Workers’ Compensation Fraud

The insurance industry would like for the public to believe that the fraud in the workers’ comp system is all on the employee side, with injured workers claiming fake injuries in order to lay out of work and draw a check.  Of course that is not true.  Heck, the insurance companies choose the doctors who treat injured workers.  How is it that so many injured workers are supposedly fooling the doctors chosen by the insurance companies?  It makes no sense at all.

No Plaintiff’s lawyer wants to represent an injured worker who is lying about his injury.  No lawyer wants to get the reputation that he represents people who are trying to pull a fraud.  If I feel that my client is not telling me the truth about his or her condition or other facts, I will withdraw from the representation.  Most Plaintiff’s lawyers feel the same way I do.

I belong to a group of lawyers around the country who represent people who have been injured at work.  This organization, the Workplace Injury Litigation Group, or “WILG,” has members who keep track of reported fraud cases all over the country.  What we have found is that there is quite a bit of fraud taking place all over the country on the employer side–not on the employee or injured worker side of the case.  My friend Lennie Jernigan, a WILG member, has compiled this list of fraud cases in 2011 on the employer and insurance carrier side of things. Notice that nearly two billion dollars is involved!   Bob https://www.bollingerlawfirmnc.com/Bio/BobbyBollinger.asp

Top 10 Employer/ Insurer Fraud Cases 2011

Total Amount of Alleged Fraud: $1,965,677,626.20

Total Amount of Restitution Ordered or Recovered: 506,050,000.00

•1. AIG agrees to pay $450 million in fines for under-reporting $1 billion in workers’ comp insurance premiums to guaranty funds

American International Group, Inc., AIG, agreed to pay seven insurers $450 million to settle a long-running case over an alleged $1 billion workers’ compensation under-reporting scheme.

Insurance Networking News; www.insurancenetworking.com , 04-29-11

•2. Small businesses face closure in workers’ comp scandal

After the state of New York hit Compensation Risk Managers, an outside administration company that monitored self-insured trusts, with a $400 million lawsuit, the company filed for bankruptcy, leaving the state with no perceived option than to go after the businesses that paid into the trusts. The businesses say they are the victims in this fraud, which totals almost $1 billion. $48 million has been recovered so far.

Crain’s New York Business; www.crainsnewyork.com , 12-09-11

•3. Fraudster trades Prada for prison blues- ‘Real Housewives’ wannabe breaks California workers’ comp record

Devon Lynn Kile was sentenced to ten years of probation with a possible ten years in prison for her role in a workers’ compensation fraud with her husband, Michael Petronella. The couple underreported payroll and the number of employees they employed, committing a total of $30 million in insurance fraud. They used their companies as a personal piggy bank to support their lavish lifestyle, which included $500,000 in jewels, Rolex watches, and two Ferraris, a Bentley, and a Range Rover. $2.8 million has been ordered in restitution.

Property Casualty 360; www.propertycasualty360.com , 12-09-11

•4. Janitorial company owner charged with $10 million payroll and insurance fraud

The owner of a San Mateo pest and janitorial services company was accused of under-reporting more than $10 million of payroll to avoid paying more than $2 million in workers’ compensation insurance.

CA; San Mateo Daily Journal, 04-16-11

•5. N.C. man pleads guilty to $2.7 million fraud against Avon Park firm

A North Carolina man, Carl Dale Fuller, pled guilty to defrauding National Employer Services (NES) and was ordered to pay $2.7 millionT. The fraud began in May of 2005. Fuller sold fraudulent insurance policies until August of 2008, when the fraud came to light. He will be sentenced on February 10, 2012.

Tampa Bay Online; www.tbo.com , 11-29-11

•6. Maki-Maki Japanese Restaurant couple sentenced for insurance fraud totaling $2.1 million

The former owners of two high-end Japanese restaurants were sentenced Wednesday for sales tax evasion and insurance fraud in a case with losses totaling $2.1 million. Authorities believe the fraud, in which the couple failed to pay proper workers’ compensation premiums and unemployment insurance, began when they opened their first restaurant in 2001.

CA; www.kpsplocal2.com , 02-23-11

•7. Shuttle service owner sentenced on workers’ comp fraud of more than $1.3 million

The former owner of a Bay Area shuttle-service contractor has been sentenced to 10 years in prison after being convicted of 10 counts of workers’ compensation fraud and tax evasion. He was ordered to pay approximately $2.7 million. A district attorney investigation revealed that Gerald Quint under-reported payroll to fraudulently and substantially reduce his company’s workers’ compensation insurance premium by more than $1.3 million.

Silicon Valley, CA; San Jose Business Journal, 03-02-11

•8. NBC General Contractor Corporation owner sentenced to 4 years in prison, $1.2 million in restitution for under-reporting workers’ comp premiums

An investigation revealed that Monica Mui Ung, along with her office manager and payroll specialist, made intentional misrepresentations to California’s State Compensation Insurance Fund regarding their payroll and job classifications of 70 employees. Restitution was ordered in the amount of $1.2 million.

CA; California Dept. of Insurance, 06-28-11

•9. Pepper Pike man faces workers’ compensation injunction to repay more than $600,000 owed

[Anthony] Gray was recently sentenced for operating his firm, Gray Container, a 55-gallon drum manufacturer, without proper insurance coverage. His employees had filed at least 25 claims. The injunction would require Gray to discontinue operations until he becomes fully compliant with workers’ compensation law and takes action to repay more than $600,000 owed to BWC [Bureau of Workers’ Compensation].

OH; www.cleveland.com, 06-24-11

•10. Ohio business owner convicted for failure to keep WC coverage; owes $73,000 in past due premiums

Linda Bommer, a Harrison, Ohio woman was convicted of fraud for failing to maintain workers’ compensation insurance coverage to protect her employees. Eight claims were filed against her policy during the time in which she was operating a business under a lapsed policy and she currently owes approximately $73,000 in past due premiums, in addition to non-compliance claims costs.  OH; www.claimsjournal.com , 02-25-11