National Media Examines Workers Compensation Disparities

 Two things happened this week to raise the consciousness of the public towards the inadequacies of workers compensation. First was a major piece of reporting by Pro Publica and NPR that conducted an exhaustive examination of workers compensation benefits, state by state. You can find the articles here:

www.propublica.org/article/photos-living-through-california-workers-comp-cuts

www.propublica.org/article/the-demolition-of-workers-compensation

The reporters chief findings:

  • Since 2003, legislators in 33 states have passed workers’ comp laws that reduce benefits or make it more difficult for those with certain injuries and diseases to qualify for them.
  • Where a worker gets hurt matters. Because each state has developed its own system, an amputated arm can literally be worth two or three times as much on one side of a state line than the other.
  • Many states, Texas among them, have not only shrunk the payments to injured workers, they’ve also cut them off after an arbitrary time limit — even if workers haven’t recovered.
  • Employers and insurers increasingly control medical decisions, such as whether an injured worker needs surgery.

As a workers compensation attorney who has been practicing since before 2003, I can attest that changes made to Texas' system that occurred after 2003 were the second such effort to reduce workers compensation benefits and make them more difficult to obtain.

Even though other states made changes to their workers' compensation schemes in part due to the success Texas has had reducing benefits, most of those states still did not take the more extreme path of reducing benefits to injured workers to the levels that Texas has done. This graphic is illustrative:

Texas Far Behind Other States in Workers' Compensation BenefitsTexas Far Behind Other States in Workers' Compensation BenefitsThose of us representing injured workers have complained for a long time that there is a race to the bottom amongst the states in what is being paid to injured workers. That race is on the verge of breaking the system. The only question is will Republicans in safely gerrymandered districts have the courage to fix the system before it breaks?

The second thing to raise some consciousness was a report put out by OSHA which can be found here:

www.dol.gov/osha/report/20150304-inequality.pdf

That report states another aspect of workers compensation law that has long been complained about by those of us who represent injured workers:

The costs of workplace injuries are borne primarily by injured workers, their families, and taxpayer-supported components of the social safety net. Changes in state based workers’ compensation insurance programs have made it increasingly difficult for injured workers to receive the full benefits (including adequate wage replacement payments and coverage for medical expenses) to which they are entitled. Employers now provide only a small percentage (about 20%) of the overall financial cost of workplace injuries and illnesses through workers’ compensation. This cost-shift has forced injured workers, their families and taxpayers to subsidize the vast majority of the lost income and medical care costs generated by these conditions.

That is, the public, not the workers' compensation insurer and not the business that purchases the insurance, bears the primary burden for the costs of injured workers. This occurs through the cost-shifting of workers onto other forms of payment.

I cannot even begin to count the number of times I have heard adjusters state that a workers isn't being disenfranchised because the worker can just apply for social security disability. Likewise, we frequently have problems on cases with doctors advising injured workers to just put their injury on medicaid so that the doctor can avoid all the pre-authorization hassles that comes with workers compensation.

One problem is the race to the bottom that impacts all injured workers. The public's attitude is "As long as it doesn't affect me, I don't care. Out of sight, out of mind." But this report confirms that it does affect the public. When the system finally breaks, remember that.

Texas Injury Statistics by Race Go Uncollected

Access the NY Times article here: http://www.nytimes.com/2014/10/10/us/injury-statistics-by-race-go-uncollected.html?_r=0

$97 Million in Workers' Comp Fraud: 2012's Top Cases

               Workers’ compensation fraud occurs when individuals intentionally make false representations to obtain or to deny workers’ comp benefits, which reimburse employees injured on the job.

             Individuals committing workers’ comp fraud carry many faces—employees, employers, and healthcare providers all qualify as potential violators. Employees become violators when seeking benefits by misrepresenting their injuries, employment status, or treatment. Alternatively, employers commit workers comp fraud not to receive benefits, but to avoid responsibility. Employers often seek to avoid responsibility by underreporting employee payrolls and avoiding premiums. Last, health care providers, such as doctors, counselors, and pharmacists, become violators by duplicating bills, billing patients for improper services, and receiving payments from multiple insurance carriers for the same treatment.

2012’s Top 10 Cases

             In 2012, the top ten workers’ comp fraud cases cost America $97,446,500. Below is a short description of each case and its damages:

 

1.     Florida: “Operation Dirty Money”

Hugo Rodriguez, owner of the Oto Group, Inc. and 10 Shell companies, and seven other individuals funneled over $70 million in undeclared and undetected payroll through different money service businesses. Using Shell companies, Rodriguez sidestepped paying workers’ compensation coverage, leaving employees at risk and scamming legitimate businesses.

http://miami.cbslocal.com/2012/07/27/operation-dirty-money-bust-takes-down-workers-comp-fraud-ring/

 

 

2.     Ohio: 41,247 Private Employers Failed to Report Payroll Data

Thousands of private companies in Ohio violated state law by failing to pay their workers’ compensation premiums, totaling almost $5.6 million, which drove up insurance costs for other businesses.

http://insurancenewsnet.com/oarticle/2012/05/14/firms-face-charges-for-skipping-workers-comp-payments-%5bdayton-daily-news-ohio%5d-a-342364.html

 

 

3.     Texas: Case Proves Employee Leasing too Good to be True

Jackson Brothers Hot Oil Service hired a staffing agency in 1999 to provide the oil company with temporary workers. Jackson Brothers required the agency to purchase workers’ compensation insurance for its employees, so the agency bought a policy for $4,100. Shortly after, one of the agency’s oil workers suffered severe injuries from an explosion, and the agency refused to pay the worker’s medical bills. The employee and Jackson Brothers sued the agency for fraud and won a judgment worth $4,466,500.

http://daviddepaolo.blogspot.com/2012/07/tx-case-proves-employee-leasing-too.html

 

 

4.     California: Business Owner Under-Reports Payroll by $3.5 Million

From 2001 to 2006, construction business owner, George Osumii, under-reported employee payroll to the State Compensation Insurance Fund by $3.5 million, preventing Osumii from paying $814,000 in insurance premiums.

http://www.ocregister.com/articles/insurance-352234-osumi-stat.html

 

 

5.     Massachusetts: Watertown Roofing Company and its Owners Sentenced for Labor Violations

The Massachusetts Insurance Fraud Bureau discovered that Newton Contracting Company, Inc. and its owners misclassified half of its workforce as subcontractors, as well as failed to disclose more than $3.4 million of payroll during its annual workers’ compensation audits.

http://www.mass.gov/ago/news-and-updates/press-releases/2012/2012-01-10-newton-contracting-plea.html

 

 

6.     California: 7-Year Sentence for Dad and 4-Year Sentence for Son

Steven Morales, of Wildomar, California, was convicted and sentenced to seven years in prison for hiding payroll and avoiding workers’ compensation premiums totaling $3.1 million. His son Brian was also convicted and sentenced to four years in prison.

http://lakeelsinore-wildomar.patch.com/articles/wildomar-father-and-son-convicted-in-workers-compensation-fraud-case

 

 

7.     Florida: Construction Company President Accused of Payroll Fraud

Randall Seltzer, president of Navarre Industries, Inc., was charged with multiple felony counts, including workers’ compensation fraud. An investigation by Florida’s Department of Financial Services’ Division of Insurance Fraud revealed that Seltzer intentionally under-reported his corporation’s payroll to his insurance carrier. If convicted, Seltzer could face up to 30 years in prison and pay over $2.8 million in restitution.

http://www.myfloridacfo.com/sitepages/newsroom/pressrelease.aspx?id=403

 

 

8.     Florida: Owner of Fake Company Created Fraudulent Insurance Certificates

Yucet Batista was arrested for allegedly creating more than 250 fraudulent certificates of insurance to help uninsured contractors avoid $2.1 million in workers compensation premiums. Batista created the company and obtained the workers’ compensation insurance policy for the purpose of “renting” it, or making it available to dozens of uninsured subcontractors for a fee.

http://www.myfloridacfo.com/sitepages/newsroom/pressrelease.aspx?id=4043

 

9.     Massachusetts: $1.2 Million in Workers’ Compensation Violations at Boston Marriott Project

Through twelve audits, authorities discovered $584,249.00 in misclassified 1099 wages and $584,287 in unreported W-2 earnings, totaling $1,171,536.00 in unreported wages by subcontractors on the Boston Marriot renovation project. Six companies misclassified workers as contractors rather than employees, and seven companies failed to report wages. Among the worst of the offenders were one company that misclassified 28 workers and failed to report over $410,000.00 in wages; another failed to report $462,081 in W-2 wages.

http://www.gotoicon.com/blog/2012/09/04/employee-misclassification-wage-problems-plague-marriott-renovation-project/

 

 

10. California: Inn Owners Face Fraud Charges

The owners of historic Brookdale Inn and Spa, Sanjiv and Neelam Kakkar, are facing trial on charges that they falsified wage information to obtain lower insurance premiums. According to records, the couple paid approximately $800,000 less in insurance premiums than they should have over a period of several years.

http://www.santacruzsentinel.com/santacruz/ci_21700046/december-trial-date-slated-owners-brookdale-inn-and

Texas Court of Appeals Affirms Injured Employee's LIBS

             A work-related accident can result in a lifelong injury. It can also leave you drowning in medical bills, lost income, and uncertainty about your future. Injured employees facing this situation are not alone—workers’ compensation attorneys will answer your questions and fight to obtain the benefits you deserve.

            Contacting a workers’ compensation attorney immediately after sustaining a work-related injury can help employees qualify for medical and indemnity benefits under their employers’ workers’ compensation policy. Medical benefits cover medical expenses, while indemnity benefits reimburse employees for bodily impairments and lost wages.

                                                        What are LIBs?

             Through the Division of Workers’ Compensation (Division), employees seeking reimbursement for lost wages may receive up to four types of income benefits: temporary income benefits, impairment income benefits, supplemental income benefits, and lifetime income benefits. Lifetime income benefits (LIBs) are the most substantial and sought-after benefits, for they extend from the date of injury until death. Under § 408.161 of Texas Labor Code, injured employees become eligible for LIBs after suffering catastrophic work-related injuries that create “total loss” to certain body parts. Some of the injuries listed in § 408.161 include loss of eyesight, loss of both feet, loss of both hands, traumatic brain injuries, spinal cord injuries, and certain third-degree burns.

                Successful workers’ compensation attorneys can help employees prove the loss requirement imposed by § 408.161. If proven, injured employees receive LIBs totaling 75% of their average weekly wage, in addition to a 3% increase per year, until death. For example, an employee earning $500 before his or her injury would receive LIBs totaling $375 per week (three-quarters of their weekly wage), plus a 3% increase per year, until death.

               Seems easy enough, right? Not exactly . . . Texas law permits insurance companies to refuse paying LIBs until employees prove that their injury amounts to a “total loss.” But what constitutes “total loss?” Does an employee who loses feeling in her feet, but is able to complete daily work duties qualify for LIBs? What about an employee who suffers a traumatic brain injury that makes focusing at work an impossible task? On August 27, 2014, in Texas Department of Insurance, Workers’ Compensation Division v. Roel De Los Santos, the Texas Court of Appeals sought to answer these questions by holding that Roel De Los Santos qualified for LIBs after suffering permanent loss that prevented him from maintaining employment.

                    Texas Department of Insurance v. Roel De Los Santos

                  In 1987, De Los Santos, a heavy equipment operator in San Antonio, Texas, injured his left wrist while operating machinery at work. After five wrist surgeries, De Los Santos continued to experience sharp pain that prevented him from gripping knobs at work. In 1994, De Los Santos suffered a second work-related injury while driving a motor vehicle, fracturing his right radius bone and right wrist. Between 1994 and 2009, De Los Santos underwent a right wrist fusion, carpal tunnel release surgery, ulnar nerve transposition, and regularly attended a pain management clinic.

                To prove qualification for LIBs due to injuries in both wrists, De Los Santos sought the help of a workers’ compensation attorney. The attorney promptly contacted Dr. Charles Kennedy, a board certified orthopedic surgeon, to perform a comprehensive evaluation on De Los Santos. After the evaluation, Dr. Kenney concluded that he suffered from complex regional pain syndrome (a chronic pain condition that damages the nervous system.) After submitting Dr. Kennedy’s conclusion to the Division, surprisingly, the Division denied De Los Santos LIBs, arguing that De Los Santos did not suffer a total loss in both hands. To receive LIBs, § 408.161 demands that employees suffer total loss “at or above the wrist.” Even though De Los Santos could not operate machinery at work using one hand, he could operate machinery using both hands. This method was slower and increased De Los Santos’s pain level, but it enabled him to continue working, disqualifying De Los Santos from receiving LIBs.

                 After the Division denied LIBs, the injured employee filed suit. The trial court conducted a bench trial, where it reviewed De Los Santos’s medical records and Dr. Kennedy’s conclusions. The trial court reversed the Division’s denial of benefits and entered judgment in favor of De Los Santos. The Division appealed.

               On appeal, De Los Santos’s attorney argued that Dr. Kennedy’s medical conclusions proved that De Los Santos’s limited ability to grip machinery with both hands failed to disprove that he suffered a total loss in both wrists. The court of appeals agreed. Justice Martinez, for the majority, noted that “total loss” under § 408.161 means “permanent loss of use,” demonstrating that De Los Santos remained eligible for LIBs if he suffered permanent loss in both wrists. To prove permanent loss in both wrists, Dr. Kennedy testified that De Los Santos’s two work-related accidents prevented him from gripping small objects, performing household duties, typing, and closing his hands. Based on these limited abilities, the court of appeals concluded that De Los Santos suffered permanent loss in both wrists that prevented him from maintaining any type of employment. The court awarded De Los Santos LIBs from 1994, the date of his second injury, until death.

              This case demonstrates how insurance companies can wrongly deny injured employees the medical and indemnity benefits they deserve. If you sustained a work-related injury, seek the help of a successful worker’s compensation attorney. Obtain the legal advice you need to make it through your workers' compensation claim, and get what you deserve.

What To Do When You Are Injured On The Job

When injured on the job be sure and follow these steps:

  1.  Immediately report the injury to your supervisor. Make sure that the injury is properly logged or recorded by your supervisor.
  2. Request medical attention for your injury and take note of the names of the doctors who are treating you. Remember, you are not required to see a company doctor.
  3. Make sure to get contact information from any witnesses. If possible, use your phone to take photographs of the accident site. Take photographs of your injuries as well, both before and after treatment.
  4. Do not sign anything, or give any recorded statements, until you have spoken with an experienced workers compensation lawyer. You may be signing away your rights without even knowing it.
  5. If you are injured, stop working until released to work by your doctor. Additional labor could severely aggravate your injury. If your doctor releases you to light duty, you do not have to return to work unless your employer agrees in writing to abide by your doctor's restrictions.
  6. Contact an experienced workers compensation attorney as soon as possible after your injury.

New Study Shows Major Deficiencies in Texas Workers' Compensation

 A new study by the Cambridge, Mass. based Workers Compensation Research Institute (WCRI) shows that Texas has major deficiencies in the amount of benefit payments and the overutilization of insurance carriers on cost containment efforts.

Medical costs per workers’ compensation claim in Texas were stable in 2007, following several years of dramatic decreases. However, in several key areas Texas showed key areas of poor performance in workers compensation, according to a new study by WCRI.

The study, Monitoring the Impact of Reforms in Texas: CompScope™ Benchmarks, 10th Edition, said that afte 2006, Texas medical costs per claim were 19 percent lower than the typical study state for claims with more than seven days of lost time. Fee schedule decreases combined with increased management of medical care by payors through utilization review and other means were behind the decline.

At the same time, though, WCRI reported that medical cost containment expenses per claim continued to grow rapidly in Texas, even after medical costs began to decline. At an average of $2,818, Texas had the highest medical cost containment expenses per claim among the study states in 2007/2008, 37 percent higher than typical. This means that even though the state legislature enacted reforms to contain costs, insurance carriers were aggressively seeking to reduce legitimate costs even further.

The study noted that indemnity benefits per claim rose ten percent in 2007, largely due to a nearly 25 percent increase in the maximum benefit for statutory weekly temporary total disability. But, despite this significant increase in the maximum benefit, the percentage of workers whose benefits were limited by the maximum was 17 percent, more than double the percentage in the typical study state. Thus, Texas lags far behind other states in calculating the maximum benefit paid under workers comp.

The study also found that from 2002 to 2006 indemnity benefits per claim decreased 9 percent overall, largely the result of a decrease in the duration of temporary disability. Since 2002, WCRI said the average duration of temporary disability for injured workers in Texas declined by more than three weeks for claims at an average of 36 months of experience, likely related to the decrease in medical utilization under HB 2600 and payor focus on managing medical care.

In addition, the study said Texas had lower permanent partial disability/lump-sum payments compared to the typical study state.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, health care, and disability issues. Its members include employers, insurers, governmental entities, insurance regulators and state administrative agencies in the U.S., Canada, Australia and New Zealand, as well as several state labor organizations.