Tag Archives: young

An Ignored Cause of Workers’ Comp Fraud

If you are involved with workers’ comp claims in any way, you undoubtedly have a stable of great stories to tell. Maybe you’ve seen the guy who claims he can barely walk yet finds the strength to run in a marathon. Or maybe you’ve seen the claimant who says he has never had any prior workers’ compensation claims yet knows the workers’ comp procedures better than most attorneys.

Watch Out for Those Sprinklers

Sheyla White, an office worker from Florida, alleged a sprinkler hit her in the head in October 2015. Unfortunately for her, the entire “injury” was captured on video.

The video shows White sitting at her desk as a sprinkler part falls from the ceiling onto her desk, missing her. She pauses for a moment, looks around the room and picks up the device, slamming herself in the head with it.

You can watch the edited video yourself here.

See also: Why So Soft on Workers Comp Fraud?  

White was convicted of workers’ compensation fraud in May 2017 after the employer turned the video over to the Florida Division of Investigative and Forensic Services.

Legend has it that a young Isaac Newton was sitting under an apple tree when he was bonked on the head by a falling piece of fruit — a 17th-century “aha moment” that prompted him to come up with his law of gravity. In retrospect, White would be a happier woman today if the revelation she received following her self-inflicted hit on the head was: “Don’t commit workers’ comp fraud.” Hindsight is always 20/20; for White, foresight would have avoided three to five in the slammer.

Workers’ Comp Fraud Is Serious

Despite the fun one can have while watching White’s viral video premier, workers’ comp fraud is serious business. It drives up costs to employers, adds to the backlog of pending claims and creates an atmosphere where even legitimate claims are often scrutinized. According to a recent study by Business Wire Magazine:

  • More than one in 10 small-business owners are concerned an employee will fake an injury or illness to steal workers’ compensation benefits;
  • Nearly one in four owners also installed surveillance cameras to monitor employees on the job;
  • One in five owners feel unsure how to identify workers’ compensation scams; and
  • More than half of business owners agree these are fraud flags: Employee has a history of claims (58%); no witnesses to the incident (52%); employee didn’t report the injury or illness in a timely manner (52%); and the injury coincides with a change in employment status (51%).

Most states have agencies devoted to workers’ compensation fraud. These agencies investigate both fraudulent claimants (trying to steal workers’ compensation benefits) as well as employers who refuse to pay lawfully owed benefits to injured workers.

Why Is Workers Comp Fraud Rarely Prosecuted?

Sheyla White was caught and convicted, but this is truly the exception rather than the rule. I’ll admit that, from my jaded perspective as a workers’ comp defense attorney, I see a lot of fraudulent claimants who go unpunished. If you have spent any amount of time in the trenches, you’ll probably agree with me.

Here’s the problem: When claims are pending, what is the desire of almost every employer and insurance carrier? It’s: How quickly can we close the file?

While this perspective is usually effective in reducing the cost of an open claim, it is not effective in prosecuting fraud. Why? The easiest way to close a claim quickly is to present evidence of fraud to the claimant’s attorney for the purpose of reaching a quick and reasonably priced settlement. Claim over. Done. Time to move on to the next claim.

And yet, doesn’t this process simply encourage more fraud and abuse? If my daughter wrecks my car and tries to hide it from me, do I “punish” her with bags of money? Claimants are often rewarded for their bad behavior, not punished, and once the bragging on social media begins others, too, are encouraged to start their own fraud journey.

See also: Workers Comp Ensnares the Undocumented  

The other problem is the level of proof that is often required by state agencies to prosecute workers’ comp fraud. Sure, it was easy to go after Sheyla White because there was video that couldn’t have been better staged by Steven Spielberg himself. But what about the thousands of claims where sexy video is not available to guarantee a quick and easy prosecution? Un-prosecuted fraud, like rabbits in spring, simply creates more of its own kind.

The benefits, though, of a significant reduction in workers’ comp fraud would be like manna falling from heaven. Now that I think about it, a metaphor based on objects falling from the sky is probably not the best way to end this.

Why Comp Claims Can Take Forever

Over the years, I’ve had safety directors or claims managers tell me that workers’ compensation claims move slower than a one-legged dog on tranquilizers. I would say the resolution speed of comp claims more closely resembles that of a three-legged dog on mild muscle relaxants – – but I won’t quibble over how far to take the metaphor.

Bottom line: Oftentimes, comp claims do move very slowly. Without dwelling on the obvious, let me suggest three legitimate reasons why comp claims aren’t yet as fast as text-messaging teenagers.

1. Litigation takes time

If you have pro se claims (where the claimant does not have an attorney), you’ve undoubtedly noticed that these claims are usually resolved very quickly. Why? You can insert you own joke, but you might consider the old one about how attorneys make good speed bumps. Having fewer attorneys involved removes obstacles and speeds the process. The absence of attorneys also means that there are likely no real issues to resolve. Everyone agrees on everything, so there is nothing to argue about.

In disputed claims, though, investigation takes time. Discovery takes time. Getting opinions from expert physicians takes time. Courts take time.

Years ago, I had a client tell me: “Brad, I don’t want you to settle any of our comp claims. Take them all to trial.” I did that. . . for a while. After two years of this (and after seeing the defense costs associated with taking every case to trial), the VP of claims called me and said: “Brad, can you start letting me know which claims can be resolved without trial?”

It doesn’t take a high level of skill to take every case to trial. It does, however, require skill to know which claims should be settled and which claims should be disputed.

2.  Movement takes willpower

Apart from falling down, movement takes willpower and initiative. A new client contacted me in June about taking over the defense of a claim that has been litigated since 2002. I entered my appearance, reviewed the medical records, called the claimant’s attorney and worked out a tentative framework for settlement with three or four phone calls.

I am certain that I am not any smarter than the defense attorney I replaced. Some would say he is far smarter – – he was paid to work a file for 12 years, and I was the dope who resolved it with a few phone calls! Self-serving attitudes aside, I had a fresh perspective and wasn’t afraid to throw out ideas to resolve the claim instead of simply throwing out ideas for continued litigation. In an area of the law where the work is often very repetitive, coming up with a new approach is often difficult.

3.  Common sense is mistaken

Common sense would seem to indicate that if the claimant’s attorney knows little about workers’ comp law, this places me (as the defense attorney) in a better position to achieve a favorable result for my client. In this instance, common sense is completely wrong.

I have always found that claimant’s attorneys who actually know what benefits are payable under the workers’ comp law and how to prosecute a workers’ comp claim are far better to work with than the attorneys who handle three comp claims a year and try to handle the claim like a jury trial in circuit court.

Knowledge and experience can bring efficiency to a system that rarely seems efficient.

Why Workers’ Comp Claims Will Keep Falling

According to NCCI, the number of lost-times claims has been on a downward trend for more than a decade. With the exception of 2010, the number of lost-time claims has been declining over the past decade at a predictable rate of approximately 2% to 3% a year. The question, though, is whether this trend will continue.

Many analysts are predicting a rise in the number and frequency of lost-time workers’ compensation claims. This certainly may be true for 2014 as the U.S. is finally emerging from one of the longest recessions in history, coupled with the resurgence of the domestic oil and natural gas industry. However, this upward blip will have little, if any, effect on the long-term downward trend. I see several reasons why, except for 2014, this downward trend will continue:

Decline in manufacturing jobs

It should come as a surprise to no one that the U.S. economy has been shifting away from manufacturing jobs and toward a service-based economy. Even before to the Great Recession of 2008, manufacturing jobs were disappearing at an alarming rate. 2005 marked the first year since the Industrial Revolution that fewer than 10% of American workers were employed in manufacturing.

According to the Bureau of Labor Statistics, U.S. manufacturing employment fell from 19.6 million jobs in 1979 to 13.7 million jobs in 2007. Since 2007, the decline has only increased.

It stands to reason that as this trend away from manufacturing jobs continues, increased jobs in the service sector (where safety risks are often reduced) will lead to reduced lost-time workers’ compensation claims. Even if 2014 is an outlier, this trend will continue for the foreseeable future.

Increased Social Security disability claims

Obviously, people who receive Social Security disability benefits are either out of the work force or have a reduced employment capacity. While the last three decades have revealed a sharp increase in the number of Americans receiving Social Security disability, this trend has increased even more sharply over the past few years.

According to the Wall Street Journal, the number of Americans receiving Social Security disability benefits is up a whopping 42% since 2004. The actual number of Americans receiving Social Security disability benefits hit almost 11 million in 2013.

Data for 2014 shows that the number of people filing new Social Security disability claims has leveled off. However, this plateau is above the levels seen before 2013, and there is no indication that the number of such claims will actually decrease soon.

Increased focus on safety

Over the past decade, we have seen the creation of an entirely new business sector — workplace safety. Driven by both the requirements of OSHA and the workers’ comp savings realized by reducing accidents, this workplace safety business sector continues to make strides.

According to the Bureau of Labor Statistics, 4,383 fatal work injuries occurred in 2012, with 3.2 injury deaths per 100,000 full-time equivalent workers. This is a drop from the 2011 figures of 4,693 fatal work injures and a rate of 3.5 deaths per 100,000 full-time workers.

According to Amanda Wood, director of labor and employment policy at the National Association of Manufacturers, OSHA has played a role in this downward trend, but the bulk of the credit for these improvements should go to employers who are focused on a safe work environment. “I think those numbers show business’s commitment to a safe workplace,” Wood said in a recent interview with Safety and Health Magazine.

Insurance carriers have also jumped on the safety bandwagon. In years past, I would often speak with “the” safety professional with an insurance carrier. Now, carriers have entire safety divisions and even local safety professionals in every major market — all dedicated to reducing the number of workplace accidents.

A changing definition of ‘workplace’

Two technology trends are truly changing our definition of the workplace — mobile technology and internet/cloud technology. Telecommuting is now commonplace. There was a day when claims adjusters were all working from regional call centers scattered across the country. Now, more often than not, a claims adjuster is working from his or her basement…as are scores of other 21st century workers.

If all of the data accessed by an employee is available in the cloud as opposed to an office mainframe computer, it makes sense to give workers flexibility on where the actual work is performed. Employers can lower costs by reducing the amount of real estate that must be owned or leased, while employees spend less time commuting — and the average number of claims related to workplace accidents keeps dropping.

Combine this trend with the current emphasis on mobile technology and one can easily see why “getting to work” may become as archaic as saying “saddle up the horse.” While using mobile technology does increase the opportunities for accidents while driving cars, this is more than offset by the physical removal of a large number of employees from company-owned “workplaces” that present even more opportunities for accidents and injuries.

Bottom line: Except for 2014, we should continue to see great strides in workplace safety and a continued downward trend in workplace injuries.

Obesity as Disability? Workers' Comp Effects

A federal district court ruled in April 2014 that obesity itself may be a disability, amounting to the first shot in a war of lawsuits on grounds of obesity discrimination and opening up additional liability for workers' compensation claims across the country.

The case is Joseph Whittaker v. America’s Car-Mart, in the federal district court for the Eastern District of Missouri. Although the case is pending in Missouri, the implications apply nationwide because the court is applying provisions of the ubiquitous Americans with Disabilities Act (ADA).

The plaintiff claims the company, a car dealership chain, fired him from his job as a general manager after seven years of employment even though he was able to perform all essential functions of his job, with or without accommodations. He alleges that “severe obesity … is a physical impairment within the meaning of the ADA,” and that the company regarded him as being substantially limited in the major life activity of walking.

Attorneys for the company had moved to dismiss the case, arguing that obesity was not a disability under the Americans with Disabilities Act, and citing language from the Equal Employment Opportunity Commission that, “except in rare circumstances, obesity is not considered a disabling impairment.”

The judge rejected the company’s position, noting: “Plaintiff has sufficiently pled a claim that he is disabled within the meaning of the ADA.”

The plaintiff’s argument could be seen as a legal extension of the medical policy change made by the American Medical Association in June 2013, when the AMA adopted a policy that recognizes obesity as a disease.

Application to workers' compensation

One of the main issues in many workers' compensation claims is whether the employee is able to return to work in the open labor market. If the employee can’t, there is a focus on whether the inability to return to work was caused by the work accident alone, or is caused by pre-existing conditions, or a combination of the pre-existing disabilities and the work-related injuries. Claims are then adjudicated based on the primary cause of the inability to return to work.

Although most states have statutes that limit an award for permanent total disability benefits to those situations where the work injury alone is the cause, the practice is must different. For example, if a claimant has pre-existing disabilities and is then injured at work and cannot return to the workforce, judges are often reluctant to award minimal benefits, knowing that the claimant cannot ever return to work. It is much easier for the judge to find that the work injury alone is the primary cause and to award permanent total disability benefits even if the work injuries are only part of the equation.

Once obesity is accepted as a valid disability, injured workers could more easily argue that their obesity is a permanent condition that impedes their ability to return to work, as opposed to a temporary life-choice that can be reversed.

Injured workers could more easily qualify for Social Security disability benefits and for permanent total disability benefits, as the work injury is usually the last event in a chain of events (including, now, a history of obesity).

Once again, employers are being asked to shoulder not only the responsibilities of a work injury but also the responsibility of dealing with issues that have little, if any, relationship to the work environment.

After the ADA became law in 1993, I remember hearing the Americans with Disabilities Act referred to as “The Lawyers Full Employment Act.” Unfortunately, that moniker is now coming closer to reality.

Can You Trust the Aflac Duck?

I'm always a bit skeptical when companies report the results of self-serving surveys, so let's look at what Aflac — you know, the duck-spokesman company — said about a survey that indicated that offering disability insurance coverage to workers could drive workers' compensation claims down considerably. The survey found:

  • 42% of all companies providing voluntary accident and disability insurance report declines in their workers’ comp claims—some of as much as 50%.
  • Roughly 17% of employers offering voluntary accident insurance and 15% of those offering disability saw claims declines of 25% to 49%. The declines were most frequent for large employers, 55% of whom saw workers’ compensation claims drop. Of small- and medium-sized companies, 34% reported the same results.

Is this really true? Can simply purchasing disability insurance really lower the number of workers' compensation claims? Forgive me for immediately thinking that this sounds a bit like the marketing strategy of snake oil salesmen: “Buy one bottle of this magic elixir, and it cures everything from rheumatism to scarlet fever.”

I can think of three reasons why “purchasing disability insurance = lower workers' comp costs” may not be a valid equation.

1. Lower claims may not amount to lower costs.

In the exposure mod rating game, there is no question that lowering the number of claims can reduce the E-Mod and result in lower premiums. However, just because the claims are lower does not automatically mean that the costs are lower.

For example, if the claims reduced by the purchase of disability insurance were small medical-only claims or small lost-time claims, this would reduce the actual number of claims but may not have much of an effect on the E-Mod of a large company that also has more serious injuries. Sure, the number of claims may have gone down, but if Acme Co.’s comp costs stayed the same because of the presence of larger or more serious claims, does that really amount to a substantive benefit?

2. Disability insurance cost may exceed any savings on workers' comp.

What this survey doesn't tell us is how much companies had to spend on disability insurance coverage to realize the savings in workers' comp costs. In other words, did Acme Co. have to spend an additional $100,000 for the disability insurance coverage to save $40,000 in workers' comp costs? If so, that doesn't seem like much of a bargain – – spending $100,000 to save $40,000 (unless we use U.S. federal government math. . . . )

The survey didn’t give us this information probably because the costs to purchase disability insurance coverage would be different for every company surveyed, as would the savings (if any) from the alleged reduction in workers' compensation claims. Nevertheless, I don’t see how we can determine the validity of the “purchasing disability insurance = lower workers comp costs” equation unless we know the ratio of dollars spent on disability insurance vs. the dollars saved in workers comp costs.

3. Why would injured workers leave money on the table?

Let’s assume that Joe Sixpack is injured on the job. If his employer, Acme Co., has both disability insurance and workers' comp coverage, Mr. Sixpack now has a choice of how he seeks payment for medical care and payment of lost wages. The implied argument from the survey is that if Mr. Sixpack has the choice between the two, he will choose disability insurance over workers' comp, thereby reducing the number of comp claims for Acme Co.

But wait…does disability insurance pay for permanent partial disability benefits? Does disability insurance pay for permanent total disability? Does disability insurance pay benefits longer than the term specified in the policy?

Obviously, the answer to these questions could vary. However, in most states, workers' compensation coverage would pay an injured worker a lot more money than the type of disability coverage refererred to in the survey. I’m not attempting to argue that injured workers should choose workers' comp over disability insurance — but I am pointing out that claimants will typically choose whichever type of benefit will pay them the most money. If that turns out to be workers' comp, then it is doubtful that claimants would be so magnanimous as to choose to file a claim through disability insurance.

Finally, the state where Mr. Sixpack lives may allow him to file a comp claim after he gets benefits through his disability insurance coverage. The presence of disability insurance wouldn’t even amount to a reduction in claims if Mr. Sixpack pursues both avenues.

Bottom line: If you are considering the purchase of disability insurance coverage because it may decrease your workers' comp costs, make sure the math works. Ducks are cute, but I don’t trust their math skills.