Category Archives: Uncategorized

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2016 Top Ten Workers’ Compensation Fraud Cases

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

  Number Value
Non-Employee Fraud Cases 10 $ 412,000,000
Employee Fraud Cases 0 $ 0
Total $ 412,000,000

Four of the top ten cases in 2016 are from perennial offender California, three from Florida, one each from Massachusetts and Texas, and one involving 20 different states. The misclassification of employees by employers continues to create dramatic financial fraud, with resulting cost shifting, lost tax revenues and hardship to inured employees. As we noted last year, while the “gig economy” pioneered by technology companies has lead to debate about new classifications for workers, these companies remain subject to our laws. We are starting to see widespread litigation and settlements like Uber’s $100 million payment to disgruntled drivers in California and Massachusetts. We’ll keep tracking these new developments in the context of the misclassification and fraud actions that we’ve been tracking for many years.

  1. (National) FedEx to Settle Driver Lawsuits in 20 States for $240 Million (6/16/16)
    FedEx Ground Systems, Inc. has agreed to pay $240 million to resolve claims by 12,000 FedEx drivers in 20 states. FedEx was labeling the drivers as independent contractors to avoid paying additional taxes, fringe benefits, health care costs, workers’ compensation insurance, and much more. The drivers were also not paid overtime or reimbursed for expenses.
  2. (California) Seven People Charged in $98 Million Workers’ Compensation Fraud Case (6/7/16)
    Seven in Riverside County charged with $98M medical fraud

    (Left): Payman Heidary Top row: Touba Pakdel Nabati, Jason Yang, Cary Abramowitz Bottom row: Quynam Nguyen, Ana Solis, Gladys Ross (Photo: Riverside County Sheriff’s Department)

    Seven people have been indicted with 107 felonies in a business scheme designed to commit workers’ compensation fraud. The ringleader, Peyman Heidary, owned or ran numerous businesses, including law firms and health clinics, and used other people to disguise his involvement and create an illegal ownership structure. The clinics were found to have inflated billings to insurance companies by exaggerating patient injuries and treatments. The businesses fraudulently billed more than $98 million to 18 insurance companies, resulting in the businesses receiving over $12.4 million in payments.
  3. (Texas) Labor Department “Mole” Helps Business Maintain $30 Million Workers’ Compensation Scam (6/28/16)
    Tshombe Anderson

    Tshombe Anderson

    Lydia Taylor worked at the U.S. Department of Labor in Dallas and used her position to give her family members information about federal workers’ compensation claims and warn them when suspicions arose about their fraudulent billing. Taylor’s uncle, Tshombe Anderson, was the ringleader of the group. Anderson and others formed several businesses that fraudulently billed the federal workers’ compensation program $30 million for unneeded and unrequested medical equipment for rehabilitation patients.
  4. (Florida) Fake Construction Company used to Process over $17.4 Million of Fraudulent Payroll (3/28/16) Orquidea Quezada set up Orquicely Construction LLC and used the company to process payroll for subcontractors who employed hundreds of people. In exchange for her services, Quezada kept a five percent fee. The scheme allowed the contractors to avoid paying payroll taxes, workers’ compensation insurance, and to conceal the employment of undocumented workers.
  5. (Florida) Fake Construction Company Used to Cash $7.4 Million in Undocumented Worker Payroll (7/7/16)
    Yamil Sanjurjo Cordero and Sandro Mendoza Alvarado

    Yamil Sanjurjo Cordero, 33, and Sandro Mendoza Alvarado, 35. (Sun Sentinel / Broward Sheriff’s Office Handout)

    Two men set up a shell company, Sunrise All Contractor Corp., to receive payments and cash checks for a fee on behalf of other companies that would then pay their undocumented workers. The scheme enabled employers to avoid workers’ compensation premiums and payroll taxes. These schemes are popular among employers of undocumented employees because these employees are less likely to blow the whistle on the fraud out of fear of exposing their undocumented status.
  6. (California) Insurance Company Agent Misappropriated $7.3 Million and Unable to Pay Workers’ Compensation Claims for California Indian Tribe (8/19/16) The operator of Management Resources Group California LLC, Gregory J. Chmielewski used more than $7.3 million from the company’s reserve accounts for his own personal investments. The company managed another company, Independent Management Resources, which sold workers’ compensation insurance to California Indian tribes. Chmielewski’s actions resulted in the company being unable to cover 117 claims.
  7. (California) Contractor Cheated Workers’ Compensation Insurer Out of More Than $5.4 million in Premiums(10/5/16) State of California Department of InsuranceMichael Harold Kreger, the owner of Michael Kreger Contracting was sentenced to 9 months in jail, 5 years of probation, 1500 hours of community service, and ordered to pay restitution of more than $5.4 million for underreporting his payroll and committing insurance fraud. Mr. Kreger cheated his company’s workers’ compensation insurer out of more than $5.4 million and his employees out of adequate protection for potential workplace injuries.
  8. (Massachusetts) Construction Companies Ordered to Pay $2.6 Million for Fraud in Misclassifying Workers (8/2/16) AB ConstructionForce Corporation, AB Construction Group, and employers Juliano Fernandes and Anderson Dos Santos were found by the U.S. Department of Labor to have misclassified the bulk of their employees to avoid paying overtime wages, workers compensation insurance, payroll taxes, and more. A consent judgment was entered requiring the companies and employers to pay more than $2.6 million in damages and penalties for their fraud.
  9. (California) Company Underreporting Payroll Defrauds Insurer of $2.1 Million (6/7/16)
    Alvin Shih Chen and Fiona Chen of Metro Worldwide, Inc.

    Alvin Shih Chen and Fiona Chen

    Co-owners Alvin Shih Chen and Fiona Chen of Metro Worldwide, Inc., a trucking company, underreported payroll by $4.7 million. The owners paid their truck drivers in cash to avoid reporting them to the insurer and to reduce their payroll obligation. While the company reported nearly $3 million in payroll to California’s State Compensation Insurance Fund, the actual payroll amount was $7.6 million. An estimated $2.1 million in premiums was lost.
  10. (Florida) Construction Company Defrauds Workers’ Compensation Insurer of $1.8 Million by Underreporting Payroll (4/6/16)
    Maira Chirinos, owner of Pompano Beach-based Tocoa Builders Inc.(Broward County Jail)

    Maira Chirinos, owner of Pompano Beach-based Tocoa Builders Inc.(Broward County Jail)

    Maira Chirinos, the owner of construction company Tocoa Builders, Inc. misrepresented information regarding the company’s operations, employees, and payroll when applying for a workers’ compensation policy. The misrepresentations enabled Chirinos to avoid paying at least $1.8 million in workers’ compensation premium payments. An investigation found Chrinos grossly underreported payroll to the insurance company. She reported a payroll of $76,000, but more than $11 million in payroll checks were cashed during the period covered by the policy.

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 3015 Glenwood Avenue, Suite 300 Raleigh, North Carolina 27612 (919) 833-0299 jes@jernlaw.com www.jernlaw.com Twitter: @jernlaw Blog: www.ncworkcompjournal.com

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I Can’t Do My Old Job, So I Qualify for Disability, Right?

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

It’s not uncommon for workers to expect to qualify for disability when they are unable to work in a job that they have held for years. The question becomes does that mean they are disabled under Social Security Administration rules? As in most cases in dealing with the law, the answer is maybe!

For workers under the age of 50, applicants must prove that they are also unable to obtain any work in the general economy, even if they can’t do their typical jobs. This includes unskilled work, and the SSA makes no distinction for what type of pay cut a worker must accept to remain gainfully employed. For instance, let’s assume a worker was earning $20 an hour as an electrician, but could no longer handle the rigors of that employment. If that person can do a minimum-wage job full time or at the level of substantial gainful employment as set by the SSA, then a person is not considered disabled under the SSA rules. Many people are surprised that the SSA would require this. Even if jobs don’t exist within the current labor market, the SSA would require a worker to move herself to a larger market to continue to be employed. 

For individuals over the age of 50, the primary question is did they acquire skills from prior employment that would enable them to transition into other employment areas. If those skills would allow the worker to transition to alternate employment, then they are not considered disabled. If those skills are too specialized and don’t easily transition to alternate employment, the worker may very may well be disabled, according to SSA rules.

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Sometimes You Need Help

Today’s post comes from guest author Kristina Brown Thompson, from The Jernigan Law Firm.

Last month our firm held a planning retreat in the beautiful town of Chapel Hill. We reaffirmed our firm’s slogan: “Accidents Happen, Sometimes You Need Help.”

Frequently we speak to injured workers during our free consultation about getting medical treatment. It’s frustrating and scary for an injured person to have to wait for authorization for surgery or a medical referral. Treatment delays are inefficient for everyone. It delays the recovery and, as a result, the return to work. Our goal is to expedite medical care when possible by following up with the workers’ compensation adjuster to have treatment approved and, if necessary, file a motion with the North Carolina Industrial Commission.

In a case I had last year, we were hired because the insurance company was dragging its feet authorizing an orthopaedic back doctor. After several communications, the adjuster agreed the referral to an orthopaedic back doctor was authorized. Sadly, the “orthopaedic doctor” that was authorized by the adjuster was actually a gynolcologist-obstetrician for my male client! Furthermore, it took several additional contacts to finally correct the situation and get my client to the appropriate doctor. Finally, my client was evaluated by an orthopaedic doctor, received medical treatment, and was also able to continue working.

Our firm sees these problems every day. I believe we (injured workers’ lawyers and insurance companies) should have a common goal:  Recovery and return to work. But “sometimes you need help” to get to that point.

 

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Insult to Injury: ProPublica’s Series “Demolition of Workers’ Compensation” Focuses on Ongoing Workers’ Comp Woes Faced by Injured Workers Nationally

Today’s post comes from guest author Kristina Brown Thompson, from The Jernigan Law Firm.

Recent years have not been favorable to injured workers. States across the nation have enacted “reform” measures curbing injured workers benefits. Disability caps have been introduced, medical care restricted. In our last blog, we discussed Oklahoma’s Opt Out provisions as an example of the court system declaring that the legislature had legislated away too much of the injured worker’s protections. A couple years ago, Florida workers’ comp laws were declared unconstitutional by a judge. Although the decision was later reversed, the Florida judge (Judge Cueto) expressed concerns regarding the loss of an employee’s right to wage-loss benefits after an accident.  

 

NPR and ProPublica have been authoring an in-depth series on national workers’ compensation issues. ProPublica reviewed “reams of insurance industry data” and their findings confirmed what many workers’ compensation attorneys suspected for years:  insurance companies are increasingly controlling medical decisions, workers are unable to pick their own doctor in many states, and insurers are denying medical care based on internal “guidelines.”

 

As an example, ProPublica’s article talks about a case in California where the insurance company reopened an old case and denied medical care based on the opinion of a doctor who never even saw the patient. “Joel Ramirez, who was paralyzed in a warehouse accident, had his home health aide taken away, leaving him to sit in his own feces for up to eight hours.”

 

The article also brings up a good point about workers’ comp fraud. Repeatedly studies show “most of the money lost to fraud results not from workers making false claims but from employers misclassifying workers and underreporting payroll to get cheaper insurance rates.”

 

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The Dangers of Working with Vibrating Tools

Today’s post comes from guest author Anthony L. Lucas, from The Jernigan Law Firm.

Vibration White Finger (VWF) or “Dead Finger,” now known as Hand-Arm Vibration Syndrome (HAVS), is a chronic, progressive disorder caused by regular and prolonged use of vibrating hand tools that can progress to loss of effective hand function and necrosis of the fingers. In its advanced stages, the obvious symptom is finger blanching (losing color). Other symptoms include numbness, pain, and tingling in the fingers, as well as a weakened grip.

It is estimated that as many as 50 percent of the estimated 2 million U.S. workers exposed to hand-arm vibration will develop HAVS. Some common industries and the tools associated with HAVS are listed below:

  • Agriculture & Forestry – Chainsaws
  • Automotive – Impact Wrenches, Riveting Guns
  • Construction – Jackhammers
  • Foundries – Chippers, Grinders
  • Metal Working – Buffers, Sanders
  • Mining – Jack-Leg Drills, Stoper Drills

The time between a worker’s first exposure to hand-arm vibration to the development of HAVS symptoms can range from a few months to several years. Prevention is critical because while the early stages of HAVS are usually reversible if vibration exposure is reduced or eliminated, treatment is usually ineffective after the fingers blanch. 

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Countertop Workers Face Silicosis Risk from Engineered Stone Countertops

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

Engineered stone countertops, a popular fixture in today’s homes, pose a health risk to workers who cut and finish them. The danger stems from the material the countertops are made from, processed quartz, which contains silica levels up to 90 percent. Silica is linked to a debilitating and potentially deadly lung disease known as silicosis, as well as lung cancer and kidney disease.

While the countertops do not pose a risk to consumers in their homes, they do pose a risk to the workers who cut and finish them before they are installed. When the countertops are cut, silica particles are released into the air, which when breathed in by the workers can start processes leading to silicosis. Manufacturers of the engineered stone countertops assert that worker hazards can be reduced through the use of protective respirators and equipment designed to trap silica dust. Despite this assertion, many safety precautions taken by employers are often inadequate.

The first documented case of silicosis among countertop workers in the United States was reported two years ago. In countries such as Israel and Spain, where engineered stone products gained their popularity, many more countertop workers have been diagnosed with silicosis and have had to undergo lung transplants. The danger of silicosis in the construction industry led OSHA to recently issue new rules requiring construction workers’ silica exposure to be reduced by 80 percent beginning on June 23, 2017.

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What I Wish I Had Known Earlier in My Workers’ Compensation Claim – Thoughts from a Former Client

Today’s post comes from guest author Kristina Brown Thompson, from The Jernigan Law Firm.

What I Wish I Had Known Earlier in My Workers’ Compensation Claim – Thoughts from a Former Client

We frequently reach out to our clients for feedback on how to improve our services. Earlier this year, we received a very thoughtful email from one of our former clients and wanted to share his thoughts.

What I Wish I had Known Earlier

1.  Filing the workers’ compensation claim:  Employees need to know how to properly file a workers’ compensation claim. Also, there needs to be a list prepared for all employers and employees that sets out the steps both of them need to take. 

2.  Nurse Case Manager:  I wish I had better understood the nurse case manager’s role at the outset of the case. I wish I had known everything she was capable of doing, aside from just reporting to the adjuster.

3.  Emotional Toll:  The magnitude of emotional stress involved in going through a workers’ compensation claim was a surprise; was there an option for counseling? This is truly a life changing event. Counseling would have been beneficial to alleviate the stressfulness of the process and the overwhelming feelings of abandonment.  For example, the feelings of “I know I’m hurt but why can’t they see that” or “why don’t they care?”

4.  Communication:  The importance of discussing issues with an attorney as early as possible.

If you have been through a workers’ compensation claim, let us know if you have other items to add. 

Pregnant Workers Should Get Workers’ Compensation If They Have a Claim

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

A new law went into effect during 2015 in Nebraska that requires employers of 15 or more employees to accommodate pregnant workers on the job. This is a significant change that affects working women by expanding workplace protections for those who become pregnant.

Nebraska’s protections for pregnant employees go beyond even the standards for pregnancy discrimination under federal law. The new law also protects women with post-childbirth medical conditions and women who choose to breastfeed or pump.

This law means that pregnant women in Nebraska will be able stay on the job longer and will have an easier time returning to work.

This accommodation includes obtaining “equipment for sitting, more frequent or longer breaks, periodic rest, assistance with manual labor, job restructuring, light-duty assignments, modified work schedules, temporary transfers to less strenuous or hazardous work, time off to recover from childbirth, or break time and appropriate facilities for breastfeeding or expressing breastmilk.” Nebraska Revised Statute 48-1102 (11)

These changes outlaw discrimination against a pregnant woman with respect to hiring, advancement, discharge, training and other terms, conditions and privileges of employment. These protections extend to a pregnant employee before, during and after a pregnancy.

Unfortunately, pregnancy doesn’t mean that women can avoid work injuries, especially in female-dominated fields like nursing and human-services support. Sometimes employers and/or insurers will attempt to use the excuse that since an employee is going to be out because of pregnancy that they do not have to pay temporary disability benefits to an injured worker who is suffering from a work injury.

But when an occupational or work injury and a non-occupational injury, combine to cause disability, employers still have to pay those disability benefits. Nebraska’s new law on pregnancy doesn’t change that fact. If anything, smart and ethical employers will attempt to accommodate injured pregnant employees in legitimate light-duty jobs so they do not have to pay disability benefits.

In addition, when a pregnant employee is injured on the job and is receiving workers’ compensation benefits and later is ordered by her physician not to perform certain work activities or is in need of bed rest due to the pregnancy, an injured and pregnant employee’s workers’ compensation benefits cannot be reduced or suspended on account of the pregnancy in both Nebraska and Iowa.

However, not all employers and workers’ compensation insurance carriers understand or follow the law. If you are injured and not receiving workers’ compensation benefits because your employer says that they could accommodate your job but for you being pregnant, you need to call a firm that handles both discrimination and workers’ compensation law. You should also call an employment lawyer if you are pregnant and being forced to take unpaid leave rather than having your job duties modified or changed.