PBS special and an ASSE book recount disaster that drew attention to workplace safety

You don’t have to know what a shirtwaist is (see the link at the end) to be interested in the 100-year anniversary of a tragic fire in New York that is said to have helped drive the beginnings of the mandatory workers’ comp system in the United States.

1911 fire killed 146 workers

According to a post at Business Insurance, “The PBS American Experience documentary on the Triangle [Shirt]Waist Factory fire that killed 146 people, mostly young immigrant women, is well worth watching, a spokeswoman for a comp insurer tells me.

“The 1911 fire is credited with being among the forces that helped launch mandatory workers compensation systems in the United States. This year marks the 100th anniversary of the fire and the birth of U.S. work comp systems.”

‘Deadliest workplace accident in New York’s history’

According to this PBS: American Experience page, “It was the deadliest workplace accident in New York City’s history. On March 25th, 1911, a deadly fire broke out in the Triangle Shirtwaist Factory in New York’s Greenwich Village. The blaze ripped through the congested loft as petrified workers–mostly young immigrant women–desperately tried to make their way downstairs. By the time the fire burned itself out, 146 people were dead. All but 17 of the dead were women and nearly half were teenagers.”

13-hour workdays, at 13 cents an hour

Not only were most of the workers immigrants but so were the owners, who paid workers 13 cents an hour–for a 13-hour workday–while they lived in luxury. “Two men who had achieved the dream were the wealthy owners of the thriving Triangle [Shirtwaist] factory. Isaac Harris and Max Blanck, immigrants who had arrived from Russia only 20 years earlier, had become known as New York’s ‘Shirtwaist Kings,’ and each owned fully staffed brownstones on Manhattan’s Upper West Side.”

Some condition improved–but not enough

After “what became the largest women’s strike in American history” and gaining support from wealthy grand dames of society such as “Anne Morgan, the daughter of J.P. Morgan,” the owners relented–somewhat:

After the strike had continued for 11 weeks, the Triangle owners finally agreed to higher wages and shorter hours. But they drew the line at a union. Back on the job, the Triangle workers still lacked real power to improve the worst conditions of the factory floor: inadequate ventilation, lack of safety precautions and fire drills–and locked doors.

When a tossed match or lit cigarette ignited a fire on the eighth floor of the building, flames spread quickly. Blanck and Harris received warning by phone and escaped, but the 240 workers on the ninth floor continued stitching, oblivious to the flames gathering force on the floor below. When they finally did see the smoke, the women panicked. Some rushed toward the open stairwell, but columns of flames already blocked their path.

A few workers managed to cram onto the elevator while others ran down an inadequate fire escape, which crumbled under the weight, crashing to the ground almost 100 feet below. The only remaining exit was a door that had been locked to prevent theft. The key was tucked into the pocket of the foreman, who listened to the women’s cries for help from the street. Hundreds of horrified onlookers arrived just in time to see young men and women jumping from the windows, framed by flames.

Immense public reaction

The next thing to ignite was public opinion: “The ensuing public outrage forced government action. Within three years, more than 36 new state laws had passed regulating fire safety and the quality of workplace conditions. The landmark legislation gave New Yorkers the most comprehensive workplace safety laws in the country and became a model for the nation.”

Follow-up resources

If you’re interested, be alert to your local PBS schedule for the next broadcast, or you can order the DVD here.

There’s also an interesting 100-year timeline of significant workplace events here assembled by the same people, the American Society of Safety Engineers, who produced this book, entitled “Triangle: The fire That Changed America.”

Oh, and a “shirtwaist”? That’s explained here.

We cover workers’ comp fraud from all angles. Sometimes the point is to help workers be alert to scams that employers may try to pull on injured workers. Sometimes the point is to remind everybody that workers’ comp law can be minefield for people who don’t have a competent, experienced attorney. Sometimes the point is that workers who scam the system can get in big trouble, too.

Earlier this month, the San Francisco Chronicle ran a short piece about a big scam.

‘One of the largest cases in California history’

“A Laguna Hills roofing contractor has been sentenced to 10 years in state prison,” says the Chronicle, “in what prosecutors are calling one of the largest workers compensation insurance fraud cases in California history.”

According to the Los Angeles Wave, “Michael Vincent Petronella was also ordered to pay $500,000 in restitution and a $500,000 fine, amounts that prosecutors said were far too low, given that he had committed a fraud that they said netted between $11 million and $35 million.

“A jury found Petronella guilty Feb. 11 of 33 felony counts of insurance fraud with a sentencing enhancement for aggravated white-collar crime of more than $500,000.”

Under-reporting payroll

The Chronicle account says prosecutors described a scam that Petronella and his wife, Devon Lynn Kile, began in 2000 by taking out workers’ comp insurance “for their multiple companies” and subsequently turning in 42 fraudulent claims for workers who were not insured, meanwhile failing to report $29 million worth of payroll in an attempt to avoid paying premiums. “The scheme,” says the Chronicle, “resulted in the state incurring more than $253,000 in uncovered injured worker claims and insurance premium losses in the millions.”

According to the account in the Wave, the scheme was so complicated that “Orange County Superior Court Judge Richard King held hearings all . . . week to determine what restitution Petronella would have to pay his victims and what punishment he deserved.”

A ‘defiant’ defendant

The demeanor of his co-defendant wife is not mentioned in either piece, but according to the Wave Petronella was not only not remorseful but also bitterly challenging.

A defiant Petronella, at times raising his voice, angrily blamed State Compensation Insurance Fund officials for his dilemma. He claimed he was a “safety nut,” and received awards for job safety from regulators and that the insurance fund officials had the responsibility to bring the discrepancies to his attention.

“We had a safe working environment and they didn’t reward us for it,” Petronella said. “They punish you for getting around the insurance laws they try to ram down your throat… You’re in a hostage situation. It’s either their way or the highway. They won’t spend 15 minutes to help you understand their business.”

Petronella’s attorney said the man did not report to proper number of employees in an effort to make up for what he considered “inflated insurance premiums.” However, doing so caught up with the couple because the number of claimed injuries attracted attention based on reporting too-few employees.

The wife is due to be sentenced soon but is expected to angle for a plea deal, presumably for having a smaller role in the scheme, which came to light in 2006 when a worker fell from a roof. He was listed as an employee of one of Petronella’s businesses–but was not covered by workers’ comp. The couple were arrested in 2009.

Home repairman faces four years

A less flamboyant case reminds us that even “run-of-the-mill” workers’ comp fraud can result in serious jail time.

A Nov. 5 press release from the New York State Insurance Department says, “A Sullivan County man accused of running a home repair and painting business while collecting workers’ compensation benefits was arrested Wednesday, the New York State Insurance Department reported.

“State police arrested Homer Spangler, 54, of Kenoza Lake, following an investigation by the Insurance Department’s Frauds Bureau.”

So, yes, the authorities really do have investigators who go out and check up on this stuff.

A re-post at workcompwire.com says, “Spangler is accused of fraudulently accepting $7,470 in benefits after submitting documents to the New York State Insurance Fund falsely stating that he was physically unable to work.

Caught by routine check up

“An investigation was begun after Spangler was discovered running his own business last October during a routine check by the Insurance Fund. He started collecting permanent partial disability benefits after suffering a job-related injury in 1988 while working for a glass company.”

After arraignment, Spangler was released on his own recognizance–but he faces up to four years in prison for the two felony charges, “workers’ compensation fraud and offering a false instrument for filing.”

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Frequently enough, a worker’s compensation case may be so complex as to demand legal representation. However, sometimes what seems like a cut-and-dried situation to an injured worker may result in a smaller award than envisioned–or even a denial. Have you, a friend or a loved one been injured on the job? Whether you’re merely seeking answers about your rights or believe a lawsuit may be necessary, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources:

Workers compensation basics

Injury on the job

Filing a claim

AIG, the giant insurer and a major player at the core of the Great Recession, has been allowed by a federal judge to begin issuing subpoenas to 400 of its competitors in the workers compensation insurance business, according to a March 16 piece at businessinsurance.com.

The ruling, which allows AIG to pursue “nonparty discovery,” is part of a larger dispute between AIG and several competitors–but extends to “discovery of practices by insurers not named in the lawsuit, AIG said Monday in a statement.”

Industry leaders involved

The fracas involves some heavyweights in the industry, including some who joined forces in the original RICO suit against AIG: “The ongoing litigation grew out of a May 2007 lawsuit against AIG originally filed by the National Workers Compensation Reinsurance Pool made up of AIG competitors and operated by Boca Raton, Fla.-based NCCI Holdings Inc. That suit alleged violations of the Racketeer Influenced and Corrupt Organizations Act by AIG, among other assertions.”

It also involves some colorful language, for what might seem an otherwise dry topic.

Let’s pick up the story in 2005 when, according to an August 26, 2009 post at an insurance law blog, “a New York state investigation revealed that AIG had, over several decades, provided false reports of its workers’ compensation premiums to NCCI and state tax authorities to evade its residual-market obligations.” Id. Thereafter, in 2006, AIG entered into settlement agreements, including a $1.6 billion settlement with New York and federal authorities. The Participating Companies contested that the settlement agreements offered full and fair restitution. Id. at 5.

“On May 24, 2007, NCCI filed suit against AIG, alleging underreporting of premium data. AIG interposed numerous defenses and asserted counterclaims for an equitable accounting and an action on an open, current, and mutual account, both of which survived NCCI’s motion to dismiss. AIG also filed a 12-count third-party complaint against 24 named companies and numerous unnamed companies. Id. at 3.”

Court dismisses NCCI suit

But in August 2009, a federal district court dismissed the suit against AIG, “holding that the NCCI failed to establish standing to assert claims on behalf of the Pool.”

That’s when AIG came out swinging, inserting itself as plaintiff, and as described at workerscompsc.com, in September 2009 amended that complaint “in its Chicago racketeering conspiracy fight alleging fellow members of the National Workers’ Compensation Reinsurance Pool conspired to suppress a state and federal probe of the systematic underreporting of workers’ compensation premiums.”

AIG’s amendment, according to Michael Whiteley, “names as defendants the pool, NCCI and 19 insurance companies. It focuses on the actions of Liberty Mutual Group, Travelers, The Hartford, Ace INA Holdings and Sentry Insurance Co. as carriers AIG says have dominated the governing board of NWCRP.

“The amended complaint, which was filed under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleges that NCCI flagged significant problems with the misreporting of premiums as early as 1986 and then conspired with pool members to conceal the problem while then-New York State Attorney General Eliot Spitzer was investigating the practice at AIG.”

AIG says it was targeted as scapegoat

Furthermore, AIG alleges the whole thing was a longstanding sham-up, designed to hurt AIG.

Again from the Whiteley piece: “And AIG repeated assertions that its competitors – led by Liberty Mutual, which last year overtook AIG as the leading comp insurer in America – conspired to make AIG the scapegoat in the Spitzer probe to prevent investigators from broadening their target.

“AIG said a Liberty Mutual representative on the pool’s governing board said at a board meeting in 2005 that the Spitzer probe gave the board ‘an opportunity to get the bastards at AIG.’ “

The residual market

What’s at stake is who-owes-what to cover costs in the so-called “residual market,” the pool for employers who can’t workers’ comp coverage in the primary market. As the insurance law blog explains:

“The action concerned the workers’ compensation insurance market. Employers obtain workers’ compensation insurance coverage from insurers in what is known as the “voluntary market.” Insurers that provide coverage to the voluntary market are required by state law to provide coverage to the “residual market,” which is the market for employers who cannot obtain coverage on the voluntary market. Those employers obtain workers’ compensation insurance coverage through an individual state’s assigned risk plan. Under that plan, the amount of insurance an insurer is required to provide for the residual market is directly proportional to the amount of premiums it collects for the policy it writes for the voluntary market. Mem Op. 3″

“Therefore, ‘any company that underreports its premiums to NCCI decreases its reinsurance participation rate and the overall total used to calculate all the rates.’ Id.”

‘Common practice in the insudtry’

Looking through the various accounts of the lawsuits and countersuits, it’s hard to find any instances in which AIG denies under-reporting these premiums. After all, it did settle for at least $1.6 billion in 2006. So far, it seems like AIG is merely saying, well, everybody did it.

From the businessinsurance.com conclusion, re AIG’s most recent action: “Now AIG is seeking proof through its subpoenas that premium underreporting practices it is alleged to have engaged in were common practice in the industry.”

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Regardless of whether you’ve been hurt on the job, it’s wise to know the basics of workers compensation in case you, a friend or family member need to file a claim in the future. If you do get hurt, you should be aware of the first things to do or what to tell a co-worker who has been injured.

Sometimes an injured employee takes all the correct steps but still has trouble getting the claim taken care of; in that case here’s some information for problems with denial of benefits. If legal help is needed to help with the case, be sure to speak to a trained, experienced attorney.

New York worker’s compensation can help a worker who has been injured while performing their normal business activities receive medical care and lost wage compensation. Worker’s compensation or workman’s compensation has eliminated the need for injured workers to file a personal injury lawsuit against their employers. Employers now provide immediate compensation for the worker and the worker avoids an expensive, protracted court battle.

New York’s workers compensation insurance is not provided for work injuries which are intentional, willful or self-inflicted. Work injuries are also not covered if they are the result of alcohol or drug use or rough housing.

Workers comp insurance covers most occupational illnesses and work injuries including:

• Amputations
• Pulmonary conditions
• Abrasions
• Work related heart attack or strokes
• Toxic chemical or smoke inhalation causing pulmonary complications
• Burns
• Neck, knee and back injuries
• Concussions

New York Worker’s Compensation Benefits

Work comp benefits can include medical compensation and wage loss protection paid by the employer’s insurance company. New York Worker’s Compensation Board processes the claims and pays them to the employee regardless of who was at fault for the work injury.

New York workers who suffer an injury at work can receive:

• Cash Benefits – New York workers who suffer an injury at work can not receive cash benefits for the first seven days of their work injury unless it last more than 14 days. The amount paid to the employee is a percentage of their average weekly wage for the past year. To calculate the amount of benefits which the employee may qualify for the following formula is used: 2/3 x average weekly wage x % of disability = weekly benefit. Disability benefits may also be paid to workers who return to work but can not make the amount of money they could prior to the work injury.

• Medical benefits- New York workers who suffer an injury at work can receive medical care benefits for the original work injury. Medical care which is compensated can include: diagnostic tests, MRIs, x-rays and other necessary exams.
• Dependent benefits – Beneficiaries of New York workers who die from their work injury or occupational illness can receive certain death benefits. Dependent benefits are 2/3 of the deceased worker’s average weekly earnings for the year prior to the work injury. Workers compensation establishes a maximum amount of compensation (regardless of the number of dependents). The estate may receive $50,000 if there are no dependents. Funeral expenses of $6,000 are paid in metropolitan New York but other counties limit expenses to $5,000.

Do I Need a New York Worker’s Compensation Attorney?

New York workers who sustain an injury at work can hire a work injury attorney or file their own work compensation claim. It is important to remember that employers will have their own work comp attorneys representing their interests. Worker’s compensation lawyers can also help if a work injury was caused by a third party or if it has led to discrimination or workplace harassment.