Is this Workers’ Compensation Claim Fraud in New York?

  1. Claimant denies having gainful employment while collecting temporary disability benefits. He actually started up a small business, but the business lost money.
  2. Claimant says he applied for jobs at 34 different businesses while seeking benefits. The employer performed its own follow-up search and learned he applied for only two (2) jobs.New York Workers' Compensation law 2017
  3. Claimant lying about his physical restrictions to our IME doctor
  4. Concealing volunteer work while “too disabled” to do your regular job?
  5. Caught selling street drugs while collecting workers’ compensation benefits?
  6. Claimant first admits to working, but her attorneys later state she isn’t. Claimant later found working seasonally while collecting benefits.

Quick explainer: the Fraud Standard in New York.

Workers’ Compensation Law § 114-a(1) provides that a claimant will be disqualified from receiving compensation attributable to a false statement or representation of a material fact made for the purpose of obtaining wage replacement benefits. Any compensation already paid to a claimant which is directly attributable to a claimant’s misrepresentations must be rescinded by the Board. The Board also has the discretionary authority to disqualify the claimant from receiving any future wage compensation benefits regardless of whether or not the claimant is subject to the mandatory penalty, even if the claimant has suffered a compensable injury. In addition, the Board may subject the claimant to an additional penalty up to the amount directly attributable to the false statement or representation.

Lessons:

1. Even if the claimant loses money on their “new” business venture, it is still work.

The Decision:

After denying “performing any work on the books, off the books, volunteer work, self-employment, assisting any friends or family members with their businesses or bartering his services in any way” the claimant was found a fraud after the employer showed that he opened a business, constructed an office for the business in a building he owned, filed a corporate tax return in 2011 and 2012, the latter indicating gross receipts/sales in the amount of $5,231.00 and business deductions totaling $12,085.00.

Practical Advice:

First, ask questions! At every hearing, have counsel ask the claimant if they are working. The employer/carrier can inquire in between hearings. Then, verify what the claimant is telling you! In the case, business tax records and filings demonstrated that he was attempting to start-up a new business.

Case:

In Re Quest Diagnostics.

2. Lying about applying for jobs is fraud – but only if we can prove it.

The Decision:

The employee alleged to have sought work at 34 different businesses while seeking benefits. The employer performed its own follow-up search and learned he applied for only two (2) jobs. The problem for this employer was in the proofs: the employer relied on the report and testimony of a vocation counselor, who contacted 34 companies by telephone with which claimant reported that he had filed an application for employment between February 2012 and February 2013. She could only confirm that two of the companies had received an application. The vocational counselor further testified that 17 companies either did not respond or could not verify whether or not they had received an application. While the witness testified that the remaining 15 companies told her that they did not have an application from claimant on file, the Board noted that she did not report the name of the individuals she had spoken with and concluded that, although claimant had not presented sufficient evidence to establish that he had remained attached to the labor market during the time in question, there was a lack of credible evidence that he had knowingly made a false statement or misrepresented a material fact in order to obtain benefits.

Practical advice:

The takeaway: use subpoenas, not phone calls, to verify that no employment application were actually submitted! This creates verified, documentary evidence we can use at trial to take apart the fraudster’s claims of work search. (Certified mail or other verified communications would work, too).

Case:

Cruz v. Buffalo Board of Educ.

3. Lying about his physical restrictions to our IME doctor is fraud.

The Decision:

The claimant told the IME doctor that “he cannot do anything any more than sedentary activity” and needs help for all of his activities of daily living. As a result the IME doctor found the claimant to be totally disabled. Surveillance video was produced showing the claimant pumping gas, eating out lunch with his wife, sitting in a car, entering his truck, mounting a motorcycle, walking and squatting with no signs of physical impairment. The Court therefore found his statements to the IME doctor as willful misrepresentations of material facts on which the IME doctor relied in giving his degree of disability finding. The claimant was disqualified from further benefits.

Practical Advice:

Video surveillance can be provided to our IME doctor to contradict the claimant’s allegations of disability. In cases where the claimant has not testified nor returned questionnaires regarding his physical abilities, his statements alone to our IME doctor may constitute fraud.

Case:

Poupore v Clinton County Highway.

4. Concealing volunteer work while “too disabled” to do your regular job?

The Decision:

The claimant in this case testified that she had not worked or volunteered since her 2005 workers’ compensation accident. She also filled out questionnaires stating that she was not working and returned those to her employer. The employer captured her on video, working without pay at a summer camp run by her husband. After being shown the video of her activities, she admitted she “answered the phones,” was listed as the camp contact person in a published directory, and was authorized to sign checks on behalf of the camp. She was found a fraud.

Practical advice:

Just because she wasn’t being paid, doesn’t mean it was not working! If she could do volunteer work, she could do paid work. Her false questionnaire responses constituted fraud.

Case:

Kathy Martinez v. Kingston City School District.

5. Selling street drugs while collecting workers’ compensation benefits is work.

The Decision:

When questioned at a workers’ compensation hearing as to whether he had worked since April 21, 2009 or received any income other than workers’ compensation benefits since then, the claimant represented that he had not, despite having been convicted of criminal sale of a controlled substance while receiving workers’ compensation benefits. Selling street drugs is work! In this case, the Board fund that he concealed his other income which constituted the fraud.

Practical advice:

Have information that the claimant may be involved in criminal activity? Get him to testify about it (likely denying it) under oath in Court and use that as grounds to terminate benefits!

Case:

Adams v Black Horse Carrier.

6. Claimant admits to working, but her attorneys state she isn’t; Claimant later found to have been working seasonally while collecting benefits.

The Decision:

In this case, the adjuster sent sent claimant a questionnaire asking her, among other things, whether she had “worked in any capacity.” Claimant, through her attorneys, initially responded that she was working, but her attorneys later rescinded that response by stating that it contained an error and should have stated that claimant was not working. Claimant also sent her own individual response to the questionnaire but did not state therein whether or not she was working in any capacity. Through investigation, it was discovered she was actually working at a golf course. When the employer called the golf course to check on her employment, she actually picked up the phone! It was determined she had been working at the golf course for four years.

Practical advice:

The claimant in this case had seasonal work at a golf course which escaped detection for years. The changing of story on her questionnaires was a red flag to look into her actual work activity.

Case:

Leising v. Williamsville Central School District.

Greg Lois is the managing partner of LOIS LLC, a 19-attorney law firm dedicated to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@lois-llc.com