Category Archives: Workers’ Comp fraud

How Significant is Employer Workers Compensation Fraud

How significant is employer workers’ compensation fraud? If you are an employee who has been a victim of employer workers’ compensation fraud or believes your employer has been guilty of workers’ compensation fraud; it may be far more significant that you can imagine, and you may need the advice and aid of a workers’ compensation lawyer.

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Former Security Company Owner Convicted of Workers Compensation Fraud

Former security company owner Ousama Karawia has been convicted of workers compensation fraud. Karawia’s security company provided security to government agencies and firms across the United States. Among those that Karawia’s security company, International Protective Services Inc., provided security for was the Statute of Liberty in New York and the downtown Los Angeles County Courthouse.

English: This modest skyscraper in San Francis...

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Washington state, feds team up to fight ‘underground economy’

Trade group’s report says lost-time claims increased 3% from 2009 to 2010


Washington L&I department signs memo with U.S. Labor Department

A Sept. 26 piece at a Washington State news site says, “The Washington State Department of Labor & Industries <> strengthened its commitment to fighting the underground economy Sept. 19 by signing a memorandum of understanding with the U.S. Department of Labor, partnering in the battle against improper classification of employees.

Targeting ‘misclassification of employees’

“According to a press release, the agreement allows the Labor Department to share information with L&I in order to better target the misclassification of employees.”

We’ve reported on similar trends elsewhere, particularly in Connecticut and California. In Connecticut, authorities shut down six jobsites involving 19 companies.

Practice cheats honest companies and endangers workers

Authorities in Washington say such practices injure honest businesses and contractors–and can be dangerous for workers. “Employee misclassification occurs when an employer classifies and treats a worker as an independent contractor even though legally the structure and circumstances of the relationship means the worker is an employee, according to the press release from L&I.

“Employers who misclassify their employees as independent contractors avoid paying unemployment taxes and workers’ compensation insurance premiums.  This allows these employers to undercut their competition and make it harder for legitimate businesses to compete.

“The worker is also harmed by this underground economy, says L&I officials.

“ ‘When employers fail to pay workers’ compensation and unemployment insurance premiums on their worker’s behalf, it is harder for the misclassified workers to collect the benefits they deserve if they are hurt on the job or laid off,’ said Schurke. ‘Misclassified workers also may not be paid the minimum wage and overtime they are owed by law.’ ”

Reform cited as cause for lower premiums

State officials also believe recent “reform” legislation is responsible for lower workers’ comp rate hikes this year. According to a Sept. 25 item at Insurance & Financial Advisor, “The Washington State Department of Labor & Industries (L&I) today proposed its lowest workers’ compensation rate increase in five years.

“The state agency is proposing a 2.5% increase, far lower than the 10% to 14% hike that would have occurred without state reforms to the system passed in the last legislative session.

“ ‘We recognize the impact of painfully slow economic growth, and this proposal balances that with the needs of the workers’ comp system,’ L&I Director Judy Schurke said in a statement. ‘The reforms passed this year had the effect they were designed to – now and into the future.’

“The legislative reforms are expected to save $1.1 billion over the next four years.”

A Sept. 26 piece in the Kitsap Peninsula Business Journal explains more about the savings: “Over the past three years, L&I used $332 million from the State Fund reserves to partially fund the premiums for employers and workers, holding down rates during the recession. This has significantly reduced the reserves, which are critically low by industry standards.

” ‘This proposed increase is a small step toward rebuilding the state’s workers’ comp reserves. Although the workers’ comp trust funds remain solvent, we recognize the need to ensure the funds are protected in the event of a further economic downturn,’ Schurke said. ‘This is consistent with past reports from the State Auditor.’

“L&I will work with the Workers’ Compensation Advisory Committee, representing business and labor, on a multi-year plan to rebuild the reserves.”

In other recent announcements, a new report says workers’ comp lost-time claims increased in 2010 over levels reported in 2009.

NCCI reports rise in lost-time claims

A Sept. 26 piece at Property Casualty 360 says, “Workers’ compensation lost-time claims increased 3 percent last year, the first increase in such claims since 1997, the National Council on Compensation Insurance, Inc. reports today.

“The Boca Raton, Fla.-based association released its 2011 Workers Compensation Claim Frequency report saying the Great Recession of 2007-2009 may have had an impact on workers’ compensation claims frequency.

“NCCI says the 3 percent increase, which was adjusted to reflect economic factors, marks the only the third time in 20 years that frequency has increased.

“Prior to this year’s increase, the report says, claim-frequency rates had fallen more than 56 percent, at an average decrease of over 4 percent a year.”

Report ties Great Recession to workers’ comp effects

In it’s PR about the study, NCCI reports ties to the Great Recession–and also finds a bit of a silver lining: “Several factors related to the recession have had a considerable influence on claim frequency. Claim frequency for workers compensation injuries increased 3% in 2010, marking the first increase since 1997. Although claim frequency is up, the good news is that NCCI’s latest data reveals that the growth in average indemnity and medical cost per claim slowed in 2010.”

The group also said, “A number of recession-related factors may have put upward pressure on the AY 2010 frequency measure, including an increase in new hires as the recovery began to take hold and a possible influx of small lost-time claims that may have been medical-only claims in previous years.”

We can help you find an attorney

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

Do you really want to act as your own contractor?

Some things to consider before hiring ‘day help’


Today, let’s start off smallish in topic and end up biggly, as in Texas, in the next episode.

Disinformation, misinformation & real information

It’s kind of amazing, in some kind of degree, what you might kind of run across on the Internet, when what you really need instead is good, solid information.

Our first two cases are from California, the first involving unemployment as well as workers’ comp from a homeowner’s perspective; the second involving, again, both unemployment and workers’ comp–but from a worker’s perspective. These are from an “ask-an-attorney” Web site. On to the first case:

Homeowners: Day laborer ‘waved papers & laughed at us’

We had a day laborer work on our property for 3 days. We hired him and his workers to work per day and be paid daily for their work. We had told him not to arrive on the 4th day because we could lay down the rest of the paving stones ourselves. He got angry over the phone then ~ 1 mo later he arrived at our house and waved some papers and laughed and threatened us. We told him to never appear on our property. We paid him using our business check and then he filed EDD and worker’s compensation benefits for personal injury using our business name. We filed fraud. Then later, he filed the same thing under the homeowner’s name and received a slew of medical diagnostic test which keep arriving in our mail. He has now had a lien against our property. I was told not to do anything until they sue.

I earnestly feel this is a fraudulent claim against our property because we have witnesses in our neighborhood who saw this man work and also know this man worked on another property a week after finishing ours. What steps do I take to protect our home? Also, I’m very confused about worker’s compensation. We hired this man to provide a service for our home. He is not at all affiliated with our business. Does his claim qualify as worker’s compensation? Do we have a duty to this person as homeowner? I would think if he worked at our home, and complained of back pain, it would be more of a personal injury claim.

The attorney’s answer

You should definitely make an appointment with a Certified Specialist in WC as soon as you can. You need to find out if your Homeowner’s Policy can cover the claim; whether the laborer can be classified as an Independent Contractor; whether there is a Civil case filed; whether there is a WC case filed; whether the Uninsured Employers’ Fund is a party….

In short, you case will be extremely fact sensitive, and there are significant potential penalties if you ignore it and do not protect your rights. Review my Uninsured Legal Guide and call a SoCal WC Specialist as soon as you can. The money you spend on Defense will save you a LOT of money later.

‘Fact-sensitive’ case shows peril of acting as contractor

I think the attorney is correct, two-fold: first, these homeowners absolutely do need to contact a trained, experienced workers’ comp attorney, ASAP. Furthermore, the responding attorney is astute in affirming that the homeowners’ case is “extremely fact-sensitive.” In other words, these homeowners really need every available assertion they’ve put forth to be verifiable by document or witness in court.

Just to remind everybody, I am no attorney and have never set foot in law school; accordingly, nothing I say, write, utter…well, lol, you get the gist: this ain’t legal advice.

Given that disclaimer, I will say that I have successfully performed hundreds–if not thousands–of home-repair jobs in my construction career (the other half of my life has been in publishing, mostly journalism and college textbooks). During that time, I have never had cause to take action against a homeowner.

In that vein, I suggest the attorney cited is remiss by not reminding other homeowners who may be reading along to not act as contractors, unless they’re prepared to do so. Yes, as the homeowner, you may in most parts of the nation bypass many permit-and-inspection rules, when you do the work yourself (be sure to check local rules) –and often you can bring in help. BUT, when you act as a general contractor by hiring “day labor,” you could wind up being as responsible for the workers you hire as if you were a general contractor.

From the worker’s point of view

I was hurt @ work ,denied comp and now fighting to get unemployment.I was excepted but now have been denied.

[Editor’s note: the writer intended accepted, not excepted: believe it or not, could make a difference in a legal filing.]

unemployment denied me stating i was unable to perform my duties.I worked for a adult foster care home with mentally and physically handicapped clients.The agency I worked for has homes with clients that are physically able to care for themselves.I was let go from my job and not offered a transfer.Can i fight the unemployment denial on this alone ? I’am pursuing the comp case @ this time,but still have no job out of work 3/23 /2011.Still under doctors care. I worked for employer over 8yrs.

Stay tuned

We’ll have the answer to this question, plus my response…next installment. And, yes, we will get to that Texas case.

Meanwhile, let’s see whether you have a workers’ comp case to be explored.

We can help you find an attorney

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

Pinnacol ‘quits’; scammers get busted; young man gets stuck in wheelchair

More news from around the country, showing the stressors at work in workers’ comp programs


We’ve been following  the situation in Colorado with Pinnacol since 2009. Pinnacol Assurance has wanted to break free of quasi-government agency and be owned privately by policy holders.

Pinnacol bails out–Colorado state employees left up in air

According to an Aug. 5 piece in The Washington Post, “A Colorado-chartered workers’ compensation insurer will no longer administer the claims of state employees following disagreements with state officials over lavish trips, compensation and golden parachutes for key executives.

“Pinnacol Assurance’s decision to bail forced Colorado to scramble to hire an independent contractor to administer claims for state workers. State Rep. Sal Pace, D-Pueblo, said about 42,000 employees were affected, including about 1,000 who have claims pending.”

‘Do the damned work”

It’s not clear how a state-chartered entity can refuse to do its work, and doing so has drawn the ire of a leader in State House, according to a piece in the Pueblo Chieftain. Apparently, Pinnacol had announced its intention in January:

“It sounds like they just don’t want to do the work,” said House Minority Leader Sal Pace, D-Pueblo. “I’m sorry to tell Pinnacol this, but you’re owned by the state of Colorado. Do the damned work.”

One year remained on Pinnacol’s contract as third-party administrator of state employees’ workers’ compensation claims when it terminated its services to the state and forced Colorado to put the services out to bid.

“They didn’t say why, but they did send a letter,” said Markie Davis, state risk manager.

Davis acknowledged that Pinnacol informed the state in January of its intent to discontinue offering administrative services to the state, which is self-insured as it had been before Pinnacol bowed out.

According to the Denver Post, the idea of changing Pinnacol to a private company is still on the table. We’ll keep monitoring developments.

Alaskan tour operator busted

Another early August article, from Canadian Business, describes a sorry situation involving an Alaskan tour operator that’s getting popped for more than a mil in penalties because they did not carry workers’ comp coverage for employees:

An Alaska tour operator has been fined $1.5 million for allegedly failing to carry workers’ compensation insurance, violating stop work orders and misclassifying employees as independent contractors.

Ultimate Tours LLC and Godwin Glacier Tours LLC can appeal the Alaska Workers’ Compensation Board decision or ask that it reconsider. An attorney for the tour operator declined comment Friday.

Mike Monagle, director of the workers’ compensation division, said the state attempted to reach agreement with the company but it wasn’t cooperative with investigators.

He said stop work orders were issued in 2005 and 2010, meaning the company couldn’t have employees. He said the operator designated workers as independent contractors.

What were they thinking?

It really makes you wonder, doesn’t it? What are employers thinking when they get warned and proceed, anyway, to try to:

1. not only leave workers at risk, but also
2. to defy the state, when obviously it’s up-to-speed enough on the scam to issue a stop-work order?

Is it merely a case of “desperate times require desperate measures”? Or is it more likely the case that some employers simply think workers should accept whatever conditions they impose, shut up and keep working?

19 companies jammed up over employee-contractor designations

Whatever it is, it’s not restricted to the hinterlands.  An Aug. 17 account by Bloomberg BusinessWeek reveals some details about 19 companies getting whacked over similar deceptive practices:

Connecticut labor officials said Wednesday that they have recently halted work by 19 companies at six construction sites in Westport.

The state said the firms misclassified workers as independent contractors to avoid workers compensation and other payments.

Gary Pechie, director of the Department of Labor’s division of wage and workplace standards, said the companies face a daily fine of $300 for each day they fails to carry workers’ compensation coverage as required by law.

How many workers does shutdown affect?

Think of the workers who can’t ply their trade after having six worksites shut down. The way I grew up, and partly because of the section of town I was raised in, my friends and I would simply walk off a construction job when we were treated shabbily. Our motto was: “I was looking for a job when I found this one.”

In this economy, I doubt those workers at any of the six sites share our youthful bravado.

Robbery at second-job leaves young man in chronic pain

Our last vignette for this edition concerns a young man who was so exuberant about work that he got himself two jobs. At the part-time, he got shot during a robbery, and hasn’t been able to work at any job since.

Worse, because of the state’s workers’ comp laws, he’s prevented from accessing higher-grade health care that his employer’s health insurance might provide. From an Aug. 7 post at

At 26, Sam McGinnis was an energetic workaholic with a day job at Time Customer Service in Tampa and a part-time gig at a CVS in Carrollwood. A lanky 6-foot-3, he enjoyed riding motorcycles and working on cars.

On Nov. 29, 2008, long before dawn, a gunman in a clown mask walked into the drugstore, shot McGinnis twice, and ran out with $80.

The second bullet entered McGinnis’ chest and traveled through his liver, stomach, bowels, colon and lumbar nerve.

McGinnis, now 29, has not worked since. By day, the pain in his legs keeps him in a wheelchair; by night, it keeps him awake.

His doctors have told him they can do no more for him than prescribe medications for his pain. McGinnis doesn’t want to accept that.

But he may not have a choice.

Since he was hurt at work, McGinnis’ medical needs are covered by workers’ compensation insurance, not the health insurance he had through his day job. And that, he and his family contend, could be standing in the way of his recovery.

What got ‘reformed,’ exactly?

The changes in the law that leave McGinnis in this damnable condition were supposedly a “reform” of poorly crafted Florida workers’ comp laws. Read the whole story, and see what you think. Myself? It makes me want to start asking questions anytime I hear the phrase workers’ comp reform.

It also makes me want to have the business card of a trained, experienced workers’ comp attorney.

We can help you find an attorney

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

California remains hotbed of workers’ comp issues

Illinois’ workers’ comp system finds new way to make news: deny a cheap headset


Longtime California residents may be wondering “What the heck happened to our state?”

Who could blame them, given one public scandal after another, for years on end?

Funds voted toward California fraud probes

A recent piece in the North County Times addresses worker’s comp fraud:

Funding to fight workers’ compensation fraud slightly increased this year despite a tough state budget climate and a limp economy.

On Tuesday, State Insurance Commissioner Dave Jones recommended a grant of $4,861,584 to investigate and prosecute workers’ compensation fraud for San Diego County’s district attorney office. That’s about $36,000 more than what the county received last year, according to Dave Lattuca, the chief of the insurance fraud division for the San Diego County District Attorney’s Office.

Riverside County will receive a grant of $1,463,732.

This year’s grant to San Diego County is the second-highest funding level recommended to a district attorney’s office in the fiscal year that began July 1, according to Jones’ office.

The state urged $5.7 million for Los Angeles County to fight workers’ compensation fraud —- the most of California’s 36 counties. Riverside County ranked No. 6 with its award.

In total, the state insurance commissioner announced $32 million in grants to fight fraud throughout California —- slightly higher than last fiscal year’s total of $31 million, according to Dave Althausen, a spokesman for Jones.

Revised contract: a ‘brawl’ between providers and carriers?

A July 11 report from Insurance Journal calls into question whether injured workers are the focus that they should be:

A controversy in the California workers’ compensation market over a revised provider contract threatens to erupt into an all-out legal brawl as doctors for injured workers and applicants’ attorneys take aim at the state’s largest carrier.

The nonprofit State Compensation Insurance Fund, California’s carrier of last resort, has drawn intense criticism over its newly implemented medical provider network (MPN) contract.

State Fund, as the carrier is known, has stood by the recent changes, saying patients will benefit from the contract revisions, all of which it says were made following state law.

However, the California Society of Industrial Medicine and Surgery (CSIMS) and the California Applicants’ Attorneys Association (CAAA) decry the contract as fraught with legal deficiencies and ethical issues that pose harm to employees at workplaces operated by State Fund’s roughly 180,000 policyholders.

CSIMS, which represents doctors who treat workers’ compensation patients, described the State Fund MPN contract as a “heavy-handed” attempt at contract medicine.

In expressing the organization’s “grave concerns,” CSIMS Executive Vice President Carlyle Brakensiek said the contract compels doctors to restrict injured workers’ right to treatment.

Illinois’ system back in the news

Regular readers know we’ve been covering the scandal-ridden Illinois workers’  comp system; among our more recent updates was this post about the Menard prison facility.

More recently, the Belleville News-Democrat has done it again, that is, scooped every other news organization, this time about a worker who was denied a simple set of cheap headphones. Gotta tell you, if I were the local, nearby AP Bureau Chief, I’d assign a reporter to this Illinois workers’ comp agency. The folks are likely to win beaucoup awards for this ongoing coverage.

OK, back to news from “Prison clerk’s lack of headset costly to taxpayers — $128,424 in medical bills so far”:

Prison finance clerk Angela Grott complained to her supervisors that file drawers at her work station jammed, the computer keyboard was set too high and her chair was hard to move, according to state workers’ compensation records.

While Grott stated these factors contributed to pain in her neck and shoulder area, she testified during a Dec. 14 workers’ compensation hearing that it was primarily the lack of a headset for the telephone at her desk at the Menard Correctional Center that caused severe pain. She said this pain worsened because, not having a headset, she was forced to hold the telephone receiver in the crook of her neck for hours while typing on a keyboard.

Grott’s workers’ comp claim so far has resulted in a $128,424 medical bill that must be paid by public money because Illinois is self-insured.

While headsets were readily available close to the prison — one currently sells for $9.96 at the Chester Walmart — Grott testified at the hearing that her supervisors repeatedly rejected her requests to provide one or to ergonomically alter her work station.

Reached at her job at the prison, Grott said, “I have no comment.”

A spokeswoman for the Illinois Department of Corrections said officials are waiting for headsets to arrive. They will then be given to any employee who wants one.

As you might surmise from the preceding, workers’ comp cases can get very involved in government problems that have nothing to do with obtaining prompt, thorough treatment for an injured worker.

We can help you find an attorney

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