July 28, 2008

Real Injuries, Phony Claims

When it comes to fraud in workers comp, we usually look to employers, doctors and lawyers. They go after the big bucks. While there are opportunities for ordinary workers to exploit the system, most decline to do it. Today we examine two claims, both involving real injuries and both involving fraud. Coincidentally, it's a bi-coastal story.

Let's begin in the east, in Gardner, Massachusetts, where Erik Teong managed a Shell Station. On October 28, 2006, Teong reported to Gardner police that he had been assaulted and robbed while taking cash receipts to the bank. He sported a bruised face and injured eye.

The police did not buy his story. He eventually confessed to stealing the $7,000 deposit. In February 2007 he was charged with larceny and making a false report of a crime. In April, he pled guilty to both charges and was sentenced to one year of probation. He also must pay the insurance company $7,900 (to repay the "stolen" payroll).

The injury to his eye? Teong told police that he had a friend give him a hard punch to the face, to make his story more credible. The hapless Teong has permanently damaged his vision. And because the injury appeared to occur in the course of employment, Teong filed a comp claim. AIG, the comp insurer (with a few problems of their own!), paid his $16,000 medical fees and $3,000 indemnity. Now AIG wants its money back. They referred the matter to the fraud bureau, which led to Teong's indictment by a Worcester County grand jury.

So Teong has earned himself a place in the Hall of Fame for Incompetent Criminals. He botched the fake robbery. His friend all-too-convincingly smashed him in the face. He has to repay the medical expenses and ill-gotten indemnity. And to top it off, given his permanently impaired vision, he may have trouble reading the charges against him.

California Scheming
Now let's hop across the continent to the Lake Tahoe, where Nicholas Jason Beaver resides. Nick worked for the Sierra-at-Tahoe resort, but busy as a Beaver he was not: the resort told him they would not rehire him for the following season. One night, after a few beers with his buddies, Nick decided to get even. He decided get himself injured on the job.

On April 9, 2004 Nick jumped up and down on a snow bridge that covered the top of percolation test hole. After three or four jumps, he broke through the bridge and fell into the 5 foot deep hole, injuring his knee. He collected comp (the injured knee required surgery) and then decided to sue the resort: he wanted to pierce comp's "exclusive remedy" shield due to the resort's "extreme negligence" in allowing an "unprotected" hole to exist on their grounds. (Nick's story belongs in the burgeoning archives defining the word "chutzpah.") The resort spent $40,000 defending itself and over $42,000 in medical bills on Nick's injured knee. They offered Nick $110,000 to make the case go away.

Nick refused to accept the chump change. He apparently told his buddies that he wanted really big bucks. At that point, one of the (disgusted) friends who witnessed the incident dropped a dime on him. His friends were given immunity from prosecution; while technically co-conspirators, they did not benefit financially from the fraud. Nick was convicted of stealing more than $65,000 and now faces up to four years in prison.

Benefit of the Doubt?
Erik and Nick were both injured on the job, but their injuries were part of a conscious effort to defraud the employer and insurer. Their stories demonstrate how the comp system defaults toward accepting a reported claim: Erik and Nick both were successful in accessing comp benefits for their injuries. The wheels of justice in these cases ground a bit slowly, but they did grind exceedingly fine. The pain of the actual injuries, with the exception of Erik's impaired vision, has already faded. But the pain of lives ruined by impulsive greed will linger for a long, long time.



I actually handled two workers comp cases similar to the first one. The manager of a restaurant in Arkansas alleged robbery and was actually shot in the leg. Another co-worker chased the car and got the tag number. They caught the assailant and the police officer went to the hospital to let the injured worker know and to get a statement. The wife was shocked because it was their friend. After more questioning the injured worker confessed to the robbery and that he asked his friend to shoot him to make it look real and receive work comp benefits while off work. Luckily we didn’t pay anything. The other incident happened in Oklahoma. The employee of the restaurant wanted to have his teeth fixed. He had a few buddies come in and beat him up. He tried to file comp but we had too many witnesses. The case was turned into fraud but since we didn’t pay a dime they didn’t pursue.

I would not call either one of these extremely unusual events a "real" work injury. That would cheapen the term which describes the unfortunate events which occur to hard working individuals who are attempting to provide for themselves and their families.

I do not share your belief that comp. defaults towards accepting claims. They might begin benefits initially, but the game is the same and it's getting very old.

Those who administer WC programs will use any means they have, legal or otherwise, to make the IW miserable enough that they will go away. Oftentimes after they have lost everything.

You have given us two examples of decidedly immoral fraudulent bahavior, and those individuals are being punished. Let's now hear about the raw deal legitimately IW's get every minute of every day. And let's hear about what does not happen to their WC carrier.

The fraud of faking and exaggerating more typical workplace injuries is no less fraud, and that occurs ALL THE TIME in workplaces everywhere. I practice work comp law, and I have NEVER known an employer or medical care provider to attempt to defraud the system, whereas employees and their attorneys do so routinely, and with impunity.

To rig:

I don't know how you define fraud. But I have seen carriers and their agents use scare tactics, hire doctors who always rule in their favor, hire doctors incompetent to access injuries, lie to claimants, lie to claimants family, deliberately short payments, deliberately withhold payments, deliberately withhold reports that support the claimant, all in just one case.

Carriers routinely and with foresight to whatever they can to minimize payouts while knowingly accepting premiums with inflated rate codes and so benefit on both sides.

In thirty years as a CPA doing turnarounds and consulting I have never seen a company I have worked with who is paying the correct amount for Workers Comp when I arrive. The codes are always inflated to higher premium codes and modifiers are seldom calculated correctly. See http://ezinearticles.com/?Dirty-Little-Secret-of-Workers-Compensation-Insurance&id=499352 .

I don't know what Fairyland you practice in, or where you got your rose colored glasses, but it surely is not this country.



Submit your email to be notified when this site is updated

Need help with your workers' comp program?

Monthly Archives

About this Entry

This page contains a single entry by Jon Coppelman published on July 28, 2008 9:38 AM.

Health Wonk Review, help for paraplegics, crane safety, PBM shakeups and more was the previous entry in this blog.

Accident investigation slide shows is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

OpenID accepted here Learn more about OpenID