16 at 12.21.25 AM The owners of G&G Translation services and over 200 of their employees fraudulently billed $24.6 million in workers’ compensation cases for services never rendered.  For example, one bill was for $422,000 for translation services by a translator who was actually in prison at the time. G&G obtained a list of patients who needed translation services at medical facilities and used those names to submit bills to large self-insured employers.

 

4. (California) Sewing Subcontractors Charged With Running $11 Million Dollar Workers’ Comp Insurance Fraud Scheme (4/16/15) Caroline ChoiJae Kim

Two CEOs of a sewing company were arrested on April 15, 2015 for conspiring with their CPA, Jae Kim, to underreport $78.5 million in payroll to multiple insurers. They were arrested on 18 felony counts of workers’ compensation insurance fraud totaling more than $11 million in losses.

 

5. (California) Truck Drivers Awarded More Than $2 Million Due To Misclassification By Employer (2/3/15)

Pacer Cartage drivers protesting in November (Photo from the Teamsters Union)

Pacer Cartage drivers protesting in November (Photo from the Teamsters Union)

Pacer Cartage, Inc. (one of the largest port trucking companies in the U.S.) owes $2,026,483 to seven truckers due to “unlawful payroll deductions and expenses as part of a wage theft scheme” by the company. The employees were incorrectly classified as “contract laborers” who were forced to lease their trucks by their employer, and the employer avoided paying workers’ compensation premiums. Their leases were deducted from their paychecks, and the employees were not allowed to use the trucks for any other business purpose or drive them home.

 

6. (California) NFL Player and Gallagher Bassett Adjuster Plead Guilty to Wire Fraud & Filing False Workers’ Comp Claims for $1.5 Million (10/1/15)

Marcus Buckley (55) played for the New York Giants from 1993 to 2000.

Marcus Buckley (55) played for the New York Giants from 1993 to 2000.

Claims Adjuster Kimberly Jones filed fraudulent workers’ compensation claims on behalf of former NFL player Marcus Buckley between 2001 and 2011. In 2006 Buckley filed a workers’ compensation claim that was settled for $300,000 in 2010. After the case was settled, Buckley and Jones filed numerous requests for reimbursement under Buckley’s closed cases providing fictitious invoices, statements and credit bills. Buckley received more than $1.5 million.

 

7. (New York) Plumbing and Heating Contractors Settle for $1.4 Million(4/21/15) USDOL_Seal_circa_2015.svgFour Long Island City plumbing and heating contractors misclassified and underpaid a total of 300 employees. At least 25 employees were misclassified as independent contractors, several hundred were not paid overtime, and the companies’ recordkeeping did not meet the Fair Labor Standards Act requirements. The companies settled out of court when the Wage and Hour Division’s New York City District Office investigated and litigation began for a total of $710,000 in back wages to cover September 2010-April 2014 and damages for 300 employees equaling $1.42 million dollars.

 

8. (Washington) Drywall Contractor in Walla Walla Must Pay More Than $1 Million in Workers’ Compensation Premiums and Penalties (4/17/15) drywallShawn A. Campbell and his wife were held personally liable for over $1 million in unpaid premiums, interest and late penalties for their company. Campbell listed his employees as co-owners in order to avoid paying workers’ compensation premiums.

 

9. (Utah) Construction Company to Pay $700,000 for Misclassification Scheme (5/1/15) CSG Workforce Partners (a.k.a. Universal Contracting, LLC and later as Arizona Tract/Arizona CLA) required their workers to classify themselves as “members/owners” which limited their legal rights and gave them no minimum wage guarantee, no time-and-a-half overtime pay, no workers’ compensation insurance and no unemployment insurance. When the employers found out that the state of Utah was investigating, they packed-up and left for Arizona. However, they were tracked down and charged $600,000 in back wages to employees as well as $100,000 for their willful violations of employment laws.

10. (Massachusetts) Roofing Business Owners Indicted for Workers’ Comp Fraud Totaling $615,000 (3/25/15) Two business owners allegedly failed to accurately report their payroll and underreported earnings in order to be granted lower insurance premiums in three roofing companies between 2008 and 2014. They avoided paying a total of more than $615,000 in insurance premiums alone.   For more information, contact: Leonard T. Jernigan, Jr. Adjunct Professor of Workers’ Compensation Law N.C. Central University 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 Twitter: @jernlaw Blog: www.ncworkcompjournal.com

The offices of Rehm, Bennett & Moore and Trucker Lawyers are located in Lincoln and Omaha, Nebraska. Six attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 90 years of practice representing injured workers and truck drivers in Nebraska and Iowa in state-specific workers’ compensation systems. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Workers’ Compensation Basics: Emotional, Psychological Injuries in Nebraska

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nurseThis blog post is the next in a series that examines the basics of workers’ compensation. It gives information on the compensability of emotional or psychological injuries in Nebraska.

The Nebraska Supreme Court recently released a new opinion in Hynes v. Good Samaritan Hosp., 291 Neb. 757 (Sept. 4, 2015) concerning the causation standard for emotional or psychological injuries in workers’ compensation injuries. This is a favorable decision for injured workers in Nebraska, and very necessary progress in the recognition and legitimization of these types of injuries. It is also progress in the struggle against the stigma associated with mental-health issues in general.

The plaintiff in the Hynes case was attacked by patients on three separate occasions while working as a nurse. She suffered some physical injuries, but ultimately required extensive treatment for major depressive disorder and PTSD and was unable to work due to her mental injuries. This decision clarified that where there is sufficient evidence to find that a psychological injury is directly related to the accident and the employee is unable to work, the employee is entitled to compensation. Before this decision, plaintiffs were generally met with the burden of showing their mental injury was directly linked to ongoing pain from a physical injury.

Nebraska law does still require a work-related accident and physical injury for most injured workers (there is an exception for mental injuries unaccompanied by physical injuries for an employee who is a first responder). An injured worker must suffer some “violence to the physical structure of the body,” rather than an injury caused by a mental stimulus only. Additionally, even where an injured worker has suffered a physical injury, mental injuries entirely attributable to other factors – such as the stress of litigating a workers’ compensation claim, where there is no physical injury related to the mental injury – are considered an intervening event and therefore not compensable. Where a mental injury is attributed to both a physical injury and the psychological stress of issues such as immobility and inability to work, the claim may be compensable.

Just like most physical injuries, proving a mental injury is related to a work-related accident requires that an injured worker seek treatment and obtain an expert opinion from a doctor. The doctor must find that the injured worker sustained physical and psychological injuries as a proximate result of a work-related accident.

Working toward recovery from a mental injury can take as long as or longer than recovering from a physical injury, and the effects can result in vast negative repercussions for an injured worker and their family. Receiving medical and psychological care and other compensation while in the recovery process can make all the difference in the world to the ultimate outcome for an injured worker dealing with a mental injury. Determining whether you have a compensable claim, and obtaining this care and compensation can be complicated, so consult an experienced workers’ compensation attorney for help.

Please read the previous blog posts in the workers’ compensation basics series by clicking on these links:

The offices of Rehm, Bennett & Moore and Trucker Lawyers are located in Lincoln and Omaha, Nebraska. Six attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 90 years of practice representing injured workers and truck drivers in Nebraska and Iowa in state-specific workers’ compensation systems. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

This entry was posted in doctors, mental health, Mental Injuries, PTSD, Workers' Comp Basics, Workers' Compensation and tagged , , , , .

What’s in a Back Injury?

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Pain radiating down the leg to the small toe in the general pattern of the S1 dermatome suggests that a herniated disk may be pinching the S1 nerve root in the spine.

I hurt my back, and my doctor said it’s my “disc.” What is going on?

Obviously, you’ll want to speak to your doctor about the specifics of your injury, but below is a simple primer on the basic information of an injured, slipped, bulging, herniated disc.

Discs are in between your vertebrae in your spine. They are there as shock absorbers between the bone and also help provide the spine with mobility.

When you have an injury to your disc, you may have what’s called a disc herniation or a disc bulge. If you have a disc herniation, the gel-type substance in the disc has extended beyond where the disc normally contains the gel substance. In the case of a herniation, you can have an extruding disc (more prominent) or a protruding disc (less prominent). The herniation becomes a problem when it interferes or “impinges” or “entraps” the nerves in your spinal column.

A bulging disc is when the gel-type substance is outside the normal disc space, but the outer “shell” of the disc remains intact for the most part. Usually, a bulging disc is less severe than a herniated disc, and bulging discs are sometimes referred to as “protruding discs” as well.

Because the nerves in your spine control your arms and legs, often, your doctor can determine which disc is causing you problems simply by what part of your arm or leg tingles, goes numb, or hurts, along with the location of the pain in your back. For example, if you had a back injury and it now hurts on the outside of your thigh, across the front of your knee, and into your big toe, you likely have an issue with your L4-L5 disc (see the chart as an illustration).

Naturally, a doctor will use your symptoms in conjunction with other diagnostic tests to determine the location of the problem more precisely and will treat your symptoms accordingly. In addition, your doctor will be better able to explain the specifics of your injury more thoroughly and precisely. However, the purpose of this blog is to simply give you an overview of what it means when the doctor says you have a disc “herniation” or “bulge.” This disclaimer applies to the information supplied in today’s blog post.

The offices of Rehm, Bennett & Moore and Trucker Lawyers are located in Lincoln and Omaha, Nebraska. Six attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 90 years of practice representing injured workers and truck drivers in Nebraska and Iowa in state-specific workers’ compensation systems. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Official Disabilities Guidelines Now Covers Diabetes

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Today’s post comes from guest author Paul J. McAndrew, Jr. from Paul McAndrew Law Firm in Iowa. Formal treatment guidelines under the Official Disabilities Guidelines (ODG) are an effort under the workers’ compensation laws in different states to standardize care among injured workers. Although that sounds like a good thing, as Mr. McAndrew points out, an underlying condition like diabetes can affect an individual’s recovery time from a work injury, which requires healing at an individual, not standardized, rate. At Rehm, Bennett & Moore, we take workers as clients being realistic about where they are with health challenges, including those who have underlying issues such as diabetes. The ODG treatment guidelines by definition are arbitrary, and to see insurance and business interests trying to get them instituted in Nebraska makes me concerned about clients and other workers’ coverage under the workers’ compensation system. Applying arbitrary guidelines like ODG’s to individual situations, such as to workers who have diabetes, is a concern that needs more study before the guidelines are implemented in any more states, including Nebraska.

While diabetes is not a work injury or illness, it can have a serious impact on the rate at which an injured worker recovers. For instance, people with diabetes may have a much harder time healing from a foot or leg injury. The latest edition of the annual Official Disabilities Guidelines (ODG) has been released, including the latest ODG volume on treating patients. ODG Treatment is the nationally recognized standard for medicine in determining the scope and duration of medical treatment in workers’ compensation.

For the first time this year, ODG Treatment includes a chapter on diabetes. According to the American Diabetes Association, there are nearly 26 million people in the United States who have been diagnosed with diabetes, and an estimated 7 million more people suffering who have not yet been diagnosed. Clearly, the implications of diabetes on workers’ compensation are significant.

The offices of Rehm, Bennett & Moore and Trucker Lawyers are located in Lincoln and Omaha, Nebraska. Six attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 90 years of practice representing injured workers and truck drivers in Nebraska and Iowa in state-specific workers’ compensation systems. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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