Employee Workers’ Compensation Fraud? No – Employer Fraud Rampant.

Attorney Leonard Jernigan compiled a list of the biggest workers’ compensation frauds

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

My friend and colleague Len Jernigan has again compiled the Top 10 Workers’ Compensation Fraud Cases for 2017.

 His results emphasize a theme that has been present for the last dozen years during which he has been compiling a “Top 10” list.  This year the Top 10 non-employee fraud cases resulted in fraud totaling just under $700 million.  Employee fraud cases resulted in zero fraud.  Seven of the Top 10 cases were from California, two from Texas, and one from Tennessee.

The cases involve health care fraud, where doctors prescribed inappropriate medications to pharmacies they operated, overbilling schemes for durable medical equipment, mail fraud, kickback schemes, referral of patients for unnecessary care, and prescribing unnecessary treatment.

A recurring theme, falsifying documents and under-reporting payroll to workers’ compensation insurance companies also appeared in the Top 10.  In one notorious case, the owners of a hotel hid the existence of 800 housekeeping and janitorial workers to avoid paying workers’ compensation insurance rates and payroll taxes.  The list also contains references to dishonest employers misclassifying more and more workers as independent contractors.  This misclassification is a fraud that wrongfully denies these employees workers’ compensation when injured, denies the government millions of dollars in payroll taxes to support Medicare, Social Security, Unemployment Compensation, and the fundamental rights of the workers.  Simply put, this misclassification is another employers shift the cost of accident and injury to the taxpayers and the fraud continues.

Temporary Help Employees Can Sue Their Employers?!

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

Temporary Help Employees Can Sue Their Employers? …. Well, maybe not.

The Wisconsin Court of Appeals considered the following issue: can a temporary help employee who was injured at work elect not to pursue a worker’s compensation claim and, instead, actually sue their employer in civil court?  The Court said the answer is “YES.”  

Wait….what?!  That is not how the worker’s compensation system was supposed to work.  Cue panic mode for employers who used temporary help employees.  (or at least until the legislature “fixed” this).

The necessary background (and backbone) of the worker’s compensation system is the 100+ year old “grand bargain” between employers and employees.  Employers agreed to provide smaller, defined benefits regardless of fault for the work injury, while employees gave up the right to tort damages (like pain and suffering) in exchange for those benefits.   Thus, worker’s compensation became the worker’s exclusive remedy against the employer.  A worker cannot sue their employer (or co-worker) for a work injury.

That exclusive remedy also extends to temporary help agency situations.  Under the traditional interpretation of the worker’s compensation act, a temporary help employee is barred from any tort lawsuit against their employing temporary help agency and against the employer where they were placed/working.   This was the interpretation…or so we thought.

In Estate of Carlos Esterley Cerrato Rivera v. West Bend Mutual Ins Co., the Court of Appeals allowed a temporary help employee’s tort lawsuit to proceed against the placed employer.  The case arose from tragic and slightly convoluted facts.  Three temporary help employees all died in a motor vehicle accident.  All three were driving in the same car and performing services for Alpine Insulation (insured by West Bend Mutual).  Mr. Rivera was a temporary help employee of Alex Drywall, who sent him to work for Alpine Insulation.  Alpine, in turn, paid Alex Drywall for the services.  The driver, whose negligence resulted in the accident, was also a temporary help employee, but of another employer.

Mr. Rivera’s estate did not pursue a claim for worker’s compensation death benefits.  The estate instead sued the placed employer, Alpine Insulation, in circuit court for tort damages.   Alpine and West Bend Mutual argued that the work comp exclusive remedy protects them from these types of lawsuits.

[Note: the facts are unclear about whether there was an “election” not to pursue a work comp claim.  There could have been difficulties by the work comp carrier in determining if there were any eligible surviving dependents.  There also could have been issues involving establishing the employment relationship with Alex Drywall.  This is mere speculation, but it is interesting to think about how the case genesis]

The Court of Appeals interpreted the relevant statutes to allow the tort suit to proceed!  Specifically, Section 102.29(6)(b)1. says that “no employee of a temporary help agency who makes a claim for compensation may make a claim … in tort against … any employer that compensates the temporary help agency for the employee’s services.”   The Court ruled that because Rivera’s estate had never pursued a worker’s compensation claim, the statute actually allowed the tort suit.

Based on the immediate outrage and backlash in the employer community (and specifically the massive amount of employers who use temporary help employees), the Wisconsin legislature moved swiftly to “fix” this perceived loophole in the law.   The legislature passed 2017 Wisconsin Act 139 (effective March 1, 2018). The Act amended the governing statutes in Section 102.29 to now state that “no employee of a temporary help agency who has the right to make a claim for compensation may make a claim … in tort against … any employer that compensates the temporary help agency for the employee’s services.”  

Accordingly, for a fleeting moment, it appeared injured temporary help employees could elect to forego a work comp claim and maintain a civil lawsuit against their placed employers for pain and suffering.   The legislature effectively restored and reiterated the exclusive remedy provision in temporary help agency situations.  If a temporary help employee is injured on the job, worker’s compensation remains their only recourse against the temporary help employer and their placed employer.

Truckers Call Baloney On Bloomberg View

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

Truckers were quick to criticize a Bloomberg View piece about the effect of shortage of truck drivers on the economy that our firm posted on our Facebook page.

Hedge fund manager Conor Sen made a valid point that the lack of truck drivers could drive up the cost of goods and slow down the economy. Sen went on to argue that this shortage will be exacerbated by the imminent automation of trucking. Why train for a job that will soon be eliminated?

There are two problems with his article.

Truckers pointed out that the shortage of drivers could be attributed to bad working conditions within a trucking. Sen didn’t address this in his article where he portrayed the driver shortage as something that just happened.

Poor working conditions for truckers are somewhat of a function of employment laws. For example, truck drivers are largely exempt from the Fair Labor Standards Act. While better laws for truckers would probably help attract more drivers, the trucking industry is fighting state law efforts to improve trucker wages. The wages of professional drivers are being further eroded by the use of contract drivers who are wrongfully classified as contractors rather than employers.

Secondly trucking industry observers believe automation is far from imminent. Professional drivers do a lot more than just drive. Even some tech industry boosters in the business press admit that automation may not be imminent. Increasing automation in truck driving could benefit drivers by making driving safer. Most airplanes fly by autopilot, but planes still have pilots.

In short, the trucker shortage isn’t just something that happened. It is driven by poor working conditions for truckers. Those poor working conditions are caused in part by bad laws which seem to be getting worse. It’s also not fair or reasonable to argue the supposed imminent arrival of automation to truck driving is causing a truck driver shortage. Automation of trucking is far from imminent, but increased automation may make trucking safer which would make it a more attractive job, which in turn would increase the supply of drivers.

Am I Being Paid Enough?

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

Injured workers commonly ask whether they are being paid the correct amount of workers’ compensation benefits.  The question usually pertains to the weekly lost time benefits paid during while healing after an injury.  It is a question I take seriously as the weekly benefit is crucial to the injured worker and their family.  This blog post outlines how the weekly benefits are calculated.  If an injured worker has questions about benefits, they should reach out to an experienced workers’ compensation attorney. 

The starting point for calculations is the worker’s Average Weekly Wage. Specifically, when an injured worker is under restrictions by a treating physician following an injury and the employer cannot provide work, or when the injured worker is taken off work completely by a physician, the insurance company owes “temporary total disability” (also referred to as “TTD”).  Temporary total disability is paid at 2/3 of the injured worker’s “average weekly wage” (also referred to as “AWW”). 

For most workers, the average weekly wage is calculated in two ways under Wisconsin law, and the injured worker is entitled to the higher of the two calculations: 

  1. Hourly Rate x 40:

    The first option is the employee’s hourly wage at the time of the injury multiplied by the hours regularly scheduled to work (usually, full-time, or 40 hrs/week).  For example, an employee making $10 an hour, who usually works 40 hours a week, has an average weekly wage of $400 ($10 x 40).

    There are additional considerations for this equation.  For example, shift differentials (especially important to those in the medical field) should be considered as should overtime if the injured worker was regularly scheduled to work overtime hours.  Also, if the employee works alternating shifts from week to week, this needs to be taken into account.  If any of these apply, it is a good idea to reach out to an attorney to discuss whether the amount being paid is correct.  In my experience, insurance companies will ignore overtime payments and shift differentials when calculating the average weekly wage, which reduces the amount owed to the injured worker.

  2. Average Earning in the Year Before the Injury.

    The second option is the actual gross earnings during the 52 weeks before the injury divided by the number of weeks worked during that period.  For example, if an employee earned $52,000 in the 52 weeks before the work injury, their average weekly wage is $1,000.  The number of weeks worked includes any weeks the employee was being paid, including paid vacation or paid sick leave.

    In addition, all taxable earnings must be included when calculating the gross earnings, including overtime, incentive pay, profit sharing, and bonuses.  Other things of value, including meals, rooms, utilities, rent remission, may also be part of the gross earnings.

The injured worker receives the higher of the two calculations.  The AWW is an essential to a claim–affecting all other workers’ compensation benefits.  An injured worker should ensure they are paid the correct amount.  The Worker’s Compensation Act is designed to protect the worker and provide these wage loss benefits.  If you are injured and question the amount paid, contact an attorney.

Discount Rate And Life Expectancy: What Most People Forget When Valuing A Workers’ Compensation Case

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

What’s my case worth?

I hear that question a lot when I meet a new client. In a workers’ compensation case I tell them it depends on many factors; How much were you earning when you were hurt, what part of your body was injured, how severely you hurt, where you live, how much education you have, whether you can return back to your old job, etc.

There are a lot of variables. But in cases where an employee has some reasonable chance of being found to be permanently and totally disabled, in other words unable to find work from their work injury, there are two constants effect the value of any settlement: discount rate and life expectancy.

Discount rate is synonymous with the time value of money. In short, a dollar today is worth more than a dollar in the future. This is important in workers compensation because if a worker is found to be permanently and totally disabled then they will be paid weekly benefit checks for the rest of their life. Under Nebraska law, that benefit check will not increase over time. The question then becomes how much will the value of that money decrease overtime. The discount rate is the expected return on investment on the money. The higher the expected return on investment, the higher the discount rate. But the higher the discount rate, the less a lump sum settlement is worth in present dollars.

An award of permanent and total disability is a form of a pension. Abnormally low interest rates in the aftermath of the financial crises have raised concerns about investment returns for pensions. The Nebraska Workers Compensation Court has used a 5 percent discount rate to value awarded permanent and total disability benefits for at least the last 12 years. But the expected rate of return on investments, as measured by interest rates of declined over the last 12 years. Lump sum payments, like workers compensation settlements, based on a 5 percent long term interest rate undervalue those payments.

For example, a 30 year US Treasury bond yields roughly 2 ¾ percent. If a 50 year-old worker earning $600 per week is found to be permanently and totally disabled, the present value of an award of permanent and total disability would be $334,000 using the 5 percent discount rate and using the court’s life expectancy tables showing a 31.4 year life expectancy. But if the court used the 30 year bond yield as the discount rate, that same award of permanent and total disability would be worth $439,000.

The issue of discount rate and case valuations isn’t widely discussed in Nebraska, but it was a contentious issue in the United Kingdom when the government cut their discount rate in personal injury claims, called the Ogden rate, by 3.25% in February 2017. The Ogden rate was increased by .75-1.75 percent in September 2017 under pressure from insurance companies.

The other variable in valuing an award of permanent and total disability is life expectancy. The Nebraska Workers Compensation Court uses a general life expectancy table to value awards of permanent and total disability that doesn’t vary by gender or nationality/race. The CDC breaks down life expectancy along those lines. Men and African-Americans have shorter life expectancies so they would actually benefit from the use of the Nebraska Workers Compensation Court life expectancy tables. Women and Hispanics tend to live longer so they would not benefit by the use of the court tables. For example, a 50 year-old Hispanic woman is expected to live 35.9 years whereas the Nebraska Workers Compensation Court just assumes a 50 year old has a 31.4 year life expectancy.  Use of the court’s life expectancy tables for a 50 year-old Hispanic woman earning $600 per week at the time of her injury could undervalue an award of permanent and total disability by about $18,000.

But workers who have a reasonable chance of being found to be permanently and totally disabled have other factors to think about when it comes to valuing any settlement of their claim. First, an insurer/employer only has to pay weekly benefits rather than a lump sum of money if a court finds a worker is permanently and totally disabled. They are free to use whatever discount rates and life expectancies they chose in valuing a claim for a settlement.  Court rules about discount rates and life expectancy only come into play when an injured worker wants to take a lump sum settlement on an awarded finding of permanent and total disability.

Secondly many employees who could potentially be awarded permanent and total disability benefits are also awarded social security disability benefits. Social security disability benefits payments can be reduced or offset by any workers compensation benefits received. An offset can have the practical effect of capping the value of any settlement based on the probability of a worker being awarded permanent and total disability benefits. 

Wearable Technology Assists Blind and Low Vision Travelers at Sea-Tac Airport

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

 

Aira

During a technology demonstration, Susan Mazrui, an Aria Explorer, shops for her daughter at a Sea-Tac Airport shop, with assistance over her cell phone.

The Port of Seattle recently introduced a pilot program for people who are blind or low vision that allows them to use a new technology to move more safely and independently through Sea-Tac Airport.

During the pilot program, there will be no cost to travelers to use the Aira service, which uses smart glasses and a cell phone mobile app to help them navigate from curb to gate.

This technology allows the user to speak to a certified live, human agent who can see the environment around the user in real-time. Agents then serve as visual interpreters for passengers to accomplish a variety of tasks in the airport—from viewing a flight information board to finding the cue line at a security checkpoint to verifying their luggage at a baggage carousel.

Sea-Tac is the first airport on the West Coast and is among the first airports in the nation to join the Aira Airport Network to provide this assistance. 

The Three Stooges Get Workers’ Comp: Why Backs Trump Knees and Shoulders in Wisconsin

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

Wisconsin’s unique workers’ compensation system contains one significant distinction, between “limb” injuries and “spine” injuries. Limb injuries (shoulders, elbows, wrists, hips, knees) are not worth as much to the injured worker as a spine injury.

To illustrate this problem to my law students, I use the 3 Stooges example: Moe, Larry and Curly work for a tree service earning $15 per hour or $600 per week. A tree branch falls on all three of them, injuring Moe’s shoulder, Larry’s knee, and Curly’s neck. They are all off work for 10 weeks while they are healing from surgeries required by the injury. During that time they received Temporary Total Disability at two-thirds of their wage or $400 per week, a total of $4,000 for each of them. After they are done healing, all three of their doctors assign a 10% functional disability rating for their injury and a 10- pound lifting restriction, which their employer cannot accommodate.

Moe gets 10% of 500 weeks for his shoulder payable at $362 per week, or a whopping total of $18,100 – making his total workers’ comp recovery just over $20,000.

Larry gets 10% of a knee or 42.5 weeks at $362 per week, or $15,385 – making his total recovery just under $20,000.

Curly, who had a neck injury and surgery, gets 10% of 1000 weeks at $362 per week, or $36,200. However, since he cannot return to the tree company, he also gets a recovery for his Loss of Earning Capacity. Based on his 10- pound restriction and his very limited education, he is probably limited to a minimum wage or part time job which would result in a 50% Loss of Earning Capacity, payable for 500 weeks or a total of $181,000. If his disability is serious enough, he may in fact receive his $400 per week for the rest of his life, bringing his total to well over a half million dollars.

That’s why many workers’ compensation attorneys (and insurance companies) focus their attention on spine injuries.

Experience Of New Virginia Legislator Points To Difficulty Of Multi-State Claims For Injured Workers

Democrat Lee Carter, a democratic socialist, won an election to represent Virginia’s 50th District in the state’s House of Delegates.

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

Lee Carter took a bad experience with a work injury and turned it into motivation to win election to the Virginia legislature last November. But the nature of Carter’s bad experience with his work injury shows why electing true worker advocates to state legislatures may not be enough to protect injured workers.

Carter was a Virginia resident who was injured in Illinois working for a Georgia company. Carter attempted to bring his claim in Virginia but he was unable to do so because of lack of jurisdiction. Tennessee lawyer Denty Cheatham pointed out on the WILG listserv that Carter’s difficulty in bringing a claim was why national standards are needed for workers compensation.

So-called federalization is controversial in the world of workers’ compensation. Workers’ compensation is a creature of state law by what amounts to a fluke of legal history. When workers compensation laws were passed in the 1910s, the Supreme Court held that regulation of workplace safety was outside of the federal government’s ability to regulate interstate commerce but was within the so-called police power of the states.

Two decades later during the New Deal era, the Supreme Court expanded the definition of interstate commerce in the 1930s which allowed Congress to enact laws impacting the workplace such as the Fair Labor Standards Act, Title VII and the Occupational Safety and Health Act (OSHA).

OSHA was implemented in the 1970s as concerns about the adequacy of state-based workers compensation systems arose from organized labor and the civil rights movement. Part of the OSHA Act was a National Commission that called for minimum standards for workers compensation claims. Part of having standardized state laws would mean that state laws would be more uniform and multi-state claims would be easier to navigate for injured workers.

Our firm is part of WILG which is a national organization of workers’ compensation lawyers. Multi-state or multi-jurisdictional claims are probably one of the most discussed topic on the WILG listserv. Mainly lawyers discuss which state’s have the best laws for a particular case. In some circumstances workers can also bring claims in and collect benefits in multiple states. The current system works for knowledgeable lawyers, but it can fail injured workers who may not even be able to bring claim because of questions over jurisdiction.

Multi-state claims can also subvert democratic rule. A worker has some input over workers compensation laws in the state where he or she lives and votes through their respective state legislatures. A worker who is forced to bring a claim in another state does not have that influence unless they happen to be among the 6 percent of private sector employees represented by a union. But even then, it may be burdensome to bring a claim in another state.

But workers have a say over national laws through their Congressional representatives. Minimum standards and some uniformity in state workers’ compensation laws would give injured workers more say in the types of benefits they would receive if they were hurt out of their home state or hurt for an out of state employer. Minimum standards legislation would also draw more national attention to the short coming of various state workers’ compensation laws. Renewed pushes for federal standards for workers’ compensation happened in the early Obama administration and towards the end of the Obama administration. National standards for workers’ compensation legislation will probably have to wait for a change in the partisan makeup of the two elected branches of the federal government.