Tag Archives: fraud

Workers' Compensation

Cries of High Costs and Fraud – Watch for Reforms

There is always discussion, in every state, about the expense of workers’ compensation insurance to employers. It is common to hear stories of corruption and fraud when employer costs run high. This discussion can lead to cries of fraud, usually with fingers pointed towards claimants and often tied into efforts to reduce benefits to injured workers. As a recent example, take a look at the article published on July 23rd in the Fresno Bee, written by Dan Walters of CALmatters, titled “California workers’ compensation system plagued by high costs and fraud.” In the article, Mr. Walters points to Southern California as an area particularly afflicted by fraud, inserting the hot-button phrase “immigrant workers,” as follows:

“Why Southern California? Its large numbers of immigrant workers are easily persuaded by recruitment agents, called “cappers,” to file claims that allow unscrupulous lawyers and medical providers to milk inflated payments for nonexistent injuries.”

Mr. Walter’s statement is misleading and inflammatory. The link provided by Mr. Walters to support his claim of fraud leads to a news piece – not a study – released by the Center for Investigative Reporting on their “Reveal” radio and web platform.  

The story on Reveal, titled “Profiteering masquerades as medical care for injured California workers,” published in March of 2016, focuses on fraud within the medical component of the workers’ compensation system.  It makes no mention of “immigrant workers” although there is discussion of Spanish-language service providers within the article. The conclusion of the Reveal piece describes injured workers as the real victims of the scams they investigated.

From our experience representing injured workers in Washington State, we see very little in the way of fraudulent acts, by medical providers, injured workers, insurance carriers or employers. In our cases, the fraud we encounter most, on both small and large scales, is committed by employers. We see misclassification of workers to reduce premium rates paid or the failure to provide coverage of a worker by stating they are independent contractors.  We see inaccurate data about earnings and overtime provided by employers in an effort to reduce compensation paid to injured workers and even outright lies about the circumstances of an injury to try to keep a claim rejected.

We do, however, see inefficiencies, on a daily basis, usually under the guise of cost management. Claims managers spend an incredible amount of time and energy micromanaging claims, segregating medical conditions from claim coverage, delaying or denying medical treatment authorizations, sometimes leading to litigation with months, or even years, involved and no relief from legal fees or costs for the claimant, even if successful at trial. In most cases, private insurance policies will not authorize treatment or surgery when a workers’ compensation claim is involved until the litigation has been concluded and the responsibility for coverage is clearly under their policy.

Fraud is a problem whenever it occurs, whomever is committing the fraudulent acts. To hear the cry of “fraud!” – especially when peppered with phrases like “immigrant workers” –  is a good warning bell. These cries often indicate another round of injured worker benefit cuts will soon be on the table. Watch for more news stories, videos of an injured worker riding a jet ski, and you’ll know there’s soon to be “reforms” proposed.

“The “grand compromise” is just as valid today as it was in 1914, but it could collapse if costs – and the fraud and other unseemly aspects of work comp that drive them – are not tamed. The next overhaul should be systemic, not just another backroom deal.” – Dan Walters

An efficiently run system run with fairness and respect and a focus on a speedy, full recovery after an injury and limiting lost wage earning capacity for workers permanently injured on the job should be the goal of all of the players within a workers’ compensation system. Cost savings and improved outcomes can both be achieved. These goals are best met through broad-based efforts to work together on the full spectrum of issues rather than singling out one or more of the segments – doctors, lawyers, claimants, carriers or government agencies – as the primary culprit. There’s room for improvement in all of these segments.

Photo credit: Kit Case

Workers' Compensation

Former Corrections Officer Charged with Felony in $100,000 Workers’ Comp Scam


A former corrections officer stands accused of holding three security jobs while claiming his on-the-job injury was so serious he couldn’t work.

A Washington State Department of Labor & Industries (L&I) investigation caught John J. Gruden, 43, on video jogging on a treadmill and sidewalk, and driving to work at the Phoenix Police Department. All of this occurred while he was receiving workers’ compensation disability payments totaling more than $100,000 over five years.

Gruden, who was injured while working as a corrections officer at Monroe Correctional Complex, has been charged with felony first-degree theft based on his work activity.

Gruden is now believed to be living in Michigan.

The Washington Attorney General’s Office is prosecuting the case based on L&I’s investigation. The charge was filed in Snohomish County Superior Court.

Injures ankle at Monroe prison

Gruden injured his right ankle and foot when someone fell on him during training at the Monroe state prison in May 2011.

That August, he moved to Arizona, where he regularly declared on official forms and told L&I vocational counselors that he could not work, and wasn’t working, due to his on-the-job injury, charging papers said. His declarations, coupled with physician confirmations, allowed Gruden to receive L&I payments to replace part of his wages.

Surveillance to check injuries

In 2014, an L&I claim manager requested surveillance to check on the extent of Gruden’s abilities and injuries, and closely monitored his case. In 2015, the claim manager requested additional surveillance, which revealed Gruden was driving to a job.

L&I, with the help of an out-of-state investigation firm, determined Gruden had actually been working full time as a security professional for nearly the entire time he told L&I he wasn’t employed.

 

Police assistant for Phoenix Police

Starting in the fall of 2011, he worked for a private security firm for eight months, then as a public safety aide for Maricopa County Community College for two-and-a-half years. His annual salary at the community college was posted at more than $34,600, charging papers said.

While still working at the community college, he was a full-time police officer assistant/municipal security guard for the Phoenix Police Department from July 2014 until early 2016.

“Making false claims about your work status to get workers’ comp benefits is a crime,” said Elizabeth Smith, assistant director of L&I’s Fraud Prevention & Labor Standards. “Fraud raises costs for the employers and employees who depend on the workers’ comp system to help injured workers heal and return to work. Tell us if you know of someone who’s trying to cheat the system.”

Report fraud on L&I’s Fraud Prevention and Compliance webpage or call 888-811-5974.

 

Photo credit: Legozilla via Foter.com / CC BY-NC-SA

Workers' Compensation

BMX Bike Racer Defrauded State, Must Pay Back $14,000

A Port Orchard, WA man who was caught on video racing BMX bikes while claiming he was too injured to work pleaded guilty to stealing more than $14,000 in disability benefits.

 

Tony T. Perry Sr., 52, pleaded guilty to two counts of third-degree theft, a gross misdemeanor, in Thurston County Superior Court. Judge Anne Hirsch sentenced Perry to 364 days in jail, but suspended all but 15 days if he obeys the law for two years. She is allowing him to serve the 15 days in electronic home monitoring, according to the Washington Attorney General’s office, which prosecuted the case.

 

Judge Hirsch also ordered Perry to repay the Washington State Department of Labor & Industries (L&I) $14,422. That was how much Perry received in workers’ compensation wage-replacement checks from January 2012 to August 2013 while misrepresenting his physical abilities.

 

Perry paid the full amount. The money will be returned to the state workers’ compensation fund, which helps employees recover from workplace injuries.

 

“It’s outrageous when people try to scam the workers’ comp system so boldly. When they steal from us they’re stealing from you,” said Elizabeth Smith, assistant director of L&I Fraud Prevention & Labor Standards. “A tip from the public helped us get to the bottom of this. We appreciate it, and encourage people to tell us when they’re aware of workers’ comp fraud.”

 

BMX racing is an off-road, physically demanding bicycle competition typically held on dirt race courses with hills requiring riders to jump in the air.

 

Racing throughout the Pacific Northwest

 

The criminal case resulted from an L&I investigation. Investigators found that Perry began racing BMX bicycles as an amateur in January 2012, eventually competing throughout the Pacific Northwest and Nevada.

 

The case investigator videotaped Perry competing in two races, and found numerous Facebook posts about Perry’s racing activities, charging papers said. In a post about a May 2012 race, Perry described how he crashed and injured his ribs ­− but told L&I he hurt himself at home that day due to a fall caused by his injured knee.

 

After receiving a summary of L&I’s investigative findings in March 2014, Perry’s physician told L&I he would have ended Perry’s wage-replacement payments as of January 2012 had he known about his physical abilities.

 

Perry had been receiving workers’ comp benefits based on knee and other injuries he sustained when lifting a heavy box while working in grounds maintenance.

 

Workers' Compensation

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.

Workers' Compensation

Vancouver, WA Road Paver Charged with Unregistered Contracting

A Vancouver, WA man faces criminal charges that he operated as an unregistered contractor while paving driveways for Clark County residents. Some Clark County customers claimed his work was shoddy or never finished.

The Washington Attorney General’s Office has charged Salvador Rodriguez, 44, with six counts of unregistered contracting, a gross misdemeanor. He also faces two felonies − one count each of doing business without workers’ compensation insurance and failing to report or pay workers’ comp premiums. His business goes under the name Chava Paving.

The prosecution stems from a Department of Labor & Industries (L&I) investigation and multiple encounters between Rodriguez and L&I construction compliance inspectors.

 

Ridgefield consumer paid $33,000

The charges cover at least seven jobs Rodriguez’s company performed or agreed to perform from September 2012 through June 2014. In several of the jobs, consumers told L&I that Chava Paving did shoddy work or never finished, but Rodriguez refused to provide refunds or complete the jobs.

In one instance last June, a Ridgefield, WA property owner paid $33,000 in advance for the company to build a retaining wall and parking pad, and spread gravel on a road. The owner said that after five days on the job, the crew’s work was so poor and incomplete that he cancelled the contract. Rodriguez wouldn’t repay any of the money, which the property owner had paid in checks written to Salvador’s 17-year-old son, court documents said.

L&I recommends that consumers never pay contractors in full until the job is completed to their satisfaction.

Along with leaving unsatisfied customers, L&I found that Rodriguez wasn’t paying workers’ compensation for his employees. He employed three to 10 workers, depending on the job, without paying workers’ comp. In one case, at a Vancouver, WA mobile home park in July 2013, one worker even filed a wage complaint, contending that he was never paid; L&I retrieved the back pay for the employee.

 

Admits working without license

During an October 2013 interview with L&I staff, court documents said, Rodriguez admitted he and his workers were performing paving jobs without a contractor’s license or workers’ compensation account. He said he had to keep working to pay his bills.

Rodriguez originally registered Chava Paving in 2005. L&I suspended his contractor registration in May 2009 when his insurance and bond were cancelled, and revoked his workers’ comp coverage in October 2010 for failing to pay premiums. Since 2009, L&I inspectors have issued Rodriguez a dozen civil citations for unregistered contracting; none has been paid.

 

Check out prospective contractors

State law requires construction contractors to register with L&I. To register, contractors must have liability insurance, a business license and a bond to allow for some financial recourse if the project goes awry. Consumers can check whether a contractor is registered by going to www.Verify.Lni.wa.gov or calling 1-888-811-5974.

 

Photo credit: Steve Snodgrass / Foter / CC BY

Workers' Compensation

Spokane Woman Charged with Defrauding State in $101,000 Disability Scam

SPOKANE — A Spokane woman stands accused of raking in more than $100,000 in disability benefits while working with her husband to operate his motel, and their nightclub and apartment building.

The Washington Attorney General’s Office has charged Mistie S. Crosby, 52, with one count of first-degree, felony theft. Crosby is slated to appear on the charge in Spokane County Superior Court on July 23.

The case resulted from a Washington State Department of Labor & Industries (L&I) investigation.

Crosby said she hurt her back, neck and shoulder in September 2010 while working at Sunset Junction, a nightclub in Spokane that has since closed. According to charging papers, she filed an injured workers’ claim, physicians confirmed she was injured, and L&I opened her claim.

No mention of ownership

When submitting the claim form, Crosby did not divulge if she was an owner, partner or corporate officer in the business where she was injured. Business owners must provide employees with workers’ compensation insurance, but the coverage is optional for the owners themselves. Crosby never signed up for the insurance.

From the time she was injured through early 2013, Crosby received nearly $59,000 in wage-replacement payments and more than $42,000 in medical and vocational benefits from L&I. During that period, she signed official forms certifying she was not working and incapable of working due to her on-the-job injury.

Undercover investigation

However, an L&I investigation revealed that Crosby was working at the Lascelle Motel and an apartment complex while she was receiving the workers’ comp benefits, charging papers said. At one point, she even showed apartments to an undercover investigator, and easily climbed stairs as the investigator watched.

In an interview in February 2013, Crosby told the investigator she co-owned the nightclub, motel and apartment complex, and played an integral role in each business, charging papers said.

L&I began the investigation based on a tip that Crosby was more active than she was reporting to L&I, and that she might be helping at the nightclub.

“We investigate every tip,” said Doric Olson, deputy assistant director of Fraud Prevention and Labor Standards. “Rooting out fraud allows us to protect the system for workers who are truly injured.”

To report cases of suspected fraud, go to Lni.wa.gov/Fraud or call 1-888-811-5974.

 

Photo credit: RoadTrippers.com

customs, Disability, disability law

Bad Time to be a Disability Lawyer

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

I passed through Customs after a trip to Europe this week and explained to the Customs official that I represented injured workers.  His first comment to me was “How ‘bout those guys that are scamming the system?”  I attempted to provide the disclaimer to his notion that “At least one out of every three is a fraud.” by explaining that in a long term study of fraud in Wisconsin, the incidence of fraud was literally one in 5,000.

Nonetheless, that notion persists.  I read with interest today the speech of Professor Jon C. Dubin accepting a Distinguished Service Award.  I sent Professor Dubin a congratulatory note and obtained his permission to reprint it in an upcoming issue of the Workers First Watch (the magazine of the Workers Injury Law and Advocates Group (WILG) which I edit.  He noted

“Sometimes it seems like the only thing less popular than a disability benefit claimant these days is a disability benefit claimant with a lawyer. But it bears remembering that you are the first line of defense against these stereotypes and misperceptions and against the insidious drumbeat of atypical anecdotes and calls for draconian policy change. You are also the only ones who can communicate your clients’ true and heartbreaking counter-narratives to those fraud stories. You are the ones who can describe the terrible injustices that routinely occur in assembly line administrative decision-making especially when there is a cloud of political pressure lurking above that process.”

References made to Social Security representation are also applicable in our worker’s compensation arena.  Congratulations again to Professor Dubin on his well-deserved award and his accurate perceptions of disability claimants and their representatives.

Workers' Compensation

Stanwood, WA Business Owner Gets Prison Time in Nearly $300,000 Disability Fraud

A Stanwood, WA business owner must spend a year in prison for a scam that defrauded state and federal disability programs and his union, U.S. Attorney Jenny A. Durkan announced Thursday.

Richard Stalkfleet, 66, of Stanwood, collected more than $295,000 in disability and pension benefits for eight years while running a wood chip distribution company that earned more than a half-million dollars annually, according to a news release from the U.S. Attorney’s office in the Western District of Washington.

Washington State Department of Labor & Industries investigators played a major role in uncovering Stalkfleet’s activities. They conducted surveillance of Stalkfleet, and found him working and driving trucks while receiving Social Security Disability and Teamster Pension Plan benefits and more than $130,000 in L&I workers’ compensation benefits, according to federal prosecutors.

Read more about Stalkfleet’s sentence and the L&I investigation in the U.S. Attorney’s news release at  www.justice.gov/usao/waw/

 

Photo credit: ABN2 / Foter / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

DLI

Pierce County, WA Landscaper Charged with Skipping Out on Workers’ Comp Coverage

          A Pierce County, WA landscaper has been charged with failing to pay workers’ compensation insurance after one of his employees was injured on the job.

           Kenneth Ivan Winters, 49, faces one count of doing business without workers’ comp insurance and seven counts of making false reports to the Department of Labor & Industries, according to charging papers. Each charge is a Class C felony with a maximum penalty of five years in prison and a $10,000 fine.

           The Lakewood man pleaded not guilty to the charges Wednesday, February 19, 2014 in Pierce County Superior Court. His trial was set for May 1.

           According to charging papers filed by the Washington Attorney General’s office, authorities were alerted to the case when an employee filed an on-the-job injury claim while working for Winters’ business, Executive Lawn Care, in October 2012.

           The worker told an L&I investigator that Winters, who was on site when the employee was hurt, threatened him and his family if he filed a claim with L&I, charging papers said. The employee said he had worked for Winters from 2002 until the day he was injured.

           Winters’ workers’ comp coverage had been revoked eight months earlier for failing to pay premiums. However, charging papers allege, he continued to employ the worker full time until the injury. Winters told an L&I investigator he started the business in 1990, and at one time had up to six employees. He said business slowed and his main employee was the worker who became injured, and occasionally the worker’s brother.

           As of Jan. 7, 2014, the employee’s claim has cost L&I more than $67,000 in medical expenses and lost wage payments, charging papers said.

           Businesses that don’t pay workers’ comp insurance gain an unfair advantage over companies that pay their fair share. A 2007 study found that an estimated 55,000 employers skipped out on paying $34.5 million in workers’ comp insurance in Washington state in 2006, causing legitimate employers to pay higher premiums.

         Washington state is one of the few states in the nation where employers and workers both pay a share of the workers’ compensation premiums.  The press release from the Department of Labor and Industries did not indicate whether this worker’s payroll deductions had continued even when his workers’ compensation coverage had lapsed.  If this was the case, this employer’s fraud would represent wage theft, as well.

         

DLI

Spokane Restaurant Owner Charged with Theft of Nearly $250,000 in Workers’ Comp Payments

Aside

     The Washington State Department of Labor and Industries issued the following news bulletin with details of a recent fraud investigation:

A Spokane restaurant owner faces a felony theft charge alleging she defrauded the state of nearly $250,000 in workers’ compensation benefits over eight years while claiming she could not work.  In reality, a Department of Labor & Industries investigation found Wanitta Racicot, 69, was cooking, busing tables and performing other duties at a restaurant that she co-owns.

The Attorney General’s Office recently charged Racicot, of Spokane Valley, with one count of first-degree theft in Spokane County Superior Court. Racicot is scheduled to enter her plea to the charge on Sept. 4. According to court documents, Racicot filed for workers’ compensation with L&I in 2001, claiming she injured both of her arms while working at a restaurant. After opening her claim, she regularly signed official documents stating she was not employed and was unable to work due to her injury.

In August 2011, L&I launched an investigation after Racicot’s case raised red flags to a department employee, who was examining whether Racicot should be referred for a pension. During the investigation, Racicot told an investigator that her hands remained so damaged that she could not button shirts or put on earrings, court documents said. The same month, an investigator witnessed Racicot carrying groceries, busing heavy dishes, scrubbing the bar counter and doing other tasks at her Spokane business, Broadway Bar and Grill, on multiple days. In addition, Racicot’s current and former employees and business associates told the investigator that she had been working at the restaurant for more than five years, and one employee said she had been doing so since at least 2001.

The charge alleges Racicot fraudulently received $249,267 in time-loss benefits for replacement of lost wages from March 2003 until August 2011. First-degree theft carries a maximum penalty of 10 years in prison plus a $20,000 fine and costs.

     In addition to the criminal penalty and fines, I expect that an overpayment order with fraud penalties was also issued under the workers’ compensation claim, although this was not mentioned in the bulletin.  The Department is able to issue an order claiming an overpayment of the benefits paid incorrectly PLUS a penalty of up to 50% of the overpaid amount.  The criteria for meeting the legal burden of proof in a fraud case is pretty tough, for good reason, but when fraud is proven the penalties can be quite severe.

     The description of this case sounds like the Department has a solid case against the claimant.  However, not all fraud cases are as clear-cut.  If you find yourself facing an overpayment order, with or without allegations of fraud, contact an attorney for possible assistance with the fight to come.

 

Photo credit: Flavia_FF / Foter / CC BY-NC-ND