Below is both a sad and funny history of work comp fraud in New York, written by a leading New York workers compensation attorney named Theodore Ronca.
While I am sure other states may have a similar work comp history, New York seems to have a particularly steep and fascinating tradition in this area. This “party” has included claimants, insurance companies and lawyers for both sides. Almost everyone has been to this workers compensation party at some time in New York..
NY Workers Comp Fraud: Began during Prohibition
NY comp fraud quickly earned an honorable place in the decade following WWI. A host of small, even tiny, comp carriers were created to launder money from Prohibition bootleg operations. One such operation consisted of three people: the owner, a clerk and an alcoholic hearing rep who was required to leave the suit the company purchased for him in the office at night. Another obscure carrier employed for a short time the father of a future first lady.
Vying with the bootleg carriers were employers who routinely reported arm and leg injuries as finger and toe problems. After a short, trusting initial period following passage of the law, a commission report disclosed the severe rate of under reporting, leading to a reform which required all claims to be scheduled for at least one face to face hearing.
NY Work Comp Fraud: Pour Whiskey on Injured Worker and Fire Him For Drunkenness
Sadly, some of the more exciting stories of NY comp fraud have proven to be urban legends, as if the system needed any additional assists. One tale was that if an accident occurred on a construction site the foreman would pour a small quantity of cheap whiskey on the unfortunate and fire him for drunkenness. But reading cases from the period shows that nearly everyone was winning all the time. Hardly surprising for a law which at the time only covered the most dangerous jobs and did not yet cover occupational diseases. Oh, yes. Alcoholic consumption leading to injury was not compensable, but the defense never succeeded.
NY Workers Comp Fraud: Late Filed Claims
Another attorneys’ room legend involved establishing a late filed claim. The defense had to be raised at the first hearing in which the claimant testified. So, the story goes, a lawyer would find every excuse to get an adjournment until there appeared a defense hearing person who forgot to raise the objection. Then the claimant would quickly be sworn in, asked a few questions and then excused. The legend fell apart when case law from early on held that the objection could be raised once and remain good for later hearings.
NY Work Comp Fraud: Doctors
Then there was the IME doctor for a major carrier who, in spite of his affiliation with Massachusetts General Hospital, produced dreadful exam reports. An FBI investigation of other matters uncovered that although his name was the same as a Mass Gen surgeon, his fingerprints were different – and, no, he didn’t have an MD.
Speaking of doctors, there was one eternally optimistic claimants’ physician who treated both the dead and the incarcerated three times a week, dutifully filing progress reports with the carriers. Confronted, he said it must have been a clerical error.
NY Work Comp Fraud: Lawyers
And we should give an honorable mention to the dozen comp lawyers who, in the 1960’s, purchased a substantial share of stock in the new Madison Square Garden. They were told they were purchasing the shares, at a bargain price, from Aristotle Onassis and the transaction had to be in cash. The reader needn’t be told how that story ended.
So, to the other 49 states, you’ve got a lot of catching up to do.
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If you have a great workers compensation fraud story I would love to hear about it. I would also be glad to offer you a workers compensation quote that may lower your rates, especially if you have high rates having been the victim of workers compensation fraud. You can reach me at david@StaffingCompSolutions.com and visit us at www.StaffingCompSolutions.com
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
ASA Exhibitor 2014 Conference Booth 1123
California Staffing Association Member