Category Archives: employer fraud

Employer Fraud in Workers’ Compensation

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It is not workers who cost the workers’ compensation system the most when it comes to fraud. Until that myth stops being perpetuated, this blog will continue to feature posts that bring people to task for fraud against workers and workers’ compensation in various states.

Today’s post comes from guest author Thomas Domer, a respected advocate for workers, from The Domer Law Firm in Milwaukee. He writes commentary on Professor Leonard Jernigan’s list of 2015 Top Ten Workers’ Compensation Fraud Cases, an excellent article that was also featured in this blog.

I will continue to reinforce that although some in the workers’ compensation industry want people to believe that individual employees are the biggest (and most expensive) perpetuators of fraud, that is just not the case. State legislatures choosing to take away workers’ compensation benefits from injured workers and their loved ones because of “worker fraud” is just inaccurate and false. This is an important and helpful quote from Mr. Domer, with whom I agree.

“The workers’ compensation insurance industry has done a marvelous job in diverting attention from the real culprits (employers, medical providers, and insurers) to the very rare, but sometimes spectacular claims involving employee fraud.”

Compilations like the yearly one that Professor Jernigan completes will continue to set the record straight.

Legislatures around the country (including ours in Wisconsin) seem to be preoccupied with employee fraud in workers’ compensation, despite overwhelming evidence that employee fraud is virtually nonexistent. 

Employer fraud, however, continues to plague the industry.  Over the last decade, my friend and colleague Len Jernigan has published a Top 10 Workers’ Comp Fraud Claims.  The list from 2015 can be found at this link.

None of the Top Ten includes only an injured worker.  The top six of the Top Ten stem from California claims.  Others are from New York, Washington, Utah, and Massachusetts. 

This year’s dollar amounts were particularly substantial, with nearly $850 million in total frauds, the largest being a $580 million kickback scheme out of California.  The California kickback scheme involved surgeons and the owner of a hospital.  The other California claims included FedEx mislabeling their drivers as Independent Contractors in order to avoid insurance, and the owners of a translation service fraudulently billing the workers’ compensation system.  Additional mislabeling involved California truck drivers from Pacer Cartage, which owed over $2 million to seven truckers, due to unlawful payroll deductions and misclassifications as Independent Contractors.

The single case involving a worker is a professional football player from the New York Giants who colluded with a claims adjuster, providing fictitious invoices and statements for more than $1.5 million.  The New York, Washington, and Utah claims also involved misclassification in which no workers’ compensation insurance was paid for actual employees.

Another popular theme is the under-reporting of earners in order to be granted lower insurance premiums.  That scheme was uncovered in Massachusetts, avoiding more than a half million dollars in insurance premiums.

The workers’ compensation insurance industry has done a marvelous job in diverting attention from the real culprits (employers, medical providers, and insurers) to the very rare, but sometimes spectacular claims involving employee fraud.  (A worker claiming permanent and total disability climbing around on rocks is far sexier than a financial officer mischaracterizing his employees in a closed office.)

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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, Employee Misclassification, employer fraud, Fraud, Misclassification, Wage Theft and tagged , , .

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, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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, Employee Misclassification, employer fraud, Fraud, Misclassification, Wage Theft and tagged , , , , , , , .

Stolen Money: Wage Theft by Employers Common

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stealingWe 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.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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 Corporate fraud, employer fraud, Employment, Wage Theft, Withholding Pay and tagged , , , .

Workers Can’t Wait to Cash In?

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Worplace-Safety-Workers-Compensation-Worker-Injury-ConstructionIt’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.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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 Disability, employer fraud, fighting fraud, Fraud, Work Injury, Workers' Compensation, Workplace Injury, Workplace Safety and tagged , .

Mining firm sentenced in workers’ comp scheme

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Today’s post was shared by Gelman on Workplace Injuries and comes from www.wvgazette.com. It struck me to see this because of how West Virginia has recently been in the news for contaminated drinking water. Do I think this state is in worse shape or more corrupt than any other state? Probably not. Do I think that investigators in this state are more diligent than other states? Possibly, but also unlikely.

The story should be a wake-up call for employers who know they’re defrauding the system, because in the long term, society suffers. This story makes for interesting reading and an opportunity to think about how some folks will always take advantage of a situation to profit and have no qualms about doing something illegal, even when it potentially puts other people and their families in danger. This scam definitely put workers in danger so businesses could avoid the cost of workers’ compensation premiums. But what about the workers? If someone were hurt on the job and they thought their employer had workers’ comp coverage but didn’t, that cost either has to be absorbed by the workers and their loved ones, or, more likely, by taxpayers. And that’s one reason that it’s so important for officials to be willing to diligently investigate situations like the one described below. Because it not only helps keep workers safe, but in the long run, also saves taxpayers money and benefits society.

Today’s post is shared from wvgazette.com

Leads continue to develop out of an investigation into a multimillion-dollar scheme aimed at lowering workers’ compensation premiums for contract firms that provided workers to some of the state’s largest coal producers, an assistant U.S. Attorney said Tuesday.

U.S. District Court Judge John Copenhaver said the “scam here has been extraordinary” before sentencing Aracoma Contracting LLC to three years probation and ordering restitution be paid.

The scheme involved former BrickStreet Mutual Insurance Co. auditor, Arville Sargent, who took bribes to help contract companies save millions in workers’ compensation premiums by paying workers in cash and falsifying payroll records.

It involved four mining contract firms  — Aracoma Contracting LLC, Christian Contracting, T&W Services LLC, and Newhall Contracting. The companies were controlled by Jerome Eddie Russell, Frelin Workman and his son, Randy Workman.

The four companies were “employee leasing” services that supplied miners for coal companies, including Alpha Natural Resources and Patriot Coal, under arrangements common in the state’s mining industry.

Acting on behalf of Aracoma, its principals Russell, 50, of Williamson and Frelin R. Workman, 58, of Belfrey, Ky., formed a relationship with the Bank of Mingo, and one of its employees at the bank’s Williamson branch.

Aracoma, Sargent and Workman must jointly pay back about $4.7 million in restitution. Aracoma must also…

[Click here to see the rest of this post]

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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 employer fraud.

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

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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 in North Carolina. It is unfortunate that this article is necessary, but I appreciate the important work Mr. Jernigan does to compile these fraud cases each year. Because it makes for very interesting reading and reminds folks that fraud occurs on both sides of the workers’ compensation debate.

Employee fraud seems to get headlines, but employer fraud occurs on a much larger economic scale. As Mr. Jernigan points out, it’s the workers and taxpayers who are on the hook with employer fraud when an employee gets hurt and doesn’t have the coverage that they expected. But it is also worth noting that this year (for the first time in the five years Mr. Jernigan has compiled this list), an employee is in the top 10. As noted below, “the record is now 49-1 (employer fraud v. employee fraud) over the past five years.” I find this important food for thought as we begin a new year.

Employer Fraud Cases (9):$44,962,492.00
Employee Fraud Cases (1): $1,500,000.00
Total: $46,462,492.00

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

    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. California & North Carolina: Cleaning Company Owner Convicted of Underreporting Payroll and Ordered to Pay $898,000 (8/3/2013)

    L. D. Hardas, President of Awesome Products Inc., said support from the community and the state was key to bringing his company to Mount Airy.

    The president of Awesome Products, a cleaning company in California, was convicted and sentenced for underreporting his payroll by over $8 million, resulting in a premium loss of $898,000. Loksarang Dinkar Hardas (53) was sentenced to five years in state prison, stayed pending successful completion of 10 years of formal probation, a $250,000 fine, and restitution payment of $898,000. Notwithstanding his conviction, the town of Mount Airy, N.C was standing by Mr. Hardas and willing to give his company taxpayer money in hopes that Awesome Products would build a manufacturing facility and create jobs in Surry County, N.C.

  8. 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.

  9. 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.

  10. 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

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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 employer fraud, fighting fraud, Insurance, Workers' Compensation and tagged , .

Employer Fraud: NJ employer accused of stealing over $265K from workers’ comp insurer

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Charles Kelcy Pegler Sr.

Today’s post was shared by Gelman on Workplace Injuries in New Jersey and comes from www.app.com. As 2013 winds down, here is yet another blog post to show that fraud doesn’t only occur on the workers’ side. It looks like this business owner did not disclose all he needed to when it came to getting insurance coverage. Because he also had a government contract, he was charged with additional crimes in New Jersey. As I and other colleagues have written about numerous times, when employers cheat the system, the costs get passed on to someone, and that someone is usually the taxpayer who often pays for injured workers’ costs when there are problems with employers’ workers’ compensation coverage, or there is no coverage at all. “This defendant had a legal responsibility to provide adequate and lawful workers’ compensation coverage for employees,” Acting Attorney General John J. Hoffman said in a release, in the story. “By providing misinformation to his workers’ compensation carrier, he not only failed in this responsibility but also defrauded an insurance company out of hundreds of thousands of dollars. The cost of such fraud is passed on to consumers through increased premiums.” I hope all have a safer workplace with appropriate workers’ compensation coverage in 2014.

TRENTON — Charles Kelcy Pegler Sr., 55, of Spring Lake, has been indicted for stealing more than $265,000 by providing false and misleading information to the workers compensation insurance carrier for his roofing company.

Pegler was charged Thursday with second-degree theft by deception, second-degree false contract payment claim for a government contract, third-degree insurance fraud and fourth-degree false swearing, the state Attorney Generals Office announced.

Pegler is the president of Roof Diagnostics Inc. located at 2333 Route 34 in Wall. During the time described by the indictment, the company was at 608 Brighton Ave. in Spring Lake Heights.

The indictment alleges that between June 6, 2002 and Oct. 5, 2009, Pegler stole $265,044 from New Jersey Casualty Insurance Co. by creating the false impression that Roof Diagnostics was not a roofing company, that it did not employ roofers and that it did not install, maintain or repair roofs. That meant he paid far less in insurance premiums than he should have, according to state investigators.

This defendant had a legal responsibility to provide adequate and lawful workers compensation coverage for employees, Acting Attorney General John J. Hoffman said in a release. By providing misinformation to his workers compensation carrier, he not only failed in this responsibility but also defrauded an insurance company out of hundreds of thousands of dollars. The cost of such fraud is passed…

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The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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 employer fraud.

NEOC Awards Whistleblower Client Misclassified as Independent Contractor

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justiceI was happy to have the chance to represent Theron Chapman in his whistleblower claim against his former employer, Midwest Demolition. While the Lincoln Journal Star headline of “Man chased from job by manager with stun gun awarded back pay” is catchy, the real story here is that an employee who was fired for complaining of legitimately being misclassified as an independent contractor won some measure of justice from the Nebraska Equal Opportunity Commission.

Mr. Chapman had a legitimate grievance about being misclassified as an independent contractor. Nebraska law explicitly prohibits the type of misclassification that he questioned. In 2010, State Sen. Steve Lathrop, who authored the legislation outlawing misclassification in Nebraska, said in his bill’s statement of intent, as quoted in Truckinginfo: the web site of Heavy Duty Trucking magazine, that:

“When a contractor misclassifies an employee, the employee is ineligible for unemployment and workers’ compensation benefits, loses labor-law protections and does not receive employer-provided health insurance. Misclassification creates an unfair advantage to unscrupulous contractors who are able to outbid law-abiding employers who must take into account the payment of taxes and insurance premiums when bidding for jobs. The State’s loss in revenue negatively affects the funding of essential programs such as unemployment benefits.”

The deeper story here is that people on the margins of the workforce can sometimes vindicate their rights in the workplace. My client was hired through a job lottery at the People’s City Mission, a homeless shelter, here in Lincoln. People in his situation are vulnerable to abuse in the workplace. Not every instance of bad behavior by management is legally actionable, but that is true from the executive suite to low-wage workers like my client. But fair-employment laws can protect people who are being abused in the workplace and do sometimes provided protections to the people who need them the most.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. 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 Court, Employee Misclassification, employer fraud, employment law, Firm News, Independent Contractor, Uncategorized and tagged , , .