North Carolina Workers' Compensation Lawyer Blog

A few months ago, this North Carolina workers’ compensation blog reported about the case of Christina Gamble, a 43-year-old woman who got arrested on charges of workers’ comp fraud, after insurance investigators found that she had been stripping while collecting disability benefits, ostensibly because she had trouble “standing and changing positions.”

The 43-year-old Gamble waitressed at Red Robin Restaurant in 2007. She allegedly hurt her back at work. In 2008, a judge granted her disability benefits of $360 a week. All told, she collected $4,000+ in expenses and $23,000+ in disability payments. However, the restaurant’s insurance representatives hired private investigators to track down Ms. Gamble. They found her working as an exotic dancer at CR Fanny’s Gentleman’s Club in nearby Wilson. The PIs taped her stripping and used this evidence to prove that her workers’ comp claim was fraudulent.

Obviously, any North Carolina workers’ compensation fraud case hurts everyone else in the system. When people fake disabilities or play up injuries to get benefits, this not only drains resources that could otherwise be used to help people who really are injured – but it also creates a sense of mutual distrust. When insurers and employers lose trust, they tend to crack down by making the process more difficult and the investigations more probing, personal, and annoying.

All that said, in the case of Ms. Gamble, you have to feel some sympathy for this woman. It sounds like she has had a very hard go of it. It’s obviously impossible to know her full story just from a news report. But it is important to remember that North Carolina workers’ compensation fraud comes in many flavors – some people purposely bilk the system to take advantage of loopholes; other people just get into desperate straits and do desperate and stupid things.

If you or a family member faces problems collecting benefits, your focus is 100% on getting these issues resolved ASAP. To that end, you might be well advised to set up a free consultation with a local North Carolina workers’ compensation firm to explore your rights, build a strategy to get your benefits and to resolve any agita associated with your claim, and work towards building a sustainable financial future for you and your family.

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CR Fanny’s Gentleman’s Club

Bucks woman to stand trial in workers' comp case

North Carolina workers’ compensation experts have been following a bizarre breaking story out of Chenango County, NY.

According to the Associated Press, a 53-year-old New York woman named Susan Tansosch has been ordered to pay over $60,000 in restitution to the United States Postal Service for workers’ comp fraud, pursuant to charges that she falsely claimed that she had no additional income streams – when she had been making significant money selling goats.

Last Wednesday, Judge Thomas McAvoy sentenced Tansosch to four years probation and forced restitution to the USPS for making untrue statements to collect workers’ comp benefits from the federal government. The Department of Labor abruptly ended Tansosch’s benefits – all because she sold goats on the side.

This story drives home a point that many North Carolina workers’ compensation claimants often forget. Namely, that you need to read and understand the fine print of your benefits arrangement. If you fail to abide by the terms stipulated, you could wind up in court, in trouble, and in debt to the agency or insurer that provided the benefits to you.

There is no way to tell from this AP story whether or not Ms. Tansosch knew that selling goats would violate her workers’ comp arrangement. But don’t think that, just because you settle your North Carolina workers’ compensation case, that the situation will be permanently resolved. Insurance carriers are businesses. They investigate claims -- even after they have settled! -- to make sure that claimants are/were telling the truth about their injuries.

Managing the legal complications of a debate over your benefits can be a draining chore – one that you likely do not have the training to handle adroitly. That’s why, even if your case is relatively simple-seeming now, you might benefit from a consultation with a reputable and proven North Carolina workers’ compensation law firm. As the old adage goes, an ounce of prevention is equal to a pound of cure. Smart planning can mean the world for your workers’ comp case.

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NY goat-seller must pay back workers' comp

Woman sentenced after conviction

North Carolina workers’ compensation experts are all talking about the case of an Ewa Beach man, who got convicted in Honolulu last week for workers’ comp theft.

Jacob Belaski allegedly hurt himself while operating his Teixeira Trucking business. He fought for benefits from his insurance company, HEMIC. At the same time, he continued (on the sly) hauling materials to and from a cement factory. In the process, he earned over $100,000 – all while collecting benefits compensating him from being unable to work.

Investigators from the Honolulu Police Department’s White Collar Crime Unit discovered the scam and realized that Belaski had misrepresented his injury to his physicians, insurance company, and others. Mr. Belaski even testified under oath to being hurt. Mr. Belaski’s conviction of theft and perjury charges may dissuade others in the Aloha State from similarly trying to take advantage of the claims process to collect benefits illegally.

This blog has investigated a number of cases of workers’ comp fraud lately to try to highlight the shades and nuances of the law – and of the individuals who commit these crimes. It’s important not to paint these defendants with a broad brush. As we have seen recently, practically anyone can wind up as a defendant in a North Carolina workers’ compensation fraud case – from strippers to goat sellers to truckers.

If you cannot collect benefits, cannot deal efficiently with your employer or insurance company, or cannot figure out how to put your life and budget back together again after a significant injury or illness, you need good help. In particular, a qualified North Carolina workers’ compensation law firm can guide you towards good resources and ensure that you stay within the bounds of your benefits arrangement. A good attorney can also help you deal with uncooperative bosses or insurance companies.

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Case of Jacob Belaski

Honolulu Man Convicted in Hawaii’s First Workers’ Compensation Theft Related Case

On Monday, a woman named Michelle McKee was sentenced to 2 years in prison for defrauding the Colorado workers’ comp system out of $25,000. North Carolina workers’ compensation experts and analysts are closely following the story, as it may have relevance to in-state cases. According to a local news report, McKee had been working as a housekeeper at a hotel, when she hurt her ankle. Although she claimed the injury was work related, an insurance investigation found that McKee had been bragging to friends about cheating the workers’ comp system. She also allegedly admitted to hurting herself not while at work but while out partying (she twisted her ankle after stepping off a curb). The state’s senior assistant Attorney General convinced the court that Ms. McKee had made false statements to collect money – a felony charge. In addition to her 2-year jail sentence, Ms. McKee now faces $25,000 in forced restitution to her old employer, Pinnacol Assurance.

As this blog has often discussed, North Carolina workers’ compensation fraud matters create tensions throughout the system and ultimately harm all major players involved: insurance companies, employers, legislators, and genuinely injured employees. It’s this latter category that is most vulnerable – subsequent to fraud cases like this one, legitimately hurt workers will likely have a harder time in Colorado collecting benefits without hassle. When insurance companies and employers grow suspicious of claimants, they tend to require higher burdens of proof and conduct longer investigations as to the veracity of claims.

If you’ve been the victim of undue harassment, frustration, or non-compliance by your employer or your employer’s insurance company, it may behoove you to seek out the counsel of a North Carolina workers’ compensation attorney to figure out how to resolve your situation adequately, get the benefits you want, and get these issues off your mind so you can focus on recovering and fixing your financial circumstances.

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Michelle McKee

Colorado workers’ comp system

The California Department of Insurance made a decision in early July to earmark $1.25 million to battle workers’ comp insurance fraud. Steve Poizner, the often-in-the-news CA Insurance Commissioner, remarked that “fraud creates costs that burden our economy at a time it can least sustain it.”

Those in the North Carolina workers’ compensation community have reacted strongly to California’s decision. Advocates of similar measures here at home argue that funneling money into fraud control can help the system be more functional and protect benefits to attend to the needs of truly injured workers. Opponents of stronger fraud control worry that antifraud dragnets might accidentally sweep up legitimate claims. For instance, take someone who ordinarily would qualify for North Carolina workers’ compensation for a hurt lower back. She might wrongly be denied benefits -- or at the very least given an overly hard time to qualify for them.

If you or a loved one or a coworker has experienced problems collecting benefits from a non-cooperating employer or bad faith insurance company, you may have rights and legal means at your disposal that you may not even be aware of. To find out how to protect your interests optimally, connect with an experienced North Carolina workers’ compensation attorney ASAP. Whether you have been improperly identified as trying to defraud the system, or you are having a simple vexing issue with your workers’ comp, get good help now before it’s too late for you and your family.

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California Department of Insurance

County tentatively slated to receive $1.25 million for worker's comp fraud

Kenneth Bullock, a St. Regis, New York man, has been charged with fraud in conjunction with a scheme that he allegedly had perpetrated since the early 1990s. North Carolina workers’ compensation blogs and analysts are closely following the story.

Background

Bullock worked as a mechanic in New York in the 1990s. While executing his duties, he hurt his back -- or so he claimed. Bullock said that his at-work accident rendered him unable to keep servicing cars, and he was put on workers’ comp. While collecting benefits, he moved to Florida and took another mechanic’s job – in direct violation of his workers’ comp arrangement.

If convicted of scamming the system, Bullock could face seven years imprisonment for illegally collecting $39,000 in benefits. Allegedly, surveillance caught Bullock working at a shop – investigators were tipped off when his claims arrived with Florida postage. The Onondaga County Insurance Fraud office will handle the matter, since that location processed Bullock’s claims.

North Carolina workers’ compensation fraud drains hundreds of thousands (if not millions) of dollars of funds from an already over-milked system every year. It’s obviously in the interest of all parties concerned – from trial attorneys to insurers to employers to injured workers – to clamp down on scams and schemes. Unfortunately, many injured workers with very legitimate claims wind up under investigation for fraud simply because they fail to file paperwork correctly or because they engage in activities to “stretch” themselves – such as aggressive physical rehab.

If you or a family member or a coworker has been wrongfully targeted for North Carolina workers’ compensation fraud, and you need guidance to make sure that you can collect benefits (and not get punished for making an illegitimate claim); or if you simply need basic FAQs answered about how to deal with a difficult employer or how to fight back against a recalcitrant insurance company, get in touch with a credentialed and experienced North Carolina workers’ compensation attorney ASAP. Get good guidance upfront, so you don’t wind up in a protracted battle over your benefits.

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St. Regis man charged in alleged workers' comp scam

Franklin County native charged with fraud

A sad and disturbing fraud case out of Pennsylvania has North Carolina workers’ compensation policy makers and analysts furiously debating a number of moral and ethical quandaries.

Background

On April 29, authorities arrested 43-year-old Christina Gamble for workers’ comp and insurance fraud stemming from a claim she made in November 2007 that she allegedly made under false pretences.

The PA Attorney General’s office alleges the following:

Gamble had been working for the restaurant Red Robin, when she fell on November 9, 2007 and hurt her back. The restaurant alerted its insurance carrier. In November 2008, a judge awarded her benefits for workers’ compensation. She collected over $22,700 in disability benefits and $4,100 in medical expenses before being caught working in a new capacity – as an exotic dancer for C.R. Fanny’s Gentlemen’s Club and Sports Bar. A private investigator tipped off an agent of Highmark Insurance, which had been representing Red Robin. Since Gamble made her claim on the basis that she could barely move her back, her work as a dancer for hire obviously completely undermined her claim.

Gamble is due in court on May 7. If she is convicted of both accounts of insurance fraud and theft, she could face 14 years in jail and $30,000 in fines.

Workers’ comp and insurance fraud are obviously reprehensible. Enforcement of North Carolina workers’ compensation laws must be strict to ensure that people who do play by the rules get treated fairly and that system-wide costs don’t get out of control. Nevertheless, this case illustrates – or at least implies – how difficult it can be for some people to recover from bad injuries or occupational diseases. Here is a story of a waitress who presumably hurt herself and then did a wrong thing by stealing from her employer’s insurance carrier. But (likely) the news story does not give us the full human dimensions of Gamble’s struggle. As anyone who has personally dealt with North Carolina workers’ compensation issues can tell you, it’s not easy to handle insurance companies or to figure out how to correctly and efficiently get your life back on financially solid ground.

To that end, before you or a family member does something dumb like try to defraud an insurance company or misreport numbers on your workers’ compensation form, connect with an ethical, reliable, and results-proven North Carolina workers’ compensation attorney to discuss your situation in confidence. A free consultation can give you the strategic guidance you need to make wise and ethical decisions about how to move forward and recover from an injury, both medically and financially.

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Christina Gamble fraud saga

Strip club no cure for her bad back

A relatively small felony case is turning the heads of top North Carolina workers’ compensation specialists. According to news sources, a 48-year old man named Richard Scepkowski pled guilty to felony workers’ compensation fraud after being caught working at an auto repair center. Scepkowski worked for the Transportation Security Administration (TSA) at Albany’s airport before claiming injury around July 4, 2004. He filed workers’ comp paperwork with the Department of Labor and collected a payout of nearly $20,000 from September 2004 through August last year. This amount is (relatively) minor as far as workers’ comp fraud cases are concerned. But since Scepkowski pled guilty to making false statements, he now faces an array of strict penalties.

How This Small Case Relates Back to North Carolina Workers’ Compensation Concerns

1. It illustrates how persistent the government can be in terms of rooting out fraud and punishing offenders.

Scepkowski got away with collecting federal workers’ comp for more than five years before getting caught. This shows that people who attempt to defraud the North Carolina workers’ compensation system will always be at risk for getting caught and facing severe financial penalties and potentially other punishments, such as jail time.

2. Even small instances of workers’ comp fraud will be taken very seriously.

A felony conviction can result in jail time and the permanent loss of certain privileges, such as the right to vote in elections.

3. The case shows how important it is to file your workers’ compensation paperwork carefully.

In this case, a claimant willfully deceived the DOL in his paperwork. Nevertheless, even otherwise well-intentioned claimants who make mistakes in their applications can get in big trouble – or at the very least lose hard-won benefits.

If you have any questions about the North Carolina workers’ compensation process or about your paperwork, connect ASAP with a reputable and experienced NC workers’ comp attorney to learn more about your rights and responsibilities under state and federal law.

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Scepkowski case

Another story about Scepkowski fraud

Those who follow North Carolina workers’ compensation policy debates often closely analyze minor court cases because these cases inform the broader discussion. To that end, we will review the implications of a recent US District Judge’s decision to sentence a former US Navy employee for workers’ comp fraud by sending him to prison for 21 months and compelling him to pay nearly $0.25 million in restitution to the Department of Labor.

Background

Mark Correnti worked for the US Navy for years as a civilian employee. In 1989, he hurt his back. Starting in the year 2000, he began collecting $2,000 a month from the Department of Labor in federal workers’ compensation for his back injury. These payments continued through 2008, during which time he accrued over $0.25 million.

According to prosecutors, Correnti violated the Federal Employees Compensation Act by starting up a small business, Safe & Sound Storage, and collecting income from this business. At seven different times, Correnti denied that he was bringing in money from this business. (These false statements allowed him to keep collecting federal workers’ comp.) After being caught, Correnti pled guilty last November to charges of making false statements, and the US District Judge sentenced him in late April to the harsh terms outlined above.

Now, obviously, most North Carolina workers’ compensation claimants work hard to understand their obligations and to avoid putting up red flags that might indicate fraud or non-compliance.

Nevertheless, claimant errors and omissions can torpedo otherwise valid North Carolina workers’ compensation claims. In other words, even if you did legitimately hurt your back lifting an object at work, for instance, your claim could be invalidated or downgraded if you don’t follow the correct protocol.

Fortunately, you don’t have to go through the rigmarole of applying for and securing workers’ comp benefits on your own. By connecting with a vetted, strategically focused, and experienced North Carolina workers’ compensation legal team, you can save yourself a lot of hassle and increase the likelihood of collecting the maximum benefits.

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Federal Employees Compensation Act

Mark Correnti case

Most North Carolina workers’ compensation fraud cases pale in comparison with two breaking stories out of California.

The first involves a San Jose man named Daniel Nelson, who allegedly bilked the CA State Compensation Insurance Fund out of nearly $60,000 by failing to report $600,000 in payroll for his businesses (Monster Magic LLC and Worldwide Attraction). According to the DA’s office in Santa Clara County, an investigation began shortly after it was discovered that Monster Magic and Worldwide Attractions had failed to report nearly $80,000 in payroll for the 2006 calendar year. But the amount of underreporting turned out to be nearly 10 times that much -- all told, investigators found over $614,000 in underreported payroll. Nelson was arrested by deputies in Alameda County and held on a $50,000 bail. If convicted of California workers’ compensation fraud, he could face a $50,000 fine and a jail sentence of up to five years.

Meanwhile, in a separate matter, a man named Mitchell Zogob faces a decade in California prison for collecting nearly $5 million in fraudulent California workers’ compensation insurance premiums. Zogob pled guilty to a gamut of offenses. Experts who followed the case interpreted the sentence to be a shot across the bow to other would-be workers’ comp defrauders.

How does North Carolina workers’ compensation fraud impact employees, employers, insurance companies, and the economy as a whole?

When someone bilks the NC workers’ comp system, everyone ultimately pays. Fraud does two things. First, it removes money from the system that could (and should) go to deserving claims. Second, it encourages insurers and watchdog agencies to vet claims more thoroughly. Thus, claimants with legitimate grievances often must go through extensive hurdles to collect their (rightly-owed) benefits.

Indeed, occasionally, legitimate claims get flagged as “false positives” for fraud. If you or a family member has been wrongfully accused of North Carolina workers’ compensation fraud, or if you need help with anything else regarding your workers’ comp matter, look to an established and peer-reviewed NC workers’ comp law firm near you to get strategic advice.

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San Jose Man Arrested for Workers' Comp Insurance Fraud

OC man gets 10 years for $4.6m insurance fraud

Bloggers who follow North Carolina workers' compensation fraud cases have been riveted by a scandal out of San Francisco, California that’s captured national headlines.

Here is the nitty-gritty:

High-ranking Department of Corrections official John Smiley and his wife have been arrested for a workers’ compensation fraud following a shootout at a San Francisco swingers club.

Mr. Smiley alleged that one of his parolees shot him and that he deserved $2.4 million in workers’ comp benefits. His sympathetic co-workers also set up a golf tournament to rake in funds for him, netting him $30,000. In addition, John and his wife’s mother made a website, on which he expanded on his lie that a parolee shot him.

The truth, according to investigators, was a lot more salacious and twisted. Apparently, Smiley and his wife had gone to a swingers club, connected with another couple, and Smiley had sex with a female partner. But during intercourse, his condom broke open, and the woman’s partner became enraged and shot him.

If the allegations against the Smileys are true, not only is it a black eye for the Department of Corrections but is also a wake up call for North Carolina workers' compensation fraud experts to double-check to make sure they are doing due diligence.

Individuals who make false allegations about injuries and occupational disease to game the North Carolina workers' compensation system cause problems for everyone else. Insurers must raise rates to make up for costs, employers must carry more insurance, and employees who actually deserve benefits may have to jump through more hoops and may see fewer benefits over the long term.

Unfortunately, due to the prevalence of North Carolina workers' compensation fraud schemes (and schemes in other states), legitimate claimants suffer undue harassment. If you or a loved one is having trouble dealing with an insurance company, an employer, or even with the North Carolina Industrial Commission, you might want to connect with a credentialed and vetted North Carolina workers' compensation lawyer ASAP to go over your concerns and figure out a plan of attack.

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John Smiley

Smiley Website

North Carolina workers’ compensation policy analysts and lawyers have been closely following a breaking story out of Butte, Montana involving a Homeland Security worker who attempted to rob Montana’s workers’ compensation out of almost $30,000.

40-year-old Richard Hannum pled guilty last Wednesday, according to the AP, of pretending to have injured his back while working as Transportation Security Administration (TSA) officer at a Montana airport. Hannum had claimed that he wrenched his back while lifting luggage and that this had caused him to be permanently disabled. But one of his workers’ compensation doctors saw him walking around a mall normally and without pain. The doctor alerted authorities, who followed him and ultimately videotaped him engaging in normal activities – which belied his claim that he was bedridden.

Hannum’s case is interesting, in particular, because it falls under federal jurisdiction. He didn’t collect his money from the Montana workers’ compensation system – he collected directly from the Department of Labor and Homeland Security.

Some North Carolina workers’ compensation fraud cases involve the defrauding of federal coffers as well. But these cases are rarer, and they can be legally more significant.

As this blog has discussed many times, North Carolina workers’ compensation fraud hurts not only the state system, insurers, and employers, but also beneficiaries. When someone steals money from the limited North Carolina workers’ compensation benefit funds, it has a ripple effect. With less money to go around, insurers, employers, and even state and federal overseers of workers’ compensation claims will be more dubious in the future of all claims. This means more invasive investigations and longer wait times before claimants can collect their benefits. So cracking down on North Carolina workers’ compensation fraud is ultimately in everyone’s interest.

That said, if you have been accused of North Carolina workers’ compensation fraud – and you are legitimately hurt – or if you are having trouble with other aspects of your claim, it’s probably a wise move to retain a reliable NC workers’ comp attorney as quickly as possible. A good representative can help you strategize and explain what to do and what not to do when confronting parties like your employer and the responsible insurance company.

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Richard Hannum

Butte, Montana

According to the Chicago Sun-Times, three individuals have been indicted for perpetrating a healthcare fraud in excess of a million dollars – the case has North Carolina workers’ compensation experts buzzing.

Details of the Crime

According to allegations, three individuals – Dr. Jacob Solomon, a chiropractor named Darwin Minnis, and a biller named Gary Strauss -- collaborated from 2004 to 2007 to falsely bill over a million dollars worth of claims at a West Chicago doctor’s office. Strauss and Solomon have been slapped with one count of healthcare fraud. Minnis, who owned and ran the Maywood Spine and Joint Rehabilitation Center, faces 18 separate counts of fraud. The three inflated claims for insurance payments and workers’ compensation. They are due to be arraigned in federal court.

Many North Carolina workers’ compensation cases “rhyme” with this Chicago case. Often, one (or a handful) of individuals collaborate over a long period of time to slowly but surely bilk the workers’ comp system. In the short-term, the amount of money stolen is usually not enough to send up red flags. But over the long-term, this money can add up to something substantial. (This blog reported only few months ago about a local woman who netted tens of thousands of dollars before being busted for North Carolina workers’ compensation fraud.)

How do these fraud cases debilitate the system?

• First of all, any time someone drains money from the system, that shortfall must be made up through higher premiums, poorer care, and thinner benefits.
• Second, North Carolina workers’ compensation fraud creates an atmosphere of distrust. If doctors, insurers, employers, and employees cannot count on the system to be fairly run, they may choose to go around it or choose to ignore other pertinent and important rules of protocol.
• Finally, fraud cases – whether perpetrated by employers, insurers, or employees – create pressure on the parties that payout North Carolina workers’ compensation benefits to vet claimants more closely. Unfortunately, this enhanced vetting often snares innocent parties. For instance, someone who may have legitimately hurt his back in a work related lifting accident may come under close scrutiny by his insurance company. Many a legitimate claim has been denied because of this kind of irrationally strict vetting.

If you or a loved one has been battling over benefits, it is a good idea to speak with a knowledgeable North Carolina workers’ compensation lawyer as soon as possible. Good, strategic legal advice can help you compel an insurer to pay out a full claim and can end annoying and potentially illegal harassment. The more knowledgeable you are about your rights under the system, the easier time you will have of collecting benefits owed and recuperating from your injuries.

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Maywood Spine and Joint Rehabilitation Center

Maywood Clinic Linked to Fraud

A former North Carolina Workers' Compensation insurance agent, Terri Lynn Spence, has been sentenced to four years of supervised probation and a full year of house arrest (under electronic surveillance) for multiple counts of embezzlement, according to North Carolina officials.

North Carolina Insurance Commissioner, Wayne Goodwin, publicized Ms. Spence's sentencing at a news conference. The 34-year-old Emerald Isle resident was ordered to pay more than $46,000 in court fees and restitution to victims of her scheme. All told, 16 different insurance companies and 43 individuals were financially impacted.

Ms. Spence "obtained property by false pretences," according to investigators at the Department of Insurance, who contacted police officers in La Grange to bust the embezzler back in June 2008. Most of the policies embezzled were North Carolina Workers' Compensation policies (along with some homeowners' policies). State officials do not believe that Ms. Spence worked in conjunction with any other entity or syndicate. But her arrest, trial, and sentencing likely have not gone unnoticed by others who would seek to embezzle or otherwise defraud the North Carolina Workers' Compensation system.

If you or a family member has had trouble collecting your North Carolina Workers' Compensation benefits, or if you are having any issues filing paperwork, dealing with your employer, managing negotiations with your insurance company, or talking to your physician or rehabilitation specialist about billing, go over your concerns with a qualified North Carolina Workers' Compensation attorney.

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Terri Lynn Spence

Wayne Goodwin

Here is a brief primer on North Carolina workers’ compensation fraud -- including relevant laws passed by the North Carolina General Assembly as well as information, implications, and a toll-free hotline for fraud investigation.

Laws
In 1994, the state assembly passed the Workers’ Compensation Reform Act, which included statute 97-88.2 (outlining punishments for misrepresentation in a North Carolina workers’ compensation filing) as well as statute 97-88.3 (outlining punishments for healthcare providers who fail to follow the law.)

The following year, the state assembly changed statute 97-88.2 and empowered the North Carolina Industrial Commission (NCIC) to look into fraud violations of the 1994 WCRA.

In 1997, the North Carolina Assembly passed House Bill 618, which further amended two key statutes - 97-88.2 and 97-94 -- to spell out increased penalties for fraud and misrepresentation under the Workers’ Compensation Act.

Today, the NCIC operates a hotline at (888) 891-4895 from Monday through Friday during normal business hours.

Who can be accused of conducting fraud? Parties including but not limited to:
• employees/claimants
• employers/managers
• corporate officers
• administrators of third party services
• insurance adjusters/agents
• lawyers
• providers of healthcare services
• rehabilitation providers

Individuals who commit North Carolina workers’ compensation fraud imperil the whole system. Fraud drains millions of dollars that would otherwise go to claimants with legitimate problems. That being said, not all cases are cut and dried. Some individuals may accidentally commit North Carolina workers’ compensation fraud simply because they fail to fill out paperwork properly or fail to follow bureaucratic protocol. It’s not that they try to cheat the system, in other words; it’s that they do not understand how to operate within it effectively.

This isn’t to say that there are not some bad eggs out there who intentionally game the system. However, if you or a family member has been accused of this crime -- or if you're in need of other kinds of assistance filing or moving forward with your North Carolina workers’ compensation claim -- it may behoove you to connect with a knowledgeable attorney right away to discuss your concerns in confidence. A free consultation with a reputable attorney can put you on a strategic path to maximize your benefits and minimize your hassle.

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NC Workers’ Compensation Reform Act

More about Workers Comp Fraud in NC

The Hartford Courant reports that a man named Steven Zaczynski has been charged with fraud and other counts in conjunction with a complex workers’ compensation scheme in CT. Although North Carolina workers’ compensation experts have yet to weigh in on the matter, the attention grabbing nature of this case may impact how authorities investigate and deal with similar North Carolina workers’ compensation fraud matters.

According to The Courant, Zaczynski had been working for the Department of Corrections at the Carl Robinson Correctional Institution, when he filed for workers’ comp benefits, citing an on-the-job injury. But according to an investigation ordered by Attorney General Richard Blumenthal, Zaczynski just took the money and continued to work full time for his own business, New England Pallet of Enfield. (Zaczynski allegedly stole $12,656 in benefits.)

But the case gets weirder and more complicated. Apparently, Zaczynski also fleeced customers of New England Pallet -- he took money for pre-orders but never delivered products -- AND he failed to provide workers’ comp coverage for his employees.

Given the nuances and layers of this case, it may be a while (if ever) before a similar North Carolina workers’ compensation case goes to trial. But the situation illustrates how fraud, insurance scams, larceny, and other labor rights violations can coincide. This is important because injury claimants who have been unfairly denied workers’ comp by their employers or insurance companies need to be aware -- not just of their own situations -- but also of the extended situations that may be preoccupying their employers/insurers.

Correction Officer Charged With Workers' Compensation Fraud, Hartford Courant, Oct 7, 2009

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Carl Robinson Correctional Institution

Since the early 1900s, North Carolina workers’ compensation benefits have provided injured workers with money for missed wages, medical bills and retraining. Unfortunately, abuses of the workers’ comp system have reached epidemic proportions, according to the National Insurance Crime Bureau, which surveyed the industry and found that this crime costs America around five billion dollars a year.

Workers who feign injury to collect benefits pass the costs of these payouts onto insurance companies, employers, and the federal government, resulting in higher premiums for everyone and stealing focus from legitimate workers’ comp claims. Insurance company advocacy groups and federal and state regulators claim that perpetrators of North Carolina workers’ compensation fraud do systemic harm, in other words.

No doubt many people do take advantage of the system by intentionally misreporting or mischaracterizing aspects of their conditions, and so forth. At the same time, however, the insurance companies cannot fairly claim to be pure victims of this fraud. Companies are generally free to hike up rates. And by investigating -- and in some cases harassing -- legitimate North Carolina workers’ compensation policy claimants, insurers often exacerbate the stresses on these individuals, thus indirectly causing more health problems for them and thus straining healthcare resources further and hurting the economy.

It’s also debatable whether at least some of the fraud that’s been going on constitutes a "gray market" as opposed to a "black market." Consider: many injured workers don’t get a fair shake when it comes to their benefits. Some then rebel against a system that they perceive to be (and objectively may be) biased against them by committing fraud. Thus some attempts to siphon money from insurance companies could theoretically be justified. (That said, the law is the law.)

The deeper issue that needs to be addressed may be more global in nature. In other words, perhaps neither the perpetrators of fraud, nor the insurance companies are at the root of this epidemic. Maybe the problem is that American workers do not get adequate safety training. Alternately, maybe some massive as-of-yet-fully-acknowledged problem (such as poor workstation ergonomics) is injuring a vast number of workers and thus draining the resources of insurance companies (who in turn must bully policyholders to survive financially; and in turn policyholders must
perpetrate small scale fraud to be able to pay their bills.)

The Cost of Fraud, NYSIF

The Myth of Workers Compensation Fraud, PBS, May 29, 2000

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National Insurance Crime Bureau

According to an El Paso, Texas news report from June 30, 2009, an El Paso man has been convicted and sentenced for trying to scam the US Postal Service via a fraudulent workers' compensation scheme.

Attorneys, workers, employers, insurers and others interested in North Carolina workers' compensation issues have closely followed the case of former postal worker, José Barraza, who accepted over $54,000 in workers' comp payments before getting busted for his activities. After being clued into the possibility that Barraza had faked an injury to his arm, investigators videotaped him throwing a football, taking out trash, and otherwise using what turned out to be his perfectly healthy arm.

Although Barraza was arrested in Texas, his sentencing would likely have been similar had he been convicted of a North Carolina workers' compensation scam. The US District Judge overseeing the case sentenced Barraza to pay back the $54,000+ he took from the US Postal Service and Department of Labor as well as a pay an assessment of $1,400. In addition, Barraza must serve out a 10 month prison sentence for committing fraud. Barraza was convicted by a jury of all 14 counts against him. But it is unknown at this time whether/how he will appeal the ruling. Following his jail sentence, Barraza will have to serve 3 years of supervised release.

Claims Journal.com, Former U.S. Postal Service Employee Sentenced for Work Comp Fraud, August 28, 2009

KVIA, Man sentenced for workers compensation fraud, August 26, 2009

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Workers' Comp Fraud

El Paso, TX

On August 20, the California Department of Insurance (CDI) reported that a Southern California resident named Joseph Baiden (56) had been arrested in conjunction with a massive workers' compensation scam. Baiden, who surrendered to LA Superior Court, had an arrest warrant out on him stemming from allegations that he had deliberately underreported his workers' compensation payroll numbers to reduce his insurance premiums. Over an eight year period, from 2001 to 2007, he allegedly cost his insurer, State Fund, around $1.4 million. North Carolina workers' compensation insurers have taken notice of the case, and no doubt the outcome will dramatically influence local NC policies, procedures and safeguards.

The size and scope of the charges against Baiden have attracted attention from local and national media. The CA state insurance commissioner, Steve Poizner, broke the story personally. If the defendant is convicted of fraud, he could face up to 40 years in jail in addition to fines of well over $3.2 million. The California Department of Insurance has frozen Baiden’s bank accounts and seized five of his Southern California properties, including an exclusive estate in the posh Diamond Bar neighborhood.

One of the reasons why the CDI has come down so hard on the accused is that workers' compensation fraud – whether it occur in North Carolina or elsewhere – pads costs across the employment spectrum. When insurers can’t collect premiums, they either raise rates or reduce service, thus creating a cascade of bad effects for employers and employees alike.

AP, Calif. man accused of cheating workers comp fund, August 21, 2009

Pasadena Star News, Diamond bar man suspected of fraud, properties seized, August 19, 2009

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Steve Poizner

California Department of Insurance

In October, 2006, employers who had bought into a self-insured North Carolina workers' compensation group fund got some terrible news. The Phoenix Fund's reinsurance broker, a man named Thomas Raitz, had been engaging in complicated illegal shenanigans to steal from the fund via a money laundering and mail-fraud operation. Investigators from North Carolina’s Department of Insurance concluded that Raitz’s scheme impacted more than $20 million worth of the fund’s money.

Although Raitz was convicted in 2007 after pleading guilty and was subsequently sentenced to nearly 6 years in jail, members of the Phoenix Fund have yet to collect money and damages. Finally, in 2008, Raitz was ordered by the court to pay $19 million to reimburse the Phoenix Fund. To date, Raitz has paid out $18 million, of which $11.5 million has gone to meet the obligations of the fund itself and has not gone to remunerate individual employers. Only $6.5 million collected will be distributed among the injured parties. That said, the North Carolina Insurance Commissioner, Wayne Goodwin, released a statement that sounded a note of optimism for these employers, assuring the victims that they would “get back every available penny” owed to them.

Triangle Business Journal, North Caroilna employers to get $6.5M from Phoenix Fund, August 10, 2009

Workforce Management, Workers’ Compensation Fund Members Hit by Fraud Get Distributions, August 14, 2009

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North Carolina Insurance Commission

North Carolina’s Department of Insurance